TOM PUTNAM: Good Evening/media/assets/Education and … · Web viewTOM PUTNAM: Good Evening. ... The word “dictator” had a positive connotation. ... I thought the Doobie Brothers

THE FIRST 100 DAYS - KENNEDY LIBRARY FORUMS

04.13.09PAGE 1

TOM PUTNAM: Good Evening. I’m Tom Putman, Director of the John F Kennedy

Presidential Library and Museum. And on behalf of John Shattuck, CEO of the Kennedy

Library Foundation and all of my Library colleagues, I thank you all for coming.

Tonight’s discussion is made possible with generous support from Kennedy Library

Forum lead sponsor, Bank of America; along with The Lowell Institute, represented here

tonight by William Lowell; Boston Capitol; the Corcoran Jennison Companies; The

Boston Foundation; and our media sponsors, The Boston Globe; NECN, which will be re-

broadcasting a number of our forums beginning in the coming months; and WBUR,

which airs Kennedy Library Forums on Sunday evenings at eight o’clock.

“The only thing that really surprised us when we got into office,” President Kennedy

quipped in the spring of 1961, “was that things were just as bad as we’d been saying they

were in the campaign. Otherwise we’ve been enjoying ourselves very much.” Well, the

same might be said for President Obama. If one thing is clear in the face of the challenges

he inherited, he intends to oversee an activist government rivaling, perhaps, that of

Franklin Roosevelt, who proclaimed famously in his inaugural address, “This nation asks

for action and action now.” In his book, The Defining Moment: FDR’s Hundred Days

and the Triumph of Hope, Jonathan Alter writes, “The confidence that FDR would build

during the opening 100 days was not faith in a stock market surge or a spurt in the GNP,

but confidence in the entire American system, in the idea that capitalism and democracy

deserved to survive.” Tonight our panelists will discuss historic parallels between that

time and our own and in some of the Presidents in between.

Jonathan Alter is an award-winning columnist, Senior Editor for Newsweek and a

contributing correspondent to “NBC News.” Among his exclusives in the 2008 campaign

were that Barack Obama would seek the presidency, that Mike Huckabee would be a

factor in the GOP contest and that Senator Ted Kennedy would likely endorse Obama

over Hillary Clinton. Though not exactly an exclusive, I especially appreciate the


04.13.09PAGE 2

anecdote he shares in the acknowledgments of his book on President Roosevelt, that

while writing it he discovered a school report he wrote at age eleven in which he penned,

“FDR was an amazing man and a great president because he knew what he was doing. He

was not physically strong, but his spirit was.” For anyone who doesn’t have time to read

the book, Mr. Alter continues, or I should add, who can’t stay for the duration of this

forum, “That’s all you need to know.”

To discuss the economic strategies used by Presidents Roosevelt, Kennedy and Obama

during their first days in office, we called on Richard Parker, Senior Fellow at the

Shorenstein Center at Harvard’s Kennedy School of Government, the co-founder of

Mother Jones Magazine and a self-professed “old Keynesian.” He’s the author of a

number of books including a biography on John Kenneth Galbraith, a book that Professor

Galbraith often described as being so erudite and well-crafted that he might have thought

he had written it himself.

Our moderator this evening is Ted Widmer, Director of the John Carter Brown Library at

Brown University, a former speechwriter to President Clinton, and an author of numerous

books on the presidency and presidential oratory. His most recent book, Ark of the

Liberties, was described by one reviewer as, “A sweeping, elegant history of the ideas

that shape American foreign policy.” All three of this evening’s speakers have made use

of the archives here or at other Presidential Libraries. We appreciate their giving back to

us and the general pubic by participating in forums like these.

Jonathan Alter concludes his book by describing FDR as a vessel president, a vessel that

held the essential elements of the American character: our faith in ourselves, our spirit of

experimentation and our hope for the future. When each of these seemed nearly

exhausted in 1933, he writes, “Franklin Delano Roosevelt restored them in a matter of

months with an elixir of leadership we are only beginning to understand.” To help us


04.13.09PAGE 3

understand more, please join me in welcoming back to the Kennedy Library Ted

Widmer, Richard Parker and Jonathan Alter. [applause]

TED WIDMER: It is wonderful to be here with so many of you. And I’m very proud to

say that all three of us here, coming to a panel devoted to the New Deal, chose

independently to take the Red Line and the shuttle bus over to the JFK Library. So we

have a lot of history to cover tonight. And I applaud the Kennedy Library for urging us to

think broadly. We’re not only comparing the new Obama Administration to the Kennedy

White House, but we’re thinking very much about the Roosevelt Administration tonight

and the 100 days. And I like the scope of that challenge to us tonight. We’ll be covering a

lot of different decades. And I suppose given that the 100 days is in the title of our event

tonight, we might begin with a question to both Jonathan and Richard: How similar is the

current crisis to the one Franklin Roosevelt inherited in March of 1933? And maybe,

Jonathan, we’ll begin with you.

JONATHAN ALTER: That one was a lot worse. As bad as we feel, the stock market

was down 90 percent, unemployment was officially 25 percent. But that was really a

misleading figure; women didn’t work, they weren’t counted. And people having part-

time work were not counted. So actually only one quarter of the adult population, able-

bodied adult population had full-time work. So you could argue that there was closer to

more than 50 percent unemployment. And the official rate in some places like Toledo,

Ohio was actually 80 percent. So it was a bad time.

People felt like capitalism and democracy were on the line. The word “dictator” had a

positive connotation. Studebaker had a car called “The Dictator” that sold very well in

the early ‘30s. Mussolini was very popular not just in Italy, but in the United States.

Hitler was brand new, the same weekend as Roosevelt came in, and people didn’t really

understand much about him. Within a couple of years, of course, “dictator” would take

on a very negative connotation. But a lot of folks wanted Roosevelt to be a dictator. And


04.13.09PAGE 4

he was maybe a little tempted to take some extra-Constitutional powers but decided — I

think almost heroically, because most presidents do not decide to take less power when

they’re offered it — he decided to work through Congress, not go extra-Constitutional

and leave it as a possible threat that if the country didn’t come along with his program,

that maybe he would take some wartime powers as he threatened to do in his inaugural.

TED WIDMER: Richard, we are certainly in one of the most impressive one hundred

days since the FDR Administration began in 1933, unbelievable bold initiatives that

we’ve seen already, and yet, I would say, with conspicuously less drama than FDR

brought to it. It’s a calmer kind of a hundred days. How would you compare the

substance achieved so far? I think we’re on day 84 today. I tried to count. And how

would you say he compares to the original hundred days of 1933?

RICHARD PARKER: Well, I think I’d have to say that Jonathan gets it just right,

which is this is not as a severe a crisis. The material consequences of this crisis are not

the same. It’s certainly the case that there are millions of Americans who are suffering

right now, and I don’t want to diminish that at all. But the scale of suffering compared to

what a generation before was going through are quite different. It’s also the case that

President Obama has entered office with a different set of challenges. President

Roosevelt was not, at that point, enmeshed in complex foreign policy challenges that

President Obama is faced with. Nor is he faced with what I would think of, wanting to

talk about more, a global economic challenge in which the United States is in a period of

transition from being the dominant figure of the global economy -- which it has been for

100 years -- into one which is much more primus inter pares.

In terms of what he’s accomplished on the domestic scene, I think that the budget will be

looked back upon as an enormous achievement. I think it’s a wait-and-see question on the

financial rescue package right now. And I think ultimately the test will come this fall, for

the first time, in whether or not he needs to come back to the Congress for more money to


04.13.09PAGE 5

get the economy moving again. If he does, I think that will push politics in one direction

in which I think he will have to turn to Plouffe and Axelrod and begin to mobilize this

email base of his, which they haven’t really deployed yet and in which the Republicans

will start to make headway against the President. If the economy is starting to turn by

then upward, more positively, I think that his ability to move an agenda on longer-term

issues, more complex issues like healthcare, the green economy, the restructuring of

fundamental American industrial outlines, he will have some room to work on. But we

don’t know yet; we just don’t know.

TED WIDMER: How do you feel about substance achieved so far, Jonathan?

