Obama's Budget Should Prioritize People

Feb 23, 2012David B. Woolner

FDR understood that balancing America's budget would be futile if the health, skills, and morale of its people were lost in the process.

Before we can think straight as a nation we have to consider, in addition to the old kind, a new kind of government balance sheet -- a long-range sheet which shows survival values for our population and for our democratic way of living, balanced against what we have paid for them. Judged by that test -- history's test -- I venture to say that the long-range budget of the present Administration of our government has been in the black and not in the red. - Franklin D. Roosevelt

As the debate over President Obama's proposed budget rages, we might do well to reflect on what Franklin Roosevelt had to say about the nation's "balance sheet" roughly three quarters of a century ago. Facing much the same criticism over government spending from the right that President Obama has faced, FDR insisted that it was time to develop a new kind of government balance sheet -- one that took into account what he called "the true and ultimate assets and liabilities of a nation." He eschewed the traditional definition of "capital" and instead argued that the "only real capital of a nation is its natural resources and its human beings." Moreover, FDR insisted that it was critical that "we take care of and make the most of" both of these fundamental assets so as to ensure that "we shall survive as a strong nation, a successful nation and a progressive nation -- whether or not the bookkeepers say other kinds of budgets are from time to time out of balance."

In keeping with this point of view, FDR also argued that it was government's responsibility to ensure that the nation's "capital structure" -- by which he meant its "natural resources and human beings" -- was maintained at all times. "The plant has to be kept up and new capital put in year by year to meet increasing needs," he said, for "if we skimp on that capital, if we exhaust our natural resources and weaken the capacity of our human beings, then we shall go the way of all weak nations."

For Roosevelt, investing in and maintaining the overall health of the nation took precedence over short-term demands to balance the federal budget. In this sense, FDR treated government less like a family that needs to meet its monthly obligations and more like a business -- a business that understands both the short-term capital requirements needed to maintain its competitive edge and the concomitant demand for well timed long-term investments to ensure continued growth and prosperity.

In articulating this philosophy, FDR placed great stress on the need to properly manage and preserve our nation's natural resources. But he also insisted that we must "husband" the resources of the other half our capital by "conserving...[the] health, energy, skill and morale of our population, and especially...that part of our population which will be the America of tomorrow." It was critical that we addressed the serious issue of long-term unemployment, for in FDR's view it was vital to maintain "the fullest use and development of precious resources of ability which cannot be stored and will be lost if they remain unused." Indeed, he went on:

Check out “The 99 Percent Plan,” a new Roosevelt Institute/Salon essay series on the progressive vision for the economy.

No nation can meet this changing world unless its people, individually and collectively, grow in ability to understand and handle the new knowledge as applied to increasingly intricate human relationships. That is why the teachers of America are the ultimate guardians of the human capital of America, the assets which must be made to pay social dividends if democracy is to survive.

President Obama has frequently alluded to the important role that education must play in building what he calls "an economy that is built to last." And his budget, which calls for increased funding to rebuild our schools and hire more teachers, reflects this. The president has also called for an increase in spending on research and development, and on our nation's crumbling infrastructure, both of which are urgently needed. But his budget also calls for deep cuts in social spending that would adversely affect a number of programs designed to assist low-income families, as well as the slashing of $33 billion from the Superfund to clean up toxic waste, a $359 million reduction in the Environmental Protection Agency's funds for safe drinking water, and nearly $500 million in cuts in heating oil assistance for the poor at a time when oil prices are on the rise.

The president has argued that it is necessary to make these cuts -- even those to the poor -- in order to provide a balance between the expenditures needed to keep the recovery on track and the long-term requirement to reduce the federal deficit. As part of this effort, he has also called for an end to the Bush-era tax cuts for incomes over $250,000 a year and introduced his so-called Buffett Rule, a minimum tax of 30 percent for those whose annual income tops $1 million.

On the surface, these all appear as logical goals. But in fashioning a budget that includes only modest spending increases and lays great stress on the need to cut spending, the president runs the risk of amplifying the right's failed deficit logic -- the falsity of which has been thoroughly exposed by the shrinking of the European economy in the wake of Europe's embrace of budget austerity. The president also insists that in calling for new taxes he is not engaged in class warfare. Indeed, in introducing his new budget to the students at Northern Virginia Community College, he insisted that "we don't begrudge success in America. We aspire to it... I want everybody here to go out there and do great. I want you to make loads of money if you can."

Franklin Roosevelt had a different vision. For him, the measure of the restoration of the U.S. economy could only be found "in the extent to which we apply social values more noble than mere monetary profit." And even in the midst of the worst depression in our nation's history, he was not afraid to remind the American people again and again that it was the forces of greed -- not class warfare -- that led to this great crisis. There were, in short, more important things in life than the accumulation of great wealth. As he observed in his first inaugural:

Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. The joy and moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits. These dark days will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves and to our fellow men.

As the fight over the budget continues, the president and Congress might do well to focus not on how to cut spending, but on the far more urgent need to restore and protect what Franklin Roosevelt called "the true and ultimate assets and liabilities of [the] nation." In particular, we have to invest in the "precious resources of ability" -- human capital -- that continue to suffer the devastating effects of long-term unemployment. Surely this is an asset on our national balance sheet that we cannot afford to lose if we hope to build a better future for ourselves and for our children.

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.

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