Plenty of Hoover to go around
TEXT OF COMMENTARY
KAI RYSSDAL: New York Sen. Charles Schumer is no fan of President Bush — he’s never made a secret of that. But earlier this week, he let loose with a really low blow: Sen. Schumer said the president reminds him of Herbert Hoover.
Commentator and economic historian Amity Shlaes takes a look at the parallels between past and present.
AMITY SHLAES: Herbert Hoover… It’s about the meanest thing you can call a politician. Hoover was the president who promised prosperity and oversaw financial disaster instead. But Hoover wasn’t all bad. And contrary to myth, he was an activist president.
History students count Hoover’s policies on their fingers. Hoover talked about confidence when people were starving and made fun of the unemployed men who sold apples. Hoover created the Reconstruction Finance Corp. to help home builders, families and farmers. Hoover increased protectionism by signing the Smoot-Hawley Tariff even though he had lived in London and knew better.
Hoover raised taxes in a downturn. Even English majors know you don’t do that. And finally, Hoover got the monetary wrong — he saw inflation where there was deflation. Whoops.
So who is replicating which Hoover policy? When it comes to the confidence chatter, Bush is the one acting in the Hoover tradition. The president gave a big speech about optimism Friday, even as Bear Stearns disintegrated. Maybe he should have been more frank.
On housing, again, Bush is a Hoover. He created FHA Secure to help challenged borrowers refinance. But there’s nothing wrong with that in itself. On trade, it’s the Democrats who are the Herberts. Hillary Clinton and Barack Obama posture to see who can repeal NAFTA, first even though they know better.
On taxes, likewise, the Democrats seem the more Hooverish. Obama has a Social Security reform that would significantly increase marginal tax rates for top earners, just as Hoover did.
But what about monetary policy? From the gold price to the oil price to the price of coffee, evidence of inflation proliferates. Yet Democrats, Republicans and the Federal Reserve seem to be looking for deflation. Monetary policy is hard these days, just as it was for Hoover.
So it’s not right to label just one single politician Hoover — especially given the current economic challenges. There’s enough Hoover to go around for all of us.
KAI RYSSDAL: Amity Shlaes is senior fellow for economic history at the Council on Foreign Relations.
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