JONATHAN ALTER: It’s actually much more than I think anybody would have had

reason to expect. And he’s already in very elite company. Only Lyndon Johnson and

Franklin Roosevelt have had as much accomplishment in their first 100 days as Barack

Obama has. Part of the reason that folks might not realize that is that the stimulus

package, $787 billion, was really about six or seven large pieces of legislation, very

important because it’s a public investment in one package. It was the largest

infrastructure investment since the interstate highway system. It was the largest tax cut in

American history. It was the largest anti-poverty program since the 1960s. It contained

multitudes in one package. So Lyndon Johnson had a tremendously productive first 100

days in 1965 where they had the Voting Rights Act, Medicare and the Immigration Bill

that changed the face of America by letting in non-European immigrants in considerable

numbers. And Roosevelt had 15 major pieces of legislation. But nobody else is anywhere

close to that.

And many Presidents, including John F. Kennedy, had serious setbacks in their 100 days.

Some of it’s luck. I mean, this thing with the pirates worked out well for Obama.

Compare that to, say, the Bay of Pigs, or Bill Clinton had the Waco fiasco. There have

been other Presidents who’ve had trouble in their first 100 days. Now having a good first


04.13.09PAGE 6

100 days is not guarantee of future success. President Bush had a fairly successful first

100 days where he got major education legislation completed with the help of Ted

Kennedy, and had a foreign crisis involving a military plane in China that was resolved

successfully. So it’s no guarantee that you’re going to have a successful term in office as

we’ve learned. But it sure helps. And it’s very hard if you haven’t had success with the

Congress in your first year to then, later in your term, have that kind of success. In fact,

maybe you guys would know this but I’m not sure there are really any examples of

modern presidents who have been stymied in their first year in office with the Congress,

and then come back to have major legislative accomplishments.

RICHARD PARKER: I think he’s been blessed in some sense because he’s got a

Congress that is so happy to have a President of their party in office that they’ve been

more than willing to cooperate with him in ways that normally Congresses are not quite

so willing to cooperate.

JONATHAN ALTER: Right. I mean, when Kennedy came in he had a Democratic

Congress, but they had been there for a while. And they were these barons who were very

comfortable with their committee chairmanships and their fiefdoms. And same thing

when Bill Clinton came in. They had been there for 40 years at that point, in power. So

Pelosi and Reid -- and this is, again, something that’s not very well-understood -- are

actually working hand-in-glove with Obama. And the White House is very, very happy

about its relationship with the Congressional leadership.

RICHARD PARKER: Well, I think also that it’s important to note that this is a

different Democratic Party than the Democratic Party that was assembled by President

Roosevelt, a New Deal coalition that lasted through the Johnson years and, perhaps, even

longer in some ways, that consisted of a Northern, ethnic, predominantly Roman

Catholic, working-class base, and a Southern, white, racist base. That Southern white

base is no longer part of the Democratic Party; it’s the core of the modern Republican


04.13.09PAGE 7

Party. And it may be the greatest problem the Republican Party has to face if it wants to

recover a national, political identity.

JONATHAN ALTER: Well, they are an older, white, poorly-educated, regional party

right now. And that can change quickly. Things change sometimes almost overnight in

American politics. But that’s where they are right now, and you don’t want to be there if

you’re a major political party. The Democrats have some advantages; they can overreach

some people. Some Democrats think they are overreaching now. I don’t agree with that. I

think you do have to strike while the iron’s hot. Yet particularly in a crisis where you’re

being dealt bad cards by fate, you have to deal your own cards faster; you have to stay on

the offensive, take the initiative.

And not too far from here Ralph Waldo Emerson said, “Things are in the saddle,” or

according to some other quotes, “Events are in the saddle and tend to ride mankind.”

Well, you’re either riding events or events are riding you. So I think Obama’s objective

has been to stay on top of events, take the initiative, be out there almost everyday with

some of kind of new announcement, new initiative, new executive order, new bill

signing, something to show that he’s taking leadership. And I think that and the dog is a

lot of why he’s so popular.

RICHARD PARKER: Let’s talk a little bit about this 13 million name email list and

the Organizing for America possibility, and the fact that this president was elected with a

remarkably differently structured financial base than previous Presidents in terms of the

number or relatively small donors who contributed. What do you hear about why it’s not

being deployed more yet? Are they holding it in reserve like an army for the second

push? Or what is it?

JONATHAN ALTER: I think that’s giving them a little too much credit. It was called

Obama for America, OFA, and now it’s called Organizing for America, or sometimes


04.13.09PAGE 8

Obama 2.0. They had legal issues they had to sort through; they had to take it out. They

couldn’t have it in the White House. They put it in the Democratic National Committee.

There was a certain amount of fatigue on the part of the Obama base. When they tried to

deploy them a little bit in some good works in California, they didn’t get a huge response.

They kind of test drove this 13 million name database on the budget, and they got

260,000 people to contact their representatives. And nobody thought that it had any

impact at all. But that’s on the budget which is kind of an abstract thing. Like if you’re

knocking on the door, “Hey, would you sign this to support Barack Obama’s budget?”

And people go, “Well, I voted for him, but what does this mean?” If they come out this

fall to support healthcare reform, I think they’re going to get a much bigger chunk of

those 13 million to be a counterweight to the insurance companies and some of the other

interests that are going to be …

RICHARD PARKER: What I understand also is they’ve been hiring people like

Heather Booth to really get ready to roll out a field operation around healthcare as well,

so that they’ll try to do a new media, old organizing strategy simultaneously.

JONATHAN ALTER: But it is the largest political organization created, I believe, in

American history. Maybe the Grange had more.

RICHARD PARKER: On a percentage of population basis it might have, but probably

not numerically.

JONATHAN ALTER: Thirteen-million is very, very large.

TED WIDMER: You talked a lot in your book about political theatre, meaning

anything from small acts to the great command of speeches that Franklin Roosevelt

always had, whether it was famous phrases like “New Deal” or “We have nothing to fear

but fear itself,” or just the simple act of the fireside chat which you described beautifully,


04.13.09PAGE 9

the first one. And Obama is known to all of us to be a great orator, and yet we haven’t

seen a whole lot of oratory in this Presidency. It’s been kind of calm and behind the

scenes. And is he holding that card? Is that something we’re going see more of as the

battles become more difficult, do you think?

JONATHAN ALTER: By the way, before I answer the question, before Ted and I

knew each other, Ted reviewed my book in The New York Times and gave it a nice

review. So I owe it all to you.

TED WIDMER: You know, I only get the galley when I’m a book reviewer. So had to

buy a real copy to read tonight to make sure everything was the same. And I was

astonished because I was the blurb on the cover. And I think you’re my only person who

gave me that high rank. So, thank you. [laughter]

JONATHAN ALTER: I liked your blurb a lot, but not as much as Kurt Vonnegut’s

blurb in the paperback where he said, “My book was crack cocaine for the senior

citizens.” [laughter]

TED WIDMER: Well, I believe he died shortly after he said that. [laughter]

RICHARD PARKER: An overdose of Jonathan Alter.

JONATHAN ALTER: This is really off the point, but only a couple of months before

he died, his wife called me up — and I didn’t know him — and said, “Kurt wants to meet

you at a particular restaurant” -- it was very early, like a blue plate special, like people in

their 80s -- “at 5:30 in the afternoon for dinner.” And I said, “Well, should I bring Emily,

my wife?” And she said, “No. He just wants to talk to you about Roosevelt. That’s the

conversation.” So I went there and I had a wonderful two-hour conversation with him

about FDR. Anyway, so in answer to your question …


04.13.09PAGE 10

RICHARD PARKER: How was the blue plate special? [laughter]

JONATHAN ALTER: How I got from blurbs to Kurt Vonnegut.

I think he was holding in reserve in that inaugural. He did not need to give another

rousing, inspirational speech. The key line in the speech, quoting Saint Paul, was, “It’s

time to put aside childish things.” To my mind, that was the key line. He was trying to

give an adult speech and gird the American public for hard times and for some sacrifice.

