For those who missed it, today's Obama town hall at the University of Maryland was a breath of fresh air on this 103 degree New York afternoon, albeit a tid bit late (t-minus 11 days and we're moving away from a sane solution to the contrived political crisis). Given the Alice-through-the-looking glass politics that overshadowed the event, only one exchange really got to the heart of the matter, which is one more than most of us probably expected. So it's worth focusing in on, because it was a hopeful and inspiring moment in the midst of so much nonsense and doom. Tom McMillen, a former Rhodes scholar, NBA star and US congressman, is hardly your average town hall interlocutor, but he asked the question everyone on the left was waiting to hear:
"You know, we're focused so much on this debt right now, and the debt ceiling, but you know, this country could be sliding into another slow down. How do we avoid what happened to President Roosevelt in the 30's? Because, we ought to be focusing on getting this economy going again."
One of the legitimate criticisms from the left is that the President, while clearly comprehending the macro-economics of the debt ceiling debate, has done too little to pressure his opponents in their own states or constituencies through what he does better than probably anyone: the town hall. This event may fall for some in the "too little, too late" category, but it's a sign that he is reaching the same conclusion, which I take as a good omen. And yet, like many others, I was disheartened to read the President's op-ed this morning. One well written diary even declared this as the definitive "Hoover moment" of this Presidency. But although I recommend reading both that diary and the op-ed and making up your own minds, I believe that the correct comparison is still FDR. To understand why, let's deconstruct the President's response, word by word, and see what kind of picture develops.
"For those of you who've studied economic history and the history of the great depression, what Tom's referring to is, you know, Roosevelt comes in, he tries all these things with the New Deal, but FDR, contrary to myth, was pretty fiscally conservative."
Stop the music. This is essentially the David Kennedy argument: that FDR was really doing anything and everything he could to preserve capitalism (see David M. Kennedy, “What the New Deal Did,” Political Science Quarterly, 124 (Summer 2009), pp.251-268). Looked at through that lens, he was a sort of bizarro conservative, and the 1936-7 austerity measures make plenty of sense. But any simple story about the New Deal is probably wrong. Here's what was really at stake in the 1930's, from a broad historical perspective.
This is what the New Deal means—or should mean—to us today. It should be remembered not as an episode in the long march of American reform but as a defining time—like the Revolution and the establishment of the new nation—that set the stage and defined the terms of American politics and government for generations to come….So from our present perspective the New Deal seems more than ever a watershed, rather than an ephemeral event that separates politics past from politics present and future. If that is indeed its deepest historical meaning, then a second large question surfaces: how and why was this the case?….There were, indeed, alternatives: the swing to a nationalist and/or totalitarian Right under the weight of hard times evident in places like Germany, Italy, Japan, China; the swing to a totalitarian Left in the USSR. Set against the world backdrop, the New Deal, and indeed the American polity since then, is as distinctive in its character as, say, the New Republic of the nation's early days. So we need to ask: why the roads not taken; why the road taken?
from Morton Keller, "The New Deal: A New Look," Polity, 31 (Summer 1999), pp.663, 662
So while Kennedy may be correct, there are certainly other interpretations of how liberal or conservative the New Deal really was, and really there are few more difficult historical puzzles, that I know of. I for one have argued in another diary that if you take into account the issue of corporate personhood, the New Deal looks decidedly more anti-corporation, as the regulatory strategies employed in all the major bills, save for a few from the 100 days, were carefully constructed so as to avoid corporate lawsuits on bill of rights grounds such as the fourth amendment. There was a lot going on at this time, and every historical moment or epoch is different, however many general similarities there may appear to be. When you peel back the layers of the New Deal onion, FDR was a politician, and a very talented one, who was populist at heart and responded to constituent pressure. Constituent pressure explained the austerity cuts, not some personal affinity for fiscal conservatism. And I think that the exact same thing could be said for Obama. Moving along then...
"And, so after the initial efforts of the New Deal, and it looked like the economy was growing again, FDR presented a very severe austerity budget, and suddenly in 1937, the economy started going down again, and ultimately what really pulled America out of the great depression was World War II.
