Sunday, October 12, 2008

Planning For An Obama Administration

It seems that both the bureaucracy and the media are expecting an Obama win, if this piece by Matt Ygelsias and today's column by David Broder are any indication. What's most fascinating about these two pieces is the belief, unsupported by either history or law, that an incoming Administration is bound in any manner, fashion, or form, to the policies of the previous Administration. The most famous, and most relevant, case was the way Herbert Hoover believed Franklin Roosevelt bound by the limited-government approach he had used to address the burgeoning banking crisis in the last months and weeks of his Administration, and his on-going attempts, during the long, cold winter of our national discontent between the election in November, 1932, and the inauguration in March, 1933 (the date was moved ahead precisely because of the multiple crises of that winter and the recognized impotence of a lame duck President and a yet-to-be-inaugurated President-elect) to bind Roosevelt to any policy he, Hoover, might attempt.

In Yglesias case in particular, we find an interesting failure to recognize that, while the bureaucratic dust-ups within the high end of the military command structure are legendary, our country has a long history of generals, upon hearing their Commander-in-Chief's orders, simply saying, "Yes, sir", and getting on with it. Whether they like it or not matters little. Indeed, that there are exceptions to this rule (most significantly Douglas MacArthur and Robert E. Lee) prove their exceptional quality precisely by the ease of recalling them.

When Franklin Roosevelt took office on March 3, 1933, he was faced with a ballooning public bankruptcy crisis; even as the inaugural parade made its way from the White House to the Capitol, and Roosevelt's booming baritone uttered some of his most famous words, his aides were taking calls from governors reporting that whole states were now, officially, broke. What had started out as a credit crisis (much like our own) had become a liquidity crisis (much as ours might be if someone, somewhere, doesn't do something smart), and there was simply no money circulating in the economy. In the weeks between the election and the inaugural, economic activity in the United States, for all intents and purposes, stopped. Oh, people still bought and sold stuff (although barter was far more common then; my father told me about how his parents used eggs, milk, and meat to purchase consumer goods during the early 1930's); it was on a macro-economic scale that the wheels were no longer turning. Bank depositors had removed millions of dollars from accounts, sinking banks around the country. The money, hidden away in jars buried in the backyard, stuffed in to envelopes and hid away in drawers, or stuffed in to mattresses, was no longer available for the kinds of necessary work banks do.

Like then, the Bush Administration seems to flail around for an answer, the recently hotly-contested $700 billion bail-out now seems not only antiquated and quaint, but useless as the Administration has decided to take a wholly different approach (from buying distressed assets, which was a truly stupid idea, to buying up stocks in failing banks, which would be a far better idea if people with intelligence were actually in charge). The idea that an in-coming Obama Administration will somehow have its hands tied by this nonsense ignores the reality that, even if certain measures, including the bailout, are made law, laws are only as strong as any government's willingness to enforce them. If my guess is correct, not only will Obama win and win big, but Democrats in general will have a very good year this year. Should an Executive Branch and Legislative Branch of the same party be willing to work together on sound policies to deal with what is likely to be a worsening financial and macroeconomic mess, I see no reason in the world why either should feel bound by actions taken by the Bush Administration.

I read Broder's column, at any rate, as an attempt by the guardians of conventional wisdom to attempt to draw a restrictive circle around a potential Obama Administration, saying, "Thus far and no farther!" I am quite sure there will be column inches wasted on how the new Administration is "ignoring" legal restrictions "imposed" by the Bush Administration. This would be true only if there were any examples in history of a new Administration, run by a different political party, had ever honored the policies of an outgoing Administration. Indeed, to use a recent example, had Ronald Reagan left Jimmy Carter's last budget proposal alone - a budget passed by Congress for fiscal year 1981 which actually began before Reagan was elected - he would have inherited a slight surplus at the end of the year. Instead, one of the first acts of the Reagan Administration was to go to Congress with new spending proposals, including huge outlays for defense, coupled with tax cuts, that ballooned the federal deficit. Yet, one hardly hears a peep about this little historic fact - Reagan came in promising a balanced budget, had in fact inherited one, but destroyed it in his first weeks in office.

I would be surprised if a newly inaugurated President Obama would turn to the American people and say, "My Administration has developed policies to address our current crisis, but we are limited in our actions by the policy of the Bush Administration." Just consider that for a moment and you will see how silly Broder's column truly is.

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