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Is Obama FDR or Hoover? Or neither?

I think the strongest objection to my earlier post is that, well, wasn't Barack Obama supposed to be FDR? A Democrat elected amid an economic collapse who presides over a roaring recovery and reshapes American politics in his image? Daniel Foster and Jonah Goldberg both make variants of this argument, and Goldberg even takes it a bit further:

One possible irony is that, as Megan McArdle has argued, 2008 may not have been 1932, it may have been 1929. In which case, Obama is Hoover. Now, I am one of those libertarian-infected conservatives who argues that Hoover wasn’t the free-market guy the Left has always said he was. But without even wading into all of that, the analogy must be dismaying to liberals. Because, fair or not, Hoover discredited free-market economics for a generation (or at least he was perceived to have done so). It would be a biting irony if Obama did the same thing to his statist brand of economics.

I think this is right on. But Goldberg should have gone one step further and actually checked the numbers. In 1932, the year FDR was elected, GDP fell by 13.1 percent. That's horrifying. In 1934, the year FDR bucked the historical trend and led his party to an eight-seat gain in his first midterm election, GDP expanded by 10.9 percent.

By contrast, in 2008, the year Obama was elected, GDP didn't change at all. Seriously: The Bureau of Economic Analysis says it was 0.0 percent. That's bad, but not Hoover bad. We don't have annual numbers for 2010 yet, but annualized GDP growth was 3.7 percent in the first quarter and 2.4 percent in the second quarter. Growth seems to be slowing a bit lately, so let's assume that 2010 growth is closer to 2 percent than to 3 percent. That's better than a 13 percent contraction, but it's a whole lot worse than a 10 percent expansion.

Which is all to say, the FDR example fits the theory quite well. Goldberg is arguing with me, but I think his post actually implies agreement: The real condition of the economy is the central ingredient in the president's political success. And if Goldberg had looked into the GDP tables, he would have seen that the economy isn't making Obama into FDR or into Hoover.

Now, that leaves us with a different question: How much more could Obama have done to accelerate the recovery? Foster accuses me of ignoring that variable, but that's actually been the central theme of this blog (and of my columns) for the past few months. To repeat, insofar as Obama could've done more to improve the economy, he would be in better shape today.

My view? I think the government could've done much more, but I'm not sure Obama could've gotten much more from Congress. Either way, what I don't think makes sense is what the political strategists told Matt Bai: "That it all comes down to messaging." I'd say something more like "it all comes down to the size and effectiveness of the stimulus against the size of the economic downturn." And the stimulus was too small, and the recession was much worse than we initially realized. Given those two factors, I don't think you need to reach for explanations for the current political situation.

By Ezra Klein  |  August 19, 2010; 4:14 PM ET
 
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Comments

Forget what Obama could have gotten out of Congress. How about the fact that he took so long to fill the open seats on the FOMC (which are still open). Frankly, if Obama wants to have a chance at a second term he needs to get people on the FOMC who respect the dual mandate ASAP. If the Senate doesn't confirm them than he needs to recess apoint them. The fact he hasn't done this yet is frankly..... his biggest mistake. If i were a journalist i would right the inside story on that. No need to go looking for other reasons why the GOP is going to win big this fall. No more stimulus is comming out of congress so the only game in town is the Fed.

Posted by: jcmontealegre | August 19, 2010 4:33 PM | Report abuse

JCM makes a good point, but I just wanted to highlight this quote:

"And if Goldberg had looked into the GDP tables"

That's satire, right? Ha ha ha ha ha.

Goldberg, Bai, etc. don't look at data. They just repeat stupid politicky nonsense.

Posted by: mschol17 | August 19, 2010 4:46 PM | Report abuse

It's a fair point that we can't know for sure what he could have accomplished. The point is that Obama is a guy who won't even try for more significant accomplishments on health care, financial regulation, labor law, you name it because he psychs himself out beforehand that it can't be done, enabled by helpful "progressives" like Ezra and Yglesias. His own advisers, including the departing Ms. Romer, told him how bad the recession was and how much stimulus was needed, but he chose not to go for that, yielding to Summers' advice that all we needed was an insurance policy against complete disaster. And now here we are. Whether you compare Obama to FDR or Hoover or whoever, the real question is whether he tried to lead by asking for the things that were necessary to get us out of this morass and fighting for them. He didn't and failed as a leader. I'm very tired of Ezra trying to distract us from that point.

