The State of the Union Then and Now: Raising the Minimum Wage is Still a Good Idea

Jan 29, 2014David B. Woolner

Decades after FDR called for a national minimum wage, the debate continues -- and his arguments for it still ring true.

Decades after FDR called for a national minimum wage, the debate continues -- and his arguments for it still ring true.

We have not only seen minimum wage and maximum hour provisions prove their worth economically and socially under government auspices in 1933, 1934 and 1935, but the people of this country, by an overwhelming vote, are in favor of having the Congress—this Congress—put a floor below which industrial wages shall not fall, and a ceiling beyond which the hours of industrial labor shall not rise. – Franklin D. Roosevelt, State of the Union Address, January 3, 1938

In calling for an increase in the minimum wage in his State of the Union address, President Obama may have unwittingly echoed Franklin D. Roosevelt. For it was in the sixth year of FDR’s presidency, in the annual message to Congress that FDR delivered on January 3, 1938, that Roosevelt reiterated his increasingly vehement call for the passage of the Fair Labor Standards Act—the very law that would establish the national minimum wage.

In proposing the legislation, FDR used many of the same arguments that President Obama used to counter the conservative opposition that insisted—much as the conservative right does today—that the federal government has no business trying to increase the purchasing power of the average worker, and that the enactment of a national minimum wage law would hurt business and increase unemployment. Opposition in the largely non-union and racially segregated South—where there was a huge differential between the wages of white and black workers—was especially intense, and thanks to the actions of Southern Democrats in both the House and Senate, who had joined with conservative Republicans in the formation of an anti-New Deal coalition, passage of the Fair Labor Standards Act was not going to be easy.

To counter these arguments, FDR appealed, as he often did, to the moral sensibilities of the American people, insisting that government had “a final responsibility for the well-being of its citizenship” and this included enacting “legislation to end starvation wages and intolerable hours.” Furthermore, there were sound economic reasons to pass wage and hours legislation. In an earlier address on the subject, using language that is especially relevant to President Obama’s call for an increase in overseas exports, FDR observed that:

American industry has searched the outside world to find new markets—but it can create on its very doorstep the biggest and most permanent market it has ever seen… A few more dollars a week in wages, a better distribution of jobs with a shorter working day will almost overnight make millions of our lowest-paid workers actual buyers of billions of dollars of industrial and farm products. That increased volume of sales ought to lessen other cost of production so much that even a considerable increase in labor costs can be absorbed without imposing higher prices on the consumer. I am a firm believer in fully adequate pay for all labor. But right now I am most greatly concerned in increasing the pay of the lowest-paid labor—those who are our most numerous consuming group but who today do not make enough to maintain a decent standard of living or to buy the food, and the clothes and the other articles necessary to keep our factories and farms fully running.

Interestingly, a group of over 600 economists, including seven Nobel laureates, recently issued an open letter calling on President Obama and the congressional leadership in both parties to raise the minimum wage, arguing, as FDR did, that “the weight of evidence” shows that an increase in the minimum wage will “have little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market.”

It seems incredible that we should still be locked in the same debate about the moral and economic impact of an increase in the minimum wage more than three-quarters of a century later, at a time when even the McDonald’s Corporation had to admit after its own internal analysis that its minimum-wage workers could not survive on what they were receiving without the addition of a second job.

In 1938, Franklin Roosevelt argued that if we want to move “resolutely to extend the frontiers of social progress, we must… ever bear in mind that our objective is to improve and not to impair the standard of living of those who are now undernourished, poorly clad and ill-housed.” The Fair Labor Standards Act, which was signed into law on June 25, 1938, has helped improve the lives of millions of American workers—especially those at the bottom rung of the income scale—through its recognition of need to establish a minimum wage and through the provision that provides time and a half for overtime work. But in order for the law to be effective and have meaning, the minimum wage must keep up with the cost of living, and, as President Obama noted in last night’s address, the real wage of the average American worker has been in decline for decades when adjusted for inflation.

If Congress is serious about improving and not impairing the lives of the millions of working poor in this country, then it is high time to heed the president’s call to “give America a raise” and increase the minimum wage. To fail to do so would be yet another example of the callous indifference—most recently exemplified by the failure of Congress to extend long-term unemployment benefits—that those in positions of wealth and power have shown for the plight of the millions of Americans who struggle day by day to get by on wages that force even those working full-time to live a life of poverty. Indeed, the inability or unwillingness of this Congress to act on behalf of the most vulnerable in our society brings to mind the words of the late Pete Seeger, who died this week, when he sang, “which side are you boys, which side are you on?”

David B. Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. 

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Progressivism in America: Are We Opening a New Chapter in Our Book of Self-Government?

Nov 7, 2013David B. Woolner

As Americans reject the extreme right wing at the polls, FDR's vision of self-government may be on the rise again. Note: On Nov. 8-9, David Woolner and other leading thinkers will explore the past, present, and future of progressivism at a conference hosted by the Roosevelt Institute and the Clinton Institute for American Studies at University College Dublin. Click here for details and livestream.

As Americans reject the extreme right wing at the polls, FDR's vision of self-government may be on the rise again. Note: On Nov. 8-9, David Woolner and other leading thinkers will explore the past, present, and future of progressivism at a conference hosted by the Roosevelt Institute and the Clinton Institute for American Studies at University College Dublin. Click here for details and livestream.

The results of this week’s elections have led to a good deal of speculation in the press about the repudiation of the hard right among the American electorate. Democrat Terry McAuliffe’s victory over Tea Party-backed Ken Cuccinelli in the Virginia gubernatorial race and Republican Governor Chris Christie’s impressive reelection win in heavily Democratic New Jersey have both been interpreted as evidence of the broader appeal of moderates in both parties. If true, this would be a welcome development, particularly on the Republican side of the ledger, where the obstructionist winner-take-all attitude of the extreme right has rendered the United States virtually ungovernable and nearly brought the country to ruin on two occasions within the past two years.

President Obama and other political leaders on both sides have frequently cited the economic damage that this “crisis governing” has wrought to our economy. But equally significant—particularly for those of us who favor more activist social and economic policies—is the damage done to government itself, and by extension, to our democracy.

Indeed, the American people’s faith in government, especially Congress, is at an all-time low. Of all the issues confronting liberals or progressives today it is this issue, faith in government, that is perhaps the most important. For without the support of the broad electorate it will be impossible for Congress and the executive to move forward on a whole range of issues.

Eighty years ago, in the midst of an even worse economic crisis, Franklin Roosevelt won the support of the American people by asking them “to find through government the instrument of our united purpose to solve for the individual the ever-rising problems of a complex civilization.” Moreover, he insisted that the failed non-governmental attempts to meet the crisis brought on by the financial collapse of 1929-1932 left the American people “baffled and bewildered,” without the means to fashion “practical controls over blind economic forces and blindly selfish men.”

