“Congress Lacks Courage And Vision”: FDR Put Humanity First, The Sequester Puts It Last
FDR placed the needs of the American people above petty budgetary concerns, but today’s leaders lack his courage and vision.
In 1933 we reversed the policy of the previous Administration. For the first time since the depression you had a Congress and an Administration in Washington which had the courage to provide the necessary resources which private interests no longer had or no longer dared to risk.
This cost money. We knew, and you knew, in March, 1933, that it would cost money. We knew, and you knew, that it would cost money for several years to come. The people understood that in 1933. They understood it in 1934, when they gave the Administration a full endorsement of its policy. They knew in 1935, and they know in 1936, that the plan is working.—FDR, 1936
Eighty years ago this month, at the height of the worst economic crisis in our nation’s history, Franklin D. Roosevelt delivered on his promise to launch a New Deal for the American people. Not wedded to any one program, idea, or ideology, the New Deal was founded on the very simple premise that when the free market failed to provide basic economic security for the average American, government had a responsibility to provide that security. In Roosevelt’s day, this meant imposing the first-ever meaningful regulation of the stock market, shoring up the nation’s financial system by guaranteeing private deposits and separating commercial from investment banking, and providing jobs to the millions of unemployed through government expenditures on infrastructure. The Roosevelt administration also launched the country’s first nationwide program of unemployment insurance to help the unemployed bridge the gap between jobs as well as Social Security to ensure that the elderly, after years of work and toil, would not suddenly find themselves utterly destitute.
Conservative critics of FDR’s polices say that these programs did not work—that unemployment remained high throughout the 1930s and that it was only World War II that brought us out of the Great Depression. As such, these same critics continually argue that the deficit spending that fueled the New Deal was the root cause of its inability to bring the unemployment rate down to acceptable levels. In short, they argue that government spending and government programs do not work, and that only the free market can provide the economic stimulus necessary to get the economy back on its feet again.
But as is the case today with the naysayers on climate change, the empirical evidence suggests that nothing could be further from the truth. During FDR’s first term, for example, the average annual growth rate for the U.S. economy was 11 percent. Compare that to the paltry 0.8 percent we witnessed in the first term of the Obama administration. The nationwide unemployment rate also fell, from its all-time high of 25 percent in 1933 to 14 percent by 1935, which at the time represented the largest and fastest drop in unemployment in our nation’s history.
But far more damning to the conservative critique is the argument that tries to invalidate the New Deal by positing that it was World War II and not the relief programs of the 1930s that brought us out of the Great Depression. Conservatives love to trumpet this fact and often use it as part of their argument against deficit spending, never stopping for a moment to consider that government expenditures—and deficits—in World War II made the New Deal look like small potatoes. In fact, deficit spending in the New Deal never topped 6 percent of GNP, while in World War II it ran as high as 28 percent. In other words, World War II was the New Deal on steroids. Viewed from this perspective, it is FDR’s critics on the left—not the right—who possess the stronger argument. The problem with the New Deal was that it did not go far enough. In other words, the government should have spent more money, not less, if it was going to be successful in bringing the economic crisis to an end.
All this is not to say that free enterprise is incapable of producing economic growth—it most certainly is. But there are times when capitalism, left to its own devices, can fail. Franklin Roosevelt was willing to acknowledge this, and he spent the better part of his tenure in office trying to put in place programs that would make capitalism work for the average American, not just those at the top. Hence, his agenda was not to subvert or destroy the free market system, but rather to save it.
It took vision and courage to launch the New Deal—the vision to understand that when the free market systems falls short or fails, government has a responsibility to take direct measures to get the economy moving again, and the courage to engage in deficit spending at a time when orthodox economic theory argued that the only proper response to an economic recession or depression was to slash government spending and balance the budget.
Unfortunately, the leadership we possess in Washington today lacks the vision and the courage to follow FDR’s example and put in place the sort of common-sense programs that would stimulate the economy and put people back to work. Instead of providing jobs for millions by spending money on our failing infrastructure—now ranked 24th in the world—or investing in programs that would reverse the falling education rates of our children, or providing greater federal support for the basic scientific research that may unlock untold benefits for future generations, we instead speak of nothing but the deficit and the sequester, as if cutting spending in the midst of recession is the magic bullet that will lead us out of our economic malaise.
