Tag Archives: FDR

Obama, Can You Spare a Job?

One of the latest attacks on Obama’s failed policies claims that his economic stimulus created few jobs at exorbitant cost to taxpayers: $278,000 per job, to be exact. Fuzzy math aside, what these attacks omit to mention is that the stimulus, like all else these days, operated under the conservative creed that everything has to be done through the private sector. This ethos, firmly embraced by Obama
himself, prevents the government from taking the far more efficient route of simply employing people, which might have created many more good jobs for the same price tag.

Had Obama had heeded FDR’s experience during the Great Depression, we could have put unemployed people to work rebuilding American infrastructure—bridges, tunnels, railroads, roads–not to mention restoring and shoring up wetlands and carrying out other environmental projects. That’s what Roosevelt
famously did
with his Works Progress Administration and Civilian Conservation
Corps.

Such an initiative might conceivably have been possible, on some scale, prior to the midterm elections. But with the gridlock in Congress and diminishing confidence in the President and government, any such course now is hard to imagine. Instead, the austerity imposed by the debts deal will likely further impede any chance at real job growth–as Roosevelt himself found in 1937 when he briefly adopted austerity measures, only to see falling unemployment rates spike once again.

But even at this dismal stage, there are nonetheless a handful of realistic projects that ought to appeal to some fiscally minded conservatives as well as to Democrats.

Jonathan Alter, who is a historian of FDR’s New Deal as well as a journalist, has promoted an idea that involves allowing states to “convert their unemployment insurance payments from checks sent to the jobless into vouchers that can be used by companies to hire workers.” The amount of the unemployment checks would in effect become subsidies to the employers, so that “for instance, a position paying $40,000 might cost employers only $20,000, thereby encouraging them to hire…If a mere 10 percent of unemployed Americans persuaded employers to accept such vouchers, more than a million people would find work with no new spending beyond some administrative costs.”

Alter believes the plan, first suggested by Alan Khazei, a Democratic candidate for the Senate in Massachusetts, might appeal to “a Republican House  that loves the concept of voucher.” But so far there’s been no interest from either Congress or the Obama Administration.

Another option is the already much-discussed German experience with the short work week. As Kevin A. Hassett of the American Enterprise Institute explained this scheme back in 2009.

Firms that face a temporary decrease in demand avoid shedding employees by cutting hours instead. If hours and wages are reduced by 10 percent or more, the government pays workers 60 percent of their lost salary. This encourages firms to use across-the-board reductions of hours instead of layoffs. Here’s how the program works.

A firm facing the challenges of the recession cuts Angela’s hours from 35 to 25 per week, thus reducing her weekly salary to 714 euros from 1,000 euros. Angela does not work for the firm during those hours. As part of its short-work program, the government now pays Angela 171 euros–60 percent of her lost salary. Most important, she still has a job. Effectively, the government is giving her unemployment insurance for the 10 hours a week that she is not employed.

Senator Jack Reed and  Congresswoman Rosa DeLauro have put this program into legislation which so far has  gone nowhere, with only a handful of co-sponsors. This despite the fact that as Dean  Baker of the Center for Economic and Policy Research points out: “Twenty  one  states (including California and New  York) already have short-time compensation as an option under their
unemployment insurance system. In these states a governmental structure already  exists to support work sharing, although there would have to be changes to make  the system more user friendly so as to increase take-up rates.”

Steven Pearlstein in the Washington Post last week pointed to another way of immediately putting people to work, which harkens back to the idea of rebuilding the nation’s crumbling infrastructure:

Over the next decade, the federal government is slated to spend hundreds of billions of dollars building roads, schools, airports, trolley  lines and airport terminals, modernizing the air traffic control system, replacing computer systems and buying planes, ships, tanks, trucks and cars.  Moving up some of that spending from years 8, 9 and 10 to years 1, 2 and 3 won’t cost any more in the long run, or increase the long-term deficit any more, but could sure help put a floor under the economy in the short run. For those worried about pork, the actual spending decisions could be left to an independent Infrastructure Bank.

To spur private investment in equipment and research, the government could immediately allow companies of all sizes to deduct 100 percent of such expenses made in the next three years, rather than “depreciating” them over many years. That incentive to invest now will increase the deficit in the short run but have little or no impact on the long-term deficit.