But in the wake of the many programs that Congress and the president put in place to meet the crisis from 1933 on, the people began to sense the truth “that democratic government has innate capacity to protect its people against disasters once considered inevitable, to solve problems once considered unsolvable. We would not admit”, he continued, “that we could not find a way to master economic epidemics just as, after centuries of fatalistic suffering, we had found a way to master epidemics of disease.”

In making this argument, FDR insisted that the American people were not discovering a wholly new truth, but were simply “writing a new chapter in our book of self-government.”

Our history, then, tells us that it is possible for us to meet the challenges before us—but only if we are willing, as FDR advised, “to find through government the instrument of our united purpose."

On November 8-9, the Roosevelt Institute and the Clinton Institute for American Studies at University College Dublin will hold a major international conference entitled Progressivism in America: Past, Present and Future. Featuring such noted figures as Nobel Laureate and Roosevelt Institute Chief Economist Joseph Stiglitz, journalists like E.J. Dionne and Jonathan Alter, and historians such as Alan Brinkley and Ellen Chesler, the conference seeks to address today’s policy challenges with solutions grounded in and inspired by the legacy of Franklin and Eleanor Roosevelt—including the all-important realization, as FDR remarked years ago—that “government is competent when all who compose it work as trustees for the whole people.” This event will be livestreamed. Click here for more details.

David B. Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. 

 

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The Ongoing Crisis Demands Jobs, Not Deficit Reduction

May 16, 2013David B. Woolner

Today's leaders must recognize that job creation is the key to boosting revenues for the government and the people.

Today's leaders must recognize that job creation is the key to boosting revenues for the government and the people.

Now, the rise and fall of national income—since they tell the story of how much you and I and everybody else are making—are an index of the rise and fall of national prosperity. They are also an index of the prosperity of your Government. The money to run the Government comes from taxes; and the tax revenue in turn depends for its size on the size of the national income. When the incomes and the values and transactions of the country are on the down-grade, then tax receipts go on the down-grade too. If the national income continues to decline, then the Government cannot run without going into the red. The only way to keep the Government out of the red is to keep the people out of the red. And so we had to balance the budget of the American people before we could balance the budget of the national Government.Franklin D. Roosevelt, 1936

The news that the nation added 165,000 jobs in April and that the unemployment rate has dipped to 7.5 percent—its lowest since December 2008—is of course welcome. It has eased the fears of many economists that recent cuts in federal spending might stall our somewhat anemic recovery, helped boost the stock market to record levels, and has been cited by Alan Krueger, the Chairman of the President’s Economic Advisors, as “further evidence that the U.S. economy is continuing to recover from the worst downturn since the Great Depression.”

But as many economists have also reported, the April rate of job growth is still far too low to bring about the level of re-employment needed to bring us back to full employment, and, worse still, the slight improvement in the overall unemployment rate masks a good many far more disturbing statistics. Many of the jobs acquired in April are low-skill and low-paying. Some of the drop in the unemployment rate can be attributed to the fact that millions of Americans have stopped looking for work and have dropped out of the work force all together—496,000 people in March 2013 alone. Then there are the under-employed, who also rank in the millions. If we add their ranks to those who are unemployed or have dropped out of the work force altogether, we arrive at an overall “underemployment rate” of 13.9 percent, up from the previous month’s rate of 13.8 percent. Taken together this means that roughly 22 million Americans are either unemployed or under-employed—a staggering figure, which after four years of so-called “recovery” has some economists predicting that long-term un-and under-employment may now be a permanent fixture of the American landscape.

What is even more shocking, however, is that in spite of all of these grim statistics, grim statistics that reflect the hardship and pain of millions, much of the political discourse in Washington—and in the media—remains fixated on the debt and deficit and the Republican demand for a balanced budget. It is almost as if Washington has all but given up on trying to take direct action to bring about a better employment picture. This realization is perhaps best evidenced by the fact that one of the more significant contributors to our persistently high unemployment rate in the past year has been public sector layoffs. 

Calls for the federal government to balance its books are not new, of course. Thanks to the extremely effective public persuasion campaign of the conservative right, we have heard this refrain time and time again. It has now become de rigueur for most politicians— no matter what their party—to pay lip service to the need to get “our house in order” and cut the deficit no matter what the consequences for the average American.

It wasn’t always this way, however. In the mid-1930s, when faced with a similar economic crisis and similar calls for cuts in federal spending, Franklin Roosevelt took an entirely different tack. He insisted that in the midst of a crisis where—much like today—we faced both declining federal revenues and increasing unemployment, “a national choice had to be made” between those who argued that the government should do nothing and “let Nature take its course” and those who argued for federal intervention in the economy, even if it meant running a deficit. As FDR saw it, what stood between his administration and a balanced budget were “millions of needy Americans, denied the promise of a decent American life.” In light of this, he argued that “to balance our budget in 1933 or 1934 or 1935 would have been a crime against the American people,” which would have required either “a capital levy that would have been confiscatory” or accepting “human suffering with callous indifference." "When Americans suffered,” he went on, “we refused to pass by on the other side. Humanity came first.”

And so the Roosevelt Administration launched programs like the Works Progress Administration that built much of the infrastructure we still enjoy today and which gave millions of Americans, from common laborers to structural engineers, the joy and dignity of work. FDR admitted that “this cost money”—and the American people understood that this would continue to cost money “for several years to come.” But given the dire state of the economy and the lack of demand in the private sector, the American people understood that it was the right thing to do.

Unlike today’s politicians, however, FDR refused to pander to the sky-is-falling rhetoric of the conservative right on the disastrous consequences that would accrue to the country by running a deficit in the midst of an economic crisis. For them FDR had a simple answer. He flat out rejected “this foolish fear about the crushing load the debt will impose upon your children and mine.” On the contrary, he went on:

This debt is not going to be paid by oppressive taxation on future generations. It is not going to be paid by taking away the hard-won savings of the present generation. It is going to be paid out of an increased national income and increased individual incomes produced by increasing national prosperity.

In other words, FDR understood that the real crisis the country faced in the Great Depression was an employment crisis—not a deficit crisis—and that in the long run the “only way to keep the Government out of the red” was, as he said, “to keep the people out of the red.” And so he set his priority on the one thing he knew would help bolster the revenue of both the American people and their government: millions upon millions of jobs.

Unfortunately, much of our leadership in Washington today seems to have lost sight of this fact, and instead of taking meaningful action to help grow the economy and alleviate the suffering of the millions of unemployed, would prefer to cut spending and engage in another endless round of bickering about the debt and deficit. Such “callous indifference” to the plight of millions of Americans is no way to bring about an end to the current crisis or build a better future 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.

