Tag: FDR

The Annals of Power: Christie, FDR, and Nixon

Experts tell Monica Hesse of the Washington Post that closing a few bridge lanes is pretty thin gruel as far as punishing your enemies goes. Journalism professor and scandal-culture expert Mark Feldstein scoffs, “If he’s not willing to be thinking of unauthorized wiretaps . . .”

Hesse asks, “In the grand scheme of diabolical political paybacks, how does this vision stack up?”

Take FDR, Feldstein says. During World War II, after the Chicago Tribune published news of broken Japanese codes, President Franklin D. Roosevelt tried to order troops to take over the newspaper’s building. (He was eventually talked down from this martial plot.) The publisher was an old nemesis from prep school.

Take President Richard M. Nixon — always with Nixon — who tried to get the IRS to conduct field audits against people he perceived as political foes in the early, pre-Watergate 1970s. “It was really a matter of trying to destroy people personally” by using the governmental means available, says Joseph Cummins, the author of dirty tricks encyclopedia “Anything for a Vote.” “That was the way Nixon felt about things.”

 FDR knew the rule, “Never pick a fight with a man who buys ink by the barrel.” He wasn’t so squeamish when it came to retailers who defied his preferences. Sewell Avery, chairman of the big catalog company Montgomery Ward, opposed labor unions, Roosevelt’s New Deal, and Roosevelt’s re-election. In 1944 Avery refused FDR’s order to extend his company’s labor contracts to avoid a strike. Roosevelt ordered the War Department to seize the offices of Montgomery Ward. Attorney General Francis Biddle flew to Chicago to oversee the army’s physical removal of Avery from his office, as the photo shows.

When Christie does that, he’ll be ready for the political big leagues.

FDR and Executive Order 9066

Gordon Hirabayashi died on January 2, at age 93.

The Washington Post obituary notes that the  federal government put him in a prison during the 1940s. President Franklin Roosevelt issued many decrees, but the one that would lead to Hirabayashi’s imprisonment, Executive Order 9066, said that thousands of Americans residing on the West Coast had to leave their jobs and homes and promptly report to certain prison camps (“relocation centers”).  The feds said actual proof of wrongdoing was unnecessary.

Hirabayashi refused to go along with the program, so he was prosecuted for disobeying the president and jailed. The courts rejected his argument that FDR had exceeded the powers of his office.  In an interview in 1985, Hirabayashi looked back on his ordeal and said, “My citizenship didn’t protect me one bit.  Our Constitution was reduced to a scrap of paper.”

Even though there are written safeguards concerning due process, habeas corpus, and jury trial, presidents will sometimes assert the power to override all that. FDR did it. George W. Bush did it. And Barack Obama wants to reserve the option to do it.

On January 17, Cato will be hosting a book forum about FDR’s war policies and civil liberties.

For related Cato scholarship, go here and here.

New Video Punctures Myths about Great Depression, Exposes Damaging Impact of Statist Policies by Hoover and FDR

I’ve commented many times about the misguided big-government policies of both Hoover and FDR, so I can say with considerable admiration that this new video from the Center for Freedom and Prosperity packs an amazing amount of solid info into about five minutes.

Perhaps the most surprising revelation in the video, at least to everyone other than economic historians, is that America suffered a harsh depression after World War I, with GDP falling by a staggering 24 percent.

But we don’t read much about that downturn in the history books, in large part because it ended so quickly.

The key question, though, is why did that depression end quickly while the Great Depression dragged on for a decade?

One big reason for the different results is that markets were largely left unmolested in the 1920s. This meant resources could be quickly redeployed, minimizing the downturn.

But this doesn’t mean the crowd in Washington was completely passive. They did do something to help the economy recover. As Ms. Fields explains in the video, President Harding, unlike Presidents Hoover and Roosevelt, slashed government spending.

Homeownership Before the New Deal

The latest canard offered for keeping taxpayers on the hook for mortgage risk is that, without such, homeownership would limited to the wealthy.  Sarah Rosen Wartell of the Center for American Progress stated before the House Subcommittee on Capital Markets, “The high cost, limited availability, and high volatility of pre-New Deal mortgage finance meant that homeownership was effectively limited to the wealthy.”  Congressman Al Green repeated the point.  As I’ve generally found Sarah to be one of the more reasonable CAP employees, and that this is fundamentally an empirical question, I would have expected her to offer some evidence to support such a claim.  Alas, she did not.  So I will.

