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Mediamatters.Org -
In recent weeks, as the current state of the economy is
giving rise to references to the Great Depression, some media outlets have
drawn comparisons between President-elect Barack Obama and former President
Franklin D. Roosevelt, characterizing Obama as inclined or compelled to take
dramatic New Deal-level measures to revive the economy. During a November 16
CBS' 60 Minutes interview,
correspondent Steve Kroft asked Obama if he had been "reading anything
about the Depression, anything about FDR," and Kroft also referred to
reports that "a number of Democratic congressmen have proposed programs
that are part of sort of a new New Deal." On its November 24 cover, Time magazine superimposed Obama's
face on an iconic image of Roosevelt with the title, "The New New
Deal"; in the accompanying essay,
contributor Peter Beinart argued that Obama might be in a position to effect a
transformation on an ailing but receptive country as dramatic as the change Roosevelt
brought about in his time.
Numerous conservative media figures
and public leaders have responded to the comparisons -- Obama to Roosevelt, the
current economic crisis to the Great Depression -- as well as to suggestions
that measures on the scope of the New Deal are needed to revive the economy by
denouncing the New Deal as ineffective or damaging, thereby arguing that
government intervention on the scale that Roosevelt launched destroys rather
than saves the economy. During the November 23 edition of ABC's This Week, Washington Post columnist George Will asked, "Before
we go into a new New Deal, can we just acknowledge that the first New Deal
didn't work?" He added: "That is, the biggest collapse in
industrial production in history occurred in 1937, eight years after the stock
market collapse of 1929, five years into the New Deal."
The comments echoed remarks Will made
the week before on This Week when
he asserted that "one of the ways we turned a depression into the Great Depression
that didn't end until the Japanese fleet appeared off Hawaii was that there were no rules, and
investors went on strike, because the government was completely
improvising." He added: "Net investment was negative through almost
all of the '30s because, again, people did not know the environment in which
they were operating because the government had the fidgets and would not let
rules and markets work."
New York Times columnist
and Nobel laureate Paul Krugman, who participated in This Week's November 16 roundtable, responded:
KRUGMAN: No, the negative net
investment was because, you know, when you have 20 percent unemployment, and
all the factories are standing idle, who wants to build a new one? You don't
need to invoke the government to explain that. No, what actually happened was,
you know, there was an --
there was a collapse of the financial system, which was not restored for a long
time. There was a persistent deep slump in consumer demand and, therefore, no
investment demand, and so you were stuck in this trap.
Roosevelt got the
economy moving somewhat. By 1937, things were a lot better than they were in
1933. Then he was persuaded to balance the budget, or try to, and he raised taxes and cut spending and the
economy went back down again. And it
took an enormous public
works program known as World War II to bring the economy out of the
Depression.
Krugman's comments echo arguments in his November 10 New York Times
column, in which he asserted that Roosevelt's policies included
"long-run
achievements" that "remain the bedrock of our nation's
economic stability,"
and that Roosevelt's
short-term successes were constrained because "his economic policies were
too cautious." Krugman wrote:
Now, there's a whole
intellectual industry, mainly operating out of right-wing think tanks, devoted
to propagating the idea that F.D.R. actually made the Depression worse. So
it's important to know that most of what you hear along those lines is
based on deliberate misrepresentation of the facts. The New Deal brought real
relief to most Americans.
[...]
F.D.R. wasn't just reluctant
to pursue an all-out fiscal expansion -- he was eager to return to conservative
budget principles. That eagerness almost destroyed his legacy. After winning a
smashing election victory in 1936, the Roosevelt administration cut spending
and raised taxes, precipitating an economic relapse that drove the unemployment
rate back into double digits and led to a major defeat in the 1938 midterm
elections.
Similarly, in a November 17 post on
his personal blog, Brad DeLong, an economics professor at the University of
California-Berkeley, wrote, "Private investment recovered in
a very healthy fashion as Roosevelt's New Deal
policies took effect. The interruption of the Roosevelt Recovery in 1937-1938
is, I think, wel [sic] understood: Roosevelt's decision to adopt more 'orthodox'
economic policies and try to move the budget toward balance and the Federal
Reserve's decision to contract the money supply by raising bank reserve
requirements provide ample explanation of that downturn."
Other media conservatives have also referred
to Time's Obama-Roosevelt
comparison to attack Obama and assert that Roosevelt's efforts did not
work, without making the distinction Krugman made between the New Deal and what
Krugman wrote was Roosevelt's "eager[ness] to return to
conservative budget principles" in 1937. Some cite former Wall Street Journal writer Amity
Shlaes' 2007 book, The Forgotten Man: A New History of the
Great Depression (HarperCollins) to attack
suggestions that significant further government intervention is necessary to save
the economy.