For more on solutions to the ongoing unemployment crisis, join the Roosevelt Institute in Washington, D.C. on June 4th for A Bold Approach to the Jobs Emergency: Setting the Political Agenda for 2014 and 2016.

 

Unemployment line image via Shutterstock.com.

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After the Senate’s Gun Control Failure, FDR Points the Way Forward

Apr 19, 2013David B. Woolner

The gun lobby may have won the latest legislative battle, but that doesn't mean the American people should stop fighting for change.

[W]e have learned lessons in the ethics of human relationships—how devotion to the public good, unselfish service, never-ending consideration of human needs are in themselves conquering forces.

The gun lobby may have won the latest legislative battle, but that doesn't mean the American people should stop fighting for change.

[W]e have learned lessons in the ethics of human relationships—how devotion to the public good, unselfish service, never-ending consideration of human needs are in themselves conquering forces.

Democracy looks to the day when these virtues will be required and expected of those who serve the public officially and unofficially. -FDR, Rochester, MN, August 18, 1934

In the wake of the Senate’s refusal to advance legislation that would have expanded background checks for gun purchasers, President Obama gave a brief but impassioned speech in which he promised “to speak plainly and honestly” to the American people about how a bill that had the support of 90 percent of the public could not make it through the U.S. Congress. After all, the president continued, the legislation was bipartisan and designed merely “to extend the same background check rules that already apply to guns purchased from a dealer to guns purchased at shows or over the internet.” The bill, he said, showed “respect for gun owners” and “respect for the victims of gun violence”; it represented “moderation and common sense.” Moreover, a majority of United States senators voted in favor of the measure, and yet it still went down to defeat, blocked by a minority “who caved to the pressure” of the well-financed gun lobby and “started looking for an excuse—any excuse—to vote ‘no.’”

The president called this “shameful” and noted that thanks to the “willful lies” of the NRA and its allies and the “continuing distortion of Senate rules,” a minority was able to block the majority from passing a common-sense measure that would “make it harder for criminals and those with severe mental illnesses to buy a gun.” Such obstructionist tactics were far less common during the New Deal era, but FDR’s appeals to the American people to never stop fighting for progress may be the key to breaking the Senate’s current logjam.

This is not the first time President Obama has made reference to the frustration he and many other Americans feel about the relentless tendency of a minority of senators to block action by the Senate as a whole. In an equally passionate section of his recent State of the Union Address, the president pleaded again and again with Congress, not necessarily to pass the gun legislation he favored, but simply to bring the measures he outlined on gun violence to a vote because the people of Newtown, Aurora, Oak Creek, Tucson, Blacksburg, and “the countless other communities ripped open by gun violence” deserved it.

Although he did not refer to it by name, what the president is referencing here is the ever-increasing use of the filibuster by the minority party in the Senate—in this case the Republican Party—to thwart the will of the majority. Filibusters used to be a rarity. During Franklin Roosevelt’s 12-year tenure as president, for example, the filibuster was used a total of six times, including twice in the 1930s to block anti-lynching legislation. But thanks to rule changes that took place in 1975, it is now much easier for senators to use the filibuster or even the threat of a filibuster to stop legislation from coming before the Senate for an actual up or down vote.

Ironically, the changes that were instituted by the Senate leadership at that time—including a reduction in the number of votes needed to close off debate from 67 to 60 and the removal of the need for the senators involved to actually be on the floor of the Senate—were expected to make it easier—not harder—to bring legislation forward. But the effect has been just the opposite. This is especially true with respect to the removal of the need to be present in the Senate chamber, since this change has meant that virtually every piece of legislation (with the exception of budget legislation) requires a 60-vote supermajority to move forward in the Senate. 

Prior to the 1990s, the historical association of the filibuster as an exceptional measure kept the number of uses relatively low. But since the 1990s the use of the filibuster by both parties has increased dramatically, averaging 34 per year. And in the past six years, the Republican minority has used the filibuster to block or stall the Senate’s business, including the ratification of federal judges and other top government officials, over 170 times.

As President Obama noted in his remarks in the Rose Garden on the Senate’s failure to move the gun control provisions forward, a number of senators have characterized their blocking move as a “victory.” But given the Constitution’s unequivocal language about majority rule in the Senate (not to mention the fact that there is no mention of the filibuster) and polling data that shows 9 out of 10 Americans support expanding background checks for gun purchases, the president is right to ask, “a victory for who? A victory for what? ...It begs the question, who are we here to represent?”

He is also right to urge the American people to act on their frustration in the one place where they can truly make a difference—in the voting booth. The president’s insistence that we can still bring about meaningful change to reduce gun violence so long as we “don’t give up on it,” demand action from our representatives, and when action is not forthcoming, “send the right people to Washington,” is not unlike the advice that FDR gave the American people in the dark days of the mid-1930s. We should remember that FDR’s efforts to use government to affect such meaningful reforms as Social Security, unemployment insurance, or the regulation of the stock market also elicited fierce opposition from a small but vocal minority that claimed these measures were an affront to the American people’s basic liberties.

But in response to these shrill efforts to stifle reform by attacking government, FDR had a simple answer. As he told an audience gathered in Marietta, Ohio in 1938:

Let us not be afraid to help each other—let us never forget that government is ourselves and not an alien power over us. The ultimate rulers of our democracy are not a president and senators and congressmen and government officials but the voters of this country.

I believe that the American people, not afraid of their own capacity to choose forward-looking representatives to run their government, want the same cooperative security and have the same courage to achieve it, in 1938, as in 1788. I am sure they know that we shall always have a frontier—of social and economic problems—and that we must always move in to bring law and order to it. In that confidence I am pushing on. I am sure that the people of the Nation will push on with me.

President Obama is right. The effort to bring about meaningful reform of the nation’s gun laws is not over, and if this Congress refuses to listen to the American people, then the voters have every right to send new representatives to Washington who will. But given the power and wealth of such anti-government special interest groups as the NRA, President Obama, like Franklin Roosevelt before him, will need to keep reminding the American people that government is indeed “ourselves,” and if we do not want it to become “an alien power over us,” each of us will need to take our responsibility to vote seriously. As things stand right now, the very essence of our democracy may depend on it. 

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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To Build a Nation and a People: FDR and the WPA

Apr 8, 2013David B. Woolner

Today's Congress needs to step up as it did in the 1930s to address high unemployment and crumbling infrastructure.

Today's Congress needs to step up as it did in the 1930s to address high unemployment and crumbling infrastructure.