He's basically right about this. What he doesn't mention is that after the 1937 "douple dip depression," FDR set in place a very non-severe, non-austerity Keynesian fiscal strategy known as the "Fair Deal" where workers' rights and unions were the centerpiece. While that in of itself was not enough stimulus to reduce unemployment to non-depression levels, I would argue that it would be enough to get our economy running again today. And it showed that once FDR, who by the way was our first Keynesian president and was taking a chance on Keynes' theories, saw that demand indeed could be a problem in a liquidity trap such as any significant crisis when interest rates are as low as they can go, when FDR tried it the other way and reversed a ton of progress from the original New Deal programs, he didn't hesitate to roll back the austerity budget and march toward a fiscal solution. The President is correct that it was ultimately WWII that got us out of the Great Depression, because WWII caused the economy to grow at around 20% annually and become essentially a centrally planned military economy. But what he doesn't mention are certain big defeats of his initiatives to empower the labor movement, most importantly Taft Hartley, which, had they failed, might have allowed for a Western European democratic socialism to take hold that could have pulled us out of the depression, albeit more gradually than the War. So I disagree with the President's historiography, again. At least he used the word SEVERE to describe FDR's budget in the 30's, implying that his won't be as severe. But again, notice that Obama basically considered the FDR budget a worthy try, economically, as do many respectable conservative economists who think that nothing short of WWII would have gotten us out of the great depression.
"So some have said, I think rightly, that we've got to be careful that any efforts that we have to reduce the deficit don't hamper economic recovery because the worst thing we can do for the deficit is continue to have really bad growth or another recession.
Yeah, I've heard that argument somewhere too lately.
"So what I've tried to emphasize in this balanced package that we've talked about is, how do we make a serious down payment and commitment to deficit reduction, but, as much as possible, focus on those structural long term costs that gradually start coming down as opposed to trying to lop off everything in the first year or two?
Translation: I'm not cutting Social Security by a percentage, I'm pegging it to a different measure of inflation, so it will take many years for the real changes to set in, by which time the economy will have recovered an people will be able to handle the reductions. I'm sure FDR might have used similar rhetoric to justify the 1930's budget. But again, FDR was operating without the benefit of 20/20 hindsight. And I think that any cuts, however modest, to safety net programs in a recession is economic suicide. As well as political.
"And how do we make sure that as part of this package we include some things that would be good for economic growth right now? So, back in December we passed a payroll tax cut that has saved the typical family 1000 dollars this year. That's set to expire at the end of this year. And what I've said is as part of this package we should renew that payroll tax cut, so that consumers still have more in their pockets next year, until the economy gets a little bit stronger.
THis is clever, using a tax cut that actually does stimulate aggregate demand to teach the tea partiers about Keynesian economics. Vintage Obama. Doesn't help balance the budget, doesn't help with demand by much, but still, this is what I want to see him doing LOTS more of in very loud and public forums.
"I've said that we have to renew unemployment insurance for another year... it recirculates money in the economy, and boosts aggregate demand to make sure our economy grows
Red meat for the base. Not going to help with the Tea party, necessarily (unless they're unemployed). But at least it gets to the problem of aggregate demand. Better to talk about infrastructure programs, except, there won't be any in this package, because the Republicans would rather hold hands and commit collective suicide by auto-erotic asphyxiation.
...[eventually] "doing an infrastructure bank, that would finance that would help to finance the rebuilding of America and put a lot of people back to work. We don't have time to wait for putting people back to work. Now what you'll hear from the other side is that the most important thing for putting people back to work is simply cutting taxes or keeping taxes low. And I have to remind them that we actually have sot of a comparison. We have Bill clinton, who created 22 million jobs during the eight years of his presidency, in which the tax rates were significantly higher than they are now, and would be higher even if, for example, the tax breaks for the high income Americans that I've called for were taken back, even if those were taken back, taxes would be lower now than they were under Bill Clinton, and the economy was doing great! We generated lots of jobs. And then you have the eight years before I was elected, when taxes were very low but there was tepid job growth.
Candidate Obama? Is that you? It's so nice to see you again. Please don't leave.
"Now I'm not saying there's an automatic correlation..."
WHY?? THere IS ONE!!! This is where you transition back to your post partisan negotiating persona, isn't it?
On the whole, I think that the reason Obama is not 2008 candidate Obama more often, just as FDR wasn't first 100 days FDR in 1936, is due to constituent pressure (or lack thereof). FDR was mired in the court stacking scandal, one of his first major failures, where congress denied him the right to add 3 very liberal supreme court justices to the bench. He felt the need to appease the angry conservatives and business leaders who were making a raucous in his tent. And Obama is feeling the same heat from business. Of course, he never tried to pull off the liberal coup d'etat that was the court stacking scandal. In fact, he really never tried to do anything in particular to piss off big business. But they're angry just the same, and they're coming after our social security because they know that Obama, like FDR, is a good politician in that he listens to constituent pressure. So how about we give him something to listen to?