In his November
18 National Review column,
editor Rich Lowry also cited Shlaes and addressed the Time cover in the context of
attacking Obama and the New Deal:
Democrats
are enjoying a New Deal reverie wherein a Democratic president solves an
economic crisis with public-works projects. The new issue of Time magazine features Obama on the cover
decked out in the trappings of FDR. This image would accurately capture the
moment, (1) if Obama --
president-elect for all of two weeks -- had actually accomplished something,
and (2) if Franklin
Roosevelt's economic program had really ended the Great Depression.
Neither is
true. As Amity Shlaes documents in her book The
Forgotten Man, the economy limped along under FDR's stewardship
in the 1930s. Many of the era's public-works projects were undertaken for
political reasons as well as economic ones.
In a November 18 post
on The American Spectator
blog, The Obama Watch, contributor Jeffrey Lord referred to Beinart's
Time story in criticizing
one of Obama's responses during his 60
Minutes interview,
writing:
The Obama idea
behind doing "something that works" is,
as Time acknowledges, nothing if not
the new New Deal
in both fact and
form. What goes unmentioned by Mr. Beinart and
his editors is that
FDR's penchant for experimenting effectively unstabilized the
American economy for a full decade. Markets crave stability and FDR proudly promised none. He tried "something that works" with
currency and exchange policy, agriculture, utilities and
the gold standard, to name but a few. The last
policy was so erratic no less than the
famed economist John Maynard Keynes described FDR's work as "the gold
standard on the booze." According to Amity Shlaes, author of the current bestseller The Forgotten Man, one fine morning FDR
informed his advisors he was raising the
gold standard by twenty-one cents. Why?
Said FDR in a classic "something that works" response: "It's a lucky number because it's
three times seven."
[...]
The problem for
President-elect Obama and his
friends is that decades after the post-New Deal era
have in fact gone
by. To re-offer the
New Deal in 2008
is just the same
Old Deal.
What's "something that
works" really all about? What
is this cry for
a new New Deal? As a new generation is about to learn, it is nothing more
than the policy of the con job.
In a column
written the week before the election, U.S.
News and World Report senior writer Michael Barone also cited
Shlaes and wrote
that "[w]ith victory in sight, Barack Obama's supporters are
predicting that he will give us a new New Deal. To see what that might
mean, let's look back on the original New Deal." He
continued:
The purpose
of New Deal legislation was not, as commonly thought, to restore economic
growth but rather to freeze the economy in place at a time when it seemed
locked in a downward spiral. Its central program, the National Recovery
Administration (NRA), created 700 industry councils for firms and unions to set
minimum prices and wages. The Agricultural Adjustment Act (AAA), the ancestor
of our farm bills, limited production to hold up prices. Unionization,
encouraged by NRA and the 1935 Wagner Act, was meant to keep workers in jobs
that the unemployed would have taken at lower pay.
These
policies did break the downward spiral. But, as Amity Shlaes points out in The
Forgotten Man, they failed to
restore growth. Double-digit unemployment continued throughout the 1930s;
despite population growth, the economy failed to rebound to 1920s production
levels. High taxes on high earners (a Herbert Hoover as well as Franklin
Roosevelt policy) financed welfare payments ("spread the wealth
around") but reduced investment and growth.
University of Texas professor James Galbraith responded to
Shlaes's thesis by criticizing her methodology; on November 18, at a Campaign for America's
Future conference,
Galbraith stated
that "the underlying numbers, which Shlaes uses ... do not count the
people who actually worked on the New Deal as employed. They count them as unemployed. Why did they do that? Because in retrospect, to
give -- to put a charitable construction on it, they wanted to assess the condition of the
private economy."
Some conservative media figures and politicians have
attacked Obama by asserting that Roosevelt not only did not improve the
economy, but made it worse, also without making the distinction that Krugman
made between Roosevelt's policies
pre-1937 and those after. In a November 19 column,
National Review Online editor-at-large Jonah Goldberg referred to the portion
of the 60 Minutes interview in
which Obama stated that "what you see in FDR that I hope my team can emulate is not always
getting it right, but projecting a sense of confidence and a willingness to try
things and experiment
in order to get people working again." Goldberg wrote that "FDR
always projected such confidence, even as he made things worse. But this
isn't another column about how FDR prolonged the Depression. Been there,
done that." Indeed, on October 9, Goldberg had appeared on CNN Headline
News' Glenn Beck and
stated, "FDR's policies made the depression longer and deeper.
Everywhere else in the world, they had the depression. In America, FDR
made the depression great."