According to the US Census Bureau, at the turn of the century in 1900, the US homeownership rate was 46.5%.  I’m pretty sure that even Sarah wouldn’t claim that close to half of US households in 1900 were “wealthy.”  Interestingly enough, homeownership after the first 10 years of the New Deal was lower than before the New Deal.

While 46.5% is about 20 percentage points below the current rate, the population in 1900 was considerably younger, and one thing we do know is that homeownership is positively correlated with age.  In 1900, 54% of the US population was under the age of 25, a reasonable cut-off for homeownership.  Today, that number is 35%.  I don’t think it would be a stretch to say the greatest driver behind the homeownership rate over the last 100 years has been the aging of the US population, probably followed by the increase in household incomes (homeownership and income are also closely correlated).

Hopefully this will put to rest the myth that FDR and the New Deal gave homeownership to the masses.  The fact is that homeownership was fairly widespread long before the New Deal.  I await the next myth from the Fannie Mae apologists.   If they are wise, they will try one that isn’t so easily falsified.

Toward Restoring Constitutional Government

Today POLITICO Arena asks:

In light of today’s reading of the Constitution in the new House, what misinterpretations of the Constitution do you regularly see in American politics? And are House Republicans implying that the previous Democratic majority did not have a firm grasp of the government’s founding document?

My response:

Thanks to the Tea Party, as I wrote in Tuesday’s Wall Street Journal, Congress seems to be rediscovering the Constitution – or at least many House Republicans seem to be. When members read the document aloud today, apparently for the first time in the nation’s history, they’ll be throwing down a marker: “We take the Constitution seriously, and intend to abide by its principles.” If true, how refreshing.

This is not a partisan matter. As many Republicans have said – albeit, some only after November’s elections – both parties for years have ignored the Constitution’s limits on political power. To confirm that, we need look no further than to James Madison, the principal author of the document, who assured skeptical ratifiers in Federalist 45 that the powers authorized by the Constitution were “few and defined.” That hardly describes today’s federal behemoth.

Thus, the main “misinterpretation” has been over the very idea of constitutional limits – particularly as inherent in the doctrine of enumerated powers, the principle that “We the People” gave Congress only 18 enumerated powers. The Commerce Clause, for example, was written mainly to ensure interstate commerce unfettered by state interference, not to enable Congress to regulate every aspect of life. And the General Welfare Clause was meant to limit Congress’s taxing power pursuant to its enumerated ends to objects of national, not particular, concern: it wasn’t meant to enable Congress to redistribute private wealth at will.

The great change came during the New Deal, of course, after FDR’s infamous Court packing threat, when a cowed Court began turning the Constitution on its head. But don’t take my word for that constitutional legerdemain. Here’s Roosevelt, writing to the chairman of the House Ways and Means Committee in 1935: “I hope your committee will not permit doubts as to constitutionality, however reasonable, to block the suggested legislation.” And here’s Rexford Tugwell, one of the principal architects of the New Deal, reflecting on his handiwork some 30 years later: “To the extent that these new social virtues [i.e., New Deal policies] developed, they were tortured interpretations of a document [i.e., the Constitution] intended to prevent them.” They knew exactly what they were doing.

So when today’s liberals tell us the Constitution authorizes the vast federal programs that now reduce so many Americans to government dependents, they reveal their historical ignorance – or their political ambition. And they’re reduced to the silliness we saw in Tuesday’s New York Times, where the Times editorialists ranted against today’s constitutional reading as “a theatrical production of unusual pomposity.” Illustrating their own penchant for pomposity, they then dug into their bag of adjectives and let loose: “a self-important flourish,” “their Beltway insider ritual of self-glorification,” “a presumptuous and self-righteous act,” “an air of vacuous fundamentalism,” ”all of this simply eyewash,” “a ghastly waste of time.” They must have been emotionally drained when they finished their screed.

