Dwight Eisenhower's Final Message to Today's Politicians

June 29, 2010 RSS Feed Print

President Dwight D. Eisenhower's farewell address is famous for its warning about the dangers of the growth of the “military-industrial complex." It was delivered on national television in January 1961; rereading it, the address is jarring in ways that have little to do with its signature phrase. Eisenhower's opening passage offered his gratitude to the national television and radio networks for giving him this opportunity to address the country.

Equally jarring to contemporary sensibilities: Ike sang the praises of Congress for putting national interest ahead of narrow sectarian interests. He expressed his belief in a broader national purpose and mission. He argued that this mission transcended partisan boundaries, sectional interests, and involved a broader search for advancing the common good.
 
Eisenhower admitted that while his initial “relations with Congress … began on a remote and tenuous basis,” it became “intimate during the war and immediate post-war period." During his presidency, it became “mutually interdependent ... The Congress and the administration have, on most vital issues, cooperated well, to serve the nation well rather than mere partisanship, and so have assured that the business of the nation should go forward. So my official relationship with Congress ends in a feeling on my part, of gratitude that we have been able to do so much together."
 
Lauding Congress and the news media aren’t the only oddities (to contemporary ears) found in Eisenhower’s final presidential speech. He highlighted his unease with several broad developments in mid-century America—including a revolution in technology and growing industrial capacity, which, he feared, had brought an end to an age when individuals could become pioneers and forge inventions largely by the strength of their own ingenuity. He cited the federal government as a source of expanding social power—and worried over the declining fortunes of America’s universities as repositories of free thought. They risked becoming beholden to military, industrial, and other government agendas.  
 
It’s a supple, thoughtful, and provocative address—a speech that belies his reputation as a president uncomfortable with complex ideas and in-depth reflection. It’s a speech, as well, that eloquently describes the horrors of modern warfare, the dread of the nuclear arms race with the Soviet Union, and the urgency of fighting global "poverty, disease, and ignorance."  
 
Eisenhower wished “the new president ... Godspeed,” and he had a message for elected officeholders who would follow him—a message to which attention should be paid now. “Our people expect their president and the Congress to find essential agreement on questions of great moment, the wise resolution of which will better shape the future of the nation,” he said. Too often, Eisenhower’s final admonishment has been lost on elected officials in our own times.

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Many competent sources and economic experts have declared ARRA effective.

CEA: ARRA raised employment "by between 2.2 and 2.8 million."

CBO estimates job impact of between 1.2 and 2.7 million.

IHS/Global Insight estimates job impact of 1.7 million.

Moody's economy.com estimates job impact of 1.9 million.

Macroeconomic Advisers estimates job impact of 1.5 million.

http://mediamatters.org/research/201007010028

Barely a year ago the WSJ had this amazing headline; "Stimulus Remains Unpopular Even as It Boosts Growth" which only proves that the right wing spin is the only thing more successful. How unfortunate. The WSJ asserts;

"The case that fiscal stimulus was a mistake altogether is weak. A decade ago, economists counseled that politicians should leave recession-fighting to the Federal Reserve and its interest-rate cuts. With the average length of a post-World War II recession at 10 months, downturns usually ended before Congress acted. This time was, truly, different. The recession was more than a year old when Mr. Obama took office, the Fed already had cut interest rates to zero and the economy was still in free fall. "If ever there was a case for a fiscal stimulus, this was it," says Alan Auerbach, a University of California, Berkeley, economist who will kick off an appraisal of the stimulus at this weekend's Fed retreat at Jackson Hole, Wyo."

http://online.wsj.com/article/SB125070781745443839.html

What is truely amazing is that the WSJ made this determination in the third quarter of 2009, right about the time the NBER is slated designate this quarter as the official end or "trough" of the recession that began in 2007 making it a roughly 21 month recession-one of the longer ones on record. Output and stock market growth, somewhat leading indicators, had barely begun and it would take a labor market recovery another nearly half year. The first quarter of 2010 was the first time since 2007 that showed a net monthly job increase. By this time most estimates cite more than 2 million jobs saved or created since the passage of ARRA in February 2009. Without this legislation, there may well have been no upturn at all.

Conservatives point out that business confidence is vital and the lack of it is what has delayed investment. This argument was made during the New Deal as well. The problem is that, the right wing media spin machine is creating a self-fulfilling prophesy; by screaming about doom, gloom and "socialism" they are actually causing the very crisis of confidence for which they are currently holding Obama responsible. Even business owners eager to invest will hold off for fear that consumers will delay spending out of fear. Secondly, personal debt levels are so high that consumer spending is still down. This can't be Obama's fault. The recovery seems to be a game of chicken; everyone is waiting for the other to make the first move. This is why Keynes ultimately favored fiscal stimulus. It breaks the deadlock caused by uncertainty.

steve of IL 7:33PM July 01, 2010

“If the multiplier is greater than 1.0, as is apparently assumed by Team Obama, the process is even more wonderful. In this case, real GDP rises by more than the increase in government purchases. Thus, in addition to the free airplane or bridge, we also have more goods and services left over to raise private consumption or investment. In this scenario, the added government spending is a good idea even if the bridge goes to nowhere, or if public employees are just filling useless holes. Of course, if this mechanism is genuine, one might ask why the government should stop with only $1 trillion of added purchases.”

“What's the flaw? The theory (a simple Keynesian macroeconomic model) implicitly assumes that the government is better than the private market at marshaling idle resources to produce useful stuff. Unemployed labor and capital can be utilized at essentially zero social cost, but the private market is somehow unable to figure any of this out. In other words, there is something wrong with the price system.”

Conclusion:

“Much more focus should be on incentives for people and businesses to invest, produce and work. On the tax side, we should avoid programs that throw money at people and emphasize instead reductions in marginal income-tax rates -- especially where these rates are already high and fall on capital income. Eliminating the federal corporate income tax would be brilliant. On the spending side, the main point is that we should not be considering massive public-works programs that do not pass muster from the perspective of cost-benefit analysis. Just as in the 1980s, when extreme supply-side views on tax cuts were unjustified, it is wrong now to think that added government spending is free.?

http://online.wsj.com/article/SB123258618204604599.html

“The Stimulus Didn't Work”

“The data show government transfers and rebates have not increased consumption at all.”

“Is the American Recovery and Reinvestment Act of 2009 working? At the time of the act's passage last February, this question was hotly debated. Administration economists cited Keynesian models that predicted that the $787 billion stimulus package would increase GDP by enough to create 3.6 million jobs. Our own research showed that more modern macroeconomic models predicted only one-sixth of that GDP impact. Estimates by economist Robert Barro of Harvard predicted the impact would not be significantly different from zero.”

http://online.wsj.com/article/SB10001424052970204731804574385233867030644.html

Bill Hedges of MO 10:34PM June 30, 2010

These "entitlements" are what stimulates the economy. Cutting them now will reverse what little recovery we've experienced. Social spending is the very best stimulus and has the highest multiplier effect because it is spend in total and quickly by the poor and low income people. Entitlement spending is down as a share of GDP from what it was thirty years ago. The effects have manifested in a slower growing economy.

steve of IL 5:46PM June 30, 2010

Matthew Dallek

Matthew Dallek

Matthew Dallek, a visiting scholar at the Washington-based Bipartisan Policy Center, teaches history and politics at the University of California Washington Center. He is author of The Right Moment: Ronald Reagan’s First Victory and the Decisive Turning Point in American Politics. He worked as a speechwriter for House Democratic Leader Richard A. Gephardt and Federal Communications Commission Chairman William E. Kennard.

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