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Where’s OUR New Deal?

If that’s the question you’ve been asking yourself, in one form or another, over the course of the past year or two, believe me you are not alone. Whenever the subject comes up people seem to respond with that instant sense of recognition and a one word accompaniment: “Right?”

By now it’s clear that a sizable consensus of all but the most wackadoodle economists think that the stimulus measures in the original Recovery Act were far too small. As the Congressional Budget Office continues to report, those stimulus measures have had a positive impact on the economy. And without them, things would have been far, far worse. But for all of the benefits of the Recovery Act — extended unemployment insurance, COBRA health subsidies, highway and rail projects, TANF low-income-family employment programs, the largest tax cut for the middle-class in history, Medicare assistance for states and education aid for the nation’s schools — it just wasn’t big and bold enough to create the millions of new jobs needed to restore full employment.

Now, with the economic impact of the original stimulus winding down, the job market, the housing market and the economy overall are worsening again. The Republican obstructionists, especially in the Senate, have succeeded to a large extent in thwarting additional measures to boost the economy. Those measures that have passed, including a partial extension of unemployment benefits and aid to states, were substantially reduced in funding and scope even as they took months off the legislative calendar. Larger jobs bills were at least temporarily abandoned. Even a small business lending bill is stalled.

Caring not a whit that their obstruction is itself a cause of deepening misery for millions and increasing economic woes for the country, Republicans are betting that a worsening economy will work to their political benefit in November.

Unemployment remains staggeringly high. For more than a year, the monthly jobs figures have reported roughly 15 million American workers unemployed. That’s more jobless workers in our country than there were in 1933, at the depths of the Great Depression.

Meanwhile, calls are mounting for additional stimulus, particularly large-scale public-funded jobs programs, amid warnings that not acting would have devastating consequences. As Paul Krugman wrote recently:

The markets aren’t demanding that we give up on job creation. On the contrary, they seem worried about the lack of action — about the fact that, as Bill Gross of the giant bond fund Pimco put it earlier this week, we’re “approaching a cul-de-sac of stimulus,” which he warns “will slow to a snail’s pace, incapable of providing sufficient job growth going forward.”

With so little additional hiring by private businesses, it is increasingly clear that the private sector needs a public jobs stimulus.

A number of renowned policy voices have been even more strident of late in demanding that major, long-past-due efforts directed at large-scale job creation become the singularly crucial focus.

Robert Reich on ‘The Jobs Emergency’:

With the worst jobs crisis since the Great Depression worsening, you might expect emergency action out of Washington. But the biggest upcoming debate there is whether to extend the Bush tax cuts for the richest 2 percent, or for everyone, or for no one. This is like debating whether to get a mousetrap when your home is sinking in quicksand.

We need a response proportional to the crisis.
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First item on the agenda: establishing a federal bank that will provide states and locales zero-interest loans, to be repaid when their unemployment rates drop to 5 percent or below.

Second item: eliminating payroll taxes on the first $20,000 of all incomes and make up the difference by subjecting all income above $250,000 to the payroll tax. (Remember, the wealthy save most of their after-tax income, lower-income Americans spend it.)

Third item: recreating the WPA to hire Americans directly. The Works Progress Administration put Americans back to work during the Depression rebuilding the nation’s infrastructure.

The jobs emergency requires no less.

And in a withering critique, titled ‘Fire and Imagination’, Bob Herbert urges the Obama administration to “re-examine what it might do to improve what is fast becoming a depressing state of affairs.”

Mr. Obama’s problem — and the nation’s — is that in the midst of the terrible economic turmoil that the country was in when he took office, he did not make full employment, meaning job creation in both the short and the long term, the nation’s absolute highest priority.

Besides responding to the nation’s greatest need, job creation would have been the one issue most likely to bolster Mr. Obama’s efforts to bring people of different political persuasions together. In the early months of 2009, with job losses soaring past a half-million a month and the country desperate for bold, creative leadership, the president had an opportunity to rally the nation behind an enormous “rebuild America” effort.

Such an effort, properly conceived, would have put millions to work overhauling the nation’s infrastructure, rebuilding our ports and transportation facilities to 21st-century standards, establishing a Manhattan Project-like quest for a brave new world of clean energy, and so on.
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Think of the returns the nation reaped from its investments in the interstate highway system, the Land Grant colleges, rural electrification, the Erie and Panama canals, the transcontinental railroad, the technology that led to the Internet, the Apollo program, the G.I. bill.

The problem with the U.S. economy today, as it was during the Great Depression, is the absence of sufficient demand for goods and services. Consumers, struggling with sky-high unemployment and staggering debt loads, are tapped out. The economy cannot be made healthy again, and there is no chance of doing anything substantial about budget deficits, as long as so many millions of people are left with essentially no purchasing power. Jobs are the only real answer.
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During the Depression, Franklin Roosevelt explained to the public the difference between wasteful spending and sound government investments. “You cannot borrow your way out of debt,” he said, “but you can invest your way into a sounder future.”

Now, with so much money already spent and Republicans expected to gain seats in the Congressional elections, the president finds himself with a much weaker hand, even if he were inclined to play it boldly.

Perhaps he can still. In fact, he must. The ideas needed to re-employ millions of Americans are not what’s lacking. There are plenty of effective ideas, and plenty of ways to finance them as well. What is needed is the resolve to put them forward and fight for their effective implementation. And not in two years or three years. Much sooner. Like now.

In a recent speech, Franklin Delano Roosevelt’s grandson, Curtis Roosevelt, described the situation facing FDR in the late summer prior to the 1934 mid-term elections during his first term, in the context of the situation facing President Obama today. The full text makes for some fascinating reading; but for our purposes here, I’ll offer some relevant excerpts.

