Paul Krugman’s column in today’s The New York Times is titled 1938 in 2010. He compares that time, 5 years into Roosevelt’s administration, to the current time, 2 years into the Obama administration.
Now, we weren’t supposed to find ourselves replaying the late 1930s. President Obama’s economists promised not to repeat the mistakes of 1937, when F.D.R. pulled back fiscal stimulus too soon. But by making his program too small and too short-lived, Mr. Obama did just that: the stimulus raised growth while it lasted, but it made only a small dent in unemployment — and now it’s fading out.
Obama’s mistake was thinking that if the stimulus proved to be too small, he could always ask for more. Politics being what it is he should have asked for a stimulus that was so big, it had a safety margin in it. Later, if the whole stimulus package was not needed, he could have stopped the parts that hadn’t been spent yet.
Comparing attitudes of the public now and then, Krugman says:
The story of 1937, of F.D.R.’s disastrous decision to heed those who said that it was time to slash the deficit, is well known. What’s less well known is the extent to which the public drew the wrong conclusions from the recession that followed: far from calling for a resumption of New Deal programs, voters lost faith in fiscal expansion.
I just got into a discussion on a purportedly progressive web site where people were wishing that Obama could be more like FDR. This is not what they had in mind, of course. I guess it really is true that those who don’t study history are doomed to repeat it.
Read the comment posted on truthdig.com by cruxpuppy to see how people pine for a history about FDR that never was. I tried to straighten him out with a comment that pointed to the Krugman piece. On Fenruary 08, 2014 I disabled the two previous links because of a warning I received about them.