When the economic collapse began a year ago, many Americans took comfort in the historical parallels with the Great Depression. As it had in 1929, the current crisis began under the clueless reign of a Republican, George W. Bush. Universally reviled since his non-response to hurricane Katrina had exposed him and the men around him as both uncaring and incompetent--either one was forgivable, not both--Bush had reacted in the classic cold-blooded Republican form embodied by the president who gave his name to the Hoovervilles.
But all was not lost. The Democrats were coming in! Barack "Yes We Can" Obama was running well ahead in the polls. Soon our new FDR would clean up Bush's mess.
In the late fall of 2008 Bush looted the stripped-bare U.S. Treasury one final time. Hundreds of billions of dollars in "bailouts," this time for the benefit of the banks, insurance companies and automobile manufacturers whose profligate ways had contributed to the crisis, were doled out without pre-conditions. Millions of homeowners who faced foreclosure got no help whatsoever.
The way to stimulate a consumer-based economy is to put money directly into consumers' pockets. Instead, Bush deployed the standard GOP trickle-down approach. Boosting the banks would encourage them to restore liquidity, allowing individuals and businesses to resume borrowing. But the banks weren't stupid. They no longer wanted to lend to people who couldn't repay them. They held on to the cash. Credit markets seized up.
Like his father in 1992, Bush finished his reign as he had begun it: tone-deaf, cheerful, obliviously floating above the mayhem, utterly unconcerned with the fate of the average American staring at a stack of bills (and, in the case of a half a million Americans each month, a pink slip).
We were a nation without leadership. We knew there was no point looking to Bush and his GOP gangsters for help. But we weren't too worried. Obama was coming. He would be the neo-FDR. He would get things rolling again.
During the 1932 campaign, Franklin Delano Roosevelt promised that help was on the way.
In radio addresses and in speeches across the country, FDR argued against Hoover's trickle-down approach. He spoke on behalf of the "forgotten man at the bottom of the economic pyramid."
In his lucid biography of FDR, "Traitor to His Class," the historian H.W. Brands described FDR's sales pitch: "For too long, he said, government had operated for the benefit of the wealthy, consigning the poor to the margins of public life. The Hoover administration had responded to the crisis by furnishing aid to big banks and corporations. This approach was characteristic of the Republicans, Roosevelt said, and characteristically wrong. It treated ordinary men and women as secondary to the powerful firms that had long dominated American life. And it certainly hadn't done anything to alleviate the Depression, which grew worse with each passing month. Roosevelt advocated "building from the bottom up," as he put it; supplying aid to those who most needed it."
Attacking the 2008-09 Great Recession wasn't rocket science. The causes of the economic collapse were strikingly similar: a real estate bubble feeding a stock market bubble, excessive borrowing and lending. So were the results. By the time Obama became president in January, the real unemployment rate (calculated the way it was calculated in 1933) was the same 20 percent it was when FDR took the oath of office.
Keynesian-influenced economists such as Paul Krugman pushed the incoming Obama Administration to repeat FDR's successful approach. Putting job creation first, FDR's New Deal programs directly put millions of people to work on government projects. The WPA, which employed eight million Americans during its existence, built bridges and highways. The TVA put up dams and the CCC improved national parks. The federal government even hired artists and authors to paint murals in public buildings and write travel guides to the 48 states.
Long after World War II ended the Depression once and for all, Americans made use of New Deal-era labor: "The WPA built or improved 651,000 miles of roads, 19,700 miles of water mains and 500 water treatment plants. Workers built 24,000 miles of sidewalks; 12,800 playgrounds; 24,000 miles of storm and sewer lines; 1,200 airport buildings; 226 hospitals; more than 5,900 schools, and more than two million privies," according to a PBS special about the New Deal.
There's plenty of work to do now. The U.S. needs a national high-speed rail system to compete with European and Asian countries, not to mention new mass transit systems and school buildings. Pull out of Afghanistan and Iraq and hire Americans to start building!
Nine months into his presidency, however, it is clear that Obama is more Hoover than FDR. There has been virtually no investment in public infrastructure. There will be no public jobs programs. According to The New York Times, "Obama's economic advisers are sifting options for a new package of tax cuts and other job creation measures to be unveiled in next year's State of the Union address."
No one in Congress has proposed a single jobs-creation bill. Instead, they're working to extend unemployment benefits to 79 weeks. "As Democrats have found, aiding those who have lost their jobs," comments the Times, "is simpler than preventing more layoffs and creating more jobs."
Is Obama stupid? Or is he crazy? More than one out of five Americans is jobless. Many more are underemployed. There are six jobseekers for every job. Inflation is out of control. Yet he thinks we can wait until January 2010? Does he really believe that tax cuts create jobs?
Other ideas include "a tax credit for homebuyers and accelerated depreciation for businesses." There's also "a $3,000 tax credit for each new hire" and "allowing more businesses to deduct their net operating loans going back five years instead of the usual two."
When Bush flew home to Texas, we thought we were getting an FDR to replace a Hoover. Instead, we got another Hoover.
Even if we had a president willing and able to offer the bold and decisive leadership that FDR offered in the 1930s, the challenge posed by the fiscal crisis would be daunting. But we're not as lucky as our grandparents. We're stuck with a small-minded schmuck with the vision of a small-time Chicago alderman. Think about it: This is a guy who thinks tinkering with the tax code is going to save American capitalism!
It's 1933. This time, however, Hoover got reelected. Can we hold out until 1937 for a president who understands that we need 10 million new jobs, and that we needed them yesterday?
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