As Suzy Khimm reports in the Washington Post, “The question of infrastructure funding will come up as soon as Congress returns from its August recess,” since “a bill reauthorizing  spending on surface transportation — which would help build roads, highways,  and the like — is set to expire in September. There’s a big gap between the House GOP proposal, which would slash federal spending to 35 percent less than Fiscal 2009 levels, and Democratic Sen. Barbara Boxer’s two-year plan to spend $55 billion a year. Boxer’s proposal would require revenue beyond what’s in the Highway Trust Fund, which receives money from the gas tax, promising yet another fight over which will be better for the economy — reducing the deficit or Keynesian spending on infrastructure.”

We all know how that fight is likely to turn out. And as Jonathan Alter points out, even these modest approaches to job creation call for an attitude of what Roosevelt called “bold, persistent experimentation” on the part of the government–and the leadership to back it up. And as we’ve seen all too clearly, Obama is no FDR.

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In the Social Security Debate, Today’s Democrats Are Worse Than Yesterday’s Republicans

Having “retooled’’ his Presidency for a more open accommodation of the center right, Obama will soon be overseeing the battle to launch a dismantling of the Social Security system.

His government has, from the start, been reminiscent of the Clinton years, so it’s safe to say that we can expect more triangulation. Clinton’s adoption of Republican tropes led him to fulfill some of the conservatives’ fondest dreams: His administration countenanced the demise of the banking regulations originally established by the Depression-era Glass Steagall Act, and the destruction of the welfare system established in the 1930s and expanded in the 1960s. Obama will provide much the same function on Social Security. Without entirely destroying the popular program, he will support cuts that go beyond anything that should rightly happen during a Democratic administration.

Of course, the Democrats will say that it isn’t their fault: It all happened because of that horrid Tea Party, dragging conservative Republicans even further to the right. This suggests that Democrats had no choice but to head them off at the rightward pass, as if standing and fighting simply wasn’t an option—and as if they didn’t still hold the Senate and the White House.  

What makes this especially disconcerting, for anyone who has lived long enough to remember earlier political eras, is how favorably the Republicans of the past compare to the Democrats of the present on many points.

Tracking back to the New Deal, one can find Senator Robert A. Taft of Ohio—the most prominent conservative Republican of his time, later identified by John F. Kennedy in Profiles in Courage as one of the five most important senators in history–registering his support for Social Security. A champion of private enterprise and enemy of labor unions, Taft bashed Roosevelt’s “socialistic” programs every which way, fighting to reduce runaway government and even opposing entry into World War II. But at the height of the Great Depression, he also supported the new Social Security program, as well as public housing and public education.

Taft embodied the tenets of Main Street middle western life before the Second World War. And he was not unreservedly laissez faire, nor was he anti-government. He believed in the intervention and utility of the federal government where he deemed it necessary, and that included providing an adequate, if not generous, public welfare system.

Taft ran for president three times and never made it. But Eisenhower, the war hero who became a popular Republican president, carried some of these same basic tenets into the postwar era. Eisenhower was not opposed to federal intervention in the economy and, for example, backed the creation of an interstate highway system, which became a vast public works program. And Eisenhower not only supported Social Security, but took steps to enlarge the program. According to the Eisenhower Memorial Commission:

Dwight Eisenhower was the principal force behind the greatest single expansion of Social Security beneficiaries in the history of the program. He led the legislative drive to add over ten million Americans to the system. Here’s how it developed.

When the Social Security Act became law in 1935 its purposes were primarily aimed at factory workers and other employees of business organizations. The legislative process leading to passage of the law was both lengthy and contentious. Large numbers of working American’s were left out of the original Old Age and Survivors Insurance coverage. No major changes in the Social Security law had been made since its initial passage.

During the presidential campaign of 1952, candidate Eisenhower made it clear that he believed the federal government played a rightful role in establishing the Social Security system, but he made no promises concerning its future. However, after the election it became clear that the Republicans would have control, by slim margins, of both the House of Representatives and the Senate. This changed the political and legislative landscape considerably.

Previously, expansion of the Social Security system or increasing the level of payments to retired Americans had been given no chance to succeed in the Congress because there were enough conservative Democrats (and the majority of Republicans) who would vote against such bills. With a Republican President it now appeared likely that the majority of congressional Republicans would honor their President and support his initiatives. Among the new legislative possibilities, action on Social Security now seemed possible.

