In the autumn of 1933, Harry Hopkins was worried about the coming winter. Since May, he had served in Franklin Roosevelt's administration as head of the federal government's new -- in fact, its first -- program to distribute funds to the unemployed. Neither unemployment insurance nor food stamps nor welfare had yet come into existence. Only a handful of states had relief programs, and they were rapidly going broke. And private charity was almost laughably inadequate to the problems of a nation where unemployment stood close to 25 percent.
Hopkins feared that millions of Americans would be without food or shelter in the coming cold months. In October, he met with the president and proposed something new: a temporary federal jobs program to see the nation through the winter. It would employ 4 million people and last for four months. Roosevelt did a quick calculation, figured it would cost $400 million, and decided to take that money from the budget of the Public Works Administration, run by his secretary of the interior, Harold Ickes.
In time, the PWA would build such enduring monuments as the Bonneville and Boulder dams, the Triborough and Oakland Bay bridges, and the carriers Enterprise and Yorktown, which ended Japan's advance across the Pacific at the Battle of Midway. But the PWA was slow to get up and running. As Roosevelt himself later wrote, the delay was the result "of the unavoidable time-consuming process of planning, designing and reviewing projects, clearing up legal matters, advertising for bids and letting contracts." Hopkins, as Roosevelt was fully aware, intended to short-circuit those processes -- indeed, to skip them altogether. It wasn't Management 101, but, as Hopkins frequently pointed out, "Hunger is not debatable."
What happened next was astounding -- by the standards of 1933 and, for that matter, of 2010. Indeed, Hopkins' initiative and ambition should be a model for our response to today's Great Recession. Hopkins' program, the Civil Works Administration (CWA), began operating on Nov. 9. He summoned governors and mayors to meet with him in Washington on Nov. 15 and submit proposals to put people to work. As the proposals came in, he approved them: 122 on Nov. 20, 109 on Nov. 21. By Nov. 26, he had approved 920 projects for Indiana alone, and 48,500 Indianans were already on the job, on the CWA's payroll, by that day.
"Ickes was concerned about the return on the taxpayers' investment," Robert Sherwood writes in his 1948 biography Roosevelt and Hopkins. "Hopkins did not give a damn about the return; his approach was that of a social worker who was interested only in getting relief to the miserable and getting it there quickly."
By Christmas, the CWA was employing 2.6 million Americans. A few weeks later, Congress appropriated an additional $950 million, funding the expansion of the program to encompass a total of 4,264,000 workers. Thirteen million Americans had been unemployed at the start of November; by early February, that figure had dropped to 9 million.
The overwhelming majority of CWA jobs were laborers' jobs, requiring the use of shovels and pickaxes. CWA workers repaired streets, built playgrounds, and paved airport runways and roads connecting farms to market. Another 50,000 of the workers on CWA payrolls were teachers, and 3,000 were artists and writers. In their four months on the job, the CWA's workers paved 255,000 miles of roads, built or improved 40,000 schools and 998 airports, and painted the San Francisco cityscape murals (including a scene of a library prominently featuring works by Marx and Lenin) on the inside of Coit Tower.
Putting millions of people to work in a space of two months was an amazing achievement. The 4.26 million Americans employed by the CWA constituted roughly 3.5 percent of the nation's population of 125 million people. Today, the Census Bureau estimates that America is home to 309 million. If a modern-day public-works program were employed on the same scale, it would employ 10.8 million Americans. Since the current recession began, the United States has lost 8.4 million jobs and failed to add the additional 2.7 million jobs it would need to hold unemployment steady due to population growth. In short, the nation needs to create 11.1 million jobs to get back to pre-recession levels.
If a new Harry Hopkins heading a new CWA were to come along, employing the same percentage of Americans that the old Hopkins and the old CWA employed, in just a few short months the recession would be over. But so far the Obama administration has failed to put such a program in place. And if, as many economists fear, the private sector fails to create many new jobs even as the recession ends, then New Deal?style public-jobs programs remain an option -- perhaps, the only option -- to return America to anything resembling full employment.
barack 0bama came to the presidency with long-standing plans to create universal health coverage and to slow global warming. But neither he nor the Democratic Party -- nor anyone, for that matter -- had a plan for how to remedy the most serious economic meltdown since the Great Depression; no one had anticipated the calamitous near-collapse of American finance. Then again, the collapse of the American economy was not something Roosevelt or anyone during the boom years of the 1920s had anticipated, either.