And he wrote that speech himself, which is not true of every speech. Then what happened

was there was a sense that maybe he was a little too gloomy, and President Clinton made

that point. So then when he came out and gave his speech before Congress, it was much

more of the Obama that we knew from the campaign. And I thought that was a very

effective piece of stagecraft.

In terms of the frames, the one-liners that describe what he’s trying to do, he’s allergic to

that. And it’s something that’s very interesting about his presidency and his approach. He

doesn’t believe in sound bites basically. And he is defiant in trying to say that he wants to

make a more complex argument that cannot be reduced to a bumpersticker. I think it was

fine until now. And I think now he really does need some kind of a frame. And I think the

one that they’re kind of moving toward is something that involves the word “foundation,”

which he used in his Inaugural, a new foundation. He’s used that word in several

speeches. I don’t know whether they’ll adopt it or not. But it’s organically kind of

coming up that they’re trying to build a new foundation under healthcare, education and

energy that is not just tinkering around the edges.

But where I first noticed was in the race speech that he gave at the Constitution Center in

Philadelphia. And I remember on the way to work, I was reading the text of it on my

Blackberry and I said to my wife, “He’s really in trouble.” The Reverend Wright thing


04.13.09PAGE 11

was a real problem, and there was no sound bite in the speech. And in my business, you

have to be able to grab something, put in a headline, put in a lead. But he was a step

ahead of me and the other critics on this. And I think he knew that people who are

accused of having short attention spans maybe can pay a little more attention if you’re

skillful enough. And he refused to have the whole thing reduced to one sentence. And it

made me think that maybe we were moving past sound bite politics. Because people can

get what they need on YouTube, they can see again. And with that speech, millions went

on YouTube to watch the speech in its entirety. And I think on some level he knew that

he could make a more complex, longer argument.

TED WIDMER: One of the parts of your book I love is showing the hundreds of times

other people used the phrase “New Deal” before Franklin Roosevelt got all the credit for

it. And we’re always recycling these things over and over again. Did Obama ever talk

about FDR in conversations with you when he was a candidate? Because we heard a lot

about the Kennedy comparison. I wrote a perhaps ill-advised piece saying that it wasn’t

that substantial a comparison. Well, no one paid any attention to it. But did he ever talk

about Roosevelt with you on those campaign flights?

JONATHAN ALTER: Well, we did have a couple of brief conversations about

Roosevelt. And we joked, because he started using the phrase “a new defining moment”

in his speeches. And he used it in Grant Park on Election night. And what I started to

realize about him was … I’m also from Chicago and when I was a kid, my mom used to

bake a birthday cake on February 12th, Lincoln’s birthday, because if you’re from

Chicago, you like Lincoln. And Lincoln is clearly his favorite president. But I think

Obama saw Roosevelt’s bias for action and action now, which is a line that Obama has

also used, and for what Roosevelt called, “bold, persistent experimentation,” and Obama

has essentially used that language as well on several occasions. He saw that approach to

the early days of his presidency as being critical for him. So even though he in many


04.13.09PAGE 12

ways doesn't' have a lot in common with Franklin Roosevelt, his early MO was clearly

instructive to him.

TED WIDMER: I don’t think any of us knew the severity of the downturn we were

facing, although rereading your book, Richard, you had a fantastic paragraph in the

middle -- or near the end, I’m sorry -- saying an economy with trumped-up figures based

on manipulation of real estate and sketchy loans is not real wealth. And your book came

out in 2005, so you were way ahead of the curve. Do you think solving this downturn will

be the defining challenge of the Obama Presidency? Or is it just the first and we’ll get

past it soon and see other challenges?

RICHARD PARKER: This president faces the challenge that all great presidents face,

which is the difference between recovery and reform. And I think that Roosevelt is one of

those remarkable presidents because he was able to achieve enormous amounts in both

areas: both lead a recovery, but also set a framework that reformed a structure. I think

the ferocious debate that is going on in the press right now about Larry Summers and Tim

Geithner and the direction of TARP and the direction of federal supervision of the

financial market recovery efforts really is a litmus test for this President about that

distinction between reform and recovery. If I’m a political aide to President Obama,

reform is not the first thing on my agenda; economic recovery is the first thing. Because

without the recovery, all the reform will be lost. It will be lost in committee, it will be lost

to special interest. If he can get the recovery going, he can then negotiate from a position

of strength the terms of reform.

That said, I think that the open question right now about the Obama Administration on

the matter of financial markets is what is the administration’s commitment to reform and

what is the nature of reform? There is enough confusion, enough uncertainly about that,

that it’s, I think, a real thorn in the side of the Administration and is doing him harm with

at least the liberal base within his party. Right now, that’s not a disaster; the liberal base


04.13.09PAGE 13

has no place else to go. But if, in fact, recovery slows or there are bank defaults or there

are further economic setbacks, the unwillingness to grasp hold of this issue of reform in a

clear-cut way that has, I think, a moral dimension as well as technical one -- because that

really is Roosevelt’s genius in that first inaugural speech is that he frames the issue of the

economy’s recovery in moral terms that hearken back to the Bible itself; it talks about the

money changers and the need to cast the money changers out of the temple. That’s

language that combines religion and politics in ways that wouldn’t be familiar to Jerry

Falwell, but that were certainly to a large part of America 80 years ago.

JONATHAN ALTER: Here’s what’s interesting about that. There was a pundit of the

time who said -- in those days the inauguration was on March 4th --- and the pundit wrote

that, “The money changers had been chased from their seats in the high temple of our

civilization,” was the line that Roosevelt used, “On March 4th, and they were back by

March 6th.” Because the following week, when it came time to figure out how to rescue

the financial system, which was in the fetal position, banks were all closed, three-fifths of

them were already closed. Roosevelt, in his first day in office, closed the rest.

We were on a barter economy. And the bankers all came to Washington and, you know,

they had these conversations about what to do. And what did they end up doing? They

implemented the Herbert Hoover bank rescue plan. This is something that I like to

remind liberals of nowadays who are, you know, very upset that Obama hasn’t been more

aggressive on nationalizing the banks. The New Dealers, like Robert Wagner who was a

Senator from New York, came to Roosevelt early in the hundred days and said, “Well, of

course, you’re going to nationalize the banks, right? These clowns have taken us over a

cliff.” I mean, if you think that bankers are in bad order now, at that time they were called

“banksters” like gangsters. You know? And he said, “No, no, I’m not going to nationalize

the banks.” And then the fallback position of the New Dealers was postal banks, let the

post office run our banking system. That would have been cute over the course of the


04.13.09PAGE 14

20th Century. And Roosevelt said, “No, no. We’re going to leave banking in private

hands.”

But they had an advantage, which I think Volcker recently pointed out, which was that

because the banks were closed they could decide which ones to allow to be reopened, and

then the weak ones they could just let stay closed. And, indeed, 10,000 banks went out of

business in this whole period, whereas Obama has a more complicated challenge in

sorting out the complexities of the banking system. But I think people should realize that

this is something that some liberals have a hard time doing, and they had a hard time with

Kennedy as well, is that just because you’re not agreeing with him on every particular —

and I’m certainly not, I’ve got some problems with the Bank Rescue Plan — it doesn’t

mean that he’s abandoned progressive ideals or anything of that kind. And some of what I

think they will be doing does relate to Joe Kennedy, interestingly.

When Joe Kennedy was made the first head of the Securities and Exchange Commission

in 1934, Roosevelt said something like -- he didn’t use the word “thief;” it was quoted

that way later on, but -- “You need somebody who knows the Wall Street scams to fix the

Wall Street scams.” Because Roosevelt knew that Kennedy had made all this money on

Wall Street in the teens and the ‘20s. And that proved to be very sound because Kennedy

was enormously successful as head of the SEC. And he put it on a sound footing and by

all accounts did a great job. So I think the Obama people, they don’t want to get Bernie

Madoff into government, but the …

RICHARD PARKER: He’s available, not doing a lot right now. [laughter]

JONATHAN ALTER: You know, I do think they have certain people who have a lot of

Wall Street experience, who they feel — and maybe were in the Clinton Administration

when some of this deregulation took place — and they feel know enough to plug the

holes and to re-regulate in a rational way. Now whether that works out to be true, who


04.13.09PAGE 15

knows? But I think that they can make a reasonable argument that you do want people

who have some idea of what they’re talking about rather than civil servants or people

with no experience at all on Wall Street making all the decisions.

