FDR pioneered Obama's policies and there was no happy ending

Roosevelt, too, pursued the dual purposes of revenue and social good. In 1935 he signed legislation known as the "soak the rich" law. FDR, more radical than Obama in his class hostility, spoke explicitly of the need for "very high taxes." Roosevelt's tax trap was the undistributed-profits tax, which hit businesses that chose not to disgorge their cash as dividends or wages. The idea was to goad companies into action.

The outcome was not what the New Dealers envisioned. Horrified by what they perceived as an existential threat, businesses stopped buying equipment and postponed expansion. They hired lawyers to find ways around the undistributed-profits tax. In May 1938, after months of unemployment rates in the high teens, the Democratic Congress cut back the detested tax. That bill became law without the president's signature.

Then there is labor policy. Obama announced this year that the federal government would award contracts to firms with more generous pay and benefit packages. With its support of private- and public-sector unions -- recall its treatment of the automakers' unions in the 2009 bailout -- the administration generally wants wages or compensation to be high.

Roosevelt's flamboyant pursuit of a similar goal cost the economy dearly. The National Industrial Recovery Act and, later, the Wagner Act gave workers the power to demand higher wages. They got them. But employers struck back, choosing not to hire or rehiring many fewer workers than they otherwise might have. In the later 1930s, the divide deepened between those with jobs and the unemployed. Economists Harold Cole and Lee Ohanian wrote in the Journal of Political Economy that the politically driven wage increases were the most important factor in the double-digit unemployment of the later 1930s. A popular Gershwin song of the period, "Nice Work If You Can Get It," captured the bitterness.

What about the third factor, the entrepreneurial environment? The Obama administration places a premium on action. When it comes to spending, the idea seems to be that any spending is better than none. Big new laws -- financial reform -- are put forward to inspire confidence.

But change that is too arbitrary and too frequent petrifies firms, especially before their rules have been tested in the courts. As Verizon Communications chief executive Ivan Seidenberg noted recently in a Business Roundtable speech: "By reaching into virtually every sector of economic life, government is injecting uncertainty into the marketplace and making it harder to raise capital and create new businesses."