Is Obama another FDR? Let's hope not!

If you Google "George W. Bush" and "Hitler," you get plenty of hits comparing the nations's 43rd president with the German warmonger and mass murderer.

If you Google "Barack Obama" and "Franklin Delano Roosevelt," you get plenty of hits comparing the president-elect with the nation's 32nd president.

Bush is a far cry from Hitler -- and let's hope Obama is just as far removed from FDR, at least as far as economic recovery goes.

The reason there are so many FDR-Obama comparisons is because Obama seems to be modeling his recovery agenda on FDR's first 100 days -- government intervention in the economy; attempts to manipulate the markets; redistributing wealth; huge infrastructure spending to put people back to work, such as FDR's National Industrial Recovery Act; Homeowners Loan Corp., which lowered mortgage rates to reduce foreclosures; "soak the rich" policies that boosted the top federal income tax rate from 25 percent in 1931 to 79 percent in 1936; and heavier regulation of the private sector.

For awhile, until the Supreme Court struck them down, FDR even imposed wage-price controls.

Obama does not appear to be going down that dreaded road again, but the rest of his agenda is strikingly similar to FDR's New Deal. Many pundits, newspapers and magazines, such as The New York Times and Time, think that's a great idea, because FDR is widely credited for leading the nation out of the Great Depression.

But did he?

Matthew Bandyk of U.S. News and World Report explored FDR's economic recovery record earlier this year and found that many historians believe Roosevelt's heart was in the right place, but that his policies, for the most part, were a dismal failure. Indeed, they probably caused the Depression to run deeper and longer than it would have if government had stayed out of it and just let the bad times run their natural course.

Roosevelt succeeded to some extent in redistributing the wealth, but it didn't improve the economy; in fact, it hurt it. His "soak the rich" policies turned out to be "tax success" policies that dried up the kind of capital and business investment that could have done more to revive the economy than anything the government did.

FDR's regulatory regime had a varied history -- some hits and some misses, just as his record as a wartime president did. He also gets credit for Social Security and implementing other safeguards that have helped people cope with hard times.

But there's no doubt that it was the war that led the nation out of the Depression, and not the New Deal. Between 1932, when FDR was elected, and 1940, when the nation began to put itself on a wartime footing, unemployment averaged more than 17 percent -- the high being 24 percent and the low about 12 percent. In 1940, it was near 15 percent.

Clearly, Obama should be careful if he emulates FDR, so that he copies the best of him and not the worst.

What the New Deal teaches is that large tax hikes, huge federal spending programs and a too-heavy regulatory hand will not put us back on the road to prosperity.

It just might make the road that much longer.

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Thu, 12/08/2016 - 23:05

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