Franklin Roosevelt faced similar critics, who, much like today’s deficit hawks, insisted that he must cut spending and balance the budget no matter what the consequences for the average American. But FDR would have none of this. “To balance our budget in 1933 or 1934 or 1935,” he said,
would have been a crime against the American people. To do so we should either have had to make a capital levy that would have been confiscatory, or we should have had to set our face against human suffering with callous indifference. When Americans suffered, we refused to pass by on the other side. Humanity came first.
As it turns out, FDR’s decision to put “humanity first” was not only the right moral decision, it was also the right economic decision. For the deficit spending that he finally unleashed in World War II, coupled with the social and economic reforms put in place during the New Deal, led to one of the longest periods of economic prosperity in America’s history and the birth of the modern American middle class.
Sadly, all of the evidence to date suggests that our leaders in Washington are quite happy “to pass by on the other side” and let the sequester proceed without so much as a fight. With roughly 16 million people across the country still unemployed, this is surely “a crime against the American people.”
By: David Woolner, The National Memo, March 3, 2013
“Co-Opted By The Extremists”: John Boehner And The GOP Choose The Tea Party Over The Middle Class
The Republicans, now led from behind by House Speaker John Boehner, are painting themselves into a tiny corner. Boehner may have secured his job as speaker but he has categorically rejected any hope of a grand bargain, thereby leading his party in a rejection of America’s middle class. Unless he can be persuaded by Republican senators and a few dozen of his House colleagues to accept a balanced deal with the president and the Democrats he will severely harm his party by appealing only to the Tea Party.
Leaving the White House after the meeting with the president, Speaker Boehner dug in his heels against the closing of any tax loopholes or raising any revenue. Hasn’t he learned anything since the election?
Look at what has happened to the Republicans. Democrats have a 22 point advantage (according to the NBC/Wall Street Journal poll) on who would look out for the middle class, the largest margin in 20 years. The same poll found that 36 percent of the public viewed the Republicans favorably in October of 2012, only 29 percent view them favorably today—a remarkable drop in just four months.
And there are very good reasons why House Republicans, who really are the current face of the party, are tanking. They are completely out of touch with the American people on the critical issues. Putting aside votes on the Violence Against Women Act or relief for Hurricane Sandy or averting the “fiscal cliff” or even gay rights, choice, and immigration, they are digging a huge hole for themselves on economic issues.
Right now, 76 percent of Americans want a balanced approach to cutting the deficit, only 19 percent support the Republican position of “cuts only.” By over 2 to 1, voters think the sequester is a bad idea. If the House Republicans and John Boehner continue down their radical path of refusing to negotiate, threatening government shutdowns, and not raising the debt limit, their public standing will continue to erode.
According to a National Journal survey, four-fifths of Americans want to completely exempt Social Security and Medicare from any deficit reduction.
With entitlements making up two-thirds of the budget and growing, it doesn’t take Willie Sutton to figure out that’s where the money is! In order to get Democrats to take on entitlements and the political heat that would bring, the Republicans need to acknowledge that the wealthy must pay their fair share, that hedge fund managers and corporate jet owners shouldn’t be getting more tax breaks. Real tax reform means that we have a fairer and more equitable system. That really is only common sense.
But right now, if Boehner continues to march in lock step with his right flank, there will be no grand bargain, there will be no tax reform, there will be no stabilizing of future budgets. Boehner caved during the last grand bargain negotiations in 2011, according to this week’s New Yorker, because Eric Cantor and the Tea Party forced him to pull out of the deal.
Now, he refuses to negotiate, to work across the aisle, to even work with Senate Republicans. This is not the mark of a leader but someone who has been co-opted by the extremists in his party.
By: Peter Fenn, U. S. News and World Report, March 1, 2013
“Insurance Against Need, Guaranteed Return”: Why Democrats Must Get Smart On “Entitlements”
In a season of depressing budget news, the worst may have been that a majority of U.S. House Democrats signed a letter urging President Barack Obama to oppose any benefit cuts to Social Security, Medicare, Medicaid and other entitlements. That’s the last thing we need.
