I just finished reading An American Life, the autobiography of Ronald Reagan. The book was given to me by my oldest daughter, and I enjoyed it very much.
What do Ronald Reagan’s autobiography and FDR have in common? After reading this, see if you agree with me.
At the end of page 66 and on page 67 of the (hardcover) book, Ronald Reagan is remembering FDR’s 1932 presidential campaign. Reagan says,
“With his alphabet soup of federal agencies, FDR in many ways set in motion the forces that later sought to create big government and bring a form of veiled socialism to America. But I think that many people forgot Roosevelt ran for president on a platform dedicated to reducing waste and fat in government. He called for cutting federal spending by twenty-five percent, eliminating useless boards and commissions and returning to state and communities powers that had been wrongfully seized by the federal government. If he had not been distracted by war, I think he would have resisted the relentless expansion of the federal government that followed him. One of his sons, Franklin Roosevelt, Jr., often told me that his father had said many times his welfare and relief programs during the Depression were meant only as emergency, stopgap measures to cope with a crisis, not the seeds of what others later tried to turn into a permanent welfare state. Government giveaway programs, FDR said, ‘destroy the human spirit,’ and he was right. As smart as he was, though, I suspect even FDR didn’t realize that once you created a bureaucracy, it look on a life of its own. It was almost impossible to close down a bureaucracy once it has been created.” [emphasis mine]
Based on what Ronald Reagan (who voted for FDR four times) said, it sounds to me like FDR is just the opposite of what Democrats say or remember. And Democrats like to cite FDR’s policies even today. So what follows can be considered a very brief fiscal history of the FDR administration.
When Roosevelt took office in March, 1933, the breadlines, bankruptcies, and bank failures of the Great Depression mandated unconventional politics. He responded immediately. The dominant faction in Roosevelt’s first Administration traced the origins of the Depression to basic structural flaws in the nation’s economy. According to “Brains-Truster” Rexford Guy Tugwell, an economist from Columbia University, a laissez-faire regime of “competition and conflict” was responsible for the crisis and only “coordination and control,” meaning centralized planning, could correct matters. FDR’s central planning economy was imposed on the United States, with almost every part of the market under the supervision, control, and regulation of the federal government. An increasing number of Americans became directly and indirectly dependent upon the Washington for their employment and income. The era of big government had arrived in the United States.
Sound familiar? Central planning is just what President Barack Obama is currently trying to ram down our throats. Obama is crafting his own laws of politics by issuing executive orders, saying “We Can’t Wait” for Congress.
FDR believed in the desirability of balanced budgets. During the presidential campaign of 1932, he pledged to balance the federal budget at a lower level of spending. Roosevelt qualified his commitment with a significant rider: The budget to be balanced included only “ordinary” government expenditures. “Extraordinary” outlays, needed to cope with fallouts from the economic emergency, could be treated separately. In the first two fiscal years for which his Administration was responsible, Roosevelt presided over record-setting peacetime deficits. But with the aid of creative bookkeeping about the categories to which expenditures were assigned, his Treasury’s arithmetic could nonetheless show an “ordinary” budget with a modest surplus. FDR’s Administrations had consistently run deficits. But he had regarded them as politically embarrassing, and had held that they were the result of unusual economic circumstances, not his policy preference.
Some advisers near FDR, including Harry Hopkins, Marriner Eccles, and Henry Wallace, had accepted the recent theories of British economist John Maynard Keynes, who argued that technically advanced economies would need permanent budget deficits or other measures (such as redistribution of income away from the wealthy) to stimulate consumption of goods and to maintain full employment. It was the reduction of federal spending that these advisers viewed as the cause of the recession. Deficit spending continued throughout WWII, when the economy expanded rapidly and employment reached full capacity. The acceptance by FDR’s Administration of what became known as Keynesianism established the precedent of using deficit spending as a vehicle for promoting economic recovery in times of national fiscal crisis.
Again, does this sound familiar? This is just what Obama wants to do: run up huge deficits and redistribute wealth through taxation.
Several of FDR’s measures have become bureaucracies and permanent fixtures. Several programs introduced by FDR remain active today, with some still operating under the original names, including the Federal Deposit Insurance Corporation (FDIC), the Federal Crop Insurance Corporation (FCIC), the Federal Housing Administration (FHA), and the Tennessee Valley Authority (TVA). The largest programs still in existence today are the Social Security System and the Securities and Exchange Commission (SEC).
But that’s just my opinion.