Barack Obama: FDR or Clinton? by Alejandro Penafiel

The following piece was written by Alejandro Penafiel, a friend and former HCHS student of mine. Alejandro is a third year student at American University in Washington D.C. Moreover, he spent his first semester of college interning for the Republican Party at its national head office working for Senator John McCain. Alejandro is one of only three students that I have taught in four different Advanced Placement courses. He has submitted articles to the Professor in the past.

As I have been watching Obama’s transition and his first few weeks in office, I have been asking myself this question and trying to decide if he has more in common FDR or Bill Clinton? I got this idea from talking to Carson about the Time cover of Obama stylized as FDR. I am sure he will be kind enough to include the photo with this post. While he has displayed much in common with both his Democratic predecessors, I think he fits much better in the Clinton mold.

What gave me the most trouble in coming to this conclusion is the fact that all three have a great deal in common. They all came after republican administrations during a time of recession and public outcry, as well as with a great deal of popularity. However, what make me tip Obama towards Bill are his centrist tendencies and his pragmatic governing philosophy. Throughout the campaign Obama has consistently shown that he is highly flexible in handling issues and crises, and thus not overly attached to strict ideology. For example, his posturing on NAFTA during the primaries and more recently, his inclusion of Sec. Robert Gates in the new cabinet both show his understanding of the need to be pragmatic in order to get the results he wants. I think the strongest case can be made off his governing philosophy, but you can also see that his administration is filled with Clinton alums. Take into account that Hillary is his foreign minister, which speaks volumes on the similarity of their approach to government policy. This can also be seen with his economic policy and the rise of Larry Summers as Obama’s chief macroeconomic policy advisor. If you take a look at the press releases coming out of the White House regarding the intent and effects of the proposed stimulus package, they match up almost entirely to what Summers has said publicly. I guess the administration is a better fit than Harvard. Maybe this keeps him from talking about social issues that he is “oh so good” at doing. Obama is enacting standard counter-cyclical fiscal policy in order to fight the contraction in the economy.

It is still far too early to say anything lasting about his legacy, and it is impossible to put any two presidents in the exact same category. The only useful part of this exercise, besides the fact that it is fun to talk about, is that it helps create a frame of reference to study his presidency. While I hope he does take after Clinton, the true test will come a few years later when the time comes to apply the flip side of Keynesian fiscal policy rules. It is always much easier and popular to spend more money. The stimulus will get passed. It has to, and everyone knows it. The hard part will be to start cutting spending and moving to balance the budget as the economy begins its expansionary cycle.


27 thoughts on “Barack Obama: FDR or Clinton? by Alejandro Penafiel

  1. Very interesting and well-written article, Alejandro. I would agree that Obama has been very centrist in his decisions and cabinet appointments thus far. This is somewhat odd, considering his VERY Liberal voting record in the Senate.

    On another note – how do you like American University? It is definitely a school that I plan to consider.

  2. We could also throw a Jimmy Carter log on that fire, but I pretty much agree it is way too early to compare this Presidency to any other. Just for kicks and giggles, though…

    Franklin D. Roosevelt = Obama seems to think New Deal policies might help us out of this current economic situation. Maybe it will work, but there is evidence that FDR might actually have prolonged the Depression. If Obama is a paper tiger on defense and allows Iran to get nuclear weapons it would be much harder to compare him to FDR. Roosevelt had executive experience as governor of New York, so we will see how Obama fares coming in cold turkey.

    Bill Clinton = I agree about Obama seeming to be a pragmatist. Clinton had to work with a Republican Congress, while Obama has a greased track with the Democrats in the majority. This should be an interesting difference, especially as it seems Speaker Pelosi feels emboldened to run further to the Left. Which one will determine party policy? Can Obama be a pragmatist and set the agenda, or will he just seem like one in comparison to Pelosi? Obama has communication skills, but (in my opinion) Clinton comes off more likable and warm… we’ll see how that develops over the next four years. Like FDR, Clinton had executive experience coming into the Presidency.

    Jimmy Carter = Carter was quite partisan, which drove some away to the “Reagan Democrats” camp. Obama doesn’t seem to be falling into that pit so far. Carter has a reputation for dissing Israel, while rumors are going around that Obama also favors the Palestinians. Carter had to deal with an energy/economic crisis, the Iran hostage crisis, and a belligerent Russia. Sadly, Obama takes over with an energy/economic crisis, an Iran nuclear crisis, and a belligerent Russia. (Doh!) If Obama can successfully navigate those rapids he will avoid the mantle of Carter. If he makes a mistake on economics or defense, he may want to take some carpentry classes (see Carter’s post-presidency work).

