There has been a growing number of signs in recent weeks that the U.S. is lurching toward recession. Interest rates on short-term bonds are currently higher than on long-term bonds, an inverted yield curve that has presaged every recession since the 1950s. Meanwhile, manufacturing growth has slowed to the lowest rate in more than a decade, resulting in worrying layoffs. And rates of residential investment, one of the key distress signals before the Great Recession, have been falling since the beginning of last year.
Yet rather than rolling up his sleeves and working to strengthen the economy, Donald Trump seems more interested in attacking Fed Chair Jerome Powell — whom he appointed — and pursuing a trade war that is hurting far more than it’s helping. If nothing else, self-interest should motivate Trump to try; the president needs the economy to stay strong to have any hope of winning reelection next year. But despite that, he seems incapable of focusing his attention on a proactive agenda to ensure this outcome.
His inactivity has a historical parallel, one that should concern all Americans: Calvin Coolidge and the tumultuous, ultimately disastrous economy of the 1920s.
Calvin Coolidge became president in August 1923 when his predecessor, Warren Harding, died of a heart attack. The former Massachusetts governor quickly became known for his dry sense of humor and staggering mediocrity, both of which made him massively popular — sound familiar? He wasn’t even supposed to be vice president, having been selected by delegates at the Republican Convention in Chicago as an act of rebellion against political bosses who preferred progressive Senator Irvine Lenroot of Wisconsin. Coolidge was thus, along with Gerald Ford, the most accidental of presidents.
Once in the White House, as political scientists Sidney Milkis and Michael Nelson have argued, “Coolidge raised inactivity to an art.” Strangely for a chief magistrate, he had an aversion to public policy and the legislative process. During his nearly six years in office, he championed only one measure: a tax bill that cut rates for the wealthiest Americans. Coolidge chose to reign, not rule.
And yet, his gift for public relations allowed him to form a deep bond with the American people. He accomplished this by mastering the newest communications technology to arrive on the scene: radio. His initial State of the Union address was the first to be broadcast via that medium, as was his acceptance speech at the 1924 Republican convention in Cleveland.
For the first time in U.S. history, more than just a small sliver of the electorate could hear the nation’s leader address them directly. Coolidge, recognizing the political power of that connection, scheduled monthly radio broadcasts for the remainder of his tenure. At the same time that he was taking advantage of this revolutionary shift in telecommunications, Coolidge also held frequent press conferences — 520 during his time in office (a rate of nearly twice per week). This was something new for a president, reaching out to the media as a conduit for frequent contact with the citizenry.
Coolidge’s outreach to the American people, however, hid the fact that he was shirking his presidential responsibilities. His focus on building his personal brand came at the expense of taking public policy seriously. This was troubling, given the warning signs that an impending economic disaster was looming. The stock market was overheating as the wealthy made increasingly risky investments, fueled by Coolidge’s tax policies and his aversion to regulation. In the Midwest and South, he did nothing to address the sharp rise in economic hardship faced by farmers even as nearly 5,000 rural banks shut their doors. He ignored rampant real estate speculation in Florida and elsewhere despite its potential to destabilize the national economy.
Coolidge chose to reign as the foundations of the financial system collapsed. Rather than run for a second full term, he left office just months before the crash and resulting depression shook democratic capitalism to its core. Unfortunately his successor, Herbert Hoover, decided to follow the same path of nonintervention, thus ensuring that the economic disaster would last for more than a decade.
There are actions these presidents might have taken to alleviate Americans’ suffering and mitigate the damage of the crash. We know this because a very similar set of problems faced our leaders just over a decade ago, and they reacted quite differently. Although there is good reason to blame George W. Bush’s policies, which in many ways mirrored those of Coolidge, for pushing the economy toward the brink, once it started going over the edge Bush decided to rule. Rather than sit on the sidelines, he signed a $170 billion stimulus package and later championed a controversial bank bailout plan aimed at assisting distressed financial institutions.
When he came into office, Barack Obama continued to rule by fighting for a series of interventions that included developing a $787 billion stimulus plan, bailing out the auto industry and authorizing $11.5 trillion in spending and loan guarantees by the Federal Reserve. By taking action, Bush and Obama staved off a much deeper depression, and stable economic growth returned in just 18 months.
Now we are facing the prospect of another economic crisis. Yet unlike a decade ago, we have a president more interested in reigning than ruling. Trump’s inaction seems more a product of indifference rather than ideology. Like Coolidge, his focus is on shaping national opinion about his presidency using the latest revolutionary telecommunications technology: social media. While Coolidge held biweekly press conferences and delivered monthly radio addresses, Trump tweets more than ten times per day.
Add to this an obsession with manipulating cable television coverage and the result is presidential self-promotion on steroids. Instead of gathering his economic advisors and working on an infrastructure plan or making targeted direct cash payments to citizens or strengthening the manufacturing sector by ending his ruinous trade war with China, each of which might help avoid a recession, he prefers trying to fool the American people into thinking that he is taking action to make their lives better. The result could be economic calamity.
If Coolidge made inaction an art form, Trump has made it a cancer eating away at the foundations of democratic capitalism. Democrats may not have the power to force him to take action in the short-term, but they must articulate a vision for how to fix our economic system and protect ordinary workers in the long-term. If we are to prevent a Hoover-like second Trump term, this must be a centerpiece of the eventual Democratic nominee’s pitch to the American people: a promise not to reign but to govern.