Yet in dealing with both economic depression and war, Roosevelt demonstrated a stunning ability to improvise and mobilize, to create programs unlike any the nation had seen before and bring them to epochal scale in a relatively short time. In dealing with the current recession, by contrast, Obama has not had to invent policies from whole cloth. He and his advisers know the lessons of Roosevelt's presidency and Keynesian economics; that is why he pushed a $787 billion stimulus program through Congress shortly after he took office. But while the stimulus clearly saved jobs (an estimated 1.5 million to 2 million in 2009), chiefly in the public sector, it was insufficient to stop the cutbacks in state and local governments and unable to keep the level of private-sector joblessness from rising. There is no latter-day equivalent of the CWA or the WPA (the Works Progress Administration, the public-jobs program, headed by Hopkins, that ran from 1935 until 1943).
There are complex reasons why we have not built 21st--century versions of these job programs. For one thing, political resistance to such policies is higher today than it was 75 years ago -- in part because today's misery is less acute, since the nation now has programs such as unemployment insurance and food stamps. America lacks the sense of existential crisis that it experienced in the depths of the Depression. Also, a resurgent American right, panicked by Obama's ascent to the presidency, has stepped up its war against government initiatives. Its efforts have been augmented by those of the deficit-phobes, who have dominated public discourse at the worst possible moment for a nation in need of all the economic stimulus it can get.
Because of this opposition, the $1.2 trillion stimulus proposal that Christina Romer, head of Obama's Council of Economic Advisers, was going to present to the president didn't even reach his desk. Romer was convinced that anything smaller than her proposed stimulus would fail to stanch the economic bleeding. The president's political aides, however, deemed it too high to be enacted, and economic policy chief Larry Summers believed it would induce panic about its impact on the federal deficit.
In the end, the stimulus package cut payroll taxes, provided more funds for unemployment insurance, gave significant aid to state governments (particularly to keep Medicaid recipients from losing their benefits), and devoted a smaller amount of funds -- but still a lot of money -- for public works. Anti--government ideology and misplaced deficit phobia took their toll on the size and character of the stimulus package, but they do not explain why so much of the stimulus has failed to bolster the economy -- particularly those parts of the economy, such as infrastructure construction, that we associate with the New Deal's jobs programs.
The real culprit wasn't underfunding or lack of political will. It was poor implementation. The White House hasn't made the massive push that's required to overcome the normal inertia of government. And matters are complicated by the checks that liberals created to keep the government from building roads, rails, and other infrastructure by executive fiat.
"I kept hearing that we had lots of projects that were shovel-ready," says one administration official. "But they weren't. We have think tanks that make a compelling case for Keynesian stimulus. What we need, it turns out, is a think tank that tells us how to actually do a stimulus -- how we can get the dollars out there now" to reduce unemployment.
Much of the stimulus money, to be sure, flowed to its beneficiaries without encountering any bottlenecks at all. The reduction in payroll taxes almost immediately boosted workers' paychecks. The additional funds for unemployment insurance and food stamps went straight to their recipients. The aid to state governments enabled those governments to keep people on the Medicaid rolls and to substantially limit the layoffs of teachers and other public employees.
What the funds haven't done is boost employment in the two sectors that have hemorrhaged the most jobs: construction (where unemployment stands at 24.9 percent) and manufacturing (where it's at 12.6 percent). The latter sector suffers from special problems, because it now is subject to global competition and must await the return of the American consumer's purchasing power. But construction is the sector that first comes to mind as the object of a public-jobs program -- in part the result of the hold that the New Deal job programs have on our historic consciousness.
To gauge what actually happens -- and doesn't happen -- when stimulus money is sent to a state, let's look at California. The recession has been particularly devastating for the once-Golden State. In February, its unemployment rate stood at 12.5 percent, while the national rate was 9.7 percent. As the Southern California exurban housing boom -- fueled by sub-prime mortgages -- has shuddered to a halt, unemployment in the state's construction sector has soared to nearly 30 percent.