Posted by: redscott | August 19, 2010 4:52 PM | Report abuse

i love the progressive mind who thinks more could have been done. Anyone of you please let me know the number of true progressives in the Senate? Heck you don't even have a majority that would admit to being liberal do you?

Posted by: visionbrkr | August 19, 2010 5:08 PM | Report abuse

I just laughed when i reread my post and said we need FOMC members who respect the dual mandate, implying that the FOMC was currently at least aiming to meet one of their mandates. They are dropping the ball on price stability as well.

Posted by: jcmontealegre | August 19, 2010 5:12 PM | Report abuse

"I think the government could've done much more, but I'm not sure Obama could've gotten much more from Congress."

I wish I could disagree with this, but I can't. Our government is so messed up.

Posted by: slag | August 19, 2010 5:13 PM | Report abuse

"Growth seems to be slowing a bit lately, so let's assume that 2010 growth is closer to 2 percent than to 3 percent. That's better than a 13 percent contraction, but it's a whole lot worse than a 10 percent expansion."

If we luck out. Check the latest take from many forecasters on the impending downward revision of the Q2 GDP estimate. And the forecasts for the Christmas shopping season should start trickling out soon (only 128 more shopping days until Christmas!). So where are the economic drivers for the second half of 2010?

"And the stimulus was too small, and the recession was much worse than we initially realized."

On this one, Obama should have taken a page from the GWB playbook on 'shock and awe.' TARP really was 'shock and awe' for the financial system, not bizzaro world 'shock and awe.' Obama's economic stimulus bill obviously is not, in the real or bizzaro world.

Posted by: tuber | August 19, 2010 5:15 PM | Report abuse

Obama could have gotten a ton more stimulus if asked for it and was willing to take a 50 vote win instead of a 60 vote one. But he was so afraid of a Broder tsk-tsking he instead doomed his Presidency.

Posted by: endaround | August 19, 2010 5:43 PM | Report abuse

I'd argue that the electorate had longer memories back in the thirties. They were still punishing Republicans for Hoover and the depression, like, 10 years in. These days, they (at least the swingers) switch their animosity within two years, if not within months. Or they were more patient: it took a while for the depression to start to end, and many of Roosevelt's policies extended rather than mitigated the depression (such as slaughtering livestock and burning crops to attempt to artificially inflate food prices).

Also, Roosevelt came up with the WPA, which actually paid people to do real things that are still darned useful today. Haven't seen much like that in the way of shovel-ready jobs from Obama.

Posted by: Kevin_Willis | August 19, 2010 5:52 PM | Report abuse

According to Obey, Obama's team asked for a stimulus package of $1.4 trillion and it got steadily revised downwards as the political realities of actually passing it through the Senate came to light.

Progressives who screech that Obama needed to aim higher are simply ignorant of what actually happened.

Posted by: lol-lol | August 19, 2010 6:06 PM | Report abuse

Had he fought for a greater stimulus, he could have taken a page from Krugman's (and Romer's) insight and laid down his marker on the day he signed it: "I am signing this now but everyone knows this is not enough. It may be better than nothing but don't be surprised if the economy starts slipping again. When that happens I'm going to come back for more."

Posted by: deanarms | August 19, 2010 6:30 PM | Report abuse

Obama's words on election night in 2008 in Chicago:

"The road ahead will be long. Our climb will be steep. We may not get there in one year or even in one term. But, America, I have never been more hopeful than I am tonight that we will get there. I promise you, we as a people will get there.

There will be setbacks and false starts. There are many who won't agree with every decision or policy I make as president. And we know the government can't solve every problem.

But I will always be honest with you about the challenges we face. I will listen to you, especially when we disagree. And, above all, I will ask you to join in the work of remaking this nation, the only way it's been done in America for 221 years — block by block, brick by brick, calloused hand by calloused hand."

Obama's speech prepared Americans for the need to stay the course over a long haul, that there would be "setbacks" and that things would not be fixed in a year, or perhaps even during a single term.

The problem is that he seems to have forgotten that wise analysis. The fiscal stimulus was a one-shot deal. We aren't getting fireside chats. FDR kept talking to us and kept a parade of new experimental programs coming down the road that inspired hope and convinced ordinary people that he was fighting for their renewed prosperity. Obama now acts like a guy who has shot all the ammunition and just wants us to wait it out a few more years.