TED WIDMER: We’re talking about the 100 days and the focus is on how much

happened at the beginning. But as many of you know, a lot of the really major legislation

happened in the middle of the Roosevelt presidency. And he had the luxury of a lot of

time, more time than any other president. And do you think there’s a danger that Obama

doesn’t have that luxury, that he’s got to achieve economic results quickly to do all the --

I mean, you said recovery first and reform second. Do you think there’s a two-year period

or so that he’s got to achieve economic recovery?

RICHARD PARKER: There are different metrics, and Jonathan knows this quite well

too, and I think the audience does too, which is this idea that we’re in a 24/7, 365 news

cycle. But there’s also a public opinion cycle, which is not correlated to the news cycle,

despite the fact that the bloviators on the news cycle would like to believe that it is driven

and controlled and manipulated by them. And he clearly, if you look at the poll numbers,

still has time to do quite a bit. The impatience is rising on the cables, but that may be of

no consequence other than to cable advertising rates. So we’ll see.

TED WIDMER: Richard, do you think that if the economy recovers too soon, in other

words, if by the end of the year people are really breathing easier and feeling, like, “Well,

2010 is going to be a lot better. Wells Fargo and other banks are reporting record profits,”

that that will make it harder to get healthcare through? Or will people be so relieved that

Obama’s stock will be so high that he’ll be able to have his way?

RICHARD PARKER: I think there’s a wedge problem, because the stock market will

come back as a leading indicator. The unemployment will lag. Unemployment will not

recover as quickly as the markets historically, at least it doesn’t. The stock market will


04.13.09PAGE 16

improve first. And so you’ll find the dualist politics being emphasized in the party and in

the nation as a whole for the part of the population that has benefited most from the

markets over the last 20 years is going to be going, “Dodged that bullet. We’re going to

make it. We’ll be back and celebrating in the Hamptons next summer after all.” And a

large part of the country and middle American, and also — Ted and I were discussing

this — in Rhode Island as well, too, where unemployment is not going to come down

quickly. And I think Obama has to calculate, or Plouffe and Axelrod have to calculate,

what the actual electoral effect is going to be in the next election cycle before they can

reach that determination.

JONATHAN ALTER: If the Roosevelt example is any indication, the folks who are

suffering will stay with Obama and the ones in the upper classes will desert him.

Roosevelt got a little bit bitter about this because he saved capitalism. I mean, he saved

the fortunes, what was left of the fortunes, of the American wealthy. And they showed no

appreciation for it at all. And a couple years later when they were causing problems for

him, he compared it to a lifeguard who rescues a drowning man and that saves his life.

And then two years later, the drowning man comes back to the lifeguard and says, “Hey

lifeguard, you lost my silk hat,” and that there was just no credit given to leadership that

might impinge on them economically. So part of me thinks that because they are using

the crisis to help drive reform on healthcare and energy, that if the crisis eases too fast it

might take the pressure off. It might make it harder for them to do it. If the Depression

had ended in 1933, I don’t think we would have gotten social security in 1935.

RICHARD PARKER: Well, I think that goes back, Jonathan, we can try to talk this

out. I don’t have a formed opinion on this, but it seems to me that the circumstances that

Roosevelt faced and the circumstances that Obama face are deeply different in the

following sense. You outlined what the international challenges were politically in the

sense that Stalin was in Moscow, Hitler was in Berlin, Mussolini was in Rome. And


04.13.09PAGE 17

while the country as a whole could not see forward to the coming of the Second World

War, there was a sense among American elites that war would inevitably come.

JONATHAN ALTER: FDR felt that way strongly.

RICHARD PARKER: And so there was that profound sense. We now are at a period

where the entire cycle of challenge that communism represented from 1917 onward

through most of all of our lifetimes, up until quite recently, is gone. And the challenge is

not so much from one system that competes against the fundamentals of capitalism as a

system, but rather former communist societies that seemed to be better at being capitalist

than we are, which is open to some interesting discussion.

JONATHAN ALTER: Not right now.

RICHARD PARKER: Well, but I mean, we all have our bad moments. I mean, that’s

sort of the lesson of the Roosevelt period as well, too. And that what’s happening is that

capitalism’s genius for production is creating a kind of rapid expansion of global

consumption that seems to be pressing in on us in a way that wouldn’t have been

Roosevelt’s problem. The recovery of the economy, the Keynesian goal of greater

production, the goal that it would have been for Kennedy or Johnson -- which was more

production, more jobs, more output, more consumption, more jobs, more output -- is not

inherently the core of the challenge facing America and Obama today. And we haven’t

gotten to a political place where we can think imaginatively about the new nature of that

challenge and how it really is an interconnected global challenge that requires American

leadership, that we haven’t also yet quite named.

JONATHAN ALTER: Well, I think Obama’s been edging toward dealing with what

my Newsweek colleague, Fareed Zakaria, calls “the rise of the rest.” And in his trip last

week, he struck many of those notes in several of his appearances: that he realized that


04.13.09PAGE 18

the United States had to make it clear that it was not going to be dictating to the rest of

the world, issuing ultimatums, saying, “my way or the highway;” and, that it was going to

be a different kind of relationship. And I think that message was well-received, and it was

an extraordinarily successful trip. But the risk is that they will pocket that good faith and

that good will without actually accrediting it and ponying up, say, with more troops for

Afghanistan. So we really won’t know how successful Obama’s new vision of American

leadership, America’s role in the world is until next year or the year after when we have a

sense of whether there’s real substance that’s being delivered from our allies.

RICHARD PARKER: I think that’s right. I mean, I think that Obama signals

something that is new and very important, which is a step away from the tendency to

dictate as a hegemonic power the attributes that America found itself exhibiting from

1945 on. I mean, really, I guess it yesterday was the anniversary of President Roosevelt’s

death, wasn’t it? So really from the day after his death onward, America moved into a

position of exercising power that had always been available to it from McKinley era on

given the size of its economy, but for domestic-political reasons, it couldn’t project.

Now we’re in a period where to play the role of primus inter pares or of partner really is

dauntingly challenging. And my own feeling about this presidential trip was that it was a

rhetorical success akin to Jackie’s visit to Paris. Michelle Obama really is the Jackie O of

this generation. I mean, it’s just remarkable the way that she had that. But that his

unwillingness at the G20 actually to engage the Europeans about global coordination of

financial market regulation worries me as an economist. Because the success, the legacy

that Roosevelt left us both on a domestic and international level was a government-to-

government coordination of finance. And we’re not moving toward that yet. And we

desperately need it in a world in which hedge funds can deploy trillions of dollars across

borders with the click of a computer, and we don’t have the ability as nations to track and

to appropriately manage those movements of capital. And I don’t see that yet.


04.13.09PAGE 19

JONATHAN ALTER: Yeah, I completely agree with that. On the first part, I’m sure

many of you know the line, JFK said, “I’m the man who accompanied Jacqueline

Kennedy to Paris.”

RICHARD PARKER: That should have been Obama’s.

JONATHAN ALTER: Obama did use a variation of that line at a couple of points. The

reason that they seem to have stepped back from going with some sort of an international

regulatory regime I think is twofold. One is there are sovereignty issues that could

become very complicated politically for Obama at home. And he would be giving the

right a traction on an issue. And I think that one thing they’ve done that’s been very smart

is that the right wing now, it’s like the Republican Party is being run by Rush Limbaugh.

And they do not have any issue that they’re getting any traction on. They keep trying and

failing.

RICHARD PARKER: I would suggest fluoridation. That was very big when I was

growing up. The whole gay thing has gotten very boring, and I’d like to get back to

fluoridation.