To those who say that our expenditures for Public Works and other means for recovery are a waste that we cannot afford, I answer that no country, however rich, can afford the waste of its human resources. Demoralization caused by vast unemployment is our greatest extravagance. Morally, it is the greatest menace to our social order. Some people try to tell me that we must make up our minds that for the future we shall permanently have millions of unemployed… But…I stand or fall by my refusal to accept as a necessary condition of our future a permanent army of unemployed. On the contrary, we must make it a national principle that we will not tolerate a large army of unemployed and that we will arrange our national economy to end our present unemployment as soon as we can and then to take wise measures against its return. I do not want to think that it is the destiny of any American to remain permanently on relief rolls.—Franklin D. Roosevelt, September 30, 1934

One of the most alarming statistics about America’s persistently high unemployment rate over the past four years is the large number of long-term unemployed. Current estimates by the Bureau of Labor Statistics put the total number of these largely forgotten workers at 4.8 million people—or roughly 40 percent of the total number of jobless Americans. Unlike previous recessions, where there was a good deal of movement in and out of the job market, loss of employment is much more serious in today’s Great Recession, as an individual’s chances of getting back to work are much lower. This leads to what one recent article terms a “loss of skills, loss of trust, and loss of networks,” all of which exacerbates the problem.

Worse still, there seems to be little political will to tackle this problem in Washington, as any serious effort to address the issue of the long-term unemployed has been sidelined by the endless budget debates in Congress and the sky-is-falling rhetoric of the extreme right, which remains ideologically opposed to government intervention in the economy. Perhaps the great symbol of this callous indifference can be found in the fact that while the recent sequester did not result in any loss of pay among the members of Congress, the long-term unemployed will see their benefits cut by 10 percent.

In the meantime, a recent report by the American Society for Civil Engineers notes that while there has been a slight improvement in the overall state of America’s infrastructure in the past four years, the current state of our nation’s roads, bridges, water systems, energy grid, and other transportation networks remains dismally low—receiving a grade of D+ as opposed to the nearly failing grade of D- four years ago. Thanks to this persistent neglect and Congress’s reluctance to appropriate the funds needed to fix our crumbling roads and other facilities, the U.S. now ranks 25th in the world in terms of infrastructure, far behind the rest of the industrialized world.

This juxtaposition of long-term unemployment and a failing infrastructure is not unlike the situation that Franklin Roosevelt faced in 1935 when, in a bold and unprecedented effort to alleviate the suffering of the long-term unemployed, FDR pushed Congress to pass the Emergency Relief Appropriations Act. It was through this piece of legislation passed 78 years ago today that Congress appropriated the funds FDR needed to launch the most ambitious public works program in American history—the Works Progress Administration, or WPA.

As the generation that lived through the Great Depression passes away, fewer and fewer Americans may be aware of what a great debt this nation owes to this remarkable government program. Indeed, the WPA not only employed 8.5 million people, it also built much of the infrastructure we still use today. How many New Yorkers, for example, are aware that the WPA is responsible for the construction of the Lincoln Tunnel, Tri-borough Bridge, the Belt, Grand Central, and Henry Hudson Parkways, the East River (FDR) Drive, or LaGuardia Airport? How many Chicagoans know that Midway Airport and much of Lake Shore Drive were built by the WPA? What about the fabled “river walk” of San Antonio, Texas? Do the residents of this community know that this critical piece and driver of much of their local economy was conceived and constructed by WPA architects and engineers? Are the people of New Jersey aware that they owe the Palisades Parkway to the WPA? What about those of us who have enjoyed the beauty of a drive along the Blue Ridge Parkway in North Carolina – are we aware that it too was built by the WPA? And what about Los Angeles International Airport or the Glendale Viaduct and countless other public works projects in California? Or the many WPA constructed buildings, parks, and other facilities constructed in New Mexico and other parts of the Southwest?

This list could go on and on, for before it was through the WPA would construct nearly 600,000 miles of rural roads, 67,000 miles of urban streets, 122,000 bridges, 1,000 tunnels, 1,050 airfields, 500 water treatment plants, 1,500 sewage treatment plants, 36,900 schools, 2,552 hospitals, 2,700 firehouses, and nearly 20,000 other state, county, and local government buildings. Most importantly, it would also give meaningful employment to millions of skilled and unskilled workers, providing our nation with the infrastructure it needed to become the most efficient and productive economy in the world and the long-term unemployed with the one thing they needed above all else—a job.

Seventy-eight years ago, our leaders in Congress had the courage and vision to engage in what FDR called “bold, persistent, experimentation.” In the face of the worst economic crisis in our history, they came to recognize that there are times when government itself must step in to provide employment if the free market fails to do so. They had no plans “to take the country down the path to socialism” as some critics charged, or to make the WPA into a permanent institution. What they did see was a need—a critical need to provide employment and to secure the skills of an entire generation of workers, juxtaposed with an equally important need to bring America’s rickety 19th century infrastructure into the modern world. They understood that this would cost money, but they also understood that in the long run this investment—even if it required deficit spending—would pay off.

They were right. Just ask any member of the “greatest generation” who lived through the seemingly massive federal investments and spending of the 1930s and 40s and then went on to enjoy the largest expansion of the American middle class in our nation’s history. Or ask yourself, the next time you land at LaGuardia Airport or enjoy an evening out among the many shops, cafes, and restaurants that cluster around San Antonio’s River Walk.

If today’s Congress had the same vision and courage that existed in Washington in 1935, it would see that with nearly 5 million people suffering the ill effects of long-term unemployment, and with an infrastructure that is now ranked 25th in the world, the least it could do is get behind President Obama’s nearly forgotten call for a modest $50 billion in spending for infrastructure. But unfortunately it does not appear that today’s Congress—particularly the conservative membership of the House—possesses anything like the vision of its counterparts in 1935. This is very bad news, for as FDR remarked about the “generation of self-seekers” that brought the country to ruin in 1933, “they have no vision, and when there is no vision, the people perish.”

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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FDR Called Minimum Wage Critics "Hopelessly Reactionary." He Was Right.

Mar 19, 2013David B. Woolner

Like President Obama, FDR faced resistance to guaranteeing workers a decent wage, but he knew he had the American people on his side.

Our Nation so richly endowed with natural resources and with a capable and industrious population should be able to devise ways and means of insuring to all our able-bodied working men and women a fair day's pay for a fair day's work. A self-supporting and self-respecting democracy can plead no justification for the existence of child labor, no economic reason for chiseling workers' wages or stretching workers' hours.

Like President Obama, FDR faced resistance to guaranteeing workers a decent wage, but he knew he had the American people on his side.

Our Nation so richly endowed with natural resources and with a capable and industrious population should be able to devise ways and means of insuring to all our able-bodied working men and women a fair day's pay for a fair day's work. A self-supporting and self-respecting democracy can plead no justification for the existence of child labor, no economic reason for chiseling workers' wages or stretching workers' hours.