The Constitution is not a blank slate, details to follow, as decided by transient majorities. Were it that, it never would have been ratified. After all, we fought a revolution to rid ourselves of overweening government, and fought a Civil War to institute at last the grand principles of the Declaration of Independence. Nor will those principles be restored in a day. But today’s reading will start a debate that is sorely needed, at the end of which one can hope for restoration.

ObamaCare Is Undermining Economic Recovery, Job Growth

In a recent Wall Street Journal oped, Carnegie-Mellon economist Allan Meltzer explains how ObamaCare is delaying economic recovery:

Two overarching reasons explain the failure of Obamanomics. First, administration economists and their outside supporters neglected the longer-term costs and consequences of their actions. Second, the administration and Congress have through their deeds and words heightened uncertainty about the economic future. High uncertainty is the enemy of investment and growth…

Mr. Obama has denied the cost burden on business from his health-care program, but business is aware that it is likely to be large. How large? That’s part of the uncertainty that employers face if they hire additional labor…

Then there is Medicaid, the medical program for those with lower incomes. In the past, states paid about half of the cost, and they are responsible for 20% of the additional cost imposed by the program’s expansion. But almost all the states must balance their budgets, and the new Medicaid spending mandated by ObamaCare comes at a time when states face large deficits and even larger unfunded liabilities for pensions. All this only adds to uncertainty about taxes and spending.

Meltzer concludes that the Obama administration is making the same mistake as FDR: “President Roosevelt slowed recovery in 1938-40 until the war by creating uncertainty about his objectives. It was harmful then, and it’s harmful now.”

For more on the harm caused by government-created uncertainty, read my colleague Tad DeHaven’s recent posts.

Uncertainty More Than Anecdotal

During a recent CNBC debate on federal spending, I argued that government policies are creating uncertainty in the business community. Businesses are reluctant to invest or hire because they’re concerned that the president’s big government agenda will mean higher taxes and more onerous regulations.

I mentioned that every business owner I’ve spoken with has expressed this concern. In fact, the owner of the TV studio I was in told me that he wants to hire more employees but is afraid he may have to turn around and fire them later on thanks to Washington. My debate opponent dismissed my argument on the basis that “you cannot conduct macroeconomic policy by anecdote.”

Unfortunately, there is plenty of evidence to support my concern beyond what I’ve heard from folks in the business community. Yesterday, the chairman of the Business Roundtable, which the Washington Post calls “President Obama’s closest ally in the business community,” said that the president and his Democratic allies are creating an “increasingly hostile environment for investment and job creation.”

From the article:

Ivan G. Seidenberg, chief executive of Verizon Communications, said that Democrats in Washington are pursuing tax increases, policy changes and regulatory actions that together threaten to dampen economic growth and “harm our ability … to grow private-sector jobs in the U.S.”

“In our judgment, we have reached a point where the negative effects of these policies are simply too significant to ignore,” Seidenberg said in a lunchtime speech to the Economic Club of Washington. “By reaching into virtually every sector of economic life, government is injecting uncertainty into the marketplace and making it harder to raise capital and create new businesses.”

Big businesses aren’t the only ones complaining. Surveys of small businesses conducted by the National Federation of Independent Business continue to point to government taxes and regulations as their single biggest obstacle.

Even the Washington Post’s editorial page is now acknowledging that government-induced uncertainty is an issue:

But as analysts ponder the mystery of weak private-sector hiring despite signs of economic growth, it’s worth asking what role is played by government-induced uncertainty. With the federal government promoting major changes in health care, financial regulation and energy law, it wouldn’t be surprising if some companies are more inclined to wait and see than they might otherwise be. And that’s especially true when they look at looming American indebtedness and the effect that could have on long-term interest rates.

The uncertainty caused by expanding government that we are facing today isn’t a new phenomenon. Economist Robert Higgs coined the phrase “regime uncertainty” in a study that showed that FDR’s anti-business policies prolonged the Great Depression. Had the Roosevelt administration heeded the “anecdotes” from the business community in the 1930s, perhaps the country could have been spared some pain. Let’s hope history doesn’t repeat itself.