Conservative radio hosts have also claimed that the New Deal
created or extended the Great Depression in arguing that Obama's policies
might also make have a similar effect:
During the November 24
broadcast of Clear Channel's The
War Room, co-host Jim Quinn, discussing how Democrats might deal
with the current economic problems, stated: "[W]hat they're
doing right now is exactly the template for what FDR did to create the
Depression. Everyone thinks that the crash of '99 -- or '29 -- created a Depression. It didn't. It created a recession. It was what FDR
did that turned it into a Great Depression." He added: "We are getting prepared
to exactly the same thing. He
called it 'priming the pump'; Obama calls it 'stimulus.' "
During the November 23
broadcast of his nationally syndicated radio show, Bill
Cunningham stated of "liberal Democrats": "Instead of
putting grease in the wheels of the American economy, they're going
to put sand, and they're going to exacerbate a recession into a
depression, much like Franklin Delano Roosevelt did in 1933, 4, and 5. We
were in a serious recession. By the time FDR got done, we were in a
full-fledged depression."
During the November 24
broadcast of his nationally syndicated radio show, Mark Levin asserted
that "the New Deal almost destroyed this country." He
continued: "It extended the Depression for seven years. It's
created massive debt that we've been carrying for 75 years, and one
day, that will come due as well. The New Deal had nothing to do with our
economic recovery, it was World War II." Levin also argued that
there was "24.9 percent unemployment at the height of the New
Deal," and that "not until World War II did it come down from
double digits."
These conservative media attacks are echoed in the comments
of Republican elected officials:
In an October 30 column
on National Review Online, former Rep. Pat Toomey (PA) wrote that "[f]ive major policy errors helped turn the 1929
downturn into a full-blown Depression lasting over ten years, and Barack
Obama has promised to repeat all five of these." He further
wrote that "Hoover's and Roosevelt's misguided policies
on taxes, trade, spending, labor, and regulation surely cost millions of
jobs and inflicted years of economic misery. Barack Obama is promising a
return to those failed policies. The stock market has noticed."
In a statement
released on November 21,
Rep. Mike Pence (IN), who was elected chairman of the House
Republican Conference, asserted that "if we will fight for the
interests of everyday Americans and offer positive substantive
alternatives without unnecessary acrimony, the American people will soon
tire of the flowery speeches and see the Democratic agenda for what it is -- the failed ideas of
the Great Society and the New Deal. And they will come looking for the
alternative."
From the November 23 edition of ABC's This Week with George Stephanopoulos:
GEORGE STEPHANOPOULOS (host): And there have been
some suggestions, Arianna, that maybe -- at least some of his supporters have
leaked this out in recent days -- well, maybe he was against not bailing out
Lehman after all. He wanted more help from the government.
ARIANNA HUFFINGTON (Huffington Post
editor in chief): Right, exactly. And he's not ideological, and Obama has
stressed again and again the importance of this being a fact-based
administration where ideology does not rule. And he, in a way -- the
president-elect -- has laid out the blueprint of massive public investment.
It's not mailing out checks, as George said. It's very different. It's really
rebuilding our infrastructure, rebuilding our schools, doing things that are
actually both going to improve the economy in the long term and help get us out
of the crisis faster.
STEPHANOPOULOS: [Treasury
Secretary-designate Tim] Geithner and a new New Deal?
DAVID BROOKS (New York Times columnist): Maybe. You know, I guess the one thing
I'd say is, one
of things they cannot do is go back to the New Deal. One of the things
they're talking about is building roads, building bridges. Well,
sometimes it takes 80 months to get an infrastructure project actually going.
The amount of money spent in the first couple of years in infrastructure --
miniscule. So, the one thing I'd say to them: Think about the new
economy. This is a human capital economy. Think about relationships and not
roads. And so, if I
were designing employment plans --
STEPHANOPOULOS: And what does that
mean exactly?
BROOKS: Right, if I were designing
employment plans, the things I would think about is do some road building,
build some schools -- that's fine -- but
think about national service. Think about how you're going to build relationships. Think about how
you're going to
build federal money to create communities that actually employ a lot of people
in a service sector sort of economy. To me, they're -- the way
they're talking now, they're doing a lot of reading about [Roosevelt adviser] Harry
Hopkins. I would spend a lot more time thinking about, "How am I going to build relationships
using service, building communities?"
ROBERT KUTTNER (co-founder, The American Prospect): I really think -- respectfully, I disagree.
It's a kind of a straw man. I mean, I think you have to do all of the
above. I think the hit to the economy is so serious. Contrary to the usual
belief, you can get infrastructure programs going pretty quickly, and by giving
relief to state and local government, you get help on the way instantaneously.
