08/09/2010 03:52 pm ET | Updated May 25, 2011

Approaching Midterms

For those who hope -- and those who fear -- that the Obama Presidency will live up to its campaign promise to be "transformational," the approaching midterm elections hold great trepidation. A look back at the first midterm of the last two transformational Presidencies is in order.

The 1934 midterm election is cited as the exception to the rule that the party in power loses seats in Congress. Democrats and Progressives gained 9 seats in the Senate and 14 in the House, creating the largest party majorities in both houses in history.

The stock market predicted, if anything, headwinds for the Democrats in the 1934 midterms. After the sickening fall during Hoover's term (from 381 in mid-1929 to 41 in early 1932), the market recovered strongly (from 50 at FDR's inauguration to 110 in early 1934). But the market stuttered again in the spring and summer of 1934, falling to 90.

FDR's first term, especially the First Hundred Days, come down through history as a legislative blizzard. However, a deeper look finds that the iconic New Deal programs that outlasted the Depression - Social Security, Glass Steigal, TVA, and such - belong to later terms. Many early FDR anti-depression programs were small and temporary. Some intended to be larger changes were found unconstitutional, such as the NRA.

Two of FDR's most admired early programs, the Civilian Conservation Corps and the Colorado River Dam, were actually Hoover's ideas. Hoover could not get them through a deadlocked Congress - the 1930 midterms resulted in a 48-48 Senate and a 218-217 House. Later, the massive hydroelectric project was renamed Hoover Dam.

The 1970s are remembered for stagflation. The Dow averaged 800 over the decade, with volitile excursions up to 1,000 and down to 600. The Recession of 1981-2 was deemed the worst economic downturn since the Great Depression, with reported unemployment peaking at 10%. It followed a decade of high inflation and stagnant real growth.

In 1982, the Republicans lost significant ground in the House, giving back 27 seats and most of their gains from 1980. The GOP fared better in the Senate, holding on to a 54-seat majority with no losses.

The Kemp-Roth tax cut bill of 1981 was Reagan's signal and sole major legislative accomplisment before the 1982 midterm. Advocates of tax cuts and supply-side economics felt they compromised too much with only 25% reductions in the top bracket, and that phased in over three years. Even those compromises, made to pass the 1981 bill, were further rolled back in the 1982 tax bill. The 1982 tax bill included a number of tax increases, which originated, ironically, in the Republican-controlled Senate. Even Republicans who didn't like the 1982 tax increases were gratified that the midterm election results were not worse for them.

Reagan is credited with moving the Supreme Court sharply to the Right. But not with his first appointment, Sandra Day O'Connor, in 1981, who defined the thoughtful Center of the Court for her entire tenure. The elevation of William Rehnquist to Chief Justice and appointment of Antonin Scalia came later, as did the unsuccessful attempts to appoint Robert Bork and Douglas Ginsberg. Reagan's last appointment, Anthony Kennedy, turned out to be a disappointment for Conservatives.

So, what does this portend for 2010?

Like FDR and Reagan, Obama faces his first midterm election with an economy and a stock market that got better with their inauguration and got nervous going into the fall. All three had eighteen eventful and controversial months. To their most avid supporters, all three failed to deliver on their campaign promise of change and new direction; all three accepted watered-down, compromised legislation; none of the three changed the direction of a Supreme Court that was not friendly to their aims.

History shows that for FDR and Reagan, their most important accomplisments came after their first midterm. Against the bitter opposition of their rivals and the disappointment of their friends, both used the smaller accomplishments of their first years to set the tone and the broader agenda for the rest of their Presidencies.

They also never stopped reminding the ever-forgetful American public just how much the public didn't like the previous administration. I think Frank Rich and many other commentators have it exactly wrong. Running against the last administration, even years later, can be a winning strategy. It certainly worked for two American master politicians.

Win, lose, or draw in the midterms, for Obama to live up to his potential to be transformational, he must show that the first eighteen months are only the first act of a long running play.

The next phases will take new approaches, new programs, and new people. FDR changed out much of his cabinet after 1934, bringing in the people who really created the New Deal. Reagan changed out a lot of his cabinet, starting 1982, bringing in the people like James Baker, Edwin Meese, William Bennett, and Elizabeth Dole who defined Conservative politics for the next generation.

History suggests that there will be more to learn from Obama's administrative changes than the midterm election results.

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