Enlightened business is learning that competition ought not to cause bad social consequences which inevitably react upon the profits of business itself. All but the hopelessly reactionary will agree that to conserve our primary resources of man power, government must have some control over maximum hours, minimum wages, the evil of child labor and the exploitation of unorganized labor. –FDR, May 1937

In his recent State of the Union address, President Obama called on Congress to increase the federal minimum wage to $9 an hour and to link the future minimum wage rate to inflation. In doing so, the president took note of the fact that at today’s minimum wage, a family with two children that works full time sill lives below the poverty line. This, he insisted, is unacceptable, as “in the wealthiest nation on Earth, no one who works full-time should have to live in poverty.” Higher wages, the president insisted, “could mean the difference between groceries or the food bank; rent or eviction; scraping by or finally getting ahead.” And for businesses across the country, it would mean “customers with more money in their pockets,” which translates into the simple fact that “our economy is stronger when we reward an honest day’s work with honest wages.”

Not surprisingly, the president’s call for an increase in the minimum wage has elicited a somewhat predicable response from conservative Republicans. House Speaker John Boehner has called the idea “a job killer,” while House Budget Committee Chairman Paul Ryan called it “inflationary” and “counter-productive.” Some Republican leaders, such as House Majority Leader Eric Cantor and Senator Marco Rubio of Florida, have even gone so far as to advocate doing away with minimum wage/maximum hours laws altogether.

Interestingly, the legislation that gave us the minimum wage, the Fair Labor Standards Act, was also promoted by Franklin Roosevelt in his January 1938 State of the Union address. Here, after taking note of the fact that “millions of industrial workers receive pay so low that they have little buying power,” and hence “suffer great human hardship,” FDR also pointed out that these same workers are “unable to buy adequate food and shelter, to maintain health or to buy their share of manufactured goods,” all of which he insisted was a drag on our national economy.

Moreover, even though a majority of Americans—much like today—supported the passage of legislation that would set minimum wages and maximum hours, the Fair Labor Standards Act aroused fierce opposition among FDR’s conservative critics. The National Association of Manufacturers insisted that the law was but the first step in taking the country down the road to “communism, bolshevism, fascism and Nazism.” The National Committee to Uphold Constitutional Government insisted the act was unconstitutional and part of a larger conspiracy to turn the president into a dictator. To counter these absurd claims, FDR turned to one of his most effective tools, the Fireside Chat, where he calmly cautioned the American people:

not [to] let any calamity-howling executive with an income of $1,000.00 a day, who has been turning his employees over to the Government relief rolls in order to preserve his company's undistributed reserves, tell you—using his stockholders’ money to pay the postage for his personal opinions—tell you that a wage of $11.00 a week is going to have a disastrous effect on all American industry. Fortunately for business as a whole, and therefore for the Nation, that type of executive is a rarity with whom most business executives most heartily disagree.

Since its passage in 1938, the Fair Labor Standards Act has helped improve the lives of millions of American workers—especially those at the bottom rung of the income scale. Moreover, contrary to the fear mongers of 1938 and today, minimum wage and maximum hours legislation has not been disastrous for American business. In fact, study after study shows that, on balance, raising the minimum wage has been good for the economy and business overall because it increases the purchasing power of the American consumer.

Given the sluggish state of our economy, and given the fact that the minimum wage as it stands today, when adjusted for inflation, falls far below the hourly income levels achieved in the mid to late 1960s, isn’t it time to offer hard-working Americans a pay increase?

In 1938, Franklin Roosevelt argued that if we want to move “resolutely to extend the frontiers of social progress, we must…ever bear in mind that our objective is to improve and not to impair the standard of living of those who are now undernourished, poorly clad and ill-housed.”

If Congress is serious about improving and not impairing the lives of the millions of working poor in this country, then it needs to act to reverse the downward spiral in hourly income that has occurred in the past four decades and get behind President Obama’s call for an increase in the minimum wage. The president is right. It is outrageous that in the richest country on earth, a person who works full-time is still forced to live in poverty. Surely the simple idea that an honest day’s work deserves an honest day’s pay is something that all Americans—even conservative Republicans—can agree should be part of the American dream.

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.

 

Rich man underpaying worker image via Shutterstock.com.

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FDR Put Humanity First. The Sequester Puts It Last.

Mar 1, 2013David B. Woolner

FDR placed the needs of the American people above petty budgetary concerns, but today's leaders lack his courage and vision.

In 1933 we reversed the policy of the previous Administration. For the first time since the depression you had a Congress and an Administration in Washington which had the courage to provide the necessary resources which private interests no longer had or no longer dared to risk.

FDR placed the needs of the American people above petty budgetary concerns, but today's leaders lack his courage and vision.

In 1933 we reversed the policy of the previous Administration. For the first time since the depression you had a Congress and an Administration in Washington which had the courage to provide the necessary resources which private interests no longer had or no longer dared to risk.

This cost money. We knew, and you knew, in March, 1933, that it would cost money. We knew, and you knew, that it would cost money for several years to come. The people understood that in 1933. They understood it in 1934, when they gave the Administration a full endorsement of its policy. They knew in 1935, and they know in 1936, that the plan is working.—FDR, 1936

Eighty years ago this month, at the height of the worst economic crisis in our nation’s history, Franklin D. Roosevelt delivered on his promise to launch a New Deal for the American people. Not wedded to any one program, idea, or ideology, the New Deal was founded on the very simple premise that when the free market failed to provide basic economic security for the average American, government had a responsibility to provide that security. In Roosevelt’s day, this meant imposing the first-ever meaningful regulation of the stock market, shoring up the nation’s financial system by guaranteeing private deposits and separating commercial from investment banking, and providing jobs to the millions of unemployed through government expenditures on infrastructure. The Roosevelt administration also launched the country’s first nation-wide program of unemployment insurance to help the unemployed bridge the gap between jobs as well as Social Security to ensure that the elderly, after years of work and toil, would not suddenly find themselves utterly destitute.

Conservative critics of FDR’s polices say that these programs did not work—that unemployment remained high throughout the 1930s and that it was only World War II that brought us out of the Great Depression. As such, these same critics continually argue that the deficit spending that fueled the New Deal was the root cause of its inability to bring the unemployment rate down to acceptable levels. In short, they argue that government spending and government programs do not work, and that only the free market can provide the economic stimulus necessary to get the economy back on its feet again. 

But as is the case today with the naysayers on climate change, the empirical evidence suggests that nothing could be further from the truth. During FDR’s first term, for example, the average annual growth rate for the U.S. economy was 11 percent. Compare that to the paltry 0.8 percent we have witnessed in the first term of the Obama administration. The nationwide unemployment rate also fell, from its all-time high of 25 percent in 1933 to 14 percent by 1935, which at the time represented the largest and fastest drop in unemployment in our nation’s history.