JONATHAN ALTER: It might go there. So they didn’t want to give them sovereignty

as an issue and if he had moved too strongly in that direction, he would have given them

an opening. And the other thing is enforcing it, and you know a lot more about this than I

do. Seems to me to be really tough. I mean, the advantage that Roosevelt had is that if

you were pulling your money out of a bank in 1933 and they had these banks runs, you

had to actually lineup around the block to take your money out of the bank. If you want

to start a bank run now, you just do it with a mouse click. And so any of the countries

that did not sign on to these international regulatory regimes would immediately have a

tremendous advantage and there would be almost instantaneous capital flows into their

countries that would make Swiss banks look like pikers. So the logistics of working out


04.13.09PAGE 20

what you suggest are really daunting. And I agree that it’s necessary; we’re going to have

to get there at some point or figure out some way to do that. But it’s not surprising that

we’re not there yet.

TED WIDMER: It does seem like the G20 by itself [inaudible] … interesting new

innovation over the G8, and do you think we need new Bretton Woods institutions and

soon?

RICHARD PARKER: We need a new global compact that involves financial markets

as well as goods markets. The movement of both conservatives and the moderate wing of

-- or the neoliberal, however you want to describe it -- of the Democratic Party toward

encompassing enforceable global compacts on behalf of trade indicate that we are

capable of crafting those kinds of global arrangements and making them work where

we’re politically committed to doing it. And it would be my comment to Jonathan that

that’s probably a model to think about when we think about global financial markets.

JONATHAN ALTER: That’s interesting.

RICHARD PARKER: I mean, the idea that we should be concerned about the

sovereignty of Grand Cayman Islands, which currently is the 7th largest holder of US

Treasuries internationally, seems to me something we ought to reexamine. It’s clearly not

being held in the Grand Caymans by the citizens of the Grand Caymans. I would like to

know, who’s holding those treasuries?

JONATHAN ALTER: You know, as I said, more about this than I do. Did the Obama

Administration refuse to join in any efforts to crack down on the Grand Caymans? Or

was it more kind of grandiose ideas that they didn’t want to?


04.13.09PAGE 21

RICHARD PARKER: What I saw was that they were refusing, even on the regulatory

details, to jump in. Now, that may have been a bargaining position because they wanted

from the Europeans a commitment to larger stimulus work on the part of the Europeans.

And so there may be something that has not yet surfaced. I’m old enough not to judge

them just on what was said at these summit meetings. But I’m apprehensive. Because I

think that making the case to the American people that special-purpose entities parked in

the Bahamas, their hedge funds operating Fairfield, Connecticut, that then allow that

money to be taxed on a special foreign entity basis that is lower than a US corporation

would be taxed in an analogous situation, that’s going to be hard to hold up in front of the

American people.

JONATHAN ALTER: Well, clearly they don’t support that. And so there must be some

other explanation for why they didn’t press the issue [simultaneous conversation] tax

havens during the campaign. He’s not a leader in them.

RICHARD PARKER: No, but I think what’s happening right now -- I mean, the way I

read this and the people I’ve talked to on the street -- is that we’ve gone through this near

disaster of the banks marketing these toxic assets. But we have a hedge fund industry that

through an anomaly and securities law of 1940 exists really outside the purview of Fed or

Securities Exchange Commission regulation. And there are hundreds of hundreds of

billions of dollars of toxic assets sitting over there as well, too. And should the Obama

Administration move toward regulation of them, forcing them into a regulatory

environment that would be an analogous to what the Fed now exercises over the banks, it

would require exposure of the depth of toxicity there as well, too. And I think that’s why

they’ve already moved to relax the standards on mark-to-market in the last couple of

weeks for those entities which are regulated, which is as a preparation for trying to move

to regulate the hedge funds but that there’s no tactical desire to try to move in on the

hedge funds right now till they can get some of the toxicity out of that system. But I just


04.13.09PAGE 22

would hate to see the opportunity lost to bring those funds in under some kind of serious

oversight and regulation. They’re too dangerous outside, though.

JONATHAN ALTER: One just quick historical point I’d make that really interested me

when I was researching Roosevelt, is that one of the most important things that he did

and things he’s most famous for is the creation of the FDIC bank insurance. And he was

totally against it when he was inaugurated as President, in his first press conference as

president, threatened to veto it. He thought it was a bad idea for the wrong reasons, and

only very reluctantly signed it as part of a larger piece of legislation at the end of the 100

days. So this idea of experimenting and trying and failing, this is part of the process.

Somebody asked, was there a blueprint for the New Deal? And Raymond Moley, who

was Roosevelt’s aide, said, “Yeah, sure. To say there was blueprint for the New Deal is

like saying that a little boy’s bedroom that is strewn with dirty clothes, broken baseball

bats, old chemistry sets, had all been put there by an interior decorator.” So it’s trial and

error, seat of the pants. This is the way things work in the real world. And one of my kind

of longtime critiques of the Kennedy School has been that they don’t have enough classes

-- I think they have more than they used to -- that deal with the messiness of government,

that it really doesn’t work the way you see it on some of our regression analysis.

TED WIDMER: Another surprise in your book is how opposed to stimulus spending

FDR was early when he’s running against Hoover. And the Republicans were, for a time,

seen as the big spending party. If you’re a Republican now, where do you begin to form a

legitimate opposition, not the crazy people opposition?

JONATHAN ALTER: You know, I actually have a very particular issue that I think is

tailor-made for the Republicans and that they could lead on more easily than the

Democrats, in which I hope the Democrats would then join them. And that is the ultimate

elimination of the Payroll Tax, which is something that a lot of conservative economists


04.13.09PAGE 23

have long favored. It’s a terribly regressive tax that hits working people the hardest and it

should be replaced by a combination of carbon taxes and value-added taxes. So it’s tax

cuts; it fits with their idea. They’re not quite there in terms of how you’d make up the

lost revenue because they never talk about or rarely talk about new taxes. They’d have to

deal with that in some way. But Democrats don’t like to talk about it because then the

questions are, so how do you fund social security and Medicare if not with the Payroll

Tax? My feeling is that that’s a great area for new policy making, but that by some

accounts it would create — and it would be interesting to hear your thoughts on this —

some economists say it would create as many as 15 million new jobs over the next ten

years.

TED WIDMER: Any thoughts, Richard?

RICHARD PARKER: Yeah, it’s an interesting topic. I think there are a couple things,

one of which is that I did a review of a good little book by Jeff Madrick called The Case

for Big Government in The New York Review of Books a couple of weeks ago. And one of

the things that I tried to emphasize in the review is that the debate about big versus little

government has become so sterile as to almost be a prohibited topic in political

discussion. If you look back and use the metric of the share of government as a

percentage of gross domestic product, in the United States 200 years ago, government

share was probably three percent of gross domestic product. A hundred years ago, it was

probably seven or eight percent. But since the Second World War, it’s been on the order

of 30 percent to one-third of GDP. And it’s fluctuated right in that area between 28 and

35, 28 and … so between 30 and 33 for the last 65 years. And that applies to Republicans

and Democrats alike. And the idea that we have a choice between big government and

small government -- if small means eight percent or three percent -- is off the table. And

we need to stop doing it. We need to stop the discussion. If it’s a question of the

composition of that one-third of GDP, that’s a valid and important debate to have. But we

really have to move American politics passed this big versus little nonsense, because we


04.13.09PAGE 24

don’t seem to be able to change.

The second is the idea of the Republican Party is a party of balanced budgets needs also

to be addressed forthrightly. The last Republican president to balance a federal budget

was Dwight David Eisenhower. And it does seem to me that if you were a baseball team

and had a batting record analogous to that, you wouldn’t be in the Major Leagues

anymore. So I think there are two things. As we move forward, I hope not only the

Democrats, but the press and sort of the talking classes will simply try to focus on other

things other than the debate of big versus little. Because it’s just sterile. And the other is

about deficits and balanced budgets: we need to get to a different understanding of when,

why we have deficits, what they’re for, and how we want to pay them down over time,

not simply go on in this kind of pre-1930s way about deficits. And then as to the

composition of taxes, I think there are some very interesting things to say.

TED WIDMER: Do you think the current stimulus is the right size for the moment?

