Jan. 31 (Bloomberg) — Meet President George W. Bush's new speechwriter — Franklin Delano Roosevelt.
A ghost, even a powerful one like FDR, can't usually be called a speechwriter. But FDR will affect the State of the Union address tonight in a real way, for it is his legacy that limits what Bush can say.
After all, Bush can't fix Social Security, we were reminded last year. The president can't really fix Medicare either, at least not in a profound sense. Fixing those programs would entail taking away things people now consider their birthright.
It is FDR's legacy, too, that Bush is fighting when he tries to explain how he will deal with long-term budget problems generated by entitlements. And it is FDR's legacy of lobbies that created the rules of the game in modern Washington. Including rules that drove Bush's party into the improbable arms of groups like the Indian casino lobby.
To understand how FDR constrains GWB, it helps to go back to 1936. That year — an election year — Roosevelt decided he would do something no American president had done systematically before. He would permanently commit the government to serving a number of large constituencies. Occasional gifts to farmers or tariffs for business weren't enough.
In his own January State of the Union, Roosevelt therefore announced that he was establishing a "new relationship between government and people." Citizens might have assumed that relationship was temporary. They were wrong, Roosevelt told them now. The New Deal had had a purpose beyond curing the Depression. It was to make the people look to Washington for help at all times. "We have returned control of the federal government to the city of Washington," FDR told senators and congressmen gathered before him.
In the same 1936 speech, Roosevelt asked some rhetorical questions that were designed to remind listeners of the gifts that were already flowing. "Shall we say to the laborer, 'Your right to organize, your relations with your employer have nothing to do with the public interest, if your employer will not even meet with you to discuss your problems and his, that is none of our affair?"'
This was a reference to the Wagner Act, the new labor law that allowed the right to organize and bargain collectively. By that January, the powerful new Committee for Industrial Organizations had already established its own office in the Rust Building on 15th Street. A modern lobby was being born.
Spend Like Crazy
Roosevelt had also given to senior citizens with the Social Security Act in 1935: "Shall we say to the unemployed and the aged, 'Social Security lies not within the province of the federal government, you must seek relief elsewhere?"' The speech didn't deliver all the details, but the message was clear — Roosevelt would assure that such groups continued to receive bounty if he were re-elected.
That year, Roosevelt demonstrated his sincerity anew by spending like crazy. In 1936, Washington's spending as a share of the economy rose by a full third, to $7.8 billion from $5.6 billion. Federal spending as a share of gross domestic product had risen before, but relatively slowly. That year it climbed to 9.3 percent from 7.6 percent of GDP.
It is important to note how these numbers related to state spending. Looking at charts produced by the Tax Foundation, a Washington-based research group, we see that in 1936, for the first time except some months during wars, federal spending rose well above state spending. Again, the base was tiny. And the depressed economy made government spending stand out. But the trend was what mattered. Washington was indeed getting control.
The new commitment may have served the nation. That's a topic for another column. What we can conclude for sure is that it made for a satisfying speech and a wonderful campaign. Roosevelt's gifts rendered his opposition incoherent with rage. While the Republicans stood around being sanctimonious about individual freedom, Roosevelt made a clean sweep of the obvious constituencies.
One angry former Roosevelt aide — James Warburg — published an attack on Roosevelt titled "Hell Bent for Election." The book sold almost a million copies. But Roosevelt got almost 28 million votes, taking 46 of 48 states.
In spending terms, World War II was merely another opportunity to set new benchmarks. The moral necessity of the war made even narrow opposition to the spending look unpatriotic. Federal outlays in 1943 hit 26 percent of GDP. It took Republicans decades to realize what had happened to them.
Subsequent presidents embellished Roosevelt's gift, most notably Lyndon Johnson with his Great Society. Bush has done his own bit of embellishment by adding an entitlement to the list, prescription drugs for seniors. But the sheer scale of the original 1936 increase has been increasingly hard to replicate. You can imagine the reaction of the bond market if Bush announced tonight that he wanted to increase federal spending in the next fiscal year by a third.
Another part of the legacy has been the problem of the interest groups. Even today Democrats still have the "good groups" — the senior lobby, organized labor — locked up. These groups are not always virtuous, but at least they look and sound respectable.
That has left the Republicans to become the party of the negative — of either offering less, or taking away. When it comes to drumming up constituencies, they have found mainly leftovers, feisty but improbable choices: gun rights voters, tax haters or casinos.
The point here is a simple one. Though no one foresaw it, the New Deal was also the Last Deal. There will be plenty of people opining tonight. Alas, the commentator who would explain the ironies best long ago passed from the scene: FDR.
(Amity Shlaes is a Bloomberg News columnist. The opinions expressed are her own.)
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