As Bob Dole's generation eases into retirement, commentators of various stripes complain loudly about generational bias in American social policy. The fiscally conservative Concord Coalition--along with independent presidential contenders Ross Perot and Richard Lamm--complains that working-age taxpayers have to cover the costs of overly generous social programs for America's elderly. The Children's Defense Fund calls upon Americans to "stand for children," marshaling facts and figures to show that the nation invests way too little to help poor children and young families. Antigovernment Republicans arrayed behind Newt Gingrich, Dick Armey, and John Kasich assert that we must cut way back on federal government spending for the poor and the elderly in order to preserve the American dream for "our children and grandchildren."
Each of these proponents of generational equity is speaking to a gaping "missing middle" in U.S. social policy. In recent decades, very little has been done through the federal government to help young adults and their children. The United States has no inclusive system of family allowances or benefits. Retired elderly Americans are eligible for relatively generous benefits through Social Security and Medicare, and very poor, mother-headed families may get Medicaid, food stamps, and Aid to Families with Dependent Children. Most working-age Americans, however, relate to the federal government as taxpayers, not as participants in broad social programs. Many do not even have health insurance coverage.
But working-age Americans could be beneficiaries, too--and not so long ago they were. For a time after World War II, U.S. federal social provision was much more balanced across the life cycle, largely due to the GI Bill, first enacted in 1944. Comprehensive individual and family benefits were made available to about 16 million World War II veterans; subsequent "little GI Bills" following the wars in Korea and Vietnam extended similar, though less generous, benefits to later cohorts of former military enlistees. All in all, the GI Bill added up to a major federal social policy in the postwar era.
Though the nature and value of the GI Bill's contributions to American social provision have generally been forgotten, Bill Clinton remains clearly fascinated by the 1944 precedent. In April 1995, as the new Republican congressional majority basked in what it claimed was a mandate to reverse key legacies of the New Deal, Clinton gave a speech at FDR's Warm Springs retreat. The GI Bill, Clinton said, was Roosevelt's "most enduring legacy" because it "gave generations of veterans a chance to get an education, to build strong families and good lives and to build the nation's strongest economy ever, to change the face of America."
No question, the accomplishments of this legislation resonate strongly today. Its best elements may well be worth "reinventing." But Bill Clinton, despite his obvious reverence for the GI Bill, may not yet have found the best way to recreate its scope and spirit for a new era.
BREAKING THE MOLD
Millions of Americans worry about getting the training and education they need to compete for good jobs in a national economy increasingly unforgiving toward the less formally educated and those without up-to-date skills. Against this backdrop it is easy to understand Clinton's nostalgia for the GI Bill. Through this law some $14.5 billion federal dollars were spent between 1944 and 1956 to help just over half of the returning World War II veterans (some 7.8 million people) obtain vocational training or higher education, preparing them for occupations ranging from skilled industrial trades to engineering, medicine, law, and business.
Unlike previous federal expenditures on education-such as the Morrill Act of 1862, which subsidized land-grant colleges-benefits under the GI Bill flowed directly to individuals in the form of grants for tuition, supplies, and living expenses. The GI Bill authorized tuition for up to $500 a year, which was at that time sufficient to pay for even prestigious private colleges. Individuals could choose from among the best kinds of training or education to which they could gain admission. Nearly two and a quarter million World War II veterans-many of whom would not have been able or motivated to pursue higher education-attended colleges and universities courtesy of the GI Bill.
The vets proved to be unusually serious and successful students, and their huge influx in the late 1940s permanently transformed the American university system. Only about 9 out of 100 young people attended college in 1939, but that rate almost doubled (to 16 out of a hundred) by 1947. American higher education expanded into an avenue for mass mobility rather than gentlemanly certification.
In addition to educational benefits, GI families were provided modest allowances while vets pursued their studies, as well as loans for purchasing homes or farms or setting up new businesses. GI loans helped some 4.3 million vets purchase residences in the decade after World War II. Under the 1944 GI Bill and its successors, some one-fifth of postwar mortgages for single-family homes came to be subsidized by the Veterans Administration, and practices in the long-term mortgage market were changed in ways that opened up loans to many nonveterans as well.
