Roosevelt and Power in Office

For FDR, re-election meant power

Power is the theme in Democratic chat rooms this month. The commentators are presenting the election as a Republican coronation. The danger, they suggest, is that George W. Bush will now seek to rule as a king, making changes that will affect the economy and culture for years to come.

This thesis seems bizarre until you consider the sweep of 1936. In that year Franklin Roosevelt, like Mr Bush a first-term incumbent and former governor, consolidated popular support by winning re-election. His party, as did Mr Bush's, strengthened majorities in both House and Senate.

Roosevelt took the 1936 election as a mandate to rule - or at least, as confirmation of the legitimacy of his already regal tendencies. Indeed, to look back to the mid-1930s is to remind ourselves what presidential reign really feels like.

Start with monetary policy: the dire problem of deflation was suffocating the US economy. Even in his first term, FDR adopted an equally dire solution. He, the executive, took over the work of the Federal Reserve board and Treasury and tried his hand at resetting the value of the dollar himself - on a daily basis, after his breakfast cigarette. When re-election became likely, FDR became bolder. As Gene Smiley, Marquette University professor, reminds us in Rethinking the Great Depression, Roosevelt asked Congress to codify his actions by ceding to the president power to install and remove Fed chairmen. It refused.

Roosevelt also threw out the old rules on taxes and business. Before the 1930s, most Americans, including, probably, Roosevelt, believed that the purpose of taxation was to raise government revenue. In office, however, FDR came to believe taxation also served the purpose of economic redistribution. What is more, he argued, such redistribution would foster recovery. The White House led lawmakers in repeatedly increasing tax rates on corporations, families, inheritances and gifts. The Revenue Act of 1936 included both an undistributed profits tax, which forced companies to hand over earnings to government rather than save or invest, and an "excess" profits tax.

A smashing victory in 1936 emboldened the president to step up his aggressive battering of business through investigations and anti-trust actions. In his second term he sent his cabinet and Congress to attack wealthy individuals and big companies. The experience for business was like encountering an Eliot Spitzer on every corner.

The second-term victory made it possible for Roosevelt to rewrite the social contract. In his first term, he presented government's job as taking temporary measures to combat a cyclical downturn - the Depression. In his second, he defined his job as introducing a new concept, the permanent safety net, with entitlements that would endure even in prosperity.

But FDR's best-known imperial gesture involved the Supreme Court. In his first term, the Supreme Court tossed out New Deal reforms repeatedly. With 46 states now in his pocket, Roosevelt sought to outmanoeuvre the nine senescent justices with a plan to add extra judges to the Supreme Court bench - justices who would tilt the balance. The sitting justices promptly began upholding New Deal changes - Social Security, the minimum wage. Although Congress blocked FDR from packing the Court, in the end he achieved his goal another way, naming eight associate justices in the course of his three terms. The worst legal nightmare of Mr Bush's opponents - another Antonin Scalia, perhaps, or the reversal of the abortion decision, Roe vs Wade - cannot compare to the 1930s shift. Roosevelt moved the country left. Mr Bush merely wants to keep it from moving farther so.

Whether Roosevelt's changes were the correct response to the tragedy of the Depression is a topic for another day. What is clear is that his audacity reduced critics and former friends to the sort of blithering rage we in 2004 associate with Michael Moore. (James Warburg, the financier who played a Robert Rubin role in Roosevelt's first term, turned on FDR and in 1935 published an anti-incumbent screed, Hellbent for Election.) What is also clear is that Roosevelt's second and third re-elections solidified the Roosevelt shift. Before Roosevelt, state and local budgets were larger than the federal budget. After Roosevelt, Washington dominated.

But what of the chat room panics of today? The idea of a similar reign is questionable. This year's election was close while Roosevelt defined the modern word landslide by taking 46 of 48 states. And there will be no third or fourth term for this president. Congress long ago limited the presidency to two terms.

In the end there is also the matter of temperament. Republicans today spend as freely as Democrats. And they enjoy draping themselves in FDR's mantle as much as Democrats do. But despite these similarities an essential difference remains: Republicans are less enthusiastic about the exercise of domestic political power. Even when it comes to the social issues that preoccupy Democrats - abortion, gay marriage - Republicans tend to act only when riled.

In short, the fear that Mr Bush will mount a second-term revolution is exaggerated, but, in Democrats, easy to understand. After all, that is what they did when they had the chance.

© Copyright 2004 Financial Times

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