It's not 2010 as 1994 or 1982, folks. It's 2010 as 1938.
Here’s the situation: The U.S. economy has been crippled by a financial crisis. The president’s policies have limited the damage, but they were too cautious, and unemployment remains disastrously high. More action is clearly needed. Yet the public has soured on government activism, and seems poised to deal Democrats a severe defeat in the midterm elections.It was a brutal year, 1938. Democrats lost 70 seats in the House and seven in the Senate, and basically the only thing that got us out of that mess was fighting World War II. I think about what would happen if the Republicans got in charge of things again and I'm thinking another one of those may not be too far off. We had the only infrastructure game in town by the time it was all over, so we were able to pay off our debt by selling things to the countries that needed it, and that was everybody in Europe.
The president in question is Franklin Delano Roosevelt; the year is 1938. Within a few years, of course, the Great Depression was over. But it’s both instructive and discouraging to look at the state of America circa 1938 — instructive because the nature of the recovery that followed refutes the arguments dominating today’s public debate, discouraging because it’s hard to see anything like the miracle of the 1940s happening again.
Now, we weren’t supposed to find ourselves replaying the late 1930s. President Obama’s economists promised not to repeat the mistakes of 1937, when F.D.R. pulled back fiscal stimulus too soon. But by making his program too small and too short-lived, Mr. Obama did just that: the stimulus raised growth while it lasted, but it made only a small dent in unemployment — and now it’s fading out.
How will things play out this time? Will we really need World War III to get us out of this hole?