A Letter to George Bush: F.D.R. Changed, and So Can You
Lekachman, Robert, The Nation
In 1932, presidential candidate Franklin Delano Roosevelt assaulted the hapless Herbert Hoover before the farmers of Sioux City, Iowa, with these flaming words "I accuse the present Administration of being the greatest spending Administration in all our history. It is an Administration that has piled bureau on bureau, commission on commission, and has faded to anticipate the dire needs and the reduced earning power of the people." In Pittsburgh a few weeks later, Roosevelt informed unemployed steelworkers that "I regard reduction in Federal spending as one of the most important issues of this campaign. In my opinion, it is the most direct and effective contribution that government can make to business."
The familiar sequel? Deficit spending, public works, public housing, massive relief programs, the National Recovery Administration, the Tennessee Valley Authority, the Federal Deposit Insurance Corporation and the Social Security Act -the foundation of our rickety welfare state. In truth, bureau upon bureau, commission upon commission. Accounted one of our great Presidents, Roosevelt was never hobbled by that foolish consistency which is the hobgoblin of little minds.
Neither should you be. I assume that you aim in your high office to do more than complete your resume and preserve the country from Dan Quayle. To be a good, even an excellent President, you must confront squarely the budget and the trade deficits. There are economists who will reassure you that the budget deficit is ever so slowly shrinking and that as a percentage of G.N.P. the Japanese deficit exceeds ours. True, but irrelevant. The Japanese finance out of domestic savings not only their own deficit but a large hunk of ours. Our trade deficit declines at a painfully slow rate. It enables the Japanese and other foreigners to gobble up American companies and real estate with the surplus dollars they continue to earn. In 1980 the United States was a creditor nation, as befits a superpower. It is now the world's largest debtor, a status once reserved for Mexico and Brazil. Our economy has become hostage to the whims of unsympathetic financial types in Japan and Europe. Right back to the nineteenth century.
Because we borrow from foreigners, the Fed must keep interest rates high enough to continue attracting funds from Asia and Europe. But high interest rates close the new housing market to middle-income families. They make it more expensive to invest in new plant and technology in the United States than it is in Japan and West Germany. Our deficits steadily erode our international competitiveness. Billions are available for leveraged buy-outs that profit investment bankers, lawyers and corporate insiders. Who's interested in new technology and investment in plant and equipment? What to do?
I'll wager that you know what comes next. The T-word. Yes, taxes must rise. I sympathize with your quandary. The nation read your lips. Is the citizenry ready to read them again for a sharply revised message? Roosevelt followed a wildly unpopular President. Congress, panic-stricken by the deep crisis, panted for legislation it could enact without reading. F.D.R. was a politician of fabulous charm. You perforce will operate within a far less favorable context. Ronald Reagan, the most successful showbiz act of the century, continues to mesmerize the public. Your crises are simmering, not yet on the boil. The new Congress will be surly and uncooperative. Your charm is unfabled. Willie Horton, the Pledge of Allegiance, the A.C.L.U. and Boston Harbor got you elected. They will not help you govern. Quite the contrary.
Here is what you should do. On day two of your Administration, you should assemble Fed chair Alan Greenspan, Treasury Secretary Nicholas Brady and the Congressional majority and minority leaders, including your old enemy Bob Dole. Sketch the deal. You will within days present a credible deficit reduction proposal. …