The irony is stunning. At the very moment when President Obama is preparing the largest political leverage on the memory of FDR in sixty years, the value of said memory is falling faster than home prices.
We are less than two weeks into the Obama Administration – the one that is supposed to replicate FDR’s New Deal. Yet we are also seeing Amity Shales, author of the revisionist The Forgotten Man: A New History of the Great Depression, land on Page One of the Washington Post Outlook section with words like these (emphasis added):
It’s reasonable that a new executive in a downturn would want to evoke Roosevelt the leader. Like no other president, Roosevelt inspired those in despair. He kindled hope with his fireside chats on a then-young medium, radio. The new president gives radio talks, but they are also made available on this era’s young medium, the Internet.
But Roosevelt the economist is unworthy of emulation. His first goal was to reduce unemployment. Of his own great stimulus package, the National Industrial Recovery Act, he said: “The law I have just signed was passed to put people back to work.” Here, FDR failed abysmally. In the 1920s, unemployment had averaged below 5 percent. Blundering when they knew better, Herbert Hoover, his Treasury, the Federal Reserve and Congress drove that rate up to 25 percent. Roosevelt pulled unemployment down, but nowhere near enough to claim sustained recovery. From 1933 to 1940, FDR’s first two terms, it averaged in the high teens. Even if you add in all the work relief jobs, as some economists do, Roosevelt-era unemployment averages well above 10 percent. That’s a level Obama has referred to once or twice — as a nightmare.
The second goal of the New Deal was to stimulate the private sector. Instead, it supplanted it. To justify their own work, New Dealers attacked not merely those guilty of white-collar crimes but the entire business community — the “princes of property,” FDR called them. Washington’s policy evolved into a lethal combo of spending and retribution. Never did either U.S. investors or foreigners get a sense that the United States was now open for business. As a result, the Depression lasted half a decade longer than it had to, from 1929 to 1940 rather than, say, 1929 to 1936. The Dow Jones industrial average didn’t return to its summer 1929 high until 1954. The monetary shock of the first years of the Depression was immense, but it was this duration that made the Depression Great.
To understand how dramatic these paragraphs are, and how much they represent a break from the past, consider this: Ronald Reagan repeatedly praised FDR during his 1980 campaign. The assumption that FDR saved the nation’s economy was not only unanimous, it was de rigeur from the time of his death until the moment The Forgotten Man was published.
Yet now, criticism of FDR’s New Deal can reach the epoch of the Washington establishment – the Outlook front page – while its author can become, as Shales is, a senior fellow in economic history at the Council on Foreign Relations.
In other words, for the first time in over seventy years, the American establishment is willing to acknowledge a debate on the New Deal.
Again, the timing on this is stunning. The Obama Administration is trying to build support for a massive government intervention into the economy that would rival the New Deal in impact (and move far beyond it in terms of government size and scope). The president and his aides are trying desperately to make us all believe it’s 1933 all over again.
Yet, even if they succeed in telling us we’re in Great Depression 2.0 (we’re not, but that’s for another post), they may find the American people looking back at FDR’s “solution” with skepticism rather than reverence.
In other words, the Republican Party – having recently reacquainted itself with limited government, could find themselves in a political Over-The-Hedge moment: hibernating in the wilderness one moment, and waking up in an exurban subdivision the next.
In fact, if Rasmussen is accurate about reaction to the “stimulus,” it may already be happening.
Posted by D.J. McGuire 