    Oh… Carter was also a governor, so he had executive experience too. I’m not saying Obama cannot be an executive, just that it will be interesting to see how his first year goes. So far, Iran and Russia have tried to push his buttons, and he’s darn near had to tackle his own teammate (Pelosi) before she draws a public personal foul. Throw in all the cabinet appointees who have had to drop out and it has been a rough start. Can he control the agenda?

  3. I can’t see how he can be compared to FDR. FDR spent time calming fears and having fireside chats to encourage people. Obama is out there causing panic in the streets and telling everyone we are on the brink of the end of the world (as we know it).

    I would say he is more like Clinton. After all, people were swooning over Clinton like he was the latest pop star. They were treating him like a major Hollywood celebrity just like they are with Obama instead of a politican.

    I love the part about “the stimulus has to pass”. Why? Because Obama said so? lol.

  4. I’m going to cut him some slack on the “panic”. I heard a congressman yesterday talking about what was said in the meeting that initiated the first infusion of emergency cash into the banking system. It’s possible the entire global economy would have crashed within hours had not an emergency brake been thrown. I was uncomfortable with the way Bush and Congress had to quickly dump money into a potential black hole, but there was a reason for the quick-step. Obama feels this is a serious issue, and I get why he is trying to keep the ball moving.

    A serious issue deserves a serious answer, and the current stimulus bill is not a serious answer. This thing is moving through Congress so quickly that it is not going through committees… FEW SENATORS HAVE EVEN READ THE WHOLE BILL! Sen. Arlen Spector was one of the “Republicans” that helped get the bill out of the Senate… but when certain items in the bill were read to him on TV he said he didn’t know that section was in there! Are. You. Kidding. Me…

    That is just ridiculous, and for Obaba to suggest this bill is the answer when a final draft has not even been put on paper is a bit over the top. I get the danger part, but it looks more like Keystone Cops over there in D.C. than serious minds making intelligent decisions.

  5. AND Matt, Republicans have NO say in the retooling of the bill. None. Zero. So much for “change” and “reaching across the aisle” and “a new spirit of bi-partisanship”.

    Beverly Perdue from NC was on the radio saying such and such was not in the bill and it is.

    I agree things are bad but end of the world? Catastrophic, as Obama puts it? Worse than the Great Depression? Not a chance. Not even close. No way. Many economists are saying by doing what we are doing with all these stimulus bills is going to be worse in the long run than if we didn’t do anything.

    All this bill is is a welfare bill. I hope y’all don’t have aging parents who need some serious surgery because you can kiss it goodbye with this bill.

  6. American is great, especially if you are interested in politics, government or international relations. It also has an excellent business school. The best part in my opinion is the location in DC that allows you to get a lot of practical experience.

    About the stimulus the reason I said that it will get passed/ it has to get passed. I’m an economics major, this is practically all we study, especially in macro. The monetary side is already being covered by the FED with the record low rates and an increased money supply. What we are seeing now is the fight over the fiscal component of govt. econ. policy. Right now the economy is contracting meaning it is shrinking, as demonstrated by the 4.8% decrease in GDP that was released by BEA a little while ago. While you cannot avoid the recession part of the business cycle you can make them shorter and any govt. spending will help that be it tax cut based or spending based. Preferences usually just depend on which end of the economic spectrum you are on politically. This is why the bill will be passed because almost everyone in washington knows this especially the leadership running the show. If you still don’t believe me I can prove it to you techniquely
    Y= total output of economy aka GDP
    C= Consumption meaning what we spend
    G= Government what the govt. spends
    Ig= Investment self explanatory I hope
    NX= Net Exports (Exports – Imports) in our case negative since we have a trade deficit.
    Y= C+G+IG+NX
    Increasing government spending increases GDP
    Tax cuts do the same thing but instead of the government spending the money they give it to the tax payers and they then spend it and it appears in the formula as consumption.
    So no the stimulus won’t hurt us in the shortterm but help us the danger is after the economy starts to heat up again is that we won’t cut spending or raise taxes which would hurt us in the long run.