But far more damning to the conservative critique is the argument that tries to invalidate the New Deal by positing that it was World War II and not the relief programs of the 1930s that brought us out of the Great Depression. Conservatives love to trumpet this fact and often use it as part of their argument against deficit spending, never stopping for a moment to consider that government expenditures—and deficits—in World War II made the New Deal look like small potatoes. In fact, deficit spending in the New Deal never topped 6 percent of GNP, while in World War II it ran as high as 28 percent. In other words, World War II was the New Deal on steroids. Viewed from this perspective, it is FDR’s critics on the left—not the right—who possess the stronger argument. The problem with the New Deal was that it did not go far enough. In other words, the government should have spent more money, not less, if it was going to be successful in bringing the economic crisis to an end.

All this is not to say that free enterprise is incapable of producing economic growth—it most certainly is. But there are times when capitalism, left to its own devices, can fail. Franklin Roosevelt was willing to acknowledge this, and he spent the better part of his tenure in office trying to put in place programs that would make capitalism work for the average American, not just those at the top. Hence, his agenda was not to subvert or destroy the free market system, but rather to save it.

It took vision and courage to launch the New Deal—the vision to understand that when the free market systems falls short or fails, government has a responsibility to take direct measures to get the economy moving again, and the courage to engage in deficit spending at a time when orthodox economic theory argued that the only proper response to an economic recession or depression was to slash government spending and balance the budget.

Unfortunately, the leadership we possess in Washington today lacks the vision and the courage to follow FDR’s example and put in place the sort of common-sense programs that would stimulate the economy and put people back to work. Instead of providing jobs for millions by spending money on our failing infrastructure—now ranked 24th in the world—or investing in programs that would reverse the falling education rates of our children, or providing greater federal support for the basic scientific research that may unlock untold benefits for future generations, we instead speak of nothing but the deficit and the sequester, as if cutting spending in the midst of recession is the magic bullet that will lead us out of our economic malaise.

Franklin Roosevelt faced similar critics, who, much like today’s deficit hawks, insisted that he must cut spending and balance the budget no matter what the consequences for the average American. But FDR would have none of this. “To balance our budget in 1933 or 1934 or 1935,” he said,

would have been a crime against the American people. To do so we should either have had to make a capital levy that would have been confiscatory, or we should have had to set our face against human suffering with callous indifference. When Americans suffered, we refused to pass by on the other side. Humanity came first.

As it turns out, FDR’s decision to put “humanity first” was not only the right moral decision, it was also the right economic decision. For the deficit spending that he finally unleashed in World War II, coupled with the social and economic reforms put in place during the New Deal, led to one of the longest periods of economic prosperity in America’s history and the birth of the modern American middle class.

Sadly, all of the evidence to date suggests that our leaders in Washington are quite happy “to pass by on the other side” and let the sequester proceed without so much as a fight. With roughly 16 million people across the country still unemployed, this is surely “a crime against the American people.”

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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The Real State of the Union Requires a Stronger Government

Feb 15, 2013David B. Woolner

Instead of downplaying the role of government, we should recommit to a "spirit of charity."

We of the Republic sensed the truth that democratic government has innate capacity to protect its people against disasters once considered inevitable, to solve problems once considered unsolvable…

In this we Americans were discovering no wholly new truth; we were writing a new chapter in our book of self-government . –Franklin D. Roosevelt, 1937

Instead of downplaying the role of government, we should recommit to a "spirit of charity."

We of the Republic sensed the truth that democratic government has innate capacity to protect its people against disasters once considered inevitable, to solve problems once considered unsolvable…

In this we Americans were discovering no wholly new truth; we were writing a new chapter in our book of self-government . –Franklin D. Roosevelt, 1937

In his State of the Union address, President Obama challenged the Congress and the American people to join him in a common effort to make the United States a better nation; to recognize that while we “may do different jobs, and wear different uniforms” we are all “citizens” imbued with the rights and responsibility “to be the authors of the next great chapter in our American story.”

Certainly, the president’s call for “investments” in setting up universal preschool, increasing access to higher education, promoting research and development, fixing our broken infrastructure, and establishing a higher minimum wage so that in “the wealthiest nation on earth, no one who works full-time should have to live in poverty,” is a welcome development. So too is the president’s acknowledgment that there are still communities in this country where, thanks to inescapable pockets of rural and urban poverty, young adults find it virtually impossible to find their first job. “America,” he insisted, shouldnot [be] a place where chance of birth or circumstance should decide our destiny.”

And yet, if we examine the state of our union honestly, it not only becomes apparent that we are indeed a society where “chance of birth or circumstance” decides our destiny, but also a society that has fallen far behind the rest of the world in education, health care, infrastructure, and a host of other indicators that determine the overall quality of life.

In study after study, for example, Americans are found to be far less economically mobile than their counterparts in Canada and Europe. In education, the U.S. now ranks 17th in the developed world overall, while we are ranked 25th in math, 17th in science, and 14th in reading, well behind our Asian and European counterparts. For decades the U.S, was ranked number 1 in college graduation, but we now stand at number 12, and even more shocking, we are now ranked 79th in primary school enrollment. This is no way to sustain or build a competitive edge in a global economy.

Other statistics tell a similar tale. How many Americans, for example, are aware that out of the 35 most economically advanced countries in the world, the U.S. now holds the dubious distinction of ranking 34th in terms of child poverty, second only to Romania? In infant mortality, the U.S. ranks 48th. As for overall health and life expectancy, a recent report by the Institute of Medicine and the National Research Council found that among the 17 advanced nations it surveyed, the U.S.—which in the 1950s was ranked at the top for life expectancy and disease—has declined steadily since the 1980s. Today, “U.S. men rank last in life expectancy among the 17 countries in the study and US women rank second to last.” In infrastructure, the World Economic Forum recently ranked the U.S. 25th in the world, behind virtually all other advanced industrialized nations and even some in the developing world.

Still, there are some categories where the United States ranks number one: we have the highest incarceration rate in the world—far higher than countries like Russia, China, or Iran. We have the highest obesity rate in the world and we use more energy per capita than any other nation. And while the U.S. does not possess the highest homicide rate in the world—that distinction goes to Honduras—the rate of death from firearms in the U.S. is nearly 20 times higher than it is among our economic counterparts. And on a city-by-city basis, we would find that if New Orleans were a country, for example, its homicide rate would rank number 2 in the world.