America's mega-state is the targeted beneficiary of $85 billion of the $787 billion stimulus package (that's 10.8 percent of the total; the state is home to 12 percent of America's population). Funds that went to existing government aid programs reached their California recipients fairly quickly. In 2009, federal stimulus dollars supplanted the state's waning contributions to its Medicaid program, enabling the state to maintain coverage for more than 190,000 children, according to a report from the nonpartisan California Budget Project. The stimulus awarded $8.2 billion to the state to help with Medicaid for a two-year period, and by the end of 2009, $4.7 billion of it had been spent for that purpose. Another $1.4 billion was allotted to California beneficiaries of food stamps for a two-year period, and half that amount, $705 million, was spent in 2009. A further $4.8 billion was provided to the state for K-12 and higher education. Facing massive cutbacks in public schools and universities, the state spent $4 billion of that to keep classrooms open and teachers on the job.
But many stimulus programs are long-range and will take years to implement. California is set to receive an estimated $1.9 billion, for instance, in federal funding to develop a health information-exchange infrastructure, including electronic record-keeping. But such programs take time to develop. By the end of 2009, no funds had yet been awarded to California.
The real problem, however, is that some programs that aren't supposed to be long-range are turning out that way. The New Deal?type programs in the stimulus come chiefly in the form of grants from the departments of Energy and Transportation -- and these have been the slowest to be implemented. California received $620 million in weatherization and energy-efficiency dollars in 2009 but by year's end had spent just $6.7 million of that. The state received $2.3 billion for intercity high-speed rail, but the construction of such projects could take decades.
The disparity in the speed at which different projects get going is evident in the state's own tally of jobs funded through the stimulus dollars. By the end of 2009, stimulus money had funded 50,138 jobs in education but just 1,656 in transportation. Totaling all infrastructure spending in the stimulus, $10.6 billion was slated to come to California, $5.6 billion had been awarded, and just $1.2 billion spent by the end of last year.
What happened? Big government -- spending, that is -- ran into good government -- regulation, competitive bidding, environmental safeguards, the works. "To be shovel-ready is much more complicated now than it was in 1933," says Laura Chick, the former Los Angeles city controller (and a liberal Democrat) whom Gov. Arnold Schwarzenegger appointed as the state's inspector general of stimulus spending. "Environmental-impact reviews, historic-preservation safeguards, unionization of government workers -- these are good things, but they've changed the way government can operate. Plus which, the federal government said, 'We'll give you a ton of money, and we want you to spend it faster -- and better.' There are no exemptions from regulations that came with the stimulus funds. They didn't waive the requirement for competitive bidding; they stressed competitive bidding."
She continues, "You can't just build a new bridge. You've got to do environmental-impact reports, you have to open up the decision to community input, you face potential lawsuits. I'm not saying concern for environmental impacts should go away, but it makes it harder to deal with an economic crisis."
Chick rolls off a litany of speed bumps. The federal government wanted community-based organizations in poor urban communities to undertake home-weatherization projects. But many organizations couldn't pay the federally mandated prevailing wages for construction work or meet the increased reporting standards that Washington mandated. Weatherization work in Los Angeles almost ground to a halt.
There have also been instances where federal spending and state cutbacks have collided. Chick discovered that many projects were stalled in the state's Office of Historic Preservation, which needs to sign off on myriad construction or modernization endeavors. As a result of Schwarzenegger's budget cuts and the furloughs for state workers, Chick found it was taking 60 days for the chronically understaffed office to get to and approve the most routine structural improvements.
Even when there are no extraordinary bottlenecks, things proceed slowly. "We got $25 million of the $256 million in Department of Energy (DOE) grants to the state Energy Commission to make 250 state office buildings more energy-efficient," says Scott Harvey, the chief deputy director of California's Department of General Services. "We do competitive bidding for the jobs. We've needed interagency agreements. We spent a lot of time figuring out how to calculate the number of jobs this would generate; that required a lot of give-and-take between us and the DOE." To date, of the $25 million, only $5.4 million has gone out to contractors.
There's a further difference between today's infrastructure work and that of the New Deal: It's much more productive, and hence employs fewer people. "The work itself has changed since the '30s -- or the '60s," says Robert Balgenorth, president of the state AFL-CIO's Building and Construction Trades Council. An electrician, Balgenorth built high schools during the 1960s. "It took 15 to 20 electricians to build a high school then," he says. "It takes four or five today. Stuff that we had to assemble then comes pre-assembled today." Heavy equipment has changed as well. "You can haul more in bigger trucks today," he says. "You need fewer drivers."
