Lessons for Obama from War­ren Hard­ing

The Washington Times Weekly - - Commentary -

Pic­ture this: It is mid­night on Nov. 4, 2009. The pre­vi­ous day’s elec­tions in Vir­ginia, New York’s 23rd con­gres­sional district, and New Jer­sey have all been won by Repub­li­cans. Health re­form is stalled. The lat­est em­ploy­ment num­bers are still dis­may­ing. Pres­i­dent Obama can­not sleep. He paces the halls of the White House and comes upon a por­trait of War­ren Hard­ing. Since Pres­i­dent Obama is noth­ing if not a re­cep­ta­cle of re­ceived un­der­stand­ing, he would prob­a­bly snort “Hard­ing! What a dis­as­ter he was! Crony­ism. Lais­sez-faire eco­nomics. Cor­rup­tion. In­com­pe­tence.”

Well, it’s true that Teapot Dome and other scan­dals en­gulfed the Hard­ing ad­min­is­tra­tion in 1923. And that’s pretty much all that pop­u­lar his­to­ries re­mem­ber about the 29th pres­i­dent. Hard­ing died in of­fice be­fore he could re­store his rep­u­ta­tion. But if his por­trait could talk, it might re­mind Pres­i­dent Obama of a few things he could take to heart.

When Hard­ing took of­fice in 1921, the U.S. econ­omy was in a far worse de­pres­sion than Pres­i­dent Obama in­her­ited. A sav­age inflation had eroded buy­ing power and un­em­ploy­ment stood at 20 per­cent. The U.S. had suf­fered more than 116,000 dead and 205,000 wounded in the war. Ad­di­tion­ally, 650,000 mostly young and pro­duc­tive Amer­i­cans had been killed by the Span­ish flu. Be­tween 1920 and 1921, GDP had de­clined 24 per­cent from $91.5 bil­lion to $69.6 bil­lion. Civil lib­er­ties had been tram­pled un­der the Wil­son ad­min­is­tra­tion. Wil­son had jailed so­cial­ist leader Eu­gene V. Debs, for ex­am­ple, for op­pos­ing the U.S. role in World War I. “With the ex­cep­tion of Lin­coln,” wrote The Na­tion mag­a­zine, “prob­a­bly no pres­i­dent in our na­tional his­tory has taken of­fice with as press­ing a bur­den of un­re­solved ques­tions.”

With ad­vice from Trea­sury Sec­re­tary An­drew Mel­lon, Pres­i­dent Hard­ing set about re­duc­ing the gov­ern­ment’s role in the econ­omy. He cut fed­eral spending from the bloated Wil­so­nian level of $6.3 bil­lion in 1920 to $5 bil­lion in 1921, and then to $3.2 bil­lion in 1922. Fed­eral taxes were cut from $6.6 bil­lion in 1920 to $5.5 bil­lion in 1921 and $4 bil­lion in 1922. Un­like his Com­merce Sec­re­tary, Her­bert Hoover, an en­thu­si­ast of gov­ern­ment in­ter­ven­tion in the econ­omy who pushed for a Con­fer­ence on Un­em­ploy­ment, Hard­ing be­lieved that “we need vastly more free­dom than we do reg­u­la­tion.”

Hard­ing, a Repub­li­can, not only par­doned and freed the so­cial­ist Eu­gene Debs, who had been pros­e­cuted by the Demo­crat Wil­son; he in­vited Debs to the White House.

Within a few months of the Hard­ing eco­nomic re­form plan pass­ing Congress, the econ­omy be­gan to re­vive. By 1922, the GDP had jumped to $74.1 bil­lion and would con­tinue its dra­matic rise ev­ery year un­til 1930. Un­em­ploy­ment plunged to 6.7 per­cent and con­tin­ued to drop. In 1926, the un­em­ploy­ment rate reached 1.6 per­cent, a record un­matched in peace­time. The Roar­ing ‘20s were on.

Pres­i­dent Obama and oth­ers of a so­cial Demo­crat cast of mind tend to re­mem­ber the ‘20s only by the way they closed. But that pe­riod of pros­per­ity was a re­mark­able achieve­ment for any na­tion. As Jim Pow­ell, au­thor of “FDR’s Folly,” noted (quot­ing his­to­ri­ans Richard Ved­der and Low­ell Gal­loway): “‘The seven years from the au­tumn of 1922 to the au­tumn of 1929 were ar­guably the bright­est pe­riod in the eco­nomic his­tory of the United States. Vir­tu­ally all the meas- ures of eco­nomic well-be­ing sug­gested that the econ­omy had reached new heights in terms of pros­per­ity and the achieve­ment of im­prove­ments in hu­man wel­fare. Real gross na­tional prod­uct in­creased ev­ery year, con­sumer prices were sta­ble (as mea­sured by the con­sumer price in­dex), real wages rose as a con­se­quence of pro­duc­tiv­ity ad­vance, stock prices tripled. Au­to­mo­bile pro­duc­tion in 1929 was al­most pre­cisely dou­ble the level of 1922. It was in the twen­ties that Amer­i­cans bought their first car, their first ra­dio, made their first long-dis­tance tele­phone call, took their first out-of-state va­ca­tion. This was the decade when Amer­ica en­tered ‘the age of mass con­sump­tion.’”

As Pres­i­dent Obama con­tin­ues his mid­night stroll in the White House, he can pon­der the fact that his eco­nomic poli­cies have or prom­ise to: a) in­crease taxes on the job-cre­at­ing sec­tors of the econ­omy; b) in­crease en­ergy costs to busi­nesses and in­di­vid­u­als; c) in­crease the size and ex­pense of gov­ern­ment; d) in­crease health care spending (don’t kid your­self); e) in­crease union power and thus the cost of la­bor; and f) dou­ble the na­tional debt over the next 10 years.

It’s looking like he can­not touch War­ren Hard­ing.

Mona Charen is a na­tion­ally syndicated colum­nist.

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