Needless to say, looming in the background for both Presidents were and are the mid-term elections. Both — 1934 and 2010 — were and are predicted to be resounding defeats for the Democrats.
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Looming over Roosevelt’s head was the Great Depression, already entrenched for several years when he became president.

During the first year and a half of FDR’s first term, as his grandson recounts, FDR’s New Deal had largely focused on addressing the banking and financial crises. And while progress had also been made to help stabilize employment in some industries, and to improve wages and working conditions for many of those workers with jobs, vast numbers of workers remained unemployed. In 1934, what we’ve come to view as the core signature programs of the New Deal — the Works Progress Administration (WPA), Social Security and unemployment insurance — were yet to be enacted. That would come a year later, in 1935.

Curtis Roosevelt continues:

Roosevelt biographer Arthur Schlesinger Jr., described FDR’s dilemma during the few months before the 1934 mid-term elections. “Roosevelt, suddenly silent and irresolute, seemed to have lost his touch … The administration appeared to lack coherence both in policy and in strategy.” Schlesinger added, “these were hard days for the President. He knew that things were going badly … Roosevelt faced the organised business community [and] its determination to halt the New Deal …[He] faced the tumult of mass opinion, so ardently stirred by the radicals and demagogues … Overhanging was the threat of judicial action against New Deal laws and programs.”

The most influential historian of the day Charles A. Beard forecast doom for FDR in 1934. He wrote: “the disintegration of President Roosevelt’s prestige proceeded with staggering rapidity during February and March.”

FDR could not have felt his accustomed confidence, and was certainly not wearing his usual jaunty air. Secretary of the Interior Harold Ickes recorded in his diary that he found his old friend “distinctly dispirited. He looked tired … and he seemed to lack the fighting vigour or the buoyancy that has always characterized him.”

Reviewing the criticisms leveled against New Deal programs was apparently instructive for the president. Roosevelt listened to his advisors suggesting one or another alternative, one option against another. And then he pondered … and pondered … taking his time, much to his aides’ frustration. “He knows nothing about economics!” was the usual charge exchanged among them.

Then, suddenly, FDR brightened and seemed to know how and where he wanted to move. His staff remained perplexed, but again Schlesinger gets it right.

“The basic reason for [FDR's] inaction was that he was simply unprepared to act … [His] inscrutable processes of decision were moving all too slowly within.” Concludes Schlesinger, “He could not lead until he knew where he wanted to go.”

My grandfather’s convoluted way of decision-making-from the stomach up to the heart, and then the head-was, as usual, right on. Later, historians would call it his natural intuition, or something like that.
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In their next edition, Time magazine reported: “Franklin Roosevelt’s mood suddenly changed.” His whole legislative program was in the pot and boiling …The Social Securities Bill, the Banking bill, the Utilities Bill, the Wagner Bill, the fate of the NRA … Suddenly the irritability which had marked his recent actions dropped from him. Pronounced Time: “His ‘winter peeve’ was over.”

Yes, the New Deal was rolling again. Referring to the autumn term of Congress in 1934, just at the time of the November elections, Charles A. Beard radically changed his tune from only a few months before. “Seldom, if ever, in the long history of Congress had so many striking and vital measures been spread upon the law books in a single session.”

And the results of mid-term election of November 1934?

The Democrats increased their congressional seats in both houses, increased their governorships, and chalked up a higher proportion of the popular vote. So much for the pundits!

The Democrats’ recovery, I think, continued to be dependent upon Franklin Roosevelt’s very personal style. He seemed to sense his way through the political maze. Whatever, it remains an exceptional example of political leadership.

What FDR did in the late summer of 1934, was talk straight with and directly to the American people, fighting for expanded public job-creation programs on a scale to re-employ millions of unemployed American workers.

In his famous Fireside Chat radio broadcast of August 30, 1934, FDR said:

To those who say that our expenditures for Public Works and other means for recovery are a waste that we cannot afford, I answer that no country, however rich, can afford the waste of its human resources. Demoralization caused by vast unemployment is our greatest extravagance. Morally, it is the greatest menace to our social order. Some people try to tell me that we must make up our minds that for the future we shall permanently have millions of unemployed just as other countries have had them for over a decade. What may be necessary for those countries is not my responsibility to determine. But as for this country, I stand or fall by my refusal to accept as a necessary condition of our future a permanent army of unemployed. On the contrary, we must make it a national principle that we will not tolerate a large army of unemployed and that we will arrange our national economy to end our present unemployment as soon as we can and then to take wise measures against its return.
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I believe with Abraham Lincoln, that “The legitimate object of Government is to do for a community of people whatever they need to have done but cannot do at all or cannot do so well for themselves in their separate and individual capacities.”

I still believe in ideals. I am not for a return to that definition of Liberty under which for many years a free people were being gradually regimented into the service of the privileged few. I prefer and I am sure you prefer that broader definition of Liberty under which we are moving forward to greater freedom, to greater security for the average man than he has ever known before in the history of America.

The Democrats’ predicted defeat in the 1934 mid-term elections was averted. The nation rallied to FDR’s side in the battle against unemployment — for jobs and economic recovery. The core New Deal programs that most directly benefited working Americans, both employed and unemployed, were largely enacted the following year. The WPA alone went on to employ 8 million American workers.

Franklin Delano Roosevelt’s impassioned statements, refusing to accept joblessness for millions of Americans, were stirring words indeed. But they were not merely words. FDR and his administration were resolved and committed to enacting big, bold New Deal plans — like the WPA — to re-employ America. And they knew that the costs of not doing so would, in fact, be far greater.

That’s the resolve that was needed in 1934; and it is needed again today.

The author is the winner of the 2010 CREDO Mobile/Netroots Nation award for Blog Activist of the Year.

Tags: Barack Obama, FDR, Jobs, public jobs stimulus, unemployment