It is outrageous that some commentators have compared President Obama to Franklin D. Roosevelt (not to mention the president's own immodest favourable comparison of himself to FDR and Lyndon Johnson and, for good measure, Abraham Lincoln). FDR came to office on March 4, 1933, with machine gun emplacements at the corners of the great federal buildings in Washington for the first time since the Civil War.
The entire financial system had collapsed; the banks and stock and commodity exchanges had been closed for up to two weeks. Unemployment was at between 25 and 33 per cent, (the Commerce department didn't keep the figures and they are difficult to piece together but the higher figure is likelier). Up to 45 per cent of people were threatened by mortgage foreclosure; there had been a 50 per cent decline in industrial output and a 90 per cent decline in the stock market in less than four years. Farm prices were below subsistence levels and there was no direct relief for anyone. The country was at the last extremity before starvation and public disorder became unmanageable.
In Roosevelt's first term, almost a third of the unemployed were absorbed by private sector economic recovery, and almost half were absorbed by his imaginative workfare programs. The rest benefited from Social Security, which he introduced in 1935.
It is one of the great unjust slurs on Roosevelt, even by such fine critical historians as Amity Shlaes and distinguished pro-Roosevelt historians as William E. Leuchtenburg, Doris Kearns Goodwin, and Arthur Schlesinger Jr., that the Roosevelt administration's record in reducing unemployment was uncompetitive with that of contemporary governments of major countries, both democracies and dictatorships.
Germany, Italy, Japan, and in response, Britain and France, all increased defence spending and conscripted large numbers of people out of unemployment and into the armed forces and defence production industries through the '30s. (So did the Soviet Union, whose figures were completely unreliable and were further complicated for comparative purposes by Stalin's detention and murder of millions of citizens.)
In the United States under Roosevelt's New Deal, as many as seven million people were cycled through the emergency relief programs that massively strengthened the country's infrastructure and wrought immense environmental benefits through a vast range of conservation projects -- from colossal reforestation activities to the rescue of the whooping crane.
Among the workfare projects were the Lincoln Tunnel, Triborough Bridge, Cathedral of Learning in Pittsburgh, Montana State Capitol, the Tennessee Valley Authority, most of the splendid lakefront of Chicago, much of the Intracoastal Waterway, the elevated causeway through the Florida Keys, the writers' and artists' workshops (where Willem de Kooning and Jackson Pollack got their start), 15,000 bridges, nearly 700,000 miles of roads, 13,000 parks and playgrounds, 2,500 hospitals, 4,000 schools, and the dredging of the port of Brownsville, Texas. More than 1.5 million people were taught to read and write; day care centres took in scores of thousands of children, and there were special programs for the physically and mentally handicapped.
The beneficiaries of these programs were much more usefully and unambiguously employed than the millions of military and defence production draftees of Europe and Japan. But Roosevelt declined to treat them as employed because he intended the private sector to absorb them all eventually. When the New Deal workfare participants were considered employed, the U.S. easily matched or exceeded the economic recovery of peer countries. And as war approached, the emphasis changed to military preparedness; the basis of America's immense aircraft industry was thus expanded, and the aircraft carriers Yorktown and Enterprise, which would be immortalized in naval history in the Battles of Coral Sea and Midway, were emergency relief projects.
When Dwight D. Eisenhower returned from his war and peacetime service in Germany and was elected president, he emulated the highway system that he had admired in Germany with his Interstate Highway System where he, too, put the unemployed to work. There is no comparison in any of this to the present administration and its steam-shovel-ready $800 billion boondoggle of a failed stimulus program, which did not reduce unemployment at all, despite the addition of over a million public sector jobs.
Social Security was a two-payer system to ensure that it could not be repealed by future reactionary administrations and Congresses. It was intended ultimately to be extended into health care. This would have avoided the core problem of American health care today, where 70 per cent have splendid health care paid for entirely by their employers and for which they are not even charged for a taxable benefit, while 30 per cent get very uneven care and are apt to be driven into insolvency and rendered homeless by a medical emergency. Reforming this monster of a system cannot be done in the half-baked, flagrantly partisan and scandalously misrepresented method of the Obama administration; it can only be done with a national consensus and the support of both parties, as Lyndon Johnson achieved for civil rights.
