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?