Eighty years ago, when the United States found itself in an even more precarious state than it does today, Franklin Roosevelt used the occasion of his first inaugural address to say to the American people that “this is preeminently the time to speak the truth, the whole truth, frankly and boldly,” to avoid the temptation “to shrink from honestly facing conditions in our country today.” The president then went on to implore the American people to reject the fear and apprehension that had paralyzed the nation by reminding them that “in every dark hour of our national life, a leadership of frankness and of vigor has met with that understanding and support of the people” which is essential to overcoming the challenges we face.

Four years later, in the first State of the Union address of his second term, President Roosevelt observed that “the deeper purpose of democratic government is to assist as many of its citizens as possible, especially those who need it most, to improve their conditions of life…” But, he went on, even with the “present recovery,” the United States was “far from the goal of that deeper purpose, for there were still “far-reaching problems… for which democracy must find solutions if it is to consider itself successful.”

President Obama certainly echoed these sentiments when he spoke about the meaning of citizenship and “the enduring idea that this country only works when we accept certain obligations to one another and to future generations; that our rights are wrapped up in the rights of others.” But the president said little about the role of government in ensuring that these obligations are met, and he qualified his remarks by opening his speech with his oft-repeated maxim that the American people do not expect government “to solve every problem.”

FDR took a different tack. For him government was the instrument of the common people, and as such its primary responsibility was not to serve as an arbiter between the demands of the rich and the needs of the poor, but rather as the vehicle through which the hopes and aspirations of all Americans could be met. In this he argued that:

The defeats and victories of these years have given to us as a people a new understanding of our government and of ourselves…It has been brought home to us that the only effective guide for the safety of this most worldly of worlds, the greatest guide of all, is moral principle.

We do not see faith, hope, and charity as unattainable ideals, but we use them as stout supports of a nation fighting the fight for freedom in a modern civilization…

We seek not merely to make government a mechanical implement, but to give it the vibrant personal character that is the very embodiment of human charity.

We are poor indeed if this nation cannot afford to lift from every recess of American life the dread fear of the unemployed that they are not needed in the world. We cannot afford to accumulate a deficit in the books of human fortitude.

In the place of the palace of privilege we seek to build a temple out of faith and hope and charity.

To bring about a government guided by the “spirit of charity,” FDR initiated the most far-reaching social and economic reforms in our nation’s history; reforms designed to provide the average American with a measure of economic security; reforms that reduced the vast, unjust, and unsustainable economic inequality that had brought the country to ruin just a few short years before.

If we are going to “honestly” face “conditions in our country today,” then we need to recognize that the steady abandonment of the principles of governance put in place by Franklin Roosevelt in the past three decades have done enormous harm to the state of the union. In light of this, rather than repeat the conservative mantra that government cannot solve every problem, perhaps President Obama should follow the example of President Roosevelt by reminding the Congress and the American people that even though

Governments can err, [and] presidents do make mistakes… the immortal Dante tells us that Divine justice weighs the sins of the cold-blooded and the sins of the warm-hearted on different scales.

Better the occasional faults of a government that lives in a spirit of charity than the consistent omissions of a government frozen in the ice of its own indifference.

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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The Bad GDP Report is a Warning Not to Create Another Roosevelt Recession

Jan 31, 2013David B. Woolner

President Obama should begin his second term much like the first and demand stimulus to bolster a sagging economy.

The only real capital of a nation is its natural resources and its human beings. So long as we take care of and make the most of both of them, 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.

President Obama should begin his second term much like the first and demand stimulus to bolster a sagging economy.

The only real capital of a nation is its natural resources and its human beings. So long as we take care of and make the most of both of them, 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.

This capital structure—natural resources and human beings—has to be maintained at all times. The plant has to be kept up and new capital put in year by year to meet increasing needs. 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. —Franklin D. Roosevelt, 1938

In a somewhat surprising announcement, the Commerce Department noted yesterday that the U.S. economy actually shrank in the fourth quarter of last year, contracting by 0.1 percent. This sharp decline from the 3.1 percent growth rate posted in the previous quarter has not as yet lead to widespread fears that the United States is about to enter another recession, but given that much of the cause of the decline can be attributed to cuts in government spending, some economists worry that this news is but a harbinger of things to come. We are, after all, facing another government-manufactured showdown on March 1, as well as a possible government shut down near the end of March when the stopgap measure financing the federal government expires. Then there is the expected fight over raising the federal debt ceiling, which could lead the U.S. to default on its debts.

Most economists agree that the uncertainty brought about by the dysfunctional nature of Washington is having a negative effect on the economy. But we hear little about the direct effects that cuts in government spending have had on job growth. How many Americans, for example, are aware that one of the primary drivers of our persistently high unemployment rate is the sharp decline in public sector employment—the massive layoffs of teachers, firefighters, police officers, and other public sector employees over the past two years? We might also ask how many Americans recognize that one of the primary ways President Obama managed to stop the downward economic spiral at the start of his first term was through the funding of public sector jobs via the stimulus funds that were channeled to state and local governments. Indeed, it was the expiration of that federal support, and Congress’s refusal to support the president’s modest request for additional federal dollars to support state and local governments in his jobs bill, that initiated the recent public sector decline.

Now at the start of President Obama’s second term, with the U.S. economy still in a very fragile state, we are reminded once again of the direct link between government spending and jobs. For it was the deep cuts in federal defense spending that helped push the economy into negative territory in the past quarter.

One would assume, in the face of such economic realities, that Congress would support the type of modest spending proposals President Obama put forward in the American Jobs Act. But rather than provide funding for the employment of teachers, firefighters, police officers, and the like, rather than put hard-pressed Americans to work rebuilding our dismal infrastructure (now rated 23rd in the world), Congress would rather engage in another endless round of bickering about the perils of deficit spending. Once again heeding the siren song of the deficit hawks, those soothsayers of doom who insist that without an immediate and massive reduction in the level of federal spending we face an imminent economic collapse.

Interestingly, roughly three-quarters of a century ago President Roosevelt faced a similar argument at the start of his second term. Thanks to the stimulus spending of the New Deal, the U.S. economy had been growing at an average annual rate of over 11 percent. Fearing inflation, his more conservative economic advisors, like Treasury Secretary Henry Morgenthau, urged the president to cut spending, balance the budget, and tighten the money supply. But the U.S. economy—which had seen the largest drop in the unemployment rate in history—was still fragile, and the results of the spending cuts were a disaster. Unemployment shot up, industrial production declined, and the country soon found itself in the midst of a recession.

Thankfully, FDR quickly reversed course, and his re-instigation of the essentially Keynesian economic policies (counter-cyclical deficit spending) he had been following since the start of his tenure as president soon turned the U.S. economy around. But the cost to the American people and to FDR’s political fortunes was high. Millions lost their jobs unnecessarily, and the president took a real beating in the 1938 midterm elections, rendering his social and economic reform agenda much more difficult to accomplish.