RICHARD PARKER: I think there are two things, and you mentioned a piece that I

had done for The Boston Globe a couple of weeks ago. And I think that we should talk

about both. Size and composition are the two issues. And let me talk about the

composition question first. There was great debate at the beginning of this discussion

about Obama’s budget, about how much would be tax cuts and how much would be

spending. The analogy was in the Kennedy years to the first real experiment in activist,

Keynesian management of the budget of the US economy, which was the achievement of

the Kennedy/Johnson years. But there was within the Kennedy Administration, a

ferocious debate between Galbraith on the one hand, Walter Heller and indirectly Bob

Solow and Paul Samuelson on the other, in which Samuelson, Solow and Heller took the

view that it was economically neutral whether or not spending or tax cuts were the source

of economic stimulus. Galbraith, with the experience of doing politics in Washington in

the New Deal era, understood that if you did the stimulus through tax cuts and you ran


04.13.09PAGE 25

into an expanded war challenge -- which he at that point saw coming in Vietnam and

which might come on Obama’s watch in Asia yet again -- the ability of the president to

turn those tax cuts around and create revenue that would cut off inflation is very limited.

Because Congress doesn't like to vote tax increases in the midst of war.

And so I worry not so much about the immediate choice between tax cuts and public

infrastructure spending, but whether if we go ahead deeper and deeper in South Asia

militarily and are drawn into a longer and longer season of combat than we except now,

whether or not this could play into damaging the Obama legacy and the American

economy’s health in a way that those choices made in 1963 and ’64 did to the country

and to the Democrats.

JONATHAN ALTER: It just came out that the Iraq War has passed the Vietnam War

in constant dollars in its cost, which is really an astonishing thing when you think about

it.

TED WIDMER: We’re at about 6:30, which means we can open this up to questions

from the audience. But why don’t I just finish with a very simple question, but I think a

telling one. If you were to give a letter grade to Obama for the first 84 days, what grade

would you give? How do you think he’s done so far, and where could he have done

better?

RICHARD PARKER: A for effort, absolutely keep going. A - for papers to date; you

need to work a little bit on your argument.

TED WIDMER: Jonathan, by the way, is writing a book on the first year of the Obama

Presidency, so he has to be very careful with this answer.


04.13.09PAGE 26

RICHARD PARKER: Well, if Widmer reviews it, apparently it’s going to work out

well.

JONATHAN ALTER: Now that we know each other, some blogger would bust us,

we’ve been together at this …

RICHARD PARKER: Logrolling, remember when they sat on the stage, right.

JONATHAN ALTER: I’d give him an A -, but also an incomplete. Because we don’t

know how a lot of these things are going to work out. And so his first 100 days might

look very different in retrospect than they do now. I hope by the end of the year we’ll

have a better sense. Like Richard, I have some doubts about the Bank Rescue Plan, the

details of the Bank Rescue Plan. And that is the most important thing. Because if you

don’t get that right, nothing else really works.

But I think there are a lot of other little things that nobody has paid attention to, and

they’re not that little. About seven or eight years ago I was on this stage with Evan Bayh

and John McCain moderating a discussion of national service at the Kennedy Library.

And next week, maybe even later this week, the President will sign the biggest national

service bill since the Civilian Conservation Core in 1933. It expands AmeriCorps from

75,000 to 250,000, which interestingly was the size of the CCC in 1933. To give you

some sense, the Peace Corps has about 10,000 in it. So now AmeriCorps’s going to be

more than 20 times as large as the Peace Corps. And the reason that not as many people

have heard of it is it’s decentralized, it’s 4,000 different non-profit organizations that

handle this service. But we are moving to a point, within a few years we will be at a

point -- this is Ted Kennedy’s and Orrin Hatch’s legislation -- we’ll be at a point where

pretty much every high school graduate will at least have an option, and college

graduates, that all young people at least consider whether they want to dedicate some


04.13.09PAGE 27

time to serving their country. And that’s a wonderful thing. I don’t credit Obama directly

for it. Ted Kennedy gets more of the credit, but it happened on his watch.

TED WIDMER: If you do have questions, if I could ask you to line up behind the

microphones on either side of the auditorium. And, sir, why don’t we begin with you?

QUESTION: Ah, yes. In your book, Mr. Alter, you used an interesting quote in

describing Roosevelt and that was, “Temperament is the great separator.” And I wonder

if you’d comment on that, and then Roosevelt’s temperament. And perhaps, could you

compare it to Obama’s temperament?

JONATHAN ALTER: Well, a few days after he took office, Roosevelt went over to the

92nd birthday party of Oliver Wendell Holmes, the Supreme Court Justice, and they drank

some bootleg champagne. Can you imagine going over and, like, the President doing a

doobie now or something like that? In those days Roosevelt was just getting rid of it, but

it was still in force. And after Roosevelt left, Oliver Wendell Holmes said famously --

and there’re some people who think he was referring to Teddy Roosevelt but I don’t; I

looked into this in some detail -- he said, “Second-class intellect, first-class

temperament.” And that became, I think, the best capsule description of Franklin

Roosevelt. Meeting him, as Churchill said, was like opening your first bottle of

champagne. He just made you feel better.

Now, Barack Obama we now know has a first-class intellect. He has a higher IQ than

Franklin Roosevelt. We don’t know yet whether he has a first-class temperament. We

know that he has a fine temperament for getting elected and that that was one of the

reasons he beat John McCain is that he seemed to be calmer and more collected and even

tempered in a crisis. And that’s a very important asset for an American president. But we

don’t know yet if things were to get a lot worse whether he would have that same

ebullient temperament that FDR had in raising our spirits. There are some good signs that


04.13.09PAGE 28

he is capable of doing some of that and can make people feel better. And there’s been a

dramatic change in the number of Americans who believe that we’re on the wrong track.

It’s just completely turned around; a majority now believe we’re on the right track, which

is a sign that his temperament is proving effective in inspiring confidence.

QUESTION: Thank you.

TED WIDMER: I believe that’s the first time the word “doobie” has been used in a

Kennedy Library Forum.

RICHARD PARKER: I thought the Doobie Brothers played, here? Right, that was

your reference? That was to the Doobie Brothers?

QUESTION: Would any of you comment on the pressing issue of climate change and

how that now fits into the agenda of President Obama?

RICHARD PARKER: I think I did try to comment on the issue of climate change by

suggesting that the Roosevelt challenge, which was simply to get the economy growing

again without qualification for composition of output, was different than the one facing

President Obama. This is not, however, a problem that will be solved by the Obama

Administration. This is a fundamental question about the nature of economic output and

for what. That will be the greatest challenge for capitalism as a system of economic

organization going forward.

JONATHAN ALTER: Can I get a little wonky for a second here for those of you who

are scoring at home on climate change? The Obama folks made a really serious tactical

mistake recently as it related to a cap and trade system. In their budget proposal, they

want cap and trade. And they’re being very aggressive and moving forward on addressing

climate change. But they chose to give the proceeds from the cap and trade system -- the


04.13.09PAGE 29

exchange of pollution permits, generates a tremendous amount of money -- and they

wanted to use some of it for healthcare and some of it for some tax reductions or tax

rebates. The problem with that is that it was not what they call “regionally or

geographically neutral.” It amounted to people in coal states, which would be taxed very

heavily, subsidizing people in non-coal states. So people in Ohio and Pennsylvania

would be subsidizing people in California. So it was dead on arrival in Congress in the

last couple of weeks.

And what happened was enough members of the Senate objected so that they cannot use

a budget process called “reconciliation” that only requires 51 votes to get something

through. So they’re going to use that for healthcare and education, which is why the odds

of major legislation on that are better than they are for a cap and trade system to confront

climate change. But Ed Markey, Congressman from near here, and Henry Waxman have

a bill that addresses this question of keeping it regionally neutral. And I talked to a coal-

state Senator for my column in this week’s magazine, Evan Bayh from Indiana, and he

kind of likes this bill. So it might be that they can, on the basis of a Waxman/Markey bill,

start to rebuild support for cap and trade that had eroded in recent weeks. And Rahm

Emanuel told me last week that he believes they can get some Republicans as well

who’ve been supportive on climate change issues. So the White House has not given up

hope of having major cap and trade legislation this year, which would be a tremendous

step toward confronting the issue.