To hold the line on harmful cuts to discretionary spending, Obama and the Democrats must educate the public about the necessity of entitlement reform. Otherwise, the poor and needy — largely spared by the automatic reductions under sequestration — will get hit much harder down the road.
Liberals are right to reject Republican proposals that would slash social-welfare programs even as they refuse to consider closing tax loopholes for the wealthy. And I agree that the sequestration will cut into the bone of important government functions and investments in the future.
That makes two more reasons to start talking seriously about how we will pay for the insanely expensive retirement of the baby boomers.
How expensive? Anyone reaching retirement age in the next 20 years (including me) will take more than three times as much out of Medicare as he or she contributed in taxes. By 2030, the U.S. will have twice as many retirees as in 1995, and Social Security and Medicare alone will consume half of the federal budget, with the other half going almost entirely to defense and interest on the national debt. It’s unsustainable.
If Democrats don’t want to talk about these programs, they can say goodbye to every other pet program. We can preserve Medicare in amber only at the expense of investments in pre-kindergarten programs or cancer research.
To reform entitlements, we should assess what these programs were meant to do in the first place.
For starters, Presidents Franklin D. Roosevelt and Lyndon B. Johnson didn’t call them entitlements. Jimmy Carter’s administration borrowed the term from Anarchy, State and Utopia, a 1974 book by Robert Nozick, a political philosopher. “Entitlement” sounds selfish and at odds with the dignity and peace of mind that Social Security and Medicare are meant to provide.
It distorts the animating idea behind these programs, which is social insurance.
FDR didn’t have strong feelings about benefit levels, retirement ages or eligibility standards. He focused on what he called guaranteed return. By that he meant that having paid into the system through a kind of insurance premium (though in fact it was merely a payroll tax), Americans should rest easy that some money would be there for them if they lived long enough to need it. The whole point was “insurance against need.”
“Guaranteed return” and “insurance against need” should continue to be the two guiding principles of social-insurance reform.
“Guaranteed return” means no privatization or voucher system for these programs. FDR would have strongly opposed President George W. Bush’s plan to allow Social Security contributions to be invested in the stock market. He thought subjecting retirement income to what he called “the winds of fortune” was a breach of the social contract. Imagine what would happen to someone who retired in 1929 or 2008? No guaranteed return.
“Insurance against need” suggests keeping the focus on poor and middle-class recipients who depend on the money most. That means means-testing, giving wealthier retirees less. FDR, who favored high levels of taxation on the rich, would have been fine with taxing their benefits, too, as long as they were guaranteed to get at least something back.
Liberals generally oppose means-testing social-insurance programs. For decades they’ve argued that if the wealthy don’t get a heaping portion of Social Security and Medicare, it will undermine the political support of the programs and turn them into a form of welfare. Once that happens, the theory goes, the programs will be ended.
Like the word “entitlements,” this hoary idea should be retired. Social Security and Medicare are now so deeply in the marrow of the American middle class that they will never be seen as welfare. The question is not whether to reform them, but how.
Roosevelt structured Social Security as an insurance program with “contributions” through the tax code “so no damn politician can ever take it away.” He didn’t specify anything about the level of taxation or cost-of-living increases, which weren’t an issue in the 1930s but would become one shortly after World War II.
Today, only the first $110,000 in income is subject to the 7.65 percent tax that pays for Social Security and Medicare. Lifting the cap to higher income levels (say $250,000 or $400,000) could eventually generate hundreds of billions of dollars.
Republicans consider this a tax increase. That’s only true outside the context of these programs. The change could be structured so that no one paid in more than actuarial tables say they would take out. That would still raise billions and be consistent with the idea of paying for your own retirement if you can afford it.
For lifting the cap to have any chance, it would have to be matched by reforms such as adopting the chained consumer-price index, a new way to measure cost-of-living adjustments that Obama apparently favors. Liberals oppose chained CPI because it would theoretically result in lower benefits. But less frequent cost-of-living increases aren’t the same as cuts, especially if the current system is, as many experts believe, based on an inaccurate assessment of inflation.
Maybe there are better ideas for reforming social insurance. The point is, we better start talking about them. Otherwise, grandpa and grandma and their fellow Grateful Dead fans are going to eat all the food on the table.