  7. Dillon, that’s the point. Obama is crying panic and end of the world. That is causing some people, not all of course but many to fear and so they will allow Govo to do whatever it wants. I can’t tell you how many people I have heard say “We are in a crisis…govenment has to do something and I don’t care what it is, just give Obama a chance!”.

    All I do know is that Tax cuts (major ones, not no $13 a week kind) work every single time.

  8. Alejandro –

    Your formula is a bit oversimplified.

    Let me first clarify that I believe what we need right now is a healthy balance of stimulus spending and long-term tax cuts.

    A dollar of government spending does not equal a dollar of tax cuts. What is so often left out of the Keynesian equation is the fact that a certain percentage of the resources sourced by government spending are inevitably drawn away from other potential projects and investments. Obviously this percentage only includes those resources which cannot then be replaced or replenished for the original destination. So it’s a small percentage, but certainly significant.

    Therefore, only a percentage of your variable ‘G’ will actually change the ‘Y’. Some of what is implemented with ‘G’ is ‘borrowed’ from ‘C’.

    The trade off is that tax cuts take a bit longer to have direct impact on unemployment. Not to mention that if the stimulus does not drastically improve consumer confidence, it will prove to be nothing more than temporary relief. Putting money directly into people’s pockets is absolutely necessary to this equation.

    Again, I agree that the stimilus is necessary and useful in the short term. Just understand that the tax cuts are much more important to the recovery and long-term health of the economy.

  9. Obviously the equation is simplified as are all economic models otherwise they would be too complicated to be of any use. Also I wanted it to be comprehensible to non economists. Its a fair argument that tax cuts allocate resources more efficiently(provided the MPC of the economy is high enough) but no one has made it definitively. No one has argued for spending definitively either. In any case its silly to hope for the “ideal” package. I just want it injected into the economy soon help shorten the recession and help consumer confidence. Also it is impossible to say what passage of the stimulus will do to consumer confidence. It will have the effect people think it will have. Perception = reality. So unless you magically know what everyone will think a few weeks from now I think its a bit presumptious to say what the effect will be so definitively.

  10. Oversimplified was the wrong term. Misleading is probably the one I was looking for. Your analysis typifies the incomplete thought process that is Keynesian economics. I don’t think your explanation needs to be any more complicated, just more complete. Non-economists’ accurate comprehension depends on it.

    I’ll grant you that there has not been a definitive argument on either side of the spending/lowering taxes debate. Like other endlessly antithetical issues, the answer probably lies somewhere in the middle. After all, the two measures accomplish very different things. Lowering taxes does not amount to stimulus and does little in the short term. Stimulus creates an artificial demand boost to help more quickly.

    What would be ‘silly’ is for our lawmakers to hastily pass a bill full of non-stimuli in fear that the nation’s economic infrastructure will fall into little pieces over night. I think the time taken to hash out some differences was appropriate. Personally I’d like to know my representatives are scrutinizing a bill before they sign it – no matter which side of the aisle it originates on. Certainly there will never be a bill of this nature that both sides are in 100% agreement on, but is it really so ‘silly’ to hope that it’s prudent and well-formed? Panic is ‘silly’. Patience and trust in the process is appropriate.

    Finally: obviously I would not ‘presume’ to ‘magically’ know what anyone will think in a few weeks. If my post led you to believe otherwise, read it more carefully next time.

  11. Yes, it would be nice when questioned that my representive would know what is in the bill. Too often, neither side, including the President, really knows all that is in there. A line item veto would be nice.

  12. Roland, that’s one more thing that makes me love Arkansas: we have line item veto. We also apparently have crappy sports teams, but we have line item veto and we’re about to have animal cruelty as a felony. These are nice things about Arkansas that other states and the nation should have as well.

  13. “All I do know is that Tax cuts (major ones, not no $13 a week kind) work every single time.”

    I disagree. In the current economic climate, not everyone is going to spend the money that they get from tax cuts. Most Americans realize that their jobs are unstable, and would put any extra income (i.e. tax cuts) in savings.

  14. Dillon –

    True, but tax cuts don’t need to be spent on new cars or even more groceries to help the economy. Simply putting all that money into savings accounts gives banks more resources with which to invest and lend. Putting your extra tax money under your shed is the only way it will not help the economy.

  15. And I’m saying that is categorically false, if for no other reason than that in a ‘normal’ economic state we don’t really NEED tax cuts.

    (Prudent) Stimulus can inject some life into the economy, but it will be long-term tax cuts that get people in a position to spend again.