Buying in to the idea that there would be only one opportunty to restart the economy, and so the size of that stimulus would have to be absolutely perfect because there would be no second chance) was the mistake. Voters don't see any remaining Democratic plan of economic action, and they don't like to be told to just wait it out and not expect robust recovery until sometime within Obama's second term.

Posted by: Patrick_M | August 19, 2010 6:42 PM | Report abuse

deanarms,

Exactly right. He should have told us every day that there would be many battles to fight before the war was over.

Posted by: Patrick_M | August 19, 2010 6:44 PM | Report abuse

Patrick,
Obama has regular YouTube videos that address these very issues.

Posted by: mschol17 | August 19, 2010 7:12 PM | Report abuse

mschol17,

I assume that you mean the weekly address (which used to be called the weekly radio address). That really is not what I mean.

What I am referring to is that after one (1) fiscal stimulus, which was only partly successful, we have sluggish growth and sky-high unemployment. We have occasional small bore attempts to preserve or create small numbers of jobs (like the state aid package), and occasional patches like UI extensions, but there is no set of major policy initiatives on the horizon for the Fall, or for next year, designed to restore demand in a big way and to accelerate the administration's own depressing forecasts about how slowly unemployment will fall.

Yes, we get bite-sized pep talks promoting particular small programs in the weekly address. But therre is no grand strategy and no set of initiatives lined up to wage the fight.

The following piece goes a little too over the top in describing this growing disconnect between the Democrats and working class Americans, but I don't think it is really that far off of the mark:

http://thehill.com/opinion/columnists/brent-budowsky/113389-revolution-in-the-air

Posted by: Patrick_M | August 19, 2010 8:00 PM | Report abuse

Inasmuch that the Great Depression and the Great Recession are the two largest bookend economic collapses in US history, you can't reasonably make comparisons between the sitting presidents at the time and Obama. Very little of the modern economy resembles that of the late '20s early '30s, like size, composition, trade, etc. Even when adjusted for inflation, comparing the 1930 economy to today would be like saying, "can Obama turn the Queen Elizabeth II with the same effectiveness as Hoover/Roosevelt steered a row boat?"

I appreciate Patrick_M's bringing President Obama's acceptance speech back to light. I would counter-point to his pessimism that at this relative time in the Great Depression, one and a half years in, that unemployment was 16% and would grow to 24% in the following year and soup lines were starting to form. The Republicans are the ones fighting tooth and nail to try and revive those soup lines by cutting off unemployment benefits and oppose any measures by the Democrats to stave off worse. Please keep that in mind.

Remember, "The road ahead will be long. Our climb will be steep. We may not get there in one year or even in one term." Keep pushing and don't turn on those who would seek to pursue common purpose... like Obama.

Posted by: Jaycal | August 19, 2010 8:25 PM | Report abuse

I think Patrick has it right. I've been thinking for a while now that communication, or lack thereof, has been the administration's greatest problem. This is not to say that I agree with the NYT piece that seems to think Obama should have forgone legislating in favor of rhetoric. I was annoyed when people seemed to be suggesting that Obama do more on the economy, when clearly Congress was about to do any more, which meant people were advocating the administration do more talking, and what would that really accomplish? But I think talking more about the economy, not necessarily in a preachy or polyanna sort of way, but in an explanatory and educational kind of way, would have been invaluable. But we've had nothing like the fireside chats -- the weekly radio/video address is certainly not enough. The crux of the problem is that people do not realize or do not believe how bad the economic situation actually was. Precisely because things were so bad, and getting worse, the government had to act quickly, and there wasn't a lot of time for discussion, debate, or explanation. Once the stimulus passed the Administration seemed to treat "the whole economy thing" as a done deal--at least that was the public perception. There are reasons for this which may or may not be good reasons. Obama wanted to move on to healthcare, and you can't really do much more on the economy right after you've passed an $800b stimulus package and banks are in the middle of getting stress-tested, etc. And let's face it, the administration disdains the media and their need to turn important discussions into gotcha sound bites and has been reluctant to give them too much ammunition. But in the end it all amounts to "Obama doesn't really care. If he did, he'd be doing something." And even if it was just talking it would have been useful.