The GI Bill broke the mold of earlier U.S. social policies. As I have recounted in my book Protecting Soldiers and Mothers: The Political Origins of Social Policy in the United States, prior to the 1930s the chief efforts in U.S. social provision helped aging men, especially former soldiers on the Union side of the Civil War, and dependent mothers and children. Male breadwinners were mostly left out. Nor did the story entirely change with the New Deal: The Social Security Act of 1935 featured benefits for the elderly and did relatively little for wage earners in their prime. By contrast, the GI Bill authorized massive federal investments in young men right at the start of their lives as workers and providers for families.
But the impact of the GI Bill was cohort-bound. Once the young veterans of World War II (and those of Korea and Vietnam) had passed through the system, federal public investments in young workers dissipated too. Meanwhile, Social Security and, later on, Medicare incorporated more and more employees. Today, the retired elderly and some poor mothers and children partake of federal social spending. But most young adults pay-their substantial payroll taxes are collected to finance Social Security and Medicare for their retired parents and grandparents.
The problem is not that too much is being done for the elderly. The real problem is that too little is being done to invest in younger Americans. For progressives, the challenge is to rearrange policy in ways that preserve decent and solidaristic security protections for all of America's elderly, while at the same time giving working-age adults and their children more of a positive stake in U.S. social policy. Conservatives address nonelderly Americans as oppressed taxpayers who need to get government off their backs. This approach delivers concrete benefits only to the well-to-do, but it resonates with many less-privileged adults, especially working men, who are more aware of government as the recipient of the tax money they pay than as a source of support for their own efforts in workplaces and family life. Progressives must find new ways to get government on the side of working parents, the way the GI Bill once was.
Before considering how the GI Bill could serve as an inspiration for the future, let us briefly look back at why this unusual social legislation was enacted in the first place.
SUMMER OF '44
The United States has a long history of remarkable generosity to veterans and survivors of its major wars. But benefits for able-bodied veterans have usually been granted long after the war in question-not until the veterans became elderly and accumulated sufficient political clout did they tap significantly into the federal treasury. In addition, benefits for able-bodied veterans were traditionally either pensions or bonuses, not educational grants or support for young families.
Moreover, the experience of World War I veterans did not bode well for soldiers returning from a second global war 25 years later. In 1919, U.S. officers and soldiers from the World War I Expeditionary Force launched the American Legion, which in due course enrolled between 15 percent and 25 percent of all World War I vets and spread more than 10,000 local posts across all of the states. Despite such strength, however, the Legion waged frustrating and often unsuccessful battles over veterans' benefits with both Republican and Democratic presidents of the 1920s and 1930s.
President Franklin Roosevelt was even more reluctant than his Republican predecessors to endorse expenditures on World War I veterans. Explaining his decision to trim veterans' benefits in response to the Depression, FDR boldly told the American Legion Convention in 1933 that "no person, because he wore a uniform must thereafter be placed in a special class of beneficiaries over and above other citizens." "Greater and broader concerns of the American people have a prior claim for our consideration at this time," Roosevelt further explained when vetoing a bonus bill in May 1935. "The veteran who suffers from this depression can best be aided by the rehabilitation of the nation as a whole. . . ."
Once the New Deal was overtaken by mobilization for war, Roosevelt acknowledged that steps would need to be taken to compensate for the disruptions suffered by millions of young draftees. Yet the plans for postwar demobilization hatched by his administration and its liberal allies consistently sought to address the needs of veterans in the context of building a stronger welfare state for all Americans. The initial benefits proposed by the Roosevelt administration were not nearly as generous as those ultimately authorized by the GI Bill. After consultations with university leaders, the President called in 1943 for an educational benefit limited to one year, with only a minority of veterans selected for more college through a combination of merit criteria, quotas distributed across the states, and federal planners' estimates of needs for specific kinds of trained manpower. This would have been an elitist and centrally managed approach to educational grants.
The GI Bill of 1944 was as much the product of popular pressures on Congress as of New Deal liberalism. The idea came from the American Legion, which proposed omnibus legislation in January 1944, calling for a "Bill of Rights for GI Joe and GI Jane." This proposal uniquely combined provision for the disabled, a full year's worth of unemployment benefits, up to four years of educational benefits open to virtually all veterans, and generous low-interest loans to finance homes, farms, and businesses. The Legion's bold approach stimulated the national publicity and grassroots pressure on Congress that moved legislative decisionmaking over many obstacles during 1944.
The American Legion was in many ways an unlikely sponsor of such a major expansion of the welfare state. Inspired by what may seem a parochial understanding of patriotism, the Legion of the 1920s and 1930s was virulently opposed to leftists, civil libertarians, and labor unions. Although the Legion was officially nonpartisan, it typically operated in partnership with Republicans and conservative Democrats.
