The economy: Obama’s new New Deal

The last time this was tried on a major scale was 75 years ago, and economists can’t agree whether it worked, said Peter Gosselin in the Los Angeles Times. But with the nation mired in a deep and intractable recession, Barack Obama “is looking to Franklin D. Roosevelt and the New Deal for inspiration,” and will propose “great bursts of deficit-funded government expenditure” in hopes of jump-starting an economic recovery. The cornerstone of Obama’s approach—a $775 billion package of programs to repair our infrastructure, promote fuel efficiency and alternative energies, and modernize our electrical grid—“would hark back to FDR’s undertakings, which put millions to work on giant projects.” Obama’s “audacious” plan, however, dwarfs anything Roosevelt ever dreamed of. When combined with current spending, the present stimulus package could “push Washington’s 2009 deficit to between $1.5 trillion and $2 trillion”—a scale of government spending unseen in modern times. Obama is not only using FDR’s “pump-priming” tactics, said Adam Nagourney in The New York Times. He’s studying FDR’s masterful speeches for tips on how to stress the gravity of the economic situation, while calmly reassuring Americans that better times are on the way.

Obama should stop trying to raise FDR from the dead, said James Piereson in The Weekly Standard. The situations in 1933 and today are not the same. When FDR took office, the country was “at the very bottom of the worst economic calamity in American history,” with unemployment at 25 percent and millions having lost all their savings in failed banks. Using similar techniques to fight this recession makes no sense—especially since “many of the New Deal measures most favored by reformers today were either unhelpful or counterproductive.” The reality is that it was not the New Deal but World War II that lifted the U.S. out of the Depression.

Here we go again, said Adam Cohen in The New York Times. For decades, conservatives have been trying to convince Americans that the New Deal failed, and they’re dragging out these tired arguments to cast doubt on another hugely popular Democratic leader. The economy, they say, will cure itself in the long run if left alone. But as a Roosevelt aide said of that same argument in 1932: “People don’t eat in the long run. They eat every day.” The American people need help, and they need it now. In fact, they need more help than Obama is proposing, said Robert Kuttner in Huffingtonpost.com. The Congressional Budget Office estimates that over the next two years, this country will suffer more than $2 trillion in lost economic production, with additional millions of lost jobs. To pull us out of this nose dive, Obama should do more—and double the size of his stimulus.

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Do more? asked David Brooks in The New York Times. In the midst of economic calamity, the president-elect is proposing to overhaul the nation’s roads and bridges, improve inner-city schools, update the power grid, and launch a host of other wildly ambitious projects. And he wants this enormously complex legislation passed and implemented in a matter of weeks, so that the deficit spending and tax cuts have a chance of helping now, rather than later. Even FDR didn’t have this kind of “audacious self-confidence.” But with economists completely divided on what, if any, government actions can help end recessions, you have to worry whether Obama can pull this all off. “By this time next year, he’ll either be a great president or a broken one.”