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April 28, 2009

Obama as the new FDR - unfortunately

Leslie S. Lebl
At first I thought I had mistaken my catch-up reading for the morning paper.  In the passage I was reading, the American president understood that the proposed new program would run out.  As he himself put it:
 “Ah, but this is the same old dole under another name.  It is almost dishonest to build up an accumulated deficit for the Congress of the United States to meet in [the future].  We can’t do that.  We can’t see the United States short in [the future] any more than [now].” 

Was this President Barack H. Obama being transparent?  No, it was President Franklin D. Roosevelt talking to trusted aides about the proposed Social Security plan, as detailed in The Forgotten Man by Amity Shlaes.

That isn’t the only whiff of déjà vu in her book.  Elsewhere, she recounts that Roosevelt was concerned that the Supreme Court might rule his gold policy unconstitutional. 
“Days after the oral argument began, he told [Treasury] Secretary Henry Morgenthau and Homer Cummings at lunch that he hoped to keep the bond market in confusion until the Supreme Court decided the gold-clause issue.  Then, if the Court decided against the administration, things would still be so rough that the people would turn to the president and say:  ‘For God’s sake, Mr. President, do something.’”

Truly, a crisis is too good a thing to waste.  Morgenthau reproached Roosevelt, who the next night said he had only been kidding.  Morgenthau was not so sure.

As we await the rollout of Obama’s health care and education initiatives, here’s a snippet from an early discussion of Social Security:  Then, Democratic Senator “Champ” Clark from Missouri objected to the program’s design: 

“If the Social Security program was entirely about social welfare, he said, then why not allow private companies with pension programs already in place to choose to stay out of the government program?  This would allow a genuine private-sector counterpart against which to measure the government program…Without the opt-out of the Clark Amendment, companies would give up supplying private pensions.  Why should they pay double when the government would do their work for them?”

Or, what about the controversy over the National Recovery Administration and its attempts to micromanage American businesses?  In the case brought by the United States against chicken butchers in Brooklyn, to give just one of the examples Shlaes presents, the prosecutor tried to demonstrate that the butchers were cheating by lowering prices – clearly oblivious to the fact that the market price for chickens fluctuated.

Roosevelt’s actions led to a growing chorus of protests that he was violating the Constitution.  As the Tea Parties demonstrate, that’s another box Obama gets to check.

In conclusion, I remain skeptical about Obama’s chances of becoming the new Lincoln but I think he definitely has the inside track for becoming the new Roosevelt.  That’s too bad, especially when you consider the assessment, made in 1939, by Morgenthau when he testified before Congress: 

“We have tried spending money.  We are spending more than we have ever spent before and it does not work.” 

His measure of effectiveness was the unemployment rate.  In 1939 it was higher than in 1931, the year before Roosevelt was elected.  

Leslie S. Lebl is Principal of Lebl Associates and a Fellow of the American Center for Democracy.

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