Balancing Reality With Hope

Feb. 24, 2009— -- From the man who ran a successful presidential campaign on a message of hope has come a more sobering tone less than two months after taking office.

Amid daily market turmoil and concerns about unemployment and the banking industry, President Obama's team believes that tonight's prime-time address must balance grim reality with the can-do optimism he's known for.

But has Obama become too negative?

"We learned from the Great Depression that an inspiring leader is important, someone whose voice can shine through the darkness," said Amity Shlaes, author of "The Forgotten Man: A New History of the Great Depression."

The comparisons between Obama and President Franklin D. Roosevelt have come fast and furious lately, even though FDR undoubtedly presided over a country in much greater need of comfort.

"If you were to compare the two now, this very minute to then, the Great Depression was Katrina. This is a rainstorm," Shlaes said."

At the start of 1933, 25 percent of Americans were out of work compared with 8 percent today. In the 1930s, people were pulling funds out of banks. Huge numbers of Americans were going hungry and more of the country's elderly were living in poverty.

Americans awoke this morning to news that the world markets had tumbled after the U.S. stock market's latest dive, which pushed Wall Street to 12-year lows. While markets were expected to moderate today, Monday's news was a sign that investors weren't overly confident about Obama's $787 billion stimulus plan.

Obama has promised large banks that he won't let them fail. And he's said that he wants to halve the national debt by the end of his first term.

It's proving a tough task.

The Not-So-Distant Past

A more recent historical figure than Roosevelt might provide inspiration: When President Reagan took office, he inherited the worst economy since the Depression.

In 1980, there was 7.1 percent unemployment and 12.5 percent inflation. Reagan combined foreboding and bootstrap optimism in his tone.

Back then Reagan noted the series of recessions that had rocked the country and said that "history will remember this as an era of American renewal."

So while Obama has to face problems that are real and threatening to the country, the lesson he can take from his predecessors is give the country something to believe in -- a notion Obama is already familiar with.

It's a fine line for the new U.S. president, and the administration knows some Americans may still need to hear how bad things can get.

"A president can change a country with a speech, and a big component of that speech has to be hope," Shlaes said.

Experts note, however, that optimism alone is hardly a solution.

"I mean, President Bush failed because during Iraq he told people to go shopping," presidential historian Douglas Brinkley said.

But today's market is often driven by psychology as well as fundamentals. A little optimism never hurts.