President Obama, who is fond of history, might do well to study what happened to FDR in 1937. At the very least he should not give up on his demand that Congress provide a modest level of support for further federal spending on behalf of state and local governments. He should also insist on further federal spending on infrastructure. As FDR once said, these measures do not represent wasteful spending; they represent an investment in the American people, an investment in what he liked to call “human capital.” Human capital whose health and well being was not only critical for the present but also for the future. Indeed, FDR insisted that:

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.

Let us hope that the president and Congress will take heed of this lesson. For, like FDR, they too will one day have to pass the test of history.

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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Leading from Behind is No Way to Lead: What a Second-Term Obama Can Learn from FDR

Jan 17, 2013David B. Woolner

To achieve progress in his second term, President Obama must recognize that his opponents aren't really interested in a "grand bargain."

To achieve progress in his second term, President Obama must recognize that his opponents aren't really interested in a "grand bargain."

My fellow countrymen. When four years ago we met to inaugurate a President, the Republic, single-minded in anxiety, stood in spirit here. We dedicated ourselves to the fulfillment of a vision—to speed the time when there would be for all the people that security and peace essential to the pursuit of happiness. We of the Republic pledged ourselves to drive from the temple of our ancient faith those who had profaned it; to end by action, tireless and unafraid, the stagnation and despair of that day. We did those first things first.

Our covenant with ourselves did not stop there. Instinctively we recognized a deeper need—the need to find through government the instrument of our united purpose to solve for the individual the ever-rising problems of a complex civilization… To do this we knew that we must find practical controls over blind economic forces and blindly selfish men. —Franklin D. Roosevelt, Second Inaugural Address, January 20, 1937

Just over three-quarters of a century ago, in his second inaugural address, Franklin Roosevelt, reflecting on the accomplishments of the New Deal in mitigating the worst effects of the Great Depression, noted that “the greatest change we have witnessed [over the past four years] has been the change in the moral climate in America.” Among “men of goodwill,” he went on, “science and democracy together offer an ever-richer life and ever-larger satisfaction to the individual. With this change in our moral climate and our rediscovered ability to improve our economic order, we have set our feet upon the road of enduring progress.”

FDR based this assumption on the idea that what had transpired over the course of his first term—a first term which brought us, among other things, Social Security, unemployment insurance, the right of workers to engage in collective bargaining, the separation of commercial and investment banking, the establishment of the Securities and Exchange Commission (SEC), the establishment of the Federal Deposit Insurance Corporation (FDIC), the largest single drop in the unemployment rate in the nation’s history to date, and an average annual economic growth rate of 14 percent—was directly tied to a new understanding of the role of government. This new understanding, he noted, was based on the “fulfillment of a [collective] vision…to speed the time when there would be for all the people that security and peace essential to the pursuit of happiness.”

Equally important, however, was FDR’s assertion that in arriving at this new vision of government the people understood that it was critical to find “practical controls over blind economic forces and blindly selfish men,” to recognize the “need to find through government the instrument of our united purpose to solve for the individual the ever-rising problems of a complex civilization.”

In essence, what FDR offered the American people was a new vision for the future. This new vision was based the fundamental idea that it was only the power of democratic government that could provide the means to counter “the blind economic forces” and “blindly selfish men” who had profaned democracy and brought the country to ruin in the dark days of the early 1930s.

There is much in this speech that still holds relevance for Americans today. In the massive loss of manufacturing jobs and the globalization of the world’s economy in the last few decades, we can see at work “the blind economic forces” of which FDR spoke. And in the wake of the 2008 financial crisis, the power of the “blindly selfish men” on Wall Street is all too familiar. So too—thanks to the onset of the Great Recession—is the anxiety, fear, and bewilderment that he noted plagued the American people on the eve of his first inaugural. What is missing, sadly, is the contravening narrative, the covenant that FDR made with the American people, the understanding that the reforms achieved in his first term had made the exercise of all power more democratic by bringing:

…private autocratic powers into their proper subordination to the public’s government. The legend that they were invincible—above and beyond the processes of a democracy—has been shattered. They have been challenged and beaten.

President Obama has for the most part shied away from the idea that the real challenge to our democracy stems not from the dysfunctional nature of Congress, but rather from the forces of wealth and privilege who see themselves as “above and beyond the process of democracy.” Rather than take on these forces directly, he speaks instead of asking the wealthy to “pay their fair share in taxes,” of building a consensus, of taking a “balanced approach,” of striking a “grand bargain” that would make sure that middle-class folks aren’t bearing the entire burden and sacrifice when it comes to some of these big challenges.” In taking this approach, the president argues that he is following the will of the American people, who made it clear through his re-election that they want compromise and action. These may be noble sentiments, but they fall far short of expressing what the American people truly want from their president, which above all else is leadership.

The sad fact is that we now live in a society where the income disparity between the rich and the rest of us now stands at its worst level since the late 1920s—just before the onset of the Great Depression. The Congressional Budget Office, for example, recently reported that between 1979 and 2007 the top 1 percent of households doubled their share of pretax income while the bottom 80 percent of American households actually saw their share of income decline. In a similar study, a recent Census Bureau report notes that the average white male worker earns roughly the same hourly wage that he would have made in 1978, adjusted for inflation, while the average CEO’s pay has increased by roughly 600 percent.

As was the case in the 1920s, such a drastic mal-distribution of wealth is clearly not sustainable, as it makes it very hard for the average worker to sustain the level of purchases necessary to maintain our largely consumer-based economy. Hence, if we truly want to find a way to grow our economy—as the president insists he does—then we must find a way to address this critical structural imbalance in our economy. And this means real reform, the type of reforms we saw in the New Deal, reforms that brought about the birth of the post-1945 modern American middle class that now seems to be so rapidly disappearing.

So rather than beat about the bushes, President Obama might do well to recognize—as FDR did—that the forces of wealth and privilege weighted against him are not really interested in a compromise or a “grand bargain.” What they want is to maintain the economic and political status quo in what FDR once rightly called the “false belief” that happiness can only be achieved “in the mad chase of evanescent profits.”

To overcome these entrenched forces, President Obama will need to provide the country with much more than his somewhat vague efforts to meet the other side halfway. He must learn to recognize that above all else it is his responsibility to give voice to the common aspiration of the people and provide them with a vision for the future -- a vision that recognizes government’s fundamental responsibility to fashion a more just and equitable society, a vision based on the truism, as FDR said in his second inaugural, that:

We have always known that heedless self-interest was bad morals; we know now that it is bad economics. Out of the collapse of a prosperity whose builders boasted their practicality has come the conviction that in the long run economic morality pays. We are beginning to wipe out the line that divides the practical from the ideal; and in so doing we are fashioning an instrument of unimagined power for the establishment of a morally better world.

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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