By: Jonathan Alter, The National Memo, March 1, 2013
“Reagan Has Left The Premises”: The Republican Party Needs A Reality Check
In the summer of 1999, George W. Bush chose the first major policy speech of his presidential campaign to pick a fight with Grover Norquist. Bush flatly rejected the “destructive” view “that if government would only get out of our way, all our problems would be solved” — a vision the Texas governor dismissed as having “no higher goal, no nobler purpose, than leave us alone.”
Norquist had proposed to define conservatism as the “leave us alone” coalition — a movement united by a desire to get government off our backs. Bush countered that “the American government is not the enemy of the American people.”
Ed Crane, then the president of the libertarian Cato Institute, said the speech sounded as if it had been written by someone “moonlighting for Hillary Rodham Clinton.” I can formally deny that charge. But the Bush campaign was purposely attempting to alter the image of the Republican Party. And the party — rendered more open to change by eight years in the presidential wilderness — gave Bush the leeway to make necessary ideological adjustments.
It is the nature of resilient institutions to take stock of new realities and adjust accordingly. In a new cover essay for Commentary magazine, Peter Wehner and I detail the examples of Bill Clinton and Tony Blair. Clinton broke a long Democratic presidential losing streak by emphasizing middle-class values, advocating the end of “welfare as we know it” and standing up to extreme elements within his coalition (thereby creating the “Sister Souljah moment”). In Britain, Blair went after the “moral chaos” that led to youth crime, abandoned his party’s official commitment to public ownership of the means of production and launched New Labor.
The Republican Party now needs similar transformation. Out of the past six presidential elections, four have gone to the Democratic nominee, at an average yield of 327 electoral votes to 211 for the Republican. During the preceding two decades, from 1968 to 1988, Republicans won five out of six elections, averaging 417 electoral votes to Democrats’ 113.
This stunning reversal of electoral fortunes has taken place for a variety of reasons: changing demographics; the end of a GOP foreign policy advantage during the Cold War; a serious gap in candidate quality; the declining relevance of economic policies that seem better suited to the 1980s; and an occasionally deserved reputation for being judgmental and censorious.
A full Republican appreciation of these disturbing fundamentals was delayed by the 2010 midterms, in which an unreconstructed anti-government message seemed to be riding a wave. Just two years later came that wave’s withdrawing roar. The Republican nominee, Mitt Romney, lost by 5 million votes to a beatable incumbent presiding over an anemic economy. The explanation is not purely technical or personality oriented. At the national level, Republicans have a winning message for a nation that no longer exists.
In retrospect, last year’s Republican primary process was entirely disconnected from the actual needs of the party. One candidate pledged to build a 20-foot-high electrical fence at the border crowned with the sign, in English and Spanish, “It will kill you — Warning.” Another promised, as president, to speak out against the damage done to American society by contraception. Another warned that vaccinations may cause “mental retardation.” In the course of 20 debates and in tens of millions of dollars of ads, issues such as upward mobility, education, poverty, safer communities and the environment were rarely mentioned.
A Republican recovery in presidential politics will depend on two factors. First, candidates will need to do more than rebrand existing policy approaches or translate them into Spanish. Some serious rethinking is necessary, particularly on economic matters. In our Commentary essay, we raise ideas such as ending corporate welfare, breaking up the mega-banks, improving the treatment of families in the tax code, and encouraging economic mobility through education reform and improved job training. Whatever form Republican proposals eventually take, they must move beyond Reagan-era nostalgia.
Second, Republican primary voters, party activists and party leaders have a choice to make, ruthlessly clarified by recent events. They can take the path of Democrats in 1988, doubling down on a faltering ideology. Or they can follow the model of Democrats in 1992 and their own party in 2000, giving their nominee the leeway needed to oppose outworn or extreme ideas and to produce an agenda relevant to our time.
By: Michael Gerson, Opinion Writer, The Washington Post, February 22, 2013
“The Party Of John C. Calhoun”: The Fall Of The GOP True Believers
Political parties rarely vanish altogether, and hardly ever over a single election cycle. So the demise of the Republicans as a national organization is probably exaggerated. At minimum, its strength across the old Confederacy and what Mencken called the “Cow States” should enable the GOP to keep Congress semi-paralyzed and the shrinking Fox News audience in a state of incipient hysteria even as it fights internal battles of surpassing nastiness.
