The most frequent worry I’ve heard about the new administration is that President Obama will get swept up in the messianism surrounding his historic presidency, and he will take advantage of it to pass a vast legislative agenda that is already mapped out in his mind. This seems to me exactly backwards: President Obama seems to be the one person who hasn’t gotten swept up in the messianism, and while he obviously has a few pet issues, he doesn’t seem to have a grand scheme in mind.
I just finished “The Defining Moment,” Jonathan Alter’s page turner about Roosevelt’s first hundred days (which Obama apparently read during the transition). The similarities at the outset of Obama’s and Roosevelt’s presidencies are uncanny, and surely not accidental. One obvious similarity is the messianism. After Roosevelt was elected in 1932, there was serious discussion about the need for a dictator. Roosevelt seems to have been tempted by this talk (Alter’s prologue recounts how he initially planned to tell a veterans’ group that “I reserve the right to command you in any phase of the situation which now confronts us” but deleted the language from his speech). But he resisted the temptation, much as Obama seems to be wary of the excesses of the current adulation in the press and elsewhere.
Second, Roosevelt revolutionized communication between the president and the American people, most famously with his “fireside chats.” Roosevelt harnessed radio to speak directly to the people, in a way previous presidents had not. President Obama’s release of his weekly message in video form on Youtube, and his use of the internet throughout his campaign, seems designed to revolutionize presidential communication in the internet era in much the same way.
The third issue brings me back to the question of a grand plan. Roosevelt clearly didn’t have a grand solution for the Depression when he entered office. His principal theme was the need for immediate action (“This Nation asks for action, and action now,” he said in his first inaugural), and for experimentation. President Obama seems to have brought the same attitude to the White House—the sense of a need for decisive action, rather than a particular plan.
The most obvious danger is that some of the steps the new administration takes will make things worse rather than better. Roosevelt’s track record was decidedly mixed, with successful early legislation like his banking and securities reforms combined with disasters like the Industrial Recovery Act. But I think the more serious question is whether the toughest reforms will get passed or simply left on the cutting room floor.
It’s clear that our financial regulation needs a major overhaul, and the administration has been quite vague about any specific plans, other than to say they’ll be rolled out soon. This legislation—not the stimulus package, which he’ll get, since, as he put it last week, “I won”—seems likely to be the administration’s first crucial test. My worry here is that Obama’s promise to transcend ordinary politics (and “the stale political arguments that have consumed us for too long,” as he put it in the inaugural speech) will discourage him from using his political capital to truly reform the existing structure. The difficulty with many of the key reforms—combining the securities regulators into a single entity; enacting reforms that make it less likely that financial institutions will be too complex and too interconnected to be allowed to fail in the future—is that they will prompt fierce resistance from Democrats as well as Republicans. There will be times when Obama will need to part ways with Chuck Schumer, for instance. The president won’t win this fight if he goes into it, as he did the stimulus discussions, saying he wants eighty percent approval in Congress.
Rhetorically, it’s easy to imagine how these reforms can and should be framed. Just as Roosevelt promised to bring sunlight (the “best disinfectant”) to the securities markets, President Obama should insist that it’s time for sunlight in the new financial world of hedge funds and credit default swaps. But the real question is whether the new administration is willing to fight for regulatory reform that will make powerful interests unhappy, but will provide the financial infrastructure for the next generation.