Yet the American Legion was also a grassroots voluntary civic organization that engaged popular loyalties in towns and cities across America. Particularly when the needs of former soldiers were at stake, the Legion espoused a populist-and not a fiscally stingy-version of conservatism, denouncing greedy businessmen and tight-fisted Republicans as well as leftists and unionists. Moreover, having decided in 1942 to open its ranks to World War II veterans, the Legion was suddenly very attentive to the needs of the young. Prior to World War II, each major American war generated a new set of veterans' organizations that grew old with the survivors of that conflict. The American Legion broke this pattern. By proving to soldiers returning from World War II that it could address their needs, it attracted millions of new members to replenish its ranks as World War I vets aged and died.
Legion populism prodded congressional conservatives in new directions. For example, John Rankin of Mississippi, the chairman of the crucial House Veterans Affairs Committee, opposed year-long transitional benefits for all veterans, and favored limited severance bonuses and educational grants. Rankin was reluctant to send millions of GIs to become "overeducated and undertrained" studying with "red" professors in "certain" colleges and universities. Why, after all, would it be in the interests of congressional conservatives to subsidize the expansion of U.S. higher education after World War II?
To overcome such conservative reservations, American Legion posts throughout the land bombarded their congressmen with letters and telegrams, and mounted a national petition drive that garnered more than a million signatures, outmaneuvering Rankin. The American Legion of the 1940s, therefore, deserves as much credit as FDR for the huge federal investments in higher education and youthful family formation that were embodied in the GI Bill.
COULD IT HAPPEN AGAIN?
Conditions in the United States today seem to cry out for a new version of the GI Bill. Post-high school training and higher education carry a greater premium than ever before. Most families-middle-class as well as poor ones-have to struggle to finance costly but essential educations for their offspring. New federal investments might widen opportunities and mitigate the impact of market forces that are steadily increasing gaps between the very privileged and everyone else.
Fascinated by the 1944 precedent, Bill Clinton has repeatedly tried to reinvent aspects of the GI Bill. In the October 1991 speech announcing his presidential candidacy in Little Rock, Clinton extravagantly promised to pass "a domestic GI Bill that would give every young American the chance to borrow the money necessary to go to college and ask them to pay it back either as a small percentage of their income over time or through national service as teachers or policemen or nurses or child care workers."
In addition, Clinton wanted to work with educational institutions to offer federal loans directly to students, eliminating private banks as costly and cumbersome middlemen. After graduation, students would repay loans over many years as a percentage of their earnings, with higher-income people ultimately paying more and lower-income earners less. The establishment of such "income-contingent" direct loans would lay a crucial basis for socially inclusive and mildly redistributive educational expenditures as the United States moves into the twenty-first century. Young people would not be forced into certain occupations just to pay for costly loans, and the repayments would become more manageable for all families.
Clinton's campaign dreams soon met the realities of governance. Faced with severe budgetary constraints, the 1993-94 Clinton administration had to retrench. Yet as Steven Waldman recounts in his engaging book The Bill, President Clinton persuaded the 103rd Congress to establish a modest version of his AmeriCorps national service program, even as the President and his congressional allies battled fierce opposition from the banking industry to establish direct income-contingent loans for a portion of federal educational spending.
But then came the Republican triumphs of 1994. Determined to roll back the domestic role of the federal government, insurgent Republicans marching behind House Speaker Newt Gingrich targeted both AmeriCorps and direct federal lending. President Clinton has waged rear-guard actions to defend scaled-back versions of these programs, but he has had a hard time coming up with any overall vision of a major federal role in redistributive social investment in education.
Since 1994 the President has tossed out a variety of proposals, with little apparent coherence. He has touted $10,000 tax deductions for expenditures on higher education by middle-class families, more Pell Grants for very poor students, and $1,000 merit scholarships for the top 5 percent of graduates in every high school. Most recently, in a speech at the June 1996 graduation ceremonies at Princeton University, Clinton called for yet another kind of federal educational benefit: $1,500 in refundable tax credits (available to families with annual incomes up to $100,000) for "America's Hope Scholarships" covering the first two years of college tuition. This latest proposal would help families of modest means. Perhaps it could serve as a framework for a broadly inclusive approach to federal educational subsidies open to more-privileged and less-privileged Americans alike.