Very, very briefly, there’s a major conference, a Kyoto-style conference at the end of the

year in Copenhagen. And the United States has to bring something to that conference. If

the Congress does not act, the EPA is ready to act by fiat and start regulating carbon,

which Senator Bayh and others think will force Congress to act. Because it would be

worse if the EPA did it. So I’m more hopeful than most other people who have been

following this issue that there will be major climate change legislation by the end of

2009.


04.13.09PAGE 30

TED WIDMER: Sir?

QUESTION: Yes, I think next year the baby-boomer generation is going to start

marching into retirement. They’re a generation that’s been characterized as having led a

rather charmed life. I think they’re going to be very unhappy with the fact that this

economic downturn is catastrophic to a lot of them. And I don’t know whether there’s a

fickleness quotient for a generation, but can you comment on what you think the effect of

the very active baby-boomer generation is going to be on politics within the next few

years and enforcing a recovery to the economic downturn since their well-being is so

intimately tied to it?

RICHARD PARKER: I was born November 5th, 1946, so I think I probably qualify for

baby-boom generation. I should also point out that that was the day that John F. Kennedy

was first elected to Congress but it was also the day that Richard Nixon was first elected

to Congress. And so I’ve lived under the sun and the moon, the light and the dark all my

life. I tend not to think simply in generational terms because what I’m acutely aware of is

how, within generations, opportunities and success and failure have been distributed. The

generation that I represent marked a huge turning point in terms of higher education and

the number of people who got education. It marked a remarkable turning point for

women’s participation in the American economy and in terms of equal rights. It certainly

has marked that as well too for African-Americans, gays, people with disabilities.

But our ability to plan for the retirement load that we’re going to represent on a much

smaller cohort behind us is not inconsequential. Now, for me, that represents the

realization that I’m going to be working into my 70s. I’m not complaining too much

about it. I’m working at Harvard, I’m not working in a coal mine. But at the same time, I

think that the privatization and individualization of retirement responsibilities that took


04.13.09PAGE 31

hold in the 1980s and has receded apace and which has not come back on to the political

agenda is going to have to come back on to the political agenda.

John Vogel, who is the founder of Vanguard Funds and has been a longtime skeptic of

the mutual fund industry as a whole, has pointed out that in toto over the last 30 years, the

funds themselves have made more in administrative fees and trading fees than have

participants in mutual funds. Because the participants in mutual funds, in fact, aren’t

market timers. They don’t count themselves, we don’t count ourselves as able to judge

the direction of markets. And most of us believe the by-and-hold rule that was taught to

us when we first started to dabble in this area and which has not worked out well. And so

the question of what the nature of the compact is between individuals and the society in

terms of retirement guarantees is one I think was thought to be being answered in a novel

way through privatization and individualization. I think now we can look back on the

behavior of capital markets and say, “That may not have been the direction that we in fact

should have taken quite so quickly or willingly as we did.” Because I think that to solve

this problem of how people will live in retirement for the next 30 years is not going to be

a small one in terms of the burden on the population as a whole.

JONATHAN ALTER: Just very briefly, I was born in 1957, the peak of the baby

boom, more babies born that year than any other year. I’m very critical of boomers and a

lot of what they’ve done with their lives, especially compared to a lot of their aspirations.

RICHARD PARKER: You were just talking about doobies for goodness sakes.

JONATHAN ALTER: There you go.

RICHARD PARKER: Some things, other things, right. It’s a tradeoff.


04.13.09PAGE 32

JONATHAN ALTER: But one thing that they did well, or I should say that we did well

as a generation is raise our kids. And I think the young people today are, as a generational

cohort, much more public spirited, much more into things like community service, much

less selfish and narcissistic than our generation was. And we’ve been much better parents

as a generation than the so-called “greatest generation” was -- not drunk as often, not

beating the wife and kids as often.

RICHARD PARKER: Not married as often either, however.

JONATHAN ALTER: Well, actually no. Actually marriage rates went back up among

boomers. And where divorce rates spiked was with the greatest generation interestingly.

So there’s going to be this crisis, I think, in the boomer soul. They love their kids, but

they also love their retirement. And if they really love their kids, they’re going to

sacrifice a little bit of their own retirement. During the Depression — there was no social

security; it didn’t start till 1941, was when the first check that came in — older people

were really poor. But the reason there were so many people in soup lines is what little

food they had they were giving to their children and grandchildren. And so we’ll see

whether baby boomers, as they age, are willing to have their retirement benefits cut a

little bit so as not to burden their children’s generation.

TED WIDMER: Sir?

QUESTION: Are there some lessons to be learned from FDR about how to lead and

shape the military? I’m not quite at talking about a two-front war in Iraq and Afghanistan

but the transformation and the strains. Is there some wisdom from FDR that maybe

Obama should apply in his efforts over the next four or five years?

RICHARD PARKER: Well, Franklin Roosevelt was the last American president to

preside over a peacetime military that was small. And I think that the great question


04.13.09PAGE 33

facing America is that with the threat of communism now gone, whether the scale of the

American military that we support as a percentage of GDP, as a percentage of the public

budget is appropriate. One doesn’t have to go back to General Washington, President

Washington’s warnings about a permanent military.

One can, I think, validly debate whether in response to 9/11 we chose a military response

because that was what we knew how to do, whereas so much of what the Europeans have

done with religious extremism over the last 30 years has been to treat it as an intelligence

and police problem, not a military problem. It may be that the United States has become

habituated to thinking of the military as the hammer that you use when perhaps the

screwdriver would have worked better. So I think that the lesson that President Roosevelt

has to offer is the example of his Presidency in the years prior to the Second World War

as much as they are his brilliance as a wartime leader for President Obama.

JONATHAN ALTER: The other week Obama said that it was much easier when

Roosevelt and Churchill could just sit down and have a brandy, I think he said when he

was in London.

RICHARD PARKER: Several brandies in the case of Churchill, the doobies of the

1930s, yeah.

JONATHAN ALTER: And it’s a lot more complicated when you have 20 quirky

countries all with their own internal politics to handle. But I think the key thing is

collective security. Roosevelt pioneered that idea of using — and Richard was talking

about this earlier — international organizations to keep the peace, to keep the global

economy on a sound footing. And Obama is an internationalist. But Roosevelt was a

genius when it came to building the architecture of the post-war world and envisioning a

system of collective security that has essentially kept the peace for that last 64 years since

his death. And, yes, we’ve had a lot of small wars, but we have not had a world war. And


04.13.09PAGE 34

if you were placing odds 64 years ago, you would have expected that we would have had

a nuclear war by now.

TED WIDMER: Sir?

QUESTION: I want to talk about long-term versus short-term. Today the Obama

Administration faces, at least they cite these four crises: the current economic crisis, the

future crisis in education, in climate and — I’m drawing a blank — healthcare, thank you

very much.

I sort of have two questions. It seems to me, and I’d like to be corrected if I’m wrong,

that Franklin Roosevelt didn’t face that level of future crises, that he could focus almost

exclusively on the present crisis. And then my second question is, what advice do you

have for Obama as he tries to deal with these future crises?

JONATHAN ALTER: Well, I guess I would take issue with the premise a little bit.

Like I thought when he said, “The only thing we have to fear is fear itself,” that it was in

some ways an inspired bit of nonsense. Because if you’re worried, literally, about putting

food on table or a roof over your head, that’s more than fear itself. That’s something real.

So their concerns about the future, including the distant future, were real. And there were

a lot of people at the time who thought that — Roosevelt was not among them — the

future was going to be vastly different. Remember, fascism and communism were

ascendant in much of the world, and a lot of people just didn’t know at all what the future

would hold, which is, in some ways scarier than today’s demographic problems. We

know exactly when Medicare and social security are going to go bust; we know exactly

what will happen if we don’t revive our education system. They were in much more

uncharted territory, which in some ways is scarier.


04.13.09PAGE 35

TED WIDMER: We’ve got a little over five minutes left and a number of questioners.

So if we can ask questions quickly and answer them quickly, might be able to …

JONATHAN ALTER: Yeah, I’m sorry. I do get longwinded.

