At the Super Bowl party, the Republicans were huddled and griping, but not talking so loud as the previous year. I did hear one guy railing about Roosevelt and The New Deal, which is obviously what Obama has in mind with some of his programs. Meyerson below gets to the issues involved in this, and revives the wisdom of Roosevelt (and Obama) and the antidotes to an economy in free-fall.

Today, the arguments made for and against President Obama's stimulus plan really aren't that different from the arguments that were made for and against the New Deal some 75 years ago. Where the New Dealers brought electric power to rural Americans, the Obama people want to bring them broadband access. Where the New Deal built dams to generate power from rivers, the Obama people want to build a power grid that can channel electricity generated by wind.

As for the Republicans, they remain locked in Landonism. While retail chains topple like so many dominos as consumers cut back, the Republicans focus on cutting corporate taxes, as though the problem confronting American businesses was the tax on their profits rather than the fact that, in the absence of sales, they have no profits.

In particular, both the Republicans and the Blue Dog Democrats exhibit a Landonesque failure to appreciate the crisis of under-investment into which American finance, now as in the '30s, has plunged the nation. The essence of the crisis, and what distinguishes both the Depression and the current meltdown from every recession between the '30s and today, is that, left to their own devices, private lending and investment will not and cannot bounce back. Only the government can provide the capital to restart capitalism, which remains, absent diligent regulation, a periodically self-annihilating system.

At times such as these, the normal measurements of government spending need to be altered. What the Obama plan envisions government doing (and what I wish it actually did more of) is committing itself to what would under normal circumstances be lending and investment undertaken by the private sector -- lest lending and investment cease altogether. The Greatest Generation's voters understood the logic of such a strategy when they reelected Roosevelt and his fellow Democrats by unheard-of margins. They rejected Landon's belief that "the American economic system" would by itself fix the crisis it had created. We can only hope that today's Americans have the wisdom of their forebears.

Harold Meyerson
Washington Post
2-5-09
The New Landonism