In that sense, the fight over Sen. Chuck Hagel’s nomination as Secretary of Defense and Sen. John McCain’s erratic quest to turn the Benghazi tragedy into a huge scandal are symptomatic: all word-games, question-begging and make-believe indignation aimed not at governance, but TV appearances.
For all the theatrics, Republican senators apparently won’t filibuster their former colleague’s nomination indefinitely. I expect most are privately appalled at seeing Ted Cruz, the freshman senator from Texas, question Hagel’s loyalty—something I doubt he’d have the temerity to say anywhere except in front of a TV camera.
On Meet the Press, David Gregory asked McCain to stipulate what he thinks the Obama administration’s hiding about the Benghazi incident.
“A cover-up of what?”
“Of the information concerning the deaths of four brave Americans,” McCain sputtered.
What else could he say? The idea that the White House refused to call the assault on the U.S. Consulate a terror attack has been a media put-up job driven by the dark arts of selective quotation and malicious paraphrase. People who really care have long since figured that out; those who haven’t probably can’t.
Beyond mischief-making, however, there are signs that conservative thinkers are beginning to challenge moribund Republican orthodoxy. The water is moving under the ice. Heterodox opinions once limited to former GOP operatives like David Frum and Bruce Bartlett have started appearing all over.
Consider this shocking passage about tax rates by National Review editor Ramesh Ponnuru in the New York Times:
When Reagan cut rates for everyone, the top tax rate was 70 percent and the income tax was the biggest tax most people paid. Now neither of those things is true: For most of the last decade the top rate has been 35 percent, and the payroll tax is larger than the income tax for most people. Yet Republicans have treated the income tax as the same impediment to economic growth and middle-class millstone that it was in Reagan’s day.
Ponnuru adds that GOP “tight-money” fundamentalism and scare talk about runaway inflation make absolutely no sense after five years of near-non-existent inflation. When it comes to fiscal matters, in short, Republicans are confronting today’s problems with yesterday’s solutions, substituting dogma for problem solving, and excommunicating heretics instead of encouraging independent thought. If Ponnuru can’t quite bring himself to agree with President Obama about the need for economic stimulus, at least he doesn’t sound like a parrot.
Far less polite is former GOP congressional staffer Michael S. Lofgren, who delivers himself of a veritable jeremiad in the Huffington Post. “As with many religions,” Lofgren writes, “political parties have a tendency to start as a movement, transform into a business, and finally degenerate into a racket designed to fleece the yokels. One organization which has gone out of its way to illustrate this evolution is the Republican Party.”
If that doesn’t clear your sinuses, Lofgren’s title might do it: “Scientology for Rednecks: What the GOP Has Become.” Now, as a matter of principle, I dislike the term “redneck,” an offensive ethnic insult like any other. A writer is on shaky ground objecting to racially coded attacks upon President Obama while using a term like it to characterize Republican voters.
Lofgren’s larger point, however, is well-taken. “Compared to the current crop of congressional GOP freshmen and sophomores, even George W. Bush looks like Henry Cabot Lodge.” Republicans have allowed themselves to become the anti-science party, indebted to tycoon-funded “think tanks” and in thrall to paranoid talk-radio ravers who encourage its dwindling voter base to see themselves as a “martyr-like… persecuted remnant of Real Americans.”
In consequence, GOP True Believers have rendered themselves incapable of noticing “the complete failure during the last 30 years of tax cuts for the wealthy to increase revenue, kick-start economic growth, or help the middle class.” They’re getting screwed, and blaming the wrong people.
Writing in The New Republic, Sam Tanenhaus launches an even more fundamental critique. “Conservatism Is Dead,” he writes, replaced by “inverse Marxists” preaching backward-looking utopianism that promises a return to an America that never existed.
In a companion piece entitled “Original Sin,” he laments that “the party of Lincoln—of the Gettysburg Address, with its reiteration of the Declaration’s assertion of equality and its vision of a ‘new birth of freedom’—has found sustenance in Lincoln’s principal intellectual and moral antagonist. It has become the party of [John C.]Calhoun.”
That is to say, of “nullification” and the Confederate States of America.
By: Gene Lyons, The National Memo, February 20, 2013
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