Thirteen days after taking his oath of office, President Eisenhower delivered his first State of the Union message to Congress and, when discussing the need for greater effectiveness of government programs, he said, “The provisions of the old-age and survivors insurance law should promptly be extended to cover millions of citizens who have been left out of the social security system.”

The following week, during a White House meeting of the House and Senate Republican leadership, Eisenhower brought up the Social Security expansion proposal and asked America’s most famous living conservative, Senator Robert A. Taft, if he would support the initiative. When he received a positive reply he knew that the possible had just become the probable. Before the end of the month, Eisenhower appointed a presidential commission to study the Social Security system’s deficiencies and submit a detailed report on specific reform measures. In his public statement creating the commission, the President said, “It is a proper function of government to help build a sturdy floor over the pit of personal disaster, and to this objective we are all committed.”

Those opposed to the initiative stressed their belief that retirement income was the responsibility of every individual and the federal government should not be involved. One citizen should not have to pay for the old age necessities of another. President Eisenhower responded to this notion during his press conference on June 17, 1953 with these remarks: “A strict application, let us say, of economic theory, at least as taught by Adam Smith, would be, ‘Let these people take care of themselves; during their active life they are supposed to save enough to take care of themselves.’ In this modern industry, dependent as we are on mass production, and so on, we create conditions where that is no longer possible for everybody. So the active part of the population has to take care of all the population, and if they haven’t been able during the course of their active life to save up enough money, we have these systems.”

You know it’s a measure of how far this country has moved to the right that someone like myself could wax nostalgic for the likes of Dwight Eisenhower and Robert Taft. (Next stop: Remembrances of the Nixon years, when the richest Americans were taxed at a rate of 70 percent.) Yet now we see the historic approach of these two major Republicans figures—the icon of the Senate and the storied war hero—submerged beneath the threat of the Tea Party adherents. And it is all happening under the listless hand of Obama, while the Democratic mainstream sits passively back and watches the demise of the programs that made their party great.

In the end, history most likely will judge that the final blows against the New Deal came not from the Republicans, but from weak or opportunistic Democratic politicians–first Clinton, then Obama.

Roosevelt’s Thanksgiving Proclamation 1933

With unemployment insurance  about to run out for millions of people and the Congress and the President set to reduce our parsimonious social welfare system in the name of free enterprise, it is well to recall those dark days of the Great Depression when, on Thanksgiving Day 1933, Franklin Delano Roosevelt proclaimed the following:

May we recall the courage of those who settled a wilderness, the vision of those who founded the Nation, the steadfastness of those who in every succeeding generation have fought to keep pure the ideal of equality of opportunity and hold clear the goal of mutual help in time of prosperity as in time of adversity.

May we ask guidance in more surely learning the ancient truth that greed and selfishness and striving for undue riches can never bring lasting happiness or good to the individual or to his neighbors.

May we be grateful for the passing of dark days; for the new spirit of dependence one on another; for the closer unity of all parts of our wide land; for the greater friendship between employers and those who toil; for a clearer knowledge by all nations that we seek no conquests and ask only honorable engagements by all peoples to respect the lands and rights of their neighbors; for the brighter day to which we can win through by seeking the help of God in a more unselfish striving for the common bettering of mankind.

In witness whereof, I have hereunto set my hand and caused the seal of the United States to be affixed.

This from the President who got us through the Depression and charted a course to ensure safe passage for future generations.  Yet today, Wall Street bankers are richer than ever,the poverty class is growing, the elderly are about to see a reduction in their paltry dole, children starve and are sick, the health system is broken down. In answer to these dark times, the Congress and the President think not of bringing people together, but talk about money as they prepare to further dismantle Roosevelt’s New Deal. All this as  the United States slides into decline and prepares to enter the dark age.

Roszak’s “Making of an Elder Culture”

Few may remember it, but before the advent of Social Security in the 1930s and Medicare in the 1960s, the old were widely viewed as a spent force. Nobody talked about happy retirement, in part because, these were people who remembered only too well the Depression. Few looked forward to leisure worlds because the poor house was too recent in so many people’s minds. Before old age entitlements, tending to the old was viewed as the job of the family. If you didn’t have a family, then it was charity–you joined the begging class. And even if you did have a family, you lived knowing that the young and middle aged couldn’t wait to get rid of you.

The same is more or less true today. Some days it seems the entire city of Washington, D.C., the nation’s capital, is on a mission against the old. Of course, nobody would ever say that. But there is a war against the old going on here in the form of a vigorous, largely uncontested attack on entitlements—a fighting word for conservatives and conservative Democrats who simply can’t stand Roosevelt’s New Deal, Johnson’s Great Society, and everything the stood for.

