National media and pundits have seized on the theme that President Obama's new budget, released last week, represents an historic change of direction akin to those taken by Presidents Franklin Roosevelt in 1933, Lyndon Johnson in 1965, and Ronald Reagan in 1981. It represents change, all right, but a close look at the earlier examples might make it seem less momentous than billed.
More likely, it represents one of the periodic rebalancings we take in domestic policy between those responsibilities taken by the public and private sectors — but never far from a moderate middle. The so-called historic turn being taken by Obama is more a course correction, putting us somewhere between the Johnson and Reagan models
One reason for this prediction is the fact that the Obama budget is based on optimistic assumptions that were dealt a blow Friday when data indicated the economy will be slower than previously anticipated in pulling out of recession. That also means that federal tax revenues accordingly will be fewer than those necessary to pay for the Obama domestic initiatives. Resource constraints, interest-group opposition, and a Congress accustomed to having the final say will certainly slow if not stop much of the Obama program.
Readers know that I had hoped he would delay these initiatives until our financial/economic house had settled. Rushing forward with them now, in a downturn, has almost certainly been a miscalculation.
Another reason for my forecast of a moderate rebalancing comes from a comparision with the Roosevelt, Johnson, and Reagan shifts. All were made in circumstances quite different than those at present.
FDR, in 1933, spent all his early energies on trial-and-error efforts to bring the national economy out of depression, during a time of global depression. It was not until 1935 that Social Security, the centerpiece achievement of his first term, was enacted, thus constructing a social safety net that previously had been lacking in American society. The 1930s were, in fact, a time when it was widely thought that "capitalism had failed" and that one or another totalitarian model might come to ascendancy internationally. Stalin's Soviet Union, Franco's Spain, Mussolini's Italy, and Hitler's Germany all had their advocates on the American left and right. It was thought entirely possible that the United States could take such a turn. Roosevelt himself stated, late in the 1930s, that his principal achievement had been to preserve free political and economic systems in the United States. On taking office, he had remarked to friends that he might be "the last democratically elected American President."
World War II brought great power to the American federal government. It stayed there after the war. "States' rights" were primarily associated then with anti-civil rights efforts in southern and border states. But it would not be until 1965, after Johnson's landslide victory over Sen. Barry Goldwater, that a huge Democratic congressional majority made into law the Great Society: Medicare, Medicaid, federal aid to education, the Voting Rights Act, economic and education measures to provide greater opportunity to all Americans. The big spending obligations associated with that legislation were made possible by a booming domestic economy — the opposite of today's economy — which LBJ said would be "an endless cornucopia" providing tax revenues to finance the Great Society and more.
By 1968, however, voters had tired of what they regarded as "big government" solutions associated with Democrats. They elected Richard Nixon president in a year when third-party candidate George Wallace also campaigned on an anti-big-government platform. The Vietnam war was a litmus issue during the Democratic nominating process. But post-general-election polling showed that Vice President Hubert Humphrey's defeat was primarily due to the defection of what later would be called Reagan Democrats alienated by what they saw as welfare-state approaches.
The only Democratic presidents elected during the remainder of the 20th century were Jimmy Carter and Bill Clinton, both identified as non-ideological populists who purposely shied away from identification with a "liberal" label. Clinton officially declared that "the era of big government is over."
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