For Next President, Historic Power Over Economy

By Chris Arnold

The next president will lead a country gripped by the worst economic turmoil in generations. But whoever ends up in the White House will also have historic power to reshape the nation’s financial system.

The way people get their home loans could be reinvented. The government could control the risks taken on Wall Street. And millions of people facing foreclosure are looking for help.

“The test of the next president being a great president is going to be: Is this someone who does what an ordinary president does, which is try to put out the fire and fix things immediately, but not do much more than that? Or is this someone who is going to say there are basic systemic problems that brought on the economic crisis of 2008?” says presidential historian Michael Beschloss.

Since the executive branch has just been given great latitude to act to address the economic crisis, the next president can make historic changes to fix the system.

“When Congress passed that bailout bill, it was crossing the Rubicon,” Beschloss says.

More Latitude In Times Of Crisis

He adds, “Before in American history, it’s been pretty rare that you’ve had a situation that the government could get involved in buying and selling stocks, deciding which banks are worth shoring up. When we’re in a crisis time, people are willing to let a president have a lot more power than he would in a normal time.”

In other words, presidents generally have a window of opportunity to take bold actions while a crisis is under way. That happened during the last great financial crisis.

Economic historian John Steele Gordon points to March 4, 1933, the day Franklin Roosevelt was inaugurated.

“The next three months became known as the 100 Days. And in those 100 Days, Roosevelt exercised extraordinary power. Nobody has ever had the power he had in those 100 days,” he says. “He would send legislation up to Capitol Hill [that would] go through both Houses virtually unexamined and be back on his desk the same day.”

We’re not quite there right now. But even with the unpopular lame duck President Bush, Treasury Secretary Henry Paulson….

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