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Jewish World Review
Oct. 13, 2009 / 25 Tishrei 5770
Can Obama Rise to Harding's Level?
Picture this: It is midnight on Nov. 4, 2009. The previous day's
elections in Virginia, New York's 23rd congressional district, and New
Jersey have all been won by Republicans. Health reform is stalled. The
latest employment numbers are still dismaying. President Obama cannot sleep.
He paces the halls of the White House and comes upon a portrait of Warren
Harding. Since President Obama is nothing if not a receptacle of received
understanding, he would probably snort "Harding! What a disaster he was!
Cronyism. Laissez-faire economics. Corruption. Incompetence."
Well, it's true that Teapot Dome and other scandals engulfed the
Harding administration in 1923. And that's pretty much all that popular
histories remember about the 29th president. Harding died in office before
he could restore his reputation. But if his portrait could talk, it might
remind President Obama of a few things he could take to heart.
When Harding took office in 1921, the U.S. economy was in a far
worse depression than President Obama inherited. A savage inflation had
eroded buying power and unemployment stood at 20 percent. The U.S. had
suffered more than 116,000 dead and 205,000 wounded in the war.
Additionally, 650,000 mostly young and productive Americans had been killed
by the Spanish flu. Between 1920 and 1921, GDP had declined 24 percent from
$91.5 billion to $69.6 billion. Civil liberties had been trampled under the
Wilson administration. Wilson had jailed socialist leader Eugene V. Debs,
for example, for opposing the U.S. role in World War I. "With the exception
of Lincoln," wrote The Nation magazine, "probably no president in our
national history has taken office with as pressing a burden of unresolved
With advice from Treasury Secretary Andrew Mellon, President
Harding set about reducing the government's role in the economy. He cut
federal spending from the bloated Wilsonian level of $6.3 billion in 1920 to
$5 billion in 1921, and then to $3.2 billion in 1922. Federal taxes were cut
from $6.6 billion in 1920 to $5.5 billion in 1921 and $4 billion in 1922.
Unlike his Commerce Secretary, Herbert Hoover, an enthusiast of government
intervention in the economy who pushed for a Conference on Unemployment,
Harding believed that "we need vastly more freedom than we do regulation."
Harding, a Republican, not only pardoned and freed the socialist
Eugene Debs, who had been prosecuted by the Democrat Wilson; he invited Debs
to the White House.
Within a few months of the Harding economic reform plan passing
Congress, the economy began to revive. By 1922, the GDP had jumped to $74.1
billion and would continue its dramatic rise every year until 1930.
Unemployment plunged to 6.7 percent and continued to drop. In 1926, the
unemployment rate reached 1.6 percent, a record unmatched in peacetime. The
Roaring '20s were on.
President Obama and others of a social Democrat cast of mind
tend to remember the '20s only by the way they closed. But that period of
prosperity was a remarkable achievement for any nation. As Jim Powell,
author of "FDR's Folly," noted (quoting historians Richard Vedder and Lowell
Galloway): "'The seven years from the autumn of 1922 to the autumn of 1929
were arguably the brightest period in the economic history of the United
States. Virtually all the measures of economic well-being suggested that the
economy had reached new heights in terms of prosperity and the achievement
of improvements in human welfare. Real gross national product increased
every year, consumer prices were stable (as measured by the consumer price
index), real wages rose as a consequence of productivity advance, stock
prices tripled. Automobile production in 1929 was almost precisely double
the level of 1922. It was in the twenties that Americans bought their first
car, their first radio, made their first long-distance telephone call, took
their first out-of-state vacation. This was the decade when America entered
'the age of mass consumption.'"
As President Obama continues his midnight stroll in the White
House, he can ponder the fact that his economic policies have or promise to:
a) increase taxes on the job-creating sectors of the economy; b) increase
energy costs to businesses and individuals; c) increase the size and expense
of government; d) increase health care spending (don't kid yourself); e)
increase union power and thus the cost of labor; and f) double the national
debt over the next 10 years.
It's looking like he cannot touch Warren Harding.
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