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."
Reagan's presidency made no attempt to roll back either the New Deal or Great Society. It did, however, implement low tax/smaller government policies, although overall public employment was not reduced. A lighter federal hand was the order of the day. He did, however, leave behind record levels of residual public debt, caused not by spending but by money borrowed to finance economic growth.
Obama has proposed ambitious new federal initiatives in health care, energy, and education in particular. He also proposes to tax the rich more heavily while bringing relief to the middle class. His proposals are broad but not so broad as Johnson's. And, unlike LBJ's, they are being submitted at a time of financial/economic crisis, when federal deficits already are at record level financing a rescue effort.
There are some other big differences between 1965 and now. Johnson was a legislative genius who had served as Senate Majority Leader and worked steadily to get support of interest groups of all persuasions. (Humphrey, for instance, regarded in 1965 as a dangerous leftist by much of the business community, was sent on a tour of business and economic clubs to pledge his loyalty to a free enterprise system. Great Society initiatives, he explained, were devised to make "tax eaters into taxpayers" by lifting them on the economic scale). By contrast, Obama has no close ties to congressional leaders of either party.
Most of Obama's cabinet, in fact, are strangers to him, while the LBJ cabinet had served non-stop since John Kennedy's inaugural in 1961 and was a highly talented, cohesive group. The recent Obama economic-stimulus package, against his express wishes, was loaded with no fewer than 8,500 earmarks by Congressional Democrats. House Speaker Nancy Pelosi and Senate Leader Harry Reid dissented publicly from Obama's Iraq withdrawal plan, when he announced it last Friday. Johnson would have retaliated with a terrible swift sword.
Another factor not mentioned in the FDR, Johnson, and Reagan comparisons: In the end, it was foreign policy that overshadowed at the time their domestic achievements. FDR was Dr. New Deal but he even more was Dr. Win the War. The Vietnam War stole resources from the Great Society and, then, undermined Johnson's popularity to the degree that he was forced to withdraw. Reagan probably will be best remembered as the president who won the Cold War, brought down the Iron Curtain, and ended the Soviet Union.
So, even as President Obama plots an ambitious domestic course, he may find that Iraq, Iran, Afghanistan/Pakistan, the Middle East, international terrorism, or the spread of nuclear/chemical/biological weapons will come to dominate his presidency and determine its failure or success.
