During the current economic environment with unemployment reaching 8.5%, the highest level since 1983, and following the election of Barack Obama to the world’s most powerful and important office, it is natural to recall the times and Presidencies of Franklin Delano Roosevelt and Ronald Reagan.

An eloquent orator confronted by the Great Depression and menacing developments abroad, FDR denounced Wall Street greed and the privileged class.  He oversaw the enactment of fundamental changes in the banking system and bank regulation.  He significantly increased marginal income tax rates on the affluent, and he championed and signed into law Social Security, unemployment insurance, and public works for the unemployed, which were associated with substantial investment in the country’s infrastructure.  He accomplished these changes in the face of extreme economic turmoil and great uncertainty about the stability of the American system.  FDR believed that his strong interventionist agenda was necessary to preserve democratic capitalism, just as he believed that his actions in leading the country away from isolationism and in saving Great Britain were essential for defeating the Nazis and protecting America.  FDR’s preparation for his rendezvous with destiny included service as Assistant Secretary of the Department of the Navy under Woodrow Wilson during World War I, as a state legislator, and later as Governor of New York, then the most  populist state.   Between the war and his election as Governor, FDR exhibited iron strength and determination as he recovered from his crippling attack of polio, which required him to be carried up and down stairs the rest of his life.  The same iron strength and determination characterized his years as President, along with an optimistic spirit that cheered a large majority of Americans and millions around the globe.  The efficacy of many of FDR’s economic policies is still being debated, and it ultimately took war to bring the country out of the depression.  But his national and international leadership up to and following American’s entrance into the war secures his stature as one of greatest Presidents.

President Reagan, whose preparation for the office included eight years as governor of California, inherited rampant inflation, sluggish employment, a moribund housing market, and a weakened national defense during the height of the Cold War.  Also an eloquent  orator, he denounced big government and bureaucracy.  When confronted with high inflation and a recession that produced unemployment as high as 10.8% at year-end 1982, he championed and oversaw significant reductions in marginal income tax rates as a means of stimulating economic freedom and economic growth.  He helped slow the growth of government and regulation.  He played a leading role in accelerating the implosion of the Soviet Union, which freed tens of millions of people from totalitarianism, and billions of people from the overhanging threat of mutually assured destruction.  Reagan’s leadership focused on several key policy objectives and principles.  He stuck to those objectives and principles even when subject to avalanches of criticism for federal budget deficits and his hard-line stance towards the Soviets.  Not unlike FDR, his cheerful optimism buoyed the spirits of many.  Despite the Iran-Contra controversy in his second term, his stature as a great President is secure.

President Obama’s remarkable ascension to the Presidency following his service as both a state and U.S. Senator placed him in the midst of a banking crisis and sharp economic downturn, albeit much less severe than in the early 1930s and without the high inflation of the early 1980s.  He faces rapid growth in entitlement spending, especially for Medicare.  He is confronted by turmoil on our southern border, by shooting wars in Afghanistan and Iraq, by the continued risk of terrorist attacks, and by the threat of nuclear proliferation among radical regimes.   He has championed and signed an $800 billion stimulus package, with some investment in infrastructure, and he apparently has assumed de facto control of GM and Chrysler, if not AIG.  He proposes higher marginal tax rates on top earners, and unprecedented increases in the federal budget and projected deficits.  He champions expansion of government-subsidized and mandated health insurance, and he advocates green technology and cap and trade legislation to reduce greenhouse emissions, which would substantially increase energy prices.  On the international front, he has apologized to Europeans for American arrogance and asked that they lend a hand in “overseas contingency operations.”

Given the historical parallels and his stunning ascendancy to the Presidency, speculation about whether President Obama could ultimately rise to the stature of Reagan or FDR, two giants of the 20th century, is difficult to resist.  He is an inspiring orator who has buoyed the spirits of many Americans and thus far been well-received abroad.   He might have the “right stuff” — character, ability, skill, determination, persona — and opportunity from events to develop into a great President.  Unfortunately, my strong belief, based on economic theory and the historical record, is that his current policy agenda is fundamentally misguided, including the amounts and types of proposed spending, the planned tax increases on the most productive citizens, an emphasis on greenhouse emissions that is disproportionate to the threat, and his apparent belief that significantly more government planning and control of economic activity is desirable and appropriate.  Enactment of significant parts of President Obama’s agenda would slow economic growth, increase inflation, lower living standards, and undermine freedom and security at home and abroad.  Let’s hope and pray for a better legacy.