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Lessons Taught By FDR

Lessons Taught By FDR

By David Ignatius - October 5, 2008

"Piece by piece, the nation's credit structure was becoming paralyzed. Crisis was in the air, but it was a strange, numbing crisis. ... It was worse than an invading army; it was everywhere and nowhere, for it was in the minds of men. It was fear."

-- James MacGregor Burns, "Roosevelt: The Lion and the Fox."

WASHINGTON -- It may be the end of an economic era on Wall Street, as commentators have noted over the past few weeks. But it is not yet the beginning of a new political era in Washington. In that gap lies the opportunity for Barack Obama to explain to the nation how he proposes to make a new start.

The frantic debate over the $700 billion bailout plan has obscured the reality that a new framework for recovery will have to be built by the next administration. The crisis package is important, but it's the political equivalent of an overnight loan, a short-term fix to keep the system functioning. The definition of the new era -- the post-crash era -- hasn't really begun.

To win, Obama will need to give voters a clearer sense of how he will govern in this new era. He still talks like a lawyer, making debating points and rebutting arguments, but not explaining how he will rebuild a shaken and traumatized country. This "vision thing" will become all the more important in coming weeks, as the economic crunch moves from Wall Street to Main Street and the country begins to feel real pain.

Franklin D. Roosevelt is the obvious model for a new president taking office amid severe economic difficulty. But what are the lessons that FDR teaches?

A first FDR decision, before he took office, was that he wouldn't get caught up in the flailing rescue measures of the lame-duck Hoover administration. Then, as now, the problem was a paralyzing credit crisis. A desperate Hoover sent Roosevelt a handwritten note on Feb. 18, 1933, pleading with him to endorse a common program to restore confidence: "The major difficulty is the state of the public mind, for which there is steadily decreasing confidence in the future."

Roosevelt ignored the plea. He felt that working with the discredited Hoover would undermine public support for his own recovery program when he took office a few weeks later.

By backing the Bush rescue plan, Obama has lost that complete freedom of action. But he didn't really have a choice. More worrisome is that he hasn't yet articulated a larger plan for economic reconstruction. Indeed, he ducked the issue in the first presidential debate. That's a mistake.

A second Roosevelt lesson is that the heart of the problem is psychological. As FDR wrote his March 4, 1933, inaugural address, he had open a volume of Thoreau with the passage, "nothing is so much to be feared as fear." That became the famous, ringing line: "First of all, let me assert my firm belief that the only thing we have to fear is fear itself." Within a few days, he had received half a million enthusiastic letters and telegrams.

A third FDR precept was to accompany his ringing words with decisive actions. Roosevelt announced a "bank holiday" his second day in office, making a virtue of the fact that panic-stricken banks had shut their doors. By the end of his first week, he had passed an emergency banking bill that reopened the banks on what the public perceived as sounder footing. The bill passed Congress in just eight hours. A GOP floor leader, Rep. Bertrand H. Snell, said simply: "The house is burning down, and the president of the United States says this is the way to put out the fire."

A final FDR lesson is that in crisis, it's sometimes better to go by instinct than to wait for a systematic plan. FDR considered sending Congress home after it passed the emergency banking bill so that he could come up with a comprehensive recovery proposal. Instead he went piecemeal, cobbling together the package of 15 major bills that made up the famous "First Hundred Days."

Roosevelt understood that it was a confidence game. He surrounded himself with smart people and good ideas. But his real success in 1933 was that he conveyed to a frightened country that he knew what he was doing, and never let on the fact that he was, as his biographer Burns says, "playing by ear." It's that sense of pitch that the public wants to see in Obama.

davidignatius@washpost.com

Copyright 2008, Washington Post Writers Group

David Ignatius

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