In his book The Making of an Elder Culture, recently published by New Society, Theodore Roszak, the cultural historian who more than three decades ago wrote The Making of a Counter Culture, sets out some of the grim history of old people in American society, and in doing so places elders within our current political world.

The old were in fact the worst victims of industrialism, primarily because they were not deemed worth saving. They belonged to that class of unwelcome dependents called the impotent poor—those who could not provide for themselves…as comfortable as many middle-class elders may be today, they share with all older people a long sad history of bleak mistreatment they would do well to remember. For generations the old have suffered wrongs inflicted on them by harsh public policy and often by their nearest and dearest….in the modern western world where the old have been seen as the claim of the dreary past upon the bustling forces of progress.

In the early days of the industrial revolution, Roszak writes, “aged workers became poor. The workhouse and county home were little better than the concentration camp. They were fed gruel, bedded down on straw or bare wood…they had no place to turn  save for their children…They were pictured as withered, toothless, bent, lean.’’

You must remember that as recently as 40 or 50 years ago, there was no senior lobby. The political pros never talked about a senior vote. Today all that has changed–yet Roszak sees in today’s entitlement wars a serious threat to the well-being of elders.

In the same way that organized labor was once regarded as a potentially tyrannical force able to achieve its own selfish ends, entitlement critics began characterizing seniors as a threat to the democratic process…

Nobody of any political stripe wants to risk the charge of granny-bashing,but the facts are clear. In the United States, gaining even  modest degrees of security in retirement has been a struggle against business leaders, political conservatives, and free market economists for whom money is the measure of all things.

Always remember, Roszak says, “the well-to-do are the first to tell us that there is not enough to go around.”

In his book, Roszak envisions a society in which rather tan cutting social programs for the old, we will extend them to younger people. Noone would resent Medicare, for example, if we had universal health care for Americans of all ages. He sees a future where the old and the young join to create a new world devoted to common humane goals: ending poverty at all ages, assuring education–laying the planks of a new society on the New Deal and LBJ’s social welfare project. Such ideas face an uphill battle in today’s political culture–but are no less inspiring for that fact.

I’ll be writing more about Roszak’s work in future posts.

Obama’s Disappointing State of the Union

Obama’s State of the Union message offered little that was new, bold, or inspiring. He spoke about the need for jobs, but avoided any specific proposals for creating them. While the unemployment rate runs 10 percent overall, and over 15 percent for blacks in some states, Obama is focused on tax credits for the middle class. Just how an unemployed worker can benefit from such tax breaks is a mystery.

The president’s economic plans eschew dramatic government action in favor of the market and the private sector. The administration is proposing the Heritage Foundation’s automatic IRAs to encourage savings by workers. To make this idea more appealing, the administration has suggested that the government might put $500 into each individual account to jump-start the program. As I wrote earlier, this scheme promises to be another boon to Wall Street. If the Democrats were willing to to ignore Republican attacks on big government, they might choose to put the $500 into Social Security instead.

Continuing the government-cutting theme, Obama proposed a freeze on spending, starting next year. The freeze wouldn’t include Medicare or Medicaid. But in another proposal, Obama said he would create by executive order a commission that would propose cuts in entitlements. That’s how, in Washington, you can support one program by undercutting it at the same time.

As for health care reform, it looks like what’s in store is a further weakening of an already weak bill, perhaps reducing it to a ban on some of the worst abuses by insurance companies, such as denying benefits to people with pre-existing conditions. There is likely to be no meaningful reining in of the insurance or pharmaceutical industries, and no control over costs. All in all, a lackluster, disappointing speech.

What would I like to have heard the president say tonight? Earlier this week, I wrote about FDR, and the ambitious initiatives he undertook in his first year. I thought about his insistence–which today sounds almost quaint–that the government exists to help its people, and when they need more help, the government should do more, not less. I thought about this particular historical moment, when the ruthlessness of Wall Street and the folly of conservative economic policymaking have been laid bare. It was a moment that might have been siezed for the purpose of real change. But tonight’s speech tells us, once and for all, that the moment has come and gone.

