Obama said the GOP wants us to go back to the 1950's; would that be SO bad? What say you?

During the
Eisenhower era, Americans achieved a level of prosperity they had never
known before. While other parts of the world struggled to rebuild from
the devastation of World War II, citizens of the United States saw their
standard of living surpass what previous generations had only dreamed
about.

Eisenhower himself deserves a good deal of credit for this
economic growth. He found the right combination of low taxes, balanced
budgets, and public spending that allowed the economy to hum along at a
steady clip. He also benefitted from steady growth in spending on new
homes and consumer goods as citizens turned away from older notions of
thrift and began to buy on credit.

The Decade of Prosperity

The
economy overall grew by 37% during the 1950s. At the end of the decade,
the median American family had 30% more purchasing power than at the
beginning. Inflation, which had wreaked havoc on the economy immediately
after World War II, was minimal, in part because of Eisenhower's
persistent efforts to balance the federal budget. Except for a mild
recession in 1954 and a more serious one in 1958, unemployment remained
low, bottoming at less than 4.5% in the middle of the decade.

Many
factors came together to produce the Fifties boom. The G.I. Bill, which
gave military veterans affordable access to a college education, added a
productive pool of highly-educated employees to the work force at a
time American businesses were willing to pay handsomely for engineering
and management skills. Cheap oil from domestic wells helped keep the
engines of industry running. Advances in science and technology spurred
productivity. At the same time, potential competitors in Europe and Asia
were still recovering from being bombed into smithereens during World
War II.

Eisenhower's Middle Way

Eisenhower steered a
balanced course economically. Some Republicans called for rolling back
the New Deal, but the president realized that many of Franklin D.
Roosevelt's libeal social programs were both popular and effective.
Instead of getting rid of Social Security, for example, Ike actually
expanded it to cover another ten million people who had been left out of
the original program. Instead of turning away from big public works
projects, he instead invested federal money in the Interstate Highway
System, one of the largest public spending projects in the country's
history.

The main economic goal that Eisenhower pursued through
both his terms in office was to achieve a balanced federal budget. The
government ran a small deficit in 1954 and 1955, then registered a
surplus for each of the next two years. As the nation went into a
recession in 1958 and 1959, Eisenhower allowed the federal deficit to
grow in order to stimulate the economy. By 1960, he managed to return to
a surplus.

To achieve a balanced federal budget was a balancing
act in itself. Democrats were clamoring for increases in defense
spending in order to counter the Soviet threat. Congressional
representatives from both parties pushed for tax cuts. Eisenhower used
his credentials as an experienced military leader to reassure the nation
that the defense budget did not need to be increased as much as some
wanted. Though he favored low taxes himself, he dug in his heels and
fought tax cuts whenever they threatened to plunge the government into
debt.

The Rise of Consumerism

One of the factors that
fueled the prosperity of the Fifties was the increase in consumer
spending. Americans enjoyed a standard of living that was inconceivable
to the rest of the world. For example, Vice President Nixon told Nikita
Khrushchev in the mid-1950s that there were 60 million cars in the
United States, but the Soviet leader simply refused to believe him. When
Khrushchev came to visit America, Eisenhower arranged for him to fly in
a helicopter over busy roads and parking lots to witness the remarkable
signs of abundance for himself.

The time was ripe for Americans
to change their spending patterns. The adults of the Fifties had grown
up in conditions of economic deprivation, first due to the general
poverty of the Great Depression and then due to the rationing of
consumer goods World War II. During the Thirties, with unemployment
sky-high and the economy in shambles, most people could simply not
afford much beyond the basics. During the war, much of the nation's
productive capacity shifted to armaments. Everything from sugar to
gasoline to tires to nylon stockings were rationed. When consumer goods
became available again, people wanted to spend. By the 1950s, though
they made up just 6% of the world's population, Americans consumed a
third of all the world's goods and services.

The difference
between a production society, which focused on meeting basic needs, and a
consumption society, which emphasized customers' wants, was like the
difference between a 1908 Ford Model T and a 1959 Ford Galaxie. The
Model T, available only in black, was a utilitarian piece of machinery
intended for basic transportation. The Galaxie, decked out in shiny
chrome, was a way to show off and to enjoy a sense of luxury, not just
to move from place to place. Within a year or two, it would be obsolete
as fashion changed. Blessed with abundant resources, America could
afford to turn part of its productive capacity to creating glitz and
fashionable waste. An older generation was careful to save and reuse;
Americans in the Fifties began to use and throw away. They became
"consumers."

Consumerism was driven by advertising. Spending on
product promotion boomed, from $6 billion annually in 1950 to more than
$13 billion by 1963. "The reason we have such a high standard of
living," Robert Sarnoff, president of the National Broadcasting Company,
said in 1956, "is because advertising has created an American frame of
mind that makes people want more things, better things, and newer
things."²⁹

There's
no question that advertising drove the purchase of new products, which
in turn kept the nation's economic wheels turning. And, as Sarnoff
pointed out, Americans did achieve a high standard of living. But some
critics questioned whether a reliance on consumers to drive a huge
portion of the economy was wise in the long term. Half a century later,
our current economic crisis, fueled in part by a collapse of consumer
spending, has raised the question again.

A Nation in Debt