RICHARD PARKER: We’ll answer quickly.

QUESTION: Paul Krugman?

RICHARD PARKER: Nobel Prize-winning economist, next question.

JONATHAN ALTER: Smarter about the economy than he is about politics. I think he’s

brilliant when discussing economic matters, but to be taken with a salt shaker when he

tries to analyze the politics of it. Because that’s not his specialty.

RICHARD PARKER: I think, in that sense, he may in fact be something akin to

Keynes. Keynes was not particularly adroit at the analyses of politics. Krugman might be

playing exactly the right role from exactly the right place for this Administration. It

depends on now what Obama’s Administration does with that talk.

TED WIDMER: But quite unlike Galbraith who was very good at politics.

RICHARD PARKER: Yeah, no, Galbraith was a very engaged and very political

economist. I think that was one of his real qualities was the depth of political

sophistication and a stubbornness, a willingness to run against political tides as well, too.

You have to remember that Milton Friedman, who many considered to be the great

economist of the second half of the 20th century, was a man who thought that Richard

Nixon was the most socialist president that American had ever had.


04.13.09PAGE 36

JONATHAN ALTER: Well, Paul Krugman wanted John Edwards for president.

TED WIDMER: Sir?

QUESTION: Related both to some of your earlier comments on what was or was not

accomplished during the G20 and also on the first question that had to do with

temperament, The Economist magazine this past week observed that it was all well and

good that Obama is very popular around the world, but it might be better if he was a little

bit more feared. What would be your comment on that observation?

JONATHAN ALTER: The pirates fear him. I mean, Machiavelli said you need to be

feared. A leader needs to be feared. But that can be a very, very dangerous trap to get

into. And I think that this hurt both Kennedy and Johnson, this idea that you kind of had

to prove that you were macho. And it was a bigger problem during the Cold War. But

we’ve seen where that led, not just in the 60s. But President Bush wanted to be feared,

and it didn’t work out so well for him. So I’m not sure that we’re in an era where a

swagger and an ability to inspire fear is the most productive way of advancing the

national interest.

TED WIDMER: Ma’am?

QUESTION: My concern has to do with trade agreements that the United States … I

think it impacts our economy a great deal. Do you see the Obama Administration

increasing support or at least insisting on adherence to the current trade agreements?

RICHARD PARKER: That’s a completely political, not economic question. And I

think that like the issue of the role of the Bush tax cuts being removed, Obama’s behavior

on trade is going to be governed by how they see the economy recovering over the next

12 to 18 months. I think that Austan Goolsbee was probably speaking the truth when he


04.13.09PAGE 37

said in Chicago to the Canadian Council, the talk of radically revising NAFTA or World

Trade Organization relations was politics more than it is policy. I don’t see the pressure

on the Obama Administration right now for overturning NAFTA or WTO arrangements,

which will greatly dishearten many liberals. But right now stimulating trade, not

enforcing the environmental and labor terms of those trade agreements, will probably be

his first priority.

JONATHAN ALTER: It doesn’t dishearten me as a liberal, because classical

liberalism, of course, is strongly pro-free trade. I don’t think they’re going to be as

aggressive as Clinton was in new free trade agreements.

RICHARD PARKER: There’s less to do.

JONATHAN ALTER: Yeah. It might be rather an uneventful time in trade relations.

RICHARD PARKER: Yeah, no, I think the financial market regulation question is the

big one. The goods trade is not the big issue; that’s the 90s.

TED WIDMER: Sir?

QUESTION: On the stress test, which they are now giving to the banks, they are now

saying they’re not going to give the results of these tests to anyone. And I was wondering

what your feeling is on that when I feel that the banks are calling out for transparency? I

mean, it just doesn’t seem to be any transparency with the banks.

RICHARD PARKER: Well, this is part of the heart and soul question that I think is

going to be a test for the Obama Administration and is this landscape between recovery

and reform. And, again, I’m one of those people who … My grandfather was a banker

who was ruined by the Great Depression because he was one of those small, Midwestern


04.13.09PAGE 38

bankers who didn’t foreclose his farmers, because they were his neighbors. And that is a

kind of banking that I think has served the country extraordinary well, where capital is

aggregated and reallocated in a way that grows the economy for all us.

Over the past 30 years, it’s my view generally that we have somehow merged banking

with the Mohegan Sun, and that I don’t personally feel inclined to want to deposit my

paycheck at the end of each month at the Mohegan Sun. Nor do I want, as a taxpayer, to

have to pay for the failure of the First National Bank of the Mohegan Sun over and over

and over and over again. So I understand why they don’t want to release the stress test. I

understand why they have diluted the mark-to-market. I understand why they don’t want

to talk about what they are making AIG do or not do or who the counterparties are. And

that’s the recovery part. But I deeply, deeply, deeply hope that Obama understands what

the reform part is that needs to be done and that lies ahead.

JONATHAN ALTER: I’m really worried about these stress tests that we’re not going

to get at the truth and that you mentioned the counterparties to AIG. I mean, we

understand that Goldman Sachs was made whole. Why do they get paid first? You can

tell that I like haircuts, and to use the Wall Street lingo …

RICHARD PARKER: I don’t as much.

JONATHAN ALTER: To use the Wall Street lingo, the shareholders of these banks

need to take a hair cut.

RICHARD PARKER: Goldman Sachs stock is up about 62 percent from its bottom in

September.

JONATHAN ALTER: Why should they get paid first? AIG got $180 billion dollars,

$180 billion dollars from the taxpayers. And why do they make Goldman whole first?


04.13.09PAGE 39

Now I can understand there are certain counterparties that are in trouble. If AIG were to

collapse, it would have many third and fourth-order problems. And you don’t want to pull

down the whole house of cards. But we need more scrutiny on who’s making out and

who isn’t. And it should be exposed to the light of day.

TED WIDMER: We are a couple minutes past seven. So with apologies, why don’t we

take one more question. And then if you don’t get your question, why don’t you come up

to the stage after.

QUESTION: Mine’s tiny. You’ll see how tiny it is. You made reference to Obama’s

use of Saint Paul’s letter to the Corinthians about putting aside the things of childhood.

The later part of that same epistle talks about now we see things dimly, but then clearly

and not through a looking glass. We’ve heard about the faith, the intellect that this man

has and his hope. But the last part of that epistle talks about the fact that there are faith,

hope and charity, these three, but the greatest of these is charity. And I think there is a

prism that Obama looks at the world through that is different than what we have seen in

recent times. It will be tested in the international world with El Salvador and the new

government there. It will be tested on the domestic side around health insurance, but with

all the poor, I think will drive it.

JONATHAN ALTER: Yeah, just very quickly, my answer to your question will be that

when FDR put his hand on the Bible to take the oath of office, the Bible was open on that

very verse that you mentioned.

TED WIDMER: Okay, a tiny question, you promise? Okay.

QUESTION: Very quickly. Oh, this is so simple to solve for you. Besides opening up

dialogue with the legitimate leaders of the Islamic world, what do you think Obama’s

next step should be to reduce the growth of radical fundamentalism and the Jihadists?


04.13.09PAGE 40

JONATHAN ALTER: I have a very short answer. And also you can tell I’ve got FDR

on the brain. But at the end of 1933 Franklin Roosevelt shocked everybody, including his

mother and his Vice President, who were very much opposed, by recognizing the Soviet

Union and restarting diplomatic relations with the Soviet Union.

RICHARD PARKER: Restored trade.

QUESTION: And then one last question?

JONATHAN ALTER: And just very, very briefly, if the Iranian elections go right this

June and we get a more moderate leader than Ahmadinejad, I think that Barack Obama

should move towards normalizing diplomatic relations with Iran and that that would go a

great distance toward reducing the threat from radical Jihadists. [applause]

TED WIDMER: Thank you. And thank all of you. And Jonathan Alter and Richard

Parker, thank you for a very interesting evening. [applause]

END

Documents

TOM PUTNAM: Good Evening/media/assets/Education and … · Web viewTOM PUTNAM: Good Evening. ... The word “dictator” had a positive connotation. ... I thought the Doobie Brothers