The historian and humanitarian Howard Zinn, who died suddenly today at age 87, said this in a speech made a few days after the 2008 election, and broadcast by Amy Goodman earlier this year: 

Why is all the political rhetoric limited? Why is the set of solutions given to social and economic issues so cramped and so short of what is needed, so short of what the Universal Declaration of Human Rights demands? And, yes, Obama, who obviously is more attuned to the needs of people than his opponent, you know, Obama, who is more far-sighted, more thoughtful, more imaginative, why has he been limited in what he is saying? Why hasn’t he come out for what is called a single-payer system in healthcare?…

I was really gratified when Obama called for “Let’s tax the rich more, and let’s tax the poor and middle class less.” And they said, “That’s socialism.” And I thought, “Whoa! I’m happy to hear that. Finally, socialism is getting a good name.”…But still, you know, he wouldn’t come out for a single-payer health system, that is, for what I would call health security, to go along with Social Security, you see, wouldn’t come out for that; wouldn’t come out for the government creating jobs for millions of people, because that’s what really is needed now. You see, when people are—the newspapers this morning report highest unemployment in decades, right? The government needs to create jobs. Private enterprise is not going to create jobs. Private enterprise fails, the so-called free market system fails, fails again and again. When the Depression hit in the 1930s, Roosevelt and the New Deal created jobs for millions of people. And, oh, there were people on the—you know, out there on the fringe who yelled “Socialism!” Didn’t matter. People needed it. If people need something badly, and somebody does something for them, you can throw all the names you want at them, it won’t matter, you see? But that was needed in this campaign….

You know, I like him. I’m for him. I want him to do well. I’m happy he won….But when I saw Obama and McCain sort of both together supporting the $700 billion bailout, I thought, “Uh-oh. No, no. Please don’t do that. Please, Obama, step aside from that….I’m sure something in your instincts must tell you that there’s something wrong with giving $700 billion to the same financial institutions which ruined us, which got us into this mess, something wrong with that, you see.” And it’s not even politically viable. That is, you can’t even say, “Oh, I’m doing it because people will then vote for me.” No. It was very obvious when the $700 billion bailout was announced that the majority of people in the country were opposed to it. Instinctively, they said, “Something is wrong with this. Why give it to them? We need it.”…

Obama should have been saying, “No, let’s take that $700 billion, let’s give it to people who can’t pay their mortgages. Let’s create jobs, you know.” You know, instead of pouring $700 billion into the top and hoping that it will trickle down to the bottom, no, go right to the bottom, where people need it and get—so, yes, that was a disappointment. So, yeah, I’m trying to indicate what we’ll have to do now and to fulfill what Obama himself has promised: change, real change. You can’t have—you can say “change,” but if you keep doing the old policies, it’s not change, right?

A Lesson for Obama from FDR: What America Needs Is Jobs–and Leadership

I published this piece yesterday on a site called Reader Supported News. It might provide some food for (wishful) thought as we prepare to listen to Obama’s State of the Union speech.

With the unemployment rate still hovering above 10 percent, the bailed-out financial sector is rewarding itself with bonuses instead of making the kinds of solid investments that might produce jobs. The time clearly is at hand for the Obama administration to push the banks aside, and plunge in to shape the economic recovery on its own terms. That means using federal monies to employ out of work people in rebuilding infrastructure and launching new projects –public employment in the public interest.

The model is Franklin Delano Roosevelt’s Civilian Conservation Corp. FDR’s idea – hardly a revolutionary one–was to replace relief with work, employing destitute young people in useful, low-skilled labor that would serve the public good. What makes the program seem even more relevant to the present day is its focus on environmental conservation: planting trees, preventing soil erosion, reducing flood and fire risk, and building infrastructure in National Parks. “I call your attention to the fact that this type of work is of definite practical value,” Roosevelt said in announcing the plan in March of 1933, “not only through the prevention of great present financial loss but also a means of creation future national wealth.”

The CCC idea was accompanied by proposals for a Public Works Administration to employ older people in large-scale projects involving a lot of planning and skilled labor. These latter projects would take many months or years, while the Civilian Conservation Corp could be implemented right away. The story of the CCC, writes Jonathan Alter in “The Defining Moment,” an account of FDR’s first 100 days, is “a tale of mobilization so rapid and so competent it almost defies belief for later generations.”

