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Historian Richard Norton Smith on Obama and the Economy


Even Barack Obama's critics and skeptics would concede that in this moment of global distress, the installation of the young senator from Illinois as America's first African American President is a moment of hope. But what are the implications for business, and can anyone live up to the hype surrounding his inauguration? I talked with author and Presidential historian Richard Norton Smith, who is currently Scholar in Residence at George Mason University and at work on a biography of Nelson Rockefeller.

MARIA BARTIROMO

Are expectations for Barack Obama so high—not just in the U.S. but around the globe—that he is doomed to disappoint?

RICHARD NORTON SMITH

I have thought on a number of occasions during the past few months that in some cases his admirers do him a disservice by making facile comparisons to Lincoln or to Roosevelt. You have to remember, no one knew in March 1933 that FDR was going to be FDR. Just a few months earlier, Walter Lippmann, dean of journalists, had referred to him as a pleasant man who, without any particular qualifications, would very much like to be President. He was elected in no small measure because he wasn't Herbert Hoover. And by the same token, Lincoln's election, far from enshrining him in myth, encouraged seven Southern states to pull out of the Union. It was only over time, dealing with that and other crises, that Lincoln obtained this larger-than-life quality.

So it's not valid to compare Obama with Lincoln?

Let's look at what we do know. We know he ran an extraordinary campaign. And it was interesting when Hillary Clinton did the "3 in the Morning" ad: It was a great ad and a perfectly appropriate threshold to set for any would-be President. What they didn't know was that there would be a number of 3-in-the-morning moments in the campaign. Some provided by Reverend Jeremiah Wright, the most memorable provided by Wall Street in the middle of September. And the way Barack Obama responded, the calm quality he displayed in that moment of panic, not only contrasted favorably with his opponent but maybe is the best evidence yet that some of these comparisons with Lincoln are not off the wall.

Right. I mean John McCain suspended his campaign.

Oh, absolutely. You know, the historical parallel for this election is not 1932, it's 1980. The country was profoundly unhappy with the status quo and wanted change. The challenge for Barack Obama was like the challenge for Ronald Reagan in 1980. People now look at Reagan as if he were born on Mount Rushmore, but he was an unconventional candidate. Under normal circumstances, Reagan would have been dismissed as too old, too right-wing, too California, too Hollywood, and too dangerous, particularly in terms of foreign policy. So what Reagan had to do was simple but not easy: He had to reassure a critical mass of the electorate that he could be trusted, that he would be an agent of change, but not a radical agent of change. And he did that famously in one debate with Jimmy Carter. Barack Obama didn't do it in one debate; he did it in three debates. He did it in the race speech in Philadelphia. He did it throughout the primary season. So the Lincoln parallel is an interesting one, but the more relevant comparisons are to John Kennedy and Reagan.

Obama comes into office with joblessness rising, the housing market shattered, the financial markets blown apart, growth slowing to a crawl, and consumer confidence at an all-time low. Does he face a more daunting situation than FDR did?

I want to be careful here because I don't want in any way to minimize the enormity of what he faces. On the other hand, in 1933, 25% of the workforce was unemployed and what was left of the credit system collapsed literally on Inauguration Day. You had a country that had been drained of hope. You had the great drought that destroyed agriculture. You had rising tensions because trade barriers had been raised. Why do you think Hitler came to power in Germany? It was on the back of economic distress. My point is, the crisis that Roosevelt faced was the very survival of democratic capitalism. Just before he became President, a friend said to him: "You know, if you succeed in reversing this economic death spiral, you'll be remembered as one of America's greatest Presidents." And Roosevelt said: "And if I fail, I'll be remembered as our last one." Now that may be a little melodramatic, but only a little. And I don't think anyone is applying that test to the incoming President, thank God.

Clearly Obama is an effective communicator, but in terms of economic experience, has any new President ever had thinner qualifications?

Ronald Reagan was governor of California and had thought about [economics] a lot, but primarily from an ideological standpoint. John Kennedy had pretty thin credentials in the Senate. But look at the other side of that coin. Richard Nixon was supposed to be an orthodox fiscal conservative. In 1973 he decided we're all Keynesians now and imposed wage and price controls. So you can't always project into the future from what you assume based upon the past. I think it's a more critical element that Obama is willing to acknowledge his need to be surrounded by people who have more experience than he does. If a President displays that humility, it's a very good sign.

What does he need to do to reassure business?

I think he's been doing things throughout the transition to try to reassure business. We know more about what Obama wants to do to combat an economic crisis than we have ever known from any incoming President.

If I were a corporate executive contemplating the Presidency of Barack Obama, what should I fear most?

The only thing you have to fear is fear itself.

Maria Bartiromo is the anchor of CNBC's Closing Bell.

Steve Ballmer, Power Forward
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