In Roosevelt's first weeks, bank deposits were guaranteed, and the banking system was reorganized. There were many arranged bank mergers, and the U.S. government was for some years, through preferred shares, the principal shareholder of a majority of the nation's banks. But, it left the banking to the bankers and exited the industry when and as possible, at great profit to the taxpayers.
Farm prices were assisted by agreed production reductions, voted on by each category of farmer, while acute fluctuations were alleviated by the flood and drought control projects of the workfare programs. There was a token tax increase to shut down third-party demagogues like Huey Long (who was then assassinated), Francis Townsend, and Charles E. Coughlin. If Roosevelt had once publicly said that those who reviled him as "a traitor to his class" would be made to pay for the nation's sorrows and named them, mobs would have burned down their houses. Instead, he excoriated mythical categories of "war profiteers, (there were no relevant wars in 1934), economic royalists, malefactors of great wealth" and so forth, in order to concentrate public anger and alarm, when timely, on the country's true enemies: Nazi Germany and Japanese imperialism.
He saved 95 per cent of the country's economic system and was, as he told justice Felix Frankfurter, "American capitalism's greatest friend." That is how he won four consecutive presidential terms with an average of 56 per cent of the voters on election day, and had a job approval rating that never descended below 60 per cent for more than a couple of months, and never below 50 per cent. And, he never conducted a tax increase, soak-the-rich election campaign as the current one is shaping up to be.
The New Deal was a huge success. Even considering the workfare participants to be unemployed, unemployment had descended into single figures by election day, 1940, and if those participants were considered employed, unemployment was well below five per cent. Roosevelt's approval rating was at 70 per cent and he broke a tradition as old as the republic in seeking and gaining election to a third term. By the day of Pearl Harbor 13 months later, unemployment by any measurement had been eliminated. The tired canard that it was only eliminated by participation in the War is false.
Roosevelt didn't like paying people to be idle and those in relief programs were paid above the Social Security scale but below the minimum wage. The New Deal ended as Roosevelt managed the stylish strategic turn of dispatching one policy challenge -- the last traces of economic depression -- by preparing for the coming war with the greatest defence build-up in world history.
What the New Deal and the response of other contemporary national anti-depression programs did introduce, was the inexorability of inflation. From the time of Dr. Johnson in the late 18th-century, to that of Dickens a hundred years later, prices in England for basic necessities had not changed. And they did not change much until after the First World War.
In the '30s, the gold standard was abandoned other than in transactions between countries. Terrible economic depressions have been avoided since then, and recessionary conditions have been ameliorated by massive spending, as the current recession has shown. But the increase in the national debt from 40 per cent of GDP in the last year of the George W. Bush administration to nearly 80 per cent less than five years later, would have been condemned by FDR himself as completely irresponsible. It was for that reason that he tried to curb relief spending in 1937 and shrunk the deficit, and was accused by the very Republicans who had urged that course, of provoking the "Roosevelt Recession."
This administration has piled on debt in a manner that is indistinguishable from a vast increase in the money supply, while only palliating the recession. And now President Obama seeks 100 per cent increases in taxes on capital gains and dividends, almost a 30 per cent increase in estate taxes, repeal of the payroll tax reduction, and an as yet imprecise but ominous "global minimum tax." This isn't a political gesture to clear the flanks, like FDR's out-maneuvering of Huey long and the others; this is confiscation, disincentivization, statism, and class war, accompanied by completely spurious forecasts, four years late and derived from whole cloth, of deficit reduction at last.
Franklin D. Roosevelt's first presidential term is rivalled only by Lincoln's and Nixon's, and his own third term, as the most successful in the country's history, (though both terms of Washington, and the first terms of Jefferson, TR, Wilson, Eisenhower, and Reagan, as well as Polk's term, were all quite successful).
The Obama term is shaping up as a conspicuous fiasco, and if re-elected, it will be an unprecedentedly generous reward for so indifferent an on-job performance. But his first term, mediocre though it has been, will be an idyll of presidential statesmanship compared to what will follow.