Fiscal continence wasn’t a hallmark of the three-and-change terms Franklin Delano Roosevelt served as president. This isn’t to say that if he had remained hale and hearty, lived to see the end of the war and the concomitant end of the Great Depression, he wouldn’t have become a budget hawk and tried to save for a rainy day. But given this was the architect of the New Deal, such a scenario was unlikely.
However, when he was pitching the New Deal, his message wasn’t that America needed to “go big” on everything. In fact, Roosevelt thought extraneous spending was the enemy of recovering from the Depression.
However you feel about FDR and how effective he was at ending the nation’s last major economic collapse (spoiler alert: not very effective), it’s curious to hear those words coming from the mouth of the man who oversaw the single biggest expansion in government spending in American history. For once, you wish President Joe Biden really would follow Roosevelt’s lead.
To set the scene: On Oct. 19, 1932, Roosevelt, then the Democratic presidential nominee vying to unseat President Herbert Hoover, spoke to union workers at Forbes Field in Pittsburgh.
This wasn’t a minor event; Forbes Field was the home of the Pittsburgh Pirates and Steelers and could hold roughly 40,000. Pennsylvania was, at the time, the second-richest state in terms of electoral votes — behind Roosevelt’s New York– and one of the few battleground states in what ended up being a landslide election. (Hoover would win the Keystone State on his way to a resounding 472-59 loss.)
The common misconception is that Hoover was a laissez faire Republican who fiddled while Main Street burned. In fact, as the Herbert Hoover Presidential Library points out, the 31st president did open the floodgates of spending — and to little effect.
“Hoover asked Congress for even more spending on public works, and he continued to encourage states and private businesses to generate new jobs,” the library’s website notes. However, the “public works projects, designed to create jobs, were characterized as wasteful government spending.”
This was the situation when FDR took to the mic on Oct. 19 and said that yes, he was in favor of government spending — but not wasteful government spending. In fact, he said that needed to be excised if recovery were to happen.
“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,” Roosevelt told the audience, according to his notes, published online at FDRLibrary.org, the website of the Franklin Delano Roosevelt Library & Museum.
“And in accordance with this fundamental policy, it is equally necessary to eliminate from federal budget-making during this emergency all new items except such as relate to direct relief of unemployment,” he added.
Roosevelt also addressed the issue of so-called “bonus payments” — a demand by World War I veterans that payments promised to them by the federal government based on their service be disbursed immediately, despite the fact they weren’t scheduled for issuance until 1945.
“I do not see how, as a matter of practical sense, a government running behind two billion dollars annually can consider the anticipation of bonus payment until it has a balanced budget, not only on paper, but with a surplus of cash in the treasury,” Roosevelt said.
And then, he did something you don’t expect to hear from an FDR: He attacked big government.
“My friends, I have sought to make two things clear: First, that we can make savings by reorganization of existing departments, by eliminating functions, by abolishing many of those innumerable boards and those commissions … which over a long period of years have grown up as a fungus growth on American government. These savings can properly be made to total many hundreds of millions of dollars a year.”
FDR’s campaign rhetoric eventually met reality and we got the New Deal in a version that still gives conservatives headaches.
What should worry us, however, is that FDR realized two things Joe Biden has yet to come to grips with.
First, if you’re going to spend money to stimulate the economy out of an emergency, that money has to be raised or offset. Second, when spending money to alleviate a crisis, that money needs to be directed at alleviating the crisis.
In terms of Biden offsetting or raising the money to pay for the $1.9 trillion COVID-19 relief package he’s proposed, this isn’t even a particular concern for the president or the new administration, although he’s promised to raise taxes on the ultra-wealthy to pay for it.
In his own words, according to The Washington Post: “Nobody making under $400,000 bucks would have their taxes raised. Period. Bingo.” I’m surprised he didn’t add “read my lips” for ironic effect, because in Washington terms, that promise should last as long as Pauly Shore’s Hollywood career.
In fairness, however, no president in recent years — Republicans included — has come up with a plausible method to pay for their various largesses and stuck to it. The second part — spending money to directly alleviate the crisis and directing those resources from other parts of the federal government — is where Biden’s $1.9 trillion plan fails spectacularly.
The biggest offender is $350 billion to bail out state and local governments, according to Fox Business. In some cases, these governments are indeed being squeezed by the COVID crisis. However, many of these jurisdictions have been the authors of their own financial ruination and fiscally prudent cities and states are being asked to foot the bill — which is why it’s being called a “blue state bailout” by Republicans.
Follow that up with $86 billion for pension funds managed by Pension Benefit Guaranty Corp., according to The Wall Street Journal.
“Managed jointly by employer sponsors and unions, these plans are chronically underfunded due to lax federal standards and accounting rules,” The Journal editorial board noted in February. “Yet the bailout comes with no real reform.”
Elementary and secondary schools get $129 billion in the relief plan, according to The Journal. One could make the case this is critical money to get these schools reopened. Except they get the money regardless of whether they reopen or not. Money well spent.
In other spending The Journal reported: Public transit gets $30 billion; Amtrak gets $1.5 billion; $35 billion is added to the Obamacare subsidy pile; and the child tax credit is “temporarily” increased by $1,000 from $2,000 to $3,000. I put “temporarily” in quotes because Democrats want to make this a permanent change and will dare the Republicans to cut it off when it sunsets.
Smaller outlays are even more problematic inasmuch as there’s no reason for them to be in a COVID relief bill.
A cool $100 million for a rail project in the Bay Area that’s already billions over budget without a shovel having met the ground? There’s that. It makes the $1.5 million for a bridge between the United States and Canada seem almost quaint by comparison.
There’s also an influx of Title X funding which pro-life groups say is little more than subsidy for Planned Parenthood subsidy, the country’s largest abortion provider.
Meanwhile, here’s a fun parlor game you can play if you manage to get yourself into one of those interminable presidential town halls we’re likely to see a lot of in the next few months.
If you get a chance to ask President Biden a question, ask him what he thinks about FDR’s statement from 1932 that “it is equally necessary to eliminate from federal budget-making during this emergency all new items except such as relate to direct relief of unemployment” and ask if that applies to COVID relief. He might even give you a laugh and a degrading head pat before you’re dragged out of the hall.
FDR is often seen as the father of the modern Democratic Party, given the mushrooming of the federal government under his watch. Even Roosevelt, however, understood that reality had to be met on its own terms and debt wasn’t just numbers on a page to be paid off by some future generation we can scarcely conceive of.
Biden’s American Rescue Plan Act is nowhere near as ambitious or wasteful as the New Deal, but here’s what should bother us: FDR actually thought about how he was going to pay for what he was spending and was willing to at least talk about cutting federal bureaucracy to make it happen.
The FDR Democrats actually cared about these sorts of things even as they were about to launch us into the brave new world of the entitlement age.
As for Joe Biden? All he keeps on saying is that “[n]ow is the time to go big.” Just don’t ask him what to do when the big bills come due. He doesn’t have the guts to even try to work it out.
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