    Think of it this way: stimulus is the defibrillator, tax cuts are the subsequent rehab or medication.

  16. “…stimulus is the defibrillator, tax cuts are the subsequent rehab or medication.”

    Nice! Too bad the doctor (Congress) is not really a doctor. They just stayed at a Holiday Inn last night.

  17. Great Piece and interesting feedback. I do think that both Nimrod and Alejandro have very valid points. We have been living in an economic bubble for too long. In other words, too much credit and not enough savings. We do need a cash injection into the economy. Without a real monetary influx into the economy (savings). I also believe that perception=reality. According to a friend, who is an analyst for Citibank-NYC, and a friend who is a credit attorney, this crisis has been going on longer than proposed in the media. It is truly a four pronged mistake: credit, too much ridiculous government spending,not enough savings of the American people and faulty accounting. Therefore, we cannot rush into a stimulus package without analyzing all areas of need. Because this crisis has been going on for sometime, we need to carefully deliberate, and educate the American people on the real value of savings and the real values of credit. The government cannot do everything and the more we allow them to do the less freedom we will have in the future. We can analyze equations and data, but truly one cannot measure any type of program until the program has been implemented. History tells us that.

  18. I need to edit my previous response. I started a sentence without finishing it. The sentence started as Without a real monetary influx (savings) there is no real money to back up the banks. As we all know, without real money it is hard to go to the ATM and receive a dollar when there is no money there. Secondly, we also know that we cannot continue to print money because the effects would be devastating but re-creating low credit rates has ill effects as well, it will only exacerbate the current situation-yet- One can only speculate. But one thing we must all remember, Clinton had a Republican congress, and they took their time. Reagan was slow and careful in budget planning, and he certainly took his hits from the press, and FDR had a lot of programs but quite a few were unconstitutional. However, his Happy Days are here again approach gave people confidence, and that is what is important now.

  19. Ideally we would like to be careful and thoughtful in crafting the perfect legislation but thats not going to happen. It has to go through a process and that process is political and in control of the democrats in congress with the input of 4 moderates. I’m glad any tax cuts got in there at all. There is no point in arguing what it should be. Policy is rarely perfect, lets just hope it’s sufficient. I also think it is important not to be overly-idealogical otherwise you won’t be happy with anything.

  20. Alejandro,

    Always nice to here from you. Your right policy is less than perfect that is why they call it legislation. However, isn’t it ideological perspective that got Barack Obama elected in the first place. I think you are incorrect about my perspective. I am far from idealogical; unfortunately, I am somewhat jaded. I have paid taxes a long time and always feel severe aftershock after April 15th. My pocketbook cannot afford to pay for a rush job, and those in the top tier must consider that as well. I fear that I will be paying for tax cuts that I cannot receive just because my husband and I have a dual income household. My question posed is: Should a plan labeled stimulus be a package that discourages people who work hard and invest in this country? After all aren’t we paying for the future injection? Additionally, I do not want to pay for frivolous decision making because there is a false sense of security in a plan and a president who institutes change but continues to play the same old boring game.

  21. “There is no point in arguing what it should be. Policy is rarely perfect, lets just hope it’s sufficient. I also think it is important not to be overly-idealogical otherwise you won’t be happy with anything.”

    It’s going to be hard to articulate the extent to which I disagree with this rubbish. I mean, I’ll agree that legislation of this kind is never 100% accepted by either side, but that’s bi-partisan politics. And it doesn’t mean that a concessionary attitude about it is the only way to be okay with it.

    There’s no point in arguing about it!? It’s important not to be overly-ideological about it? Whatever you say, Comrade.

    A very small percentage of legislation passed in this country will have my 110% seal of approval, and some will truly upset me. That doesn’t mean I’ll go numb to the whole process though.

  22. You beat me to it Nimrod. No point to arguing? You know, Obama and many Democrats are saying the same thing. They are, in essence, saying that Obama won on November 4th so, drop it. Democrats won and there is no need to question anything or oppose anything anymore.

    Obama, truly, is such a joke. He stated while campaigning that no critical piece of legislation would ever be signed before the American People had at least five days to review it yet, here he is getting ready to sign it. Oh, and don’t give me the crap about this is so important in must be signed right away because Obama is taking his own sweet time signing it. Why not sign it Saturday or Sunday or Monday…why wait? The guy is so very amature.

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