Was the US effort in World War II government spending?

One thing that the Milton Friedman school of conservative, supply side economists and the Paul Krugman, Keynesian school of liberal economists both agree upon is that only the US entry into WWII brought the US back to full employment after the crash of 1929 and the Great Depression it percipitated. So why do conservatives insist that government spending is the worst thing to do when unemployment soars? I am pretty sure that God didn’t provide the money to finance WWII. GM and GE didn’t fund it. The Government did. In fact, the US Government spent at a level that had never been seen before. In inflation adjusted dollars, that level of spending has never been seen since either. Nothing even remotely close to it has ever been seen.

In point of fact, while FDR couldn’t muster congressional support for the spending needed to really jumpstart the economy till WWII broke out and we had no option but to spend like drunken sailors. the New Deal and WPA programs did get the GDP back where it should have been in mid 1942, well before Pearl Harbor was attacked on December 2, 1942. Even the recession within the depression, which occurred in 1936–37, happened when, in response to blistering Republican criticism of costs, FDR backed off on WPA spending.

So why must we still debate whether spending works to end a recession? Either WWII did or it did not end the Depression. It did. We all agree on that. And WWII was government spending on a scale never seen before or since. Granted the spending piles up debt. We were incredibly fortunate that WWII also created a unique set of conditions that allowed us to pay that debt down. The war devastated manufacturing capacity in nearly the entire developed world except for the USA We were able to retool our tremendous wartime manufacturing operation for civilian uses, and we became the supplier of the whole world. Even the boatloads of money we spent on the Marshal plan ended up coming back here with interest.

If we spend foolishly to get out of a recession, we might put people to work, but run up so much debt that we can’t possibly repay it. We are NOT there yet. The debt hit 120% of GDP in 1945. It’s hovering around 90% of GDP today.

Rather than make-work spending, we need to plan a spending program that invests in things that will drive a huge surge in GDP in the future. Energy would be a good target. The actual burdened cost of gasoline (petrol) in the USA today is around $14 a gallon. When we cart it to Afghanistan to support our nation-building there, it rises to $400 a gallon. Government subsidies keep it artificially low here so we can be happy driving our 3 ton SUVs as is our God Given Right. And almost all of that subsidy goes offshore to buy oil.

If we invested in natural gas like T. Boone Pickens is suggesting, and in a smart grid so we can phase in wind, tidal and eventually solar energy, we could wean ourselves from foreign oil, be energy independent, drastically cut our overall energy costs, generate a quarter of a million direct jobs and 5 to 10 million indirect jobs that won’t be offshored, and have a cleaner environment to boot. That sort of spending to get out of a recession makes sense. It not only puts people to work now, it develops something that pays dividends and keeps generating jobs for decades into the future. Those dividends let you retire the investment debt. And it is something we are going to have to do some day anyway, because every year the planet uses 1,000,000 years worth of fossil fuel.

We are seeing serious signs today that a house divided against itself cannot long stand. Why don’t we find a few things that are so obvious and logical that a strong majority of us can agree they are a good idea, and get together to work on something?