And yet, some of these constraints were around in Roosevelt's day, too. The great projects of the PWA proceeded, at Ickes' insistence, with painstaking deliberation and constant fiscal oversight. Ickes required states and localities to come up with 55 percent of the funding for projects, which slowed things down even more. Hopkins made no such demands; in 1936, state and local governments covered just 9.8 percent of the WPA's costs.
Roosevelt had Hopkins create and run the CWA and then the WPA because he knew Hopkins would pay no heed to fiscal and procedural strictures. The work would be simple; the labor, cheap. The average monthly wage for WPA workers was $82; for PWA workers (more likely to be skilled craftsmen), it was $330. While the PWA was building the Oakland Bay Bridge, the WPA in Oakland was engaged in rat control, book repairs at libraries, park improvements, painting schools, and hacking away underbrush to create fire trails. There was no competitive bidding for these projects, no means test for workers, and not much in the way of skills requirements.
And therein lies the problem with Obama's stimulus package: To the extent that it follows in Roosevelt's footsteps, it doesn't really re-create the WPA at all. It re-creates the PWA -- a far smaller program than the WPA in the number of people it employed and a far slower program to get up and running. Re--creating the WPA would require a sense of economic emergency so urgent that it would overcome not just the bureaucratic inertia common to much of government but also the conservative objections to more government spending, and the liberal objections to short-circuiting some of the safeguards erected against quick and large-scale infrastructure projects.
That doesn't mean liberals must go down the same road to countercyclical economics that China has, unhampered by the procedural, environmental, and democratic constraints that Americans take for granted. But these are not normal or healthy times, and liberals should exercise a preferential option for the tens of millions of unemployed Americans (particularly since their plight is not likely to be lifted through the normal workings of the economy), for reasons both of compassion and nation-building here at home.
Recently, Rep. George Miller of California, the chair of the House Education and Labor Committee, introduced a stimulus bill of his own, which would allocate roughly $100 billion to state governments, still facing massive cutbacks, to save the jobs of their teachers, nurses, cops, and firefighters. It's a necessary measure, but it doesn't address the continuing crisis in the manufacturing and construction sectors. Blue-collar men constitute 57 percent of the Americans who've lost jobs in this recession; blue-collar white men (who are 11 percent of the work force and 36 percent of the unemployed) are the group whose support for Obama and the Democrats, by the evidence of the polls, has fallen the furthest.
The way that the government can create the most jobs in the least time, however, is to create them in the home-care, child-care, and preschool industries. A February study from the Levy Economics Institute of Bard College found that a $50 billion investment in these industries would generate 1.2 million new jobs, while the same $50 billion applied to infrastructure would yield just 556,000 jobs. The case for such an investment is both economic and moral -- the beneficiaries would disproportionately be low-wage women of color -- but given the state of American politics today, the political obstacles to enacting such a program would be major. Only if it were linked to programs creating more construction jobs would it even be conceivable -- and only barely at that.
What the nation needs economically, then, and what Obama needs politically, is a jobs bill that invests in home care and child care, boosts tax credits for domestic manufacturing (this is, in fact, the subject of one White House proposal), and hurls money into infrastructure spending (the kind of spending that Republicans oppose least). Obama then needs his own Harry Hopkins. The new Hopkins won't be able to dispense funds as quickly as the original, but he must convey the urgency and zeal for cutting red tape that Hopkins brought to the New Deal's job programs.
The heaviest lift, however, remains Obama's. The globalization (and the attendant overcapacity) of production and the long-term effects of the financial crisis mean that the manufacturing and construction sectors, which have provided decent-paying jobs to millions of workers and economic vibrancy to the nation, aren't likely to recover on their own. Obama needs to talk to Americans about the constrained economic future they will face if those sectors don't revive, as well as the benefits of more early childhood education and senior care -- and why the nation needs a massive government commitment to those sectors to recapture its economic vibrancy.
With the enactment of health-care reform, Democrats now insist they have turned their focus to jobs, jobs, jobs. Saying so but not doing so will only bring down the wrath of the electoral gods. However arduous the task, they need to find their way to build a new WPA.
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