HILLSDALE, Mich.

--The New Deal--Franklin Roosevelt's program for getting the U.S. out of the Great Depression--failed miserably. Throughout the 1930s, unemployment remained mired in double digits. In May 1939, with Roosevelt's second term almost at an end, unemployment had jumped again to more than 20 percent. In frustration, Henry Morgenthau, the president's trusted secretary of treasury, blurted out, "We have tried spending money. We are spending more than we have ever spent before, and it does not work. We have never made good on our promises. I say after eight years of this administration we have just as much unemployment as when we started. And an enormous debt to boot."

Why did FDR's lavish New Deal spending, contrary to predictions by Keynesian economists, produce so few jobs? Because every job he created with federal dollars had to be paid for out of taxes (or with debt). Tax dollars were simply taken from private citizens, who could have bought tires, neckties, or cheese sandwiches, and given to politicians, who spent it on road building at best or increased federal salaries at worst. Jobs are created by private investment, not by government redistribution.

The rising taxes during FDR's presidency illustrated massive federal spending at work. In 1932, the year Roosevelt was elected, the top marginal tax rate was 25 percent. By 1935, FDR secured a tax hike on the rich to 79 percent. By 1945, the year he died, rich people paid 94 percent on all income over $200,000. Most other Americans had begun paying taxes as well, and at rates similar to the 25 percent rate for rich people back in 1932. How can we expect entrepre- neurs to invest in new jobs when more than half of what they earn must be given to Uncle Sam?