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Monday, September 12, 2011

The Speech Obama Should Have Given

Guess which candidate for the Presidency said this: “Our Federal extravagance and improvidence bear a double evil; first, our people and our businesses cannot carry these excessive burdens of taxation; second, our credit structure is impaired by the unorthodox Federal financing made necessary by the unprecedented magnitude of these deficits.”

Here’s a hint: In the same speech, this candidate promised to “reduce the cost of current Federal Government operations by 25 percent.” He was elected President three weeks later.

Ronald Reagan? Wrong. Calvin Coolidge? Wrong again. The correct answer is Franklin Delano Roosevelt—in a campaign speech in Pittsburgh, Pennsylvania on October 19, 1932.

But how could this be, you ask? FDR was running against Herbert Hoover, the president our teachers and textbooks told us was a heartless skinflint who twiddled his thumbs as the economy fell into Depression. How could Roosevelt assail a supposedly laissez faire administration for its “reckless and extravagant” record of boosting federal spending by 50 percent in just four years?

The better question to ask is, “Why did my teachers and textbooks tell me something that just wasn’t true?” But that’s a story for another occasion. (See “The 1932 Bait-and-Switch” and “Great Myths of the Great Depression”.)

The fact is, what Roosevelt said about the Hoover administration in his Pittsburgh speech was precisely right. It’s a pity he proved to be an even bigger taxer and spender than Hoover was, thereby prolonging the Depression by at least seven years.

President Obama says he admires FDR, but which FDR—the candidate who promised one thing or the President who did the opposite? Clearly, it’s the latter. Obama’s policies imitate what Roosevelt actually did as president, which his New Deal confidant Rexford Tugwell admitted was just Hooverism on steroids.

Instead of the speech he read from the teleprompter last Thursday before Congress, Obama should have given something like the FDR Pittsburgh speech. Perhaps on the day after the markets would have soared but as we all know, they tanked. Markets know something (actually, a whole lot) that Obama doesn’t.

Imagine if Obama had spoken these words from FDR’s Pittsburgh speech instead of the ones some staff members wrote for him:

“The credit of the family depends chiefly on whether that family is living within its income. And that is equally true of the Nation. If the Nation is living within its income, its credit is good. If, in some crises, it lives beyond its income for a year or two, it can usually borrow temporarily at reasonable rates. But if, like a spendthrift, it throws discretion to the winds, and is willing to make no sacrifice at all in spending; if it extends its taxing to the limit of the people’s power to pay and continues to pile up deficits, then it is on the road to bankruptcy.

“For over two years our Federal Government has experienced unprecedented deficits, in spite of increased taxes. We must not forget that there are three separate governmental spending and taxing agencies in the United States–the national Government in Washington, the State Government and the local government….[A]ll three of our governmental units became reckless….

“It was all very merry while it lasted. We did not greatly worry. We thought we were getting rich. But when the Crash came, we were shocked to find that while income melted away like snow in the spring, governmental expense did not drop at all…..Can we stand that? I do not believe it. That is a perfectly impossible economic condition. Quite apart from every man’s own tax assessment, that burden is a brake on any return to normal business activity. Taxes are paid in the sweat of every man who labors because they are a burden on production and are paid through production. If those taxes are excessive, they are reflected in idle factories, in tax-sold farms, and in hordes of hungry people, tramping the streets and seeking jobs in vain. Our workers may never see a tax bill, but they pay. They pay in deductions from wages, in increased cost of what they buy, or—as now—in broad unemployment throughout the land. There is not an unemployed man, there is not a struggling farmer, whose interest in this subject is not direct and vital. It comes home to every one of us!”

This is not the FDR of the typical history book. But it is certainly the FDR of the 1932 election. The Pittsburgh speech was not an anomaly. He repeated these charges throughout the campaign. The Democratic Party platform on which he ran contained the very same promise of a 25% reduction in government spending. FDR’s running mate, John Nance Garner, echoed the theme by declaring that Hoover “was leading the country down the road to socialism.” Roosevelt and Garner won the election and proceeded to lead the country down the same road at warp speed.

More from candidate Roosevelt:

“The most obvious effect of extravagant Government spending is its burden on farm and industrial activity, and, for that, nearly every Government unit in the United States is to blame. But when we come to consider prodigality and extravagance in the Federal Government, as distinguished from State or local government, we are talking about something even more dangerous. For upon the financial stability of the United States Government depends the stability of trade and employment, and of the entire banking, savings and insurance system of the Nation.”

Then there was this nugget. Attacking the Hoover administration for predicting surpluses but producing deficits, Roosevelt pronounced, “There is something much more than mere error in that kind of thing. Our people and the world are entitled to reasonable accuracy and reasonable prudence; and above all they are entitled to complete frankness. They have a right and a duty to place in retirement those who conceal realities, those who abuse confidence.”

Roosevelt quoted this statement signed by Calvin Coolidge: “All the costs of local, State and national Government must be reduced without fear and without favor. Unless the people, through unified action, arise and take charge of their Government, they will find that their Government has taken charge of them.” FDR’s very next sentence was, “Every word of that warning is true; and the first and most important and necessitous step in balancing our Federal budget is to reduce expense.”

On September 8, 2011, we were treated to a campaign speech but it wasn’t anything like the FDR campaign speech of October 19, 1932. Instead, we got more of what FDR actually delivered but didn’t work and what Bush and Obama gave us that isn’t working any better. Sadly, the joke is on the rest of us, which gives me the opportunity to close with one:

A bus filled with politicians was driving through the countryside one day, on the campaign trail. The bus driver, caught up in the beautiful scenery, loses control and crashes into the ditch. A farmer living nearby hears the horrible crash and rushes out to discover the wreckage. Finding the politicians, he buries them.

The next day, the police come to the farm to question the man. “So you buried all the politicians?” asked the police officer. “Were they all dead?”

The farmer answered, “Some said they weren’t, but you know how politicians lie.”

Lawrence W. Reed is president of the Foundation for Economic Education, with offices in Irvington, New York and Atlanta, Georgia.

  • Lawrence W. Reed is FEE's President Emeritus, having previously served for nearly 11 years as FEE’s president (2008-2019). He is also FEE's Humphreys Family Senior Fellow and Ron Manners Global Ambassador for Liberty. His Facebook page is here and his personal website is