This, despite the fact that the proposal for a Civilian Conservation Corps immediately met with considerable resistance from all sides. The labor unions said Roosevelt’s proposed low wages would turn the nation into a forced labor camp, and amounted to fascism, Hitlerism and Sovietism, all rolled into one. It was attacked from the left by Huey Long, who called it a “sapsucker’s bill,” and from the right by conservative members of Congress who said that the economy would sort itself out in the long run without so much government spending. To one such remark, FDR’s aide Harry Hopkins replied: “People don’t eat in the ‘long run’ Senator They eat every day.”

The Roosevelt administration got the bill creating the CCC through Congress less than a month after his inauguration on March 4, 1933. Members of his own cabinet protested the idea was impossibly ambitious, but the president accepted no excuses–he wanted a quarter of a million young men put to work by summer. He then proceeded to manage the plan himself, delving into bureaucracy that ran the public lands–which then, as now, made a third of the nation–pulling in members of Congress, debating wage levels, making charts, writing up plans. When the mobilization still seemed too slow, he ordered in the army to help. “By April 7,” Alter writes, “only 34 days into the administration, the first corps members were enlisted. By July 1, less than four months after Roosevelt made his outlandish demand, he exceeded the quarter million goal. Nearly 275,000 young men were enrolled in 1,300 camps across the country, supporting their families and undertaking much-needed projects.”

The benefits of the CCC went beyond their impact on the economy or the environment. A friend whose father served in the Corps told me he recalled it, to his dying day, as one of the happiest times of his life. A kid from an immigrant ghetto in upper Manhattan, his idea of wilderness was no doubt limited to Fort Tryon Park–but the CCC sent him to work in Washington state’s glorious Mount Ranier National Park. And instead of the hopelessness that came with unemployment and desperate poverty, he had a place to live, three meals a day, and the pride of sending money home to help his single mother and younger siblings.

In its time, Alter writes, the mobilization of the Civilian Conservation Corps exceeded all prior efforts in the nation’s history–“and it has not been matched since.” Over nine years, more than 3 million men were provided meaningful work. The CCC would inspire numerous other programs–the Job Corps, Peace Corps, Vista, and AmeriCorps. It succeeded in the same spirit of solidarity and national service that would soon help win Second World War.

Roosevelt’s bold experiment in federal job-creation demonstrated that government can work–and more than that. It showed that there are times when leadership must come not from the states or localities or the slow-moving Congress, but directly from the White House. It provides a stark lesson for the Obama government, which remains mired in a swampland of political bickering while it pursues the illusion of bipartisanship, triangulates corporate special interests, and naively supports big banks in some revamped version of trickle-down economics.

The current word on the political street is that the Obama administration is bent on “going populist” in the wake of recent political defeats. And since his opponents long ago branded him a socialist (if not the anti-Christ), it seems he has little to lose. A good beginning would be to tax the $45 billion in bank bonuses at the utmost possible level, using the return to jump-start a federal government sponsored, government-run program like the CCC to employ men–and this time, women as well. Through a federally funded jobs program, they can be put to work to rebuild the nation’s rotting infrastructure; to spark public enterprise in the new energy industries, from autos to solar and wind powered electric utilities; to lay railways that criss-cross the nation and build the engines, coaches, and freight cars that will travel over them; and to construct and the staff community health centers that might fill in for a failed health care reform effort.

Some version of this plan has been proposed many times during the current financial crisis, and always ignored or shoved aside because of opposition from powerful industries and their supporters, who argue that such dramatic federal action would disrupt the free market or override local initiative. Well, the market, such as it is–never really free, and usually greased to serve corporate interests–has not done the job for the millions of Americans who remain unemployed. It’s time for the president to step in and do his.

I encourage you to check out the rest of Reader Supported News, an up-and-coming progressive news site.

Lessons from the 1930s: “Big Business Must Be Controlled If Our Democracy Is to Survive”

The Progressive, which is currently celebrating its 100th year, is running on its web site “a series of excerpts from The Progressive magazine in the 1930s that are especially relevant today.” I think these documents from the Depression era are especially resonant for us members of the Silent Generation, because they speak the language of our childhood. But these days, of course, they also speak the language of the present moment.  

All of the selctions are worth reading, but one of them stands out for the downright eeriness with which it captures our current predicament. It recalls the government bailout of banks and corporations that took place in the early years of the New Deal, and the swiftness with which those corporations and Wall Street executives bit the hand that had fed them.

In 1937, the economy went through a renewed downturn that FDR’s critics have referred to as “the Roosevelt Recession.” Conservatives blamed the slump on the administration’s hostility to big business and its Keynesian economic policies, and argued for rollbacks of government spending and regulation. Some spending cuts were made, to no good effect, and Roosevelt became convinced that the banking industry and other corporate interests were determined to scuttle the New Deal. 

