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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?



Originally posted to tote on Fri Jul 22, 2011 at 11:55 AM PDT.

Also republished by ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement.

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Comment Preferences

  •  Tip Jar (5+ / 0-)

    I don't know half of you half as well as I should like, and I like less than half of you half as well as you deserve.

    by tote on Fri Jul 22, 2011 at 11:55:11 AM PDT

  •  "collective suicide by auto-erotic asphyxiation" (3+ / 0-)
    Recommended by:
    tote, Roger Fox, Johnny Q

    +4.  Nice phrase.

    But they've got theirs, and SCREW US!

    Happy little moron, Lucky little man.
    I wish I was a moron, MY GOD, Perhaps I am!
    -Spike Milligan

    by polecat on Fri Jul 22, 2011 at 12:04:03 PM PDT

  •  I think it is important to note after the '36 (1+ / 0-)
    Recommended by:

    election everything was looking rosy.

    GNP 1929=96 billion
    GNP 1936=103 billion

    GNP growth:

    Unemployment below 15%
    Non ag unemployment below 10%,

    So yeah, the reasoning was there.... to cut CCC and WPA funding by 60%, coupled with a tightened Fed policy= instant recession.

    FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

    by Roger Fox on Fri Jul 22, 2011 at 12:12:05 PM PDT

    •  Good data. (1+ / 0-)
      Recommended by:
      Roger Fox

      I might mention something about that. I kind of assume everyone who bothers to read this is at least somewhat acquainted with the New Deal story... but even I was unaware that GNP was growing at that much of a clip.

      I don't know half of you half as well as I should like, and I like less than half of you half as well as you deserve.

      by tote on Fri Jul 22, 2011 at 12:19:44 PM PDT

      [ Parent ]

      •  FDR then ordered up 200 new Navy ships (2+ / 0-)
        Recommended by:
        tote, Anne Elk

        in 38. No keel funded after Dec 7th 1941 saw action.

        Skilled worker shortages started at Grumman aircraft in Sept of '41, they started a training program to help. Interesting Story at Grumman, they produced more aircraft than any other single plant, turnover was 3% during the war (6% average industrywide), they had picnics and softball games for employees, I think daycare too.

        Yeah in 1936 Louis Armstrong set a record for selling... records, Chevy set a record for selling sedans, we had the Wagner act, 40 hr work week, and Social Security.

        CCC had a program to get men their high school degree, the best students were then offered college, so by 36-37 we had an influx of mech and electrical engineer types to help drive emerging tech in the market.

        In WW2 our vacuum tubes were better, produced in volume, so our radio, radar, sonar was superior. Battleship fire control computers.. yes, tubes....allowed gunnery to hit targets without a visual sighting. West Virginia, sunk at Pearl, refloated, refitted, scored hits at the Battle Sargasso straights at 4 am from 5 miles out. this was part of the Battle for Leyte Gulf.

        Even in June of 1942, radar allowed the Yorktown to close with the Japanese carriers, after radar sighting of japanese planes, to close to 25 miles and to have the Yorktown air strike arrive over the Japanese fleet simultaneously to stunning effect, 3 japanese carriers aflame in 15 minutes.

        FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

        by Roger Fox on Fri Jul 22, 2011 at 12:48:48 PM PDT

        [ Parent ]

      •  Yeah the CCC and the WPA were enormously (2+ / 0-)
        Recommended by:
        tote, Johnny Q


        Stunningly effective.

        FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

        by Roger Fox on Fri Jul 22, 2011 at 12:50:02 PM PDT

        [ Parent ]

  •  Real Point Is That FDR Was Inventing Everything (4+ / 0-)
    Recommended by:
    tote, Roger Fox, OLinda, Johnny Q

    Obama and the Democrats have the advantage of the entire history of every idea every different player got passed or advocated, plus the record of the much greater war and postwar spending at home & abroad.

    And we have the growth record and peoples' economic record of of the subsequent 40 years, and the record of everything that began with Carter with all the deregulation, the gusher-up of the people's wealth to the top, through the Clinton and W years.

    In other words we know exactly what works and exactly what doesn't, which FDR and the New Deal Dems couldn't know.

    That raises the floor for acceptable concessions to Republicans by leaps and bounds.

    Our generation is debating proven policy, against a backdrop of many different eras of proven failures from which all the Republican demands are drawn.