Right now, state and local governments are laying off people. They're
deferring projects. They're cutting health and
education. If the government cuts a check to state and local governments to the
tune of $100, $150 billion dollars, not one of those layoffs have to occur.
STEPHANOPOULOS: Frees up some of
their money in the [inaudible].
KUTTNER: So -- so, it may take some
time -- let me just finish -- it make take some time to create new jobs, but at
least we can prevent layoffs from occurring in state and local governments. And
you can get infrastructure programs going within six months.
BROOKS: I'm not against that. I just think --
they're talking about, as [Sen.] Chuck Schumer [D-NY] did, 5 to $700 billion dollars. We
can agree on state aid. I do agree on that. The things we know work: state aid works, food
stamps works, extending unemployment -- which they've done -- that works.
That clearly works to stimulate the economy. It's actually very hard to
spend $700 billion quickly, and what they're -- if you've got a tiddlywinks hall of fame,
they're going to
fund that thing. They are going to
fund everything.
WILL: They do that anyway under
earmarks and all the rest. I mean, what you're proposing is reactionary
liberalism. That is, whatever exists, double-down on it. Before we go into a
new New Deal, can we just acknowledge the first New Deal didn't work?
That is, the biggest collapse in industrial production in history occurred in
1937, eight years after the stock market collapse of 1929, five years into the
New Deal.
STEPHANOPOULOS: Well, let
me --
HUFFINGTON: You know, it is really
another of the myths that conservatives cling to now, that the New Deal did not
work. And it's really, as every sort of myth of conservatism has exploded --
WILL: Refute it.
HUFFINGTON: -- you know, whether it is -- you know, whether it is the fact that the
"leave us alone coalition," you know, of Grover Norquist, or the
tax-and-spend slogans -- those are not being repeated anymore. So, now
we're going back to the New Deal, or as Senator [Richard] Shelby [R-AL] said,
"We're not going to throw money at problems." I mean, I agree
with Robert, that it's got to be both. It's got to be major
infrastructure, public investments.
From the November 16
edition of This Week with George
Stephanopoulos:
WILL: Sam, one of the ways we turned
a depression into the Great Depression that didn't end until the Japanese fleet
appeared off Hawaii
was that there were no rules, and investors went on strike, because the
government was completely improvising. Net investment was negative through
almost all of the '30s because, again, people did not know the environment in
which they were operating because the government had the fidgets and would not
let rules and markets work.
KRUGMAN: This is not the way -- OK.
It's not the way I read the history. It's not the way -- no. What actually happened --
WILL: Am I wrong about net
investment?
SAM DONALDSON (ABC News
correspondent): Yes.
KRUGMAN: No, the negative net
investment was because, you know, when you have 20 percent unemployment, and
all the factories are standing idle, who wants to build a new one? You don't
need to invoke the government to explain that. No, what actually happened was,
you know, there was an --
there was a collapse of the financial system, which was not restored for a long
time. There was a persistent deep slump in consumer demand and, therefore, no
investment demand, and so you were stuck in this trap.
Roosevelt got the
economy moving somewhat. By 1937, things were a lot better than they were in
1933. Then he was persuaded to balance the budget, or try to, and he raised taxes and cut spending and the
economy went back down again. And it
took an enormous public
works program known as World War II to bring the economy out of the Depression.
From the October 9 edition of CNN Headline News' Glenn Beck (accessed via Nexis):
GOLDBERG:
The way I look at it is, the Great Depression was this thing that progressives
in America
were waiting for. They had been talking about how they wanted to revive what
they did under Woodrow Wilson for -- throughout the 1920s, but the 1920s were
prosperous and no one wanted to hand over the entire country, let alone the
economy to a bunch of sort of pinhead social planners.
And
then you had the Great Depression, and all of a sudden the progressives said,
"Aha! This is our moment." And we've been seeing something
similar over the last decade or so, where we've seen after Katrina all
these intellectuals of the left start saying, "This proves it's time
for a new New Deal."
After 9-11, people like Bill
Moyers said, "This is time for a new New Deal." I think Chuck Schumer actually has a macro on
his keyboard, just hits F-10 after any event, and it says, "This is the
moment for a new New Deal."
GLENN BECK (host): Right.
GOLDBERG:
And so they're looking at this, even though the new New Deal prolonged the Great Depression; it did not end the
Great Depression.
BECK:
World War II ended it.
GOLDBERG:
Right. FDR's policies made the depression longer and deeper. Everywhere
else in the world, they had the depression. In America, FDR made the depression
great.
