On April 29, the U.S. will have survived the first hundred days of President Barack Obama. Of course, unemployment is up and the stock market is down, but the president’s optimism is still unbounded. Mr.Obama’s staff is encouraging writers to find parallels to FDR and his first hundred days as president 75 years ago during the Great Depression. Let’s take the challenge: Here are three points of similarity between the two presidencies.
First, President Obama, like FDR, has used the economic emergency to pass massive spending bills. For example, Obama warned of dire consequences if Congress failed to pass his 1,100 page emergency “stimulus bill” of $787 billion. Congressmen had no time to reflect on the bill, or even read it. They passed a bill that would spend $25,000 per second every second of the year 2009–without serious debate. In doing that, President Obama was taking a page from FDR’s emergency banking bill, which the House passed, sight unseen, after only thirty-eight minutes of debate. As Congressman Robert Luce of Massachusetts responded, “judgment must be waived… argument must be silenced, we should take matters without criticism lest we may do harm by delay.” The atmosphere in the House in 2009 was almost identical.
Second, President Obama, like FDR, has already begun centralizing power in the executive branch. For example, Obama is already trying to move the Census Bureau into the executive department, from the Commerce Department, to control the counting of the U. S. population for the 2010 census — which will help to determine congressional representation and federal funding. In FDR’s first hundred days, he moved to control the currency — the banking bill gave him control over the movement of gold, and the Thomas Amendment to the Agricultural Adjustment Act allowed the president to issue greenbacks or tinker with gold and silver, as he saw fit, to promote inflation.
Third, President Obama is following FDR by vilifying businessmen. On TV, we see Mr. Obama pointing his finger at bankers, cajoling executives at credit card companies, and regularly denouncing “Wall Street greed.” In doing so, Obama has followed FDR’s script. In his first day in office, Roosevelt set the tone for his relentless attacks on businessmen: “rulers of the exchange of mankind’s goods have failed through their own stubbornness and their own incompetence.… The money changers have fled from their high seats in the temple of our civilization.”
What is disturbing about these parallels to FDR’s first hundred days is to contemplate the next 2,500 days of that bygone era. Where did the cries of emergency, the centralization of power, and the vilification of business take the nation? The answer is class warfare, a deeply divided country, and 18 percent unemployment. The Great Depression of the 1930s lingered — and lingered, and lingered. It could do nothing else. Massive federal spending merely transferred money from the wallets of average Americans to the hands of federal bureaucrats. As taxes rose to a top marginal rate of 79 percent under FDR (Obama has already promised to raise the current marginal rate on top incomes), entrepreneurs had no incentive to take what capital they had left and start new businesses, or expand existing ones. Uncle Sam wanted almost four out of five of their last earned dollars for taxes. Class warfare, and the redistribution of income, had knocked the creativity out of a generation of entrepreneurs — some of whom in the 1920s had either invented or expanded the production of radios, talking movies, air-conditioners, zippers, scotch tape, and even sliced bread.
In running for re-election in 1936, FDR said, “They [businessmen] are unanimous in their hate for me — and I welcome their hatred.” He had found, as his speechwriter Ray Moley pointed out, that “every time they [businessmen] made an attack on him… he gained votes and that the result of carrying on his sort of warfare was to bring the people to his support.” In other words, FDR had discovered a striking paradox: Attacking businessmen, and raising their taxes, prevented the Great Depression from ending, but it won votes from Americans who came to believe that businessmen were their enemies and FDR was their “fireside chat” friend.
As in the case of FDR, President Obama will soon approach a fork in the road — does he cut tax rates on income and capital gains, and give incentives to entrepreneurs to invest, or does he continue to vilify businessmen and risk another Great Depression?