Secretary of the Interior Harold Ickes led the counterattack. The following piece by Ickes was published on January 8, 1938. Because the excerpt is so long I am not setting it off as a block quote (no one want to read that much italics), but it’s better still to follow this link and read the whole thing, since for reasons of space I had to leave out some choice insults. 

Economic power in this country does not rest in the mass of the people as it must if a democracy is to endure. Wealth is not equitably distributed nor do its owners in the main even manage and control it. On the contrary, wealth has become so great and so concentrated that as a matter of fact, it controls those who possess it.

About one-half of the wealth of this country is in corporate form, and over one-half of it is under the domination of 200 corporations, which in turn are controlled by what [has been] referred to as “America’s 60 Families.”

[Up until the 1929 crash], America’s 60 families had held in their hands…complete dominion over the economic and political life of the country. They had lulled the American people into the conviction that if the people would grant conditions in which these 60 families…[could] do as they pleased, the 60 families would put capital to work; enterprise would boom, wages would rise, stocks would soar and there would be two cars in every garage.

The people gave the 60 families this confidence; gave the 60 families this trust in their benevolent despotism—in short, gave the 60 families then what they ask for today, and what happened? Out of their divinely claimed genius as managers of private enterprise the 60 families promptly led the American people into the worst peacetime catastrophe ever known.

Then the disillusioned people changed the government [electing Roosevelt in 1932].

The new government bailed the 60 families out of the consequences of their own mesmeric miscalculations and their unintelligent leadership of the system of private enterprise of which they had pretended to be master managers. It preserved the corporate structures in which their capital was invested from going through the wringer of bankruptcy and reorganization and stock assessment.

As an inevitable by-product of preserving the capital structure…[it also] preserved the management structure from going through the wringer to squeeze out incompetence and big salaries. Then government sought to modify the way in which the business of the nation was done so that business confidence would be based upon the well-being and purchasing power of 120 million people at the bottom standing on their own feet rather than upon the license of the 60 families at the top and upon their premises, in return for that license, to permit the gravy of their benevolence to trickle down upon the exploited millions at the bottom.

Government did get the economic system back on its feet; did succeed in doing a job where the 60 families had failed.

Government had the system back on its feet so well at the time of the elections of 1936 that, as the president said…the patients—over their panic and raising their salaries—felt strong enough to throw their crutches at the doctor.

And last spring government had the business of the country turning over so well that it thought it could safely heed the pleas of private enterprise to government and abandon the economic initiative.

Pursuant to these pleas government cut down public expenditures…in order to meet the insistence of private enterprise that business confidence would be greater if government would take steps to balance the budget—assuaged the fears of the head of the biggest bank in the United States about runaway inflation—and turned over to the managers of private enterprise the responsibility they had said that they were eager and willing to assume.

And what happened?

Two things. First, the 60 families that were masterminding private enterprise proved to have learned nothing nor forgotten nothing since 1929 about the management of business under modern conditions. They made the same mistakes they had made before 1929. They ran the stock market up and helped it get started down. They did little or nothing to increase the purchasing power of labor to make up for the government withdrawals and then ran prices to the sky so that the consumer refused to spend what they graciously let him earn.

Second, the 60 families, unwilling to learn to do business upon the democratic terms of 1937, began to make demands and threats.

To Franklin D. Roosevelt…[they have made] a threat that they will refuse to do business at all unless the President and the Congress and the people will repeal all that we have gained in the last five years and regrant them the suicidal license they had enjoyed in 1929….

To the 120 million people of the United States they have made the threat that, unless they are free to speculate free of regulations to protect the people’s money; unless they are free to accumulate through legal tricks by means of corporations without paying their share of taxes; unless they are free to dominate the rest of us without restrictions on their financial or economic power; unless they are once more free to do all these things, then the United States is to have its first general sit-down strike—not of labor—not of the American people—but of the 60 families and of the capital created by the whole American people of which the 60 families have obtained control.

If the American people call this bluff, then the America that is to be will be a democratic America, a free America.

If the American people yield to this bluff, then the America that is to be will be a big-business Fascist America—an enslaved America….

Big business must be controlled if our democracy is to survive….The new America must be a land of free business, not of ruthless business—a land of free men, not of economic slaves.