Posted by: dollarwatcher | August 19, 2010 8:51 PM | Report abuse

"But I think talking more about the economy, not necessarily in a preachy or polyanna sort of way, but in an explanatory and educational kind of way, would have been invaluable. But we've had nothing like the fireside chats -- the weekly radio/video address is certainly not enough."

dollarwatcher,

Yes, taping a 10 minute Internet talk is not the way to connect. We see the President looking sharp in his suits, and we see him on the stump with big crowds with sleeves partially rolled up. But it is curious that the WH never puts him in the kind of small group one-on-one kind of opportunities in which Clinton was so skilled in conveying his listening skills and empathy for individuals. Even press conferences (where JFK understood how to flash warmth and charm) have become very rare.

"Once the stimulus passed the Administration seemed to treat "the whole economy thing" as a done deal--at least that was the public perception. There are reasons for this which may or may not be good reasons."

Exactly right. ARRA was treated as one of the agenda items to be checked off the list, like health care and finreg. We know immigration and energy remain on the check list, but the economy remains deeply troubled, and there is no sense that the Democrats have any major plan to address that ongoing pain. I would rather see Obama pushing for a second stimulus, for example, even if the program went down in flames in Congress, because it would demonstrate that the Dems were trying to give the patient more medicine, and the Republicans were the party of "no." It gets hard to portray them as the party of "no," when you aren't offering anything for them to turn down.

"The Republicans are the ones fighting tooth and nail to try and revive those soup lines by cutting off unemployment benefits and oppose any measures by the Democrats to stave off worse. Please keep that in mind."

Jaycal,

I do, and I give Obama credit for what has been done. I just think it has been a mistake not to roll out a continuous stream of economic efforts, even if some would not work and others would not even pass. Extending unemployment benefits is the right thing to do. But there is much more that ought to be done, in order that a day arrives when we don't have to extend the benefits yet again, and that kind of active intervention seems to all be disappearing in the rearview mirror in favor of "austerity." If all we are going to do is continue assistance to the unemployed, the people will lose patience.

I support Obama and I think he is a very decent and smart guy. I want him to succeed, but to get there I think he needs bolder economic policy and better communication strategies. Hopefully he will still hit his stride; we truly need to get "fired up" again.

I really enjoyed reading both of your thoughtful reactions to my thoughts. Thanks.

Posted by: Patrick_M | August 19, 2010 9:19 PM | Report abuse

excellent post (although debating Jonah Goldberg is like stealing candy from a baby). I would like to make a technical point (which may have been made up-thread).

The growth in annual GDP from 2009 to 2010 is not equal to the average annualized growth rate quarters to quarter in 2010. Consider the change in GDP (not the growth rate I am ignoring geometric mean vs arithmetic mean by point is very basic).

The change is (2010q1+2010q2+2010q3+2010q4) - (2009q1+2009q2+2009q3+2009q4) =

(2010q4-2010q3) + 2(2010q3-2010q2) +
3(2010q2-2010q1) + 4(2010q1-2009q4) +
3(2009q4-2009q3) + 2(2009q3-2009q2) +
(2009 q2-2009q1) !=

(2010q4-2010q3) + (2010q3-2010q2) +
(2010q2-2010q1) + (2010q1-2009q4).

If quarter to quater growth to all 4 quarters of 2010 were zero, growth from 2009 to 2010 would have been over 0.5% not 0. Without a double dip, growth 2009 to 2010 will be over 3%.

Posted by: rjw88 | August 20, 2010 12:19 PM | Report abuse

Franklin Roosevelt took Herbert Hoover's policies and expanded them -- he did not reverse any of Hoover's mistakes, including the protectionist trade policies of Smoot-Hawley. Hoover greatly increased federal spending and tax rates -- the Revenue Act of 1932 increased the top tax rate from 25% to 63%.

Some observers have tried to argue that Obama is mainly continuing the fiscal and regulatory policies of George W Bush, because Bush signed one stimulus bill and launched the TARP program. But in every important respect, Obama has reversed or tried to reverse Bush policies, including policies which promoted economic growth and were not at all the cause of the economic downturn.

The question whether Obama is FDR or Hoover is the wrong question -- he is both. Hoover and FDR were two faces of the same pro-government anti-business thinking. They both thought government bureaucrats knew better than anyone in the private sector how to restore economic growth -- and when they failed, they thought it was because they did not interfere enough in the economy.

Posted by: JBaustian | August 25, 2010 2:05 PM | Report abuse

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