BECK:
Great, yes. OK. So here's the thing that Americans should be concerned --
and I would honestly be saying this -- I mean, look, I don't trust John
McCain, either. I have no idea what this guy's going to do with the
economy.
From the November 24 edition of Clear
Channel's The War Room with Quinn
& Rose:
QUINN:
Costco was a mob scene yesterday.
ROSE TENNENT (co-host): Really?
QUINN: Absolutely a mob scene.
TENNENT:
See, that's how it was everywhere I was yesterday.
QUINN:
Yeah. Yeah, and
I'm thinking, "So, where's the bad economy?" And, you know, I had dinner with some friends on
Saturday night at a very expensive restaurant. Place was full. It was -- full to the walls. Now -- but Democrats
are working on it.
TENNENT:
Yeah. Yeah.
QUINN:
And we will have --
TENNENT:
We'll get there eventually, don't worry.
QUINN: Yes. We'll have our Great Depression, OK, if they have anything to say about it,
because --
TENNENT:
Yeah, if it's the last
thing they do.
QUINN: Well,
that's -- well,
what they're doing right now
is exactly the template for what FDR did to create the Depression. Everybody thinks that the crash of '99 -- or '29 --
created the Depression.
It didn't. It created a recession. It was what FDR did that turned it into a Great
Depression. We are getting
prepared to do exactly
the same thing. He
called it "priming the pump"; Obama calls it "stimulus." And we're
gonna talk about that after the half-hour, and why it can't possibly work. And, you know, you would think by now -- I mean, you saw what happened to your
401(k) after they pumped
$700 billion dollars
into the system. What
happened? It tanked.
TENNENT: Yup, nothing happened.
QUINN:
Exactly.
TENNENT: Yeah, there's just nothing there.
QUINN:
So, shows you that it doesn't work.
From the November 23 broadcast of Premiere Radio Networks' Live on Sunday Night, It's Bill Cunningham:
CUNNINGHAM: And as far as fear,
there is a real sense that when you have a 401(k), that becomes a 201(k), on
it's way to a 101(k). Your retirement's gonna be delayed, and
there's a great fear that when colleges and universities in January jack
up tuitions, loans may not be approved. People are having their home equity
loans capped. They're having credit cards capped. There's a sense
that 7 or 8 percent unemployment may become 10 to 12 percent, and that
we're heading toward a collision and nobody's in charge.
And few people I know, John Tamney,
believe that the liberal Democrats have an answer to help an ailing economy. Instead
of putting grease in the wheels of the American economy, they're gonna
put sand, and they're gonna exacerbate a recession into a depression,
much like Franklin Delano Roosevelt did in 1933, 4, and 5. We were in a serious
recession. By the time FDR got done, we were in a full-fledged depression. And
I fear that's what coming.
From the November 24 edition of ABC Radio Networks' The Mark Levin Show:
LEVIN: Schumer was talking about a
little New Deal, another New Deal. They're
very excited. Well, the New Deal almost
destroyed this country. It
extended the Depression for seven years. It's created massive debt that
we've been carrying for 75 years,
and one day, that will
come due as well. The
New Deal had nothing to do with our economic recovery, it was World War II. And everybody knows it who's honest -- 24.9 percent unemployment
at the height of the New Deal.
And not until World War II did it
come down from double digits. And
they spent the country into a massive debt. They created program after program, law after
law, bureaucracy after bureaucracy. They
built roads and buildings. They
built bridges and tunnels. And
the people were miserable. They
were poor. They were
hungry.
The economic system was on its back, because all that does is
move a pot of money from one citizen to another. All it does is spread the wealth, or spread
the income, if you will. It
doesn't fix anything. And
that's the road we're on.
Whatever this is, it's going to be deeper and longer, because the way the
Treasury Department and the Federal Reserve and the Congress and this president
and the next president will have reacted. How many more businesses are going to be
subsidized to the tune of tens of billions of dollars?
Ladies and gentlemen, six months
ago, if one company had come to Congress and said, "We need $5 billion to survive," we would've
been stunned. We would've been repulsed. And these numbers -- $7.4 trillion -- are mind-numbing.
Media Matters - Conservative media react to talk of Obama-led economic recovery by attacking FDR and New Deal {...} In recent weeks, several conservative media figures, echoed by Republican lawmakers, are responding to comparisons in the media of President-elect Barack Obama to FDR, or assertions in the media that a New Deal-level of government intervention will be necessary to resolve the current economic crisis, by asserting that the New Deal was a dismal failure, plunging the 1930s economy into a depression, an assertion that prominent progressive economists flatly reject. {...} Published: November 26, 2008, 2:07 pm - Indexed: November 27, 2008, 10:47 am - Page Size: 47KB |