    A college student could put together a much better economic platform by just cutting and pasting out of history books. Which raises several questions.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Fri Jul 22, 2011 at 12:20:48 PM PDT

    •  I kind of agree, (1+ / 0-)
      Recommended by:

      and I mention that difference in my diary. But I also tried to emphasize that no two historical moments are even similar, and comparisons must be made very carefully. That's why I wanted to discredit the comparisons to Hoover, and suggest that comparisons to FDR are mush more reasonable. The bottom line for me is, if Obama crashes the economy by putting into place austerity measures, then that will be repeating history. OF COURSE the repeater gets extra blame. But it's still repeating the same mistake. I just don't think that makes him Hoover. Democracy was much less accepted worldwide in the 1930's, for one. So one might argue that Obama is assuming that 3 decades of neoliberal economic policies have taken the edge off the general theory (published in 1936, by the way). I would say that's a foolish assumption, but so was FDR's budget in 1937.

      But yes, very good point and well taken.

      I don't know half of you half as well as I should like, and I like less than half of you half as well as you deserve.

      by tote on Fri Jul 22, 2011 at 12:28:52 PM PDT

      [ Parent ]

    •  I entirely 100% unequivocally agree (2+ / 0-)
      Recommended by:
      tote, Johnny Q

      FDR pretty much said he was experimenting.

      And by 1936, by all financial metrics but employment the Depression was over.

      Once FDR saw the Recession of '37-38, he realized he mad a mistake, repealed the 60% cuts to the CCC and the WPA, ordered up 200 new ships for the Navy, funded tanks, aircraft.

      Most US WW2 aircraft were developed in the 1936 to 1939 period, P-51, P38, P-40, Wildcat. Except for possibly the Hellcat (and F4-U Corsair), which was developed from the Wildcat, which was our carrier plane thru Midway.

      Then by the summer of 43 those Navy ships started showing up and it was all but over for the Japanese. At the Gibert Islands invasion (Oct 43) we sent in 18 brand spanking new Carriers, IIRC more than Japanese would build for the rest of the war.

      FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Fri Jul 22, 2011 at 01:03:25 PM PDT

      [ Parent ]

  •  Keynes came from a perception (1+ / 0-)
    Recommended by:

    that the growth of an economy during war could be replicated just as well in peacetime through the same kind of government-led expansion in spending that builds tanks, planes and ships to fight a war. For some reason, the same spending seen as essential for war is seen as wasteful and frivolous when it comes to building bridges.

    One of the important aspects about the present economy is that expansion in business is not accompanied by hiring because technology is making many workers redundant, permanently so. The logical conclusion is that all of the output pre-recession can be achieved in the absence of any hiring. How does a society deal with the presence of a vast number of unemployed people? It's a big problem already but it will get bigger. Even if you stimulate the economy with massive infrastructure spending, you may still not do much for unemployment because businesses now work assiduously to avoid hiring even while they expand their business volume. In this respect, the government ought to be looking carefully at targeting stimulus to jobs that are inherently labor-intensive and resistant to technology.

    •  Massive public works program would be a HUGE start (1+ / 0-)
      Recommended by:
      Johnny Q

      And something like the CCC to massively retrain workers would be another goal, because I have to admit that some of this unemployment is going to become structural very soon, if it hasn't already.

      As to industries that are resistant to technology, there is some talk of a renewed American manufacturing boom, etc, etc. But in reality, the bottom line is that if the economy can produce all that it was producing without workers, then the exorbitant profits should go to the government, to guarantee healthcare, number one, but number two, to create whole new industries and spaces for people to innovate and invest in. That would be a work of imagination, but it could be done. And if there is still money left over, we could shift things around so that workers get more paid vacation time, creating the demand for other workers, etc. The point is that vertical integration should be a good problem to have, but it's not, thanks to the power of a select few.

      I don't know half of you half as well as I should like, and I like less than half of you half as well as you deserve.

      by tote on Fri Jul 22, 2011 at 01:20:12 PM PDT

      [ Parent ]

      •  I guess all this presupposes (1+ / 0-)
        Recommended by:
        Roger Fox

        an industrial policy and that seems unlikely. So, lots of great things we could do but will we?

        •  what other choice is there? (0+ / 0-)

          I don't know half of you half as well as I should like, and I like less than half of you half as well as you deserve.

          by tote on Fri Jul 22, 2011 at 02:03:59 PM PDT

          [ Parent ]

          •  Doing nothing (0+ / 0-)

            as we are. Americans have not really had a peacetime industrial policy and it doesn't look like it would happen unless we had a cataclysm of some kind. One could morbidly imagine such cataclysms, of course. But it's Friday...

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