The next post-New Deal prosperity

By the time the 2008 Democratic National Convention had convened in Denver, millions of Americans left destitute by the Great Recession needed help. In particular what they needed (along with a job) was what the nation needed – and got - when FDR delivered his First Inaugural Address on March 4, 1933. They needed a pep talk and Barack Obama gave a rousing one as he accepted his party’s nomination for president.  At the convention, he spoke of hope and change and vowed that if he was elected he’d help restore the nation’s middle class.

Before long it should be clear that Pres. Obama has kept his promise. I think many ravaged by the '08 collapse will join the bourgeoisie because of what he has done.

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What the president has done is what Franklin Roosevelt did in '33. After FDR took office he authorized $3.3 billion in new spending and increased tax revenue, and in three years the Great Depression was over.  In '36 the job, housing and financial markets all surged in what even Republicans must have deemed a remarkable turnaround from the '29 crash. The economy has not performed as well under Obama as it did in '36. But I’m convinced that it will before he retires. Apparently, his critics are not.

Evidentially, they read the tea leaves differently than I do. Rather than forecast a boom, they say a sharp downturn is just around the corner. The problem, these prophets of doom claim, is the president’s “lack” of restraint. Unless he’s stopped, they say, his “runaway” spending will bankrupt the federal government and destroy the economy.

Indeed, to his critics Obama is the biggest spendthrift in U.S. history. In fact, though, two of his predecessors deserve the title more than he does.

Federal spending increased far more rapidly in the Bush and Reagan eras than it has since '09. What made Bush and Reagan so wasteful, though, was not so much what they spent as how they spent. Both men splurged when they did not need to - Bush on nation-building in the Middle East, Reagan on weapons programs after Gorbachev had shown a fervent interest in arms reduction talks and the Cold War had begun to thaw. By contrast, Obama had no alternative but to boost spending in February of '09. He inherited two wars he had to fund after he took office and a horrid economy in need of a stimulus.

This last claim almost certainly would cause his critics to bristle. They don’t think the economy was horrid in '09, not by 1929 standards. Though most of these “pundits” were born after the crash, nearly all insist that the Great Recession was nothing like the Great Depression. Maybe it wasn’t. But the slump wasn’t as mild as Phil Graham implied that it was either. In 2008-09 the economy lost 8.5 million jobs, the Dow 47 percent of its value and scores of families their homes, in what by any standard was our worst financial crisis in 80 years.

Hence, I reject Graham’s claim in his '08 interview with the Washington Times. What hit the nation back then was no “mental recession,” but a steep, protracted decline and as such Obama had few options when he took office. Faced with the prospect of a full-scale collapse, he had to ply the markets with a $787 billion stimulus – to no avail his critics claim. They say the economy still is nothing to brag about, and that if it was going to fully recover from the '08 slump under Obama it would have done so by now.

In fact, it would have fully recovered by now if not for George W. Bush. Some give Bush a pass for the financial struggles of our nation after January of '09. But he does not deserve one. His policies continued to cramp the markets after he left office and would have done so indefinitely had Obama not intervened. In the face of intense opposition, over the last three years he has repealed most of the Bush agenda. He’s cut defense spending and war costs as well as allowed tax breaks for the wealthy to expire, and his actions should pay huge dividends. Before he leaves office, the economy should not just fully recover from the '08 collapse but flourish. 

As a result, the outcome of the next presidential election should be a foregone conclusion. Democrats should make it three straight in 2016, something they’ve not done since New Dealers extricated our economy from the morass.

In all likelihood, Hillary Clinton will be the Democratic nominee and the election probably won’t be much of a contest. With her party having galvanized the markets, she should stomp her opponent and while she’s in office the good times should keep on rolling. After the economy fully recovers in the next two years, it should steadily improve at least through 2024. If so, Obama will have laid the foundation for the longest period of economic expansion since the post-New Deal era. 

Jarmuth is an attorney and free-lance writer who hosts bar-sponsored legal clinics in a Seattle suburb.