Meanwhile, the Clinton administration may have trivialized the rubric of a new GI Bill by turning it into a mere rhetorical label for yet another, unrelated initiative. The administration seeks to convert all existing federal job training and retraining programs into $2,600 vouchers to be given to displaced workers eligible for federal aid. In both his 1994 and 1995 State of the Union addresses, President Clinton labeled this worthy but narrow reorganization a "GI Bill for America's workers" -thus shifting morally potent symbolism away from his ideas about service and direct loans for most American young people.
In today's climate of inherited federal debt and unending political rhetoric hostile to taxes, people find it hard to envisage major new federal initiatives. Imagination fails amidst an apparent national consensus about balancing the budget and in the face of looming debates over restructuring Social Security. Clinton and Congress may retreat to making educational gestures along the grain of inherited programs: grants for the very poor versus tax credits and guaranteed loans for the middle class.
But there might be a better way, combining moderate and progressive ideas already on the table, to proceed toward a new domestic GI Bill. Writing in the January-February 1995 issue of the Democratic Leadership Council magazine, the New Democrat, Peter Plastrik calls for a "GI Bill for Working Americans" combining "job opportunity vouchers" for the unemployed with an extension of the income-contingent loan program into a "skills line of credit" for any worker who wants to train (or retrain) for a better job. "Like its namesake," explains Plastrik, "a new GI Bill would create a vast learning enterprise controlled by its intended beneficiaries rather than bureaucrats," because workers as well as students would be able to use vouchers or income-contingent loans to obtain training from universities or community colleges, from private employers or vocational schools, or from training efforts run by voluntary groups or government agencies.
As Secretary of Labor Robert Reich has argued, making this system work would require the establishment of "one-stop shopping centers," clearinghouses where workers could go to learn about training choices and refer to standardized data on cost, quality, and job-placement results. Otherwise, Plastrik's plan could fall victim to some of the same problems that plagued noncollege training under the original GI Bill. During the 1940s, fly-by-night commercial vocational "schools" often sprang up to collect veterans' tuition grants, because the GI Bill provided no oversight or institutional infrastructure to ensure effectiveness or provide information about training options.
Although Plastrik's proposal appeared in an outlet sponsored by conservative Democrats, it overlaps with the more liberal ideas put forward in this magazine's pages in the summer of 1990. In "Generational Alliance: Social Security as a Bank for Education and Training," Barry Bluestone proposed to link revisions of two great Franklin Roosevelt initiatives, the Social Security Act of 1935 and the GI Bill of 1944. Today the tax surpluses in the Social Security Trust Fund are used to cover federal government debt. They are not invested in ways that might produce higher rates of return. In Bluestone's vision, the Social Security Trust Fund would be partially invested in long-term loans to working-age adults, both students and mid-career adults. Arguing that federal policy "can create a positive link between those coming of working age and those coming of retirement age," Bluestone hopes to achieve "generational equity not by retrenching on the elderly, but by putting our reserves for the elderly to work for the entire society." Former students and retrained workers would repay their loans over a lengthy period in amounts corresponding to their actual incomes, yet set high enough on average to allow the Social Security Trust Fund to grow over time.
Of course, existing Trust Fund reserves will sharply attenuate after 2010, so Social Security alone would be insufficient to fund a permanent program of educational and job training loans. Nonetheless, Bluestone has put his finger on a worthy goal for progressives. We need to recapture the sense of national solidarity embodied in the original GI Bill, and find new ways to create a stake for working parents in a national system of public social provision that is currently highly skewed toward benefits for retirees.
Since 1994, clashing schemes for fundamentally revamping Medicare have been at the center of congressional and public debates. Soon the country will be embroiled in an equally fundamental debate about the future of Social Security. Without going over all of the details of alternative plans for reforming Social Security [see Robert Dreyfuss, "The Biggest Deal," and Joseph F. Quinn and Olivia S. Mitchell, "Social Security on the Table," TAP, May-June 1996], what's important to note is that many of them would quickly or gradually destroy the national-solidarity nature of the Social Security Trust Fund. Some conservatives would like to abolish Social Security altogether and create instead a set of publicly mandated individual private investment accounts; this parallels far-right calls to dismantle Medicare in favor of individual medical savings accounts. Certain middle-of-the-road analysts, meanwhile, favor the creation of a two-tiered system for Social Security (and perhaps Medicare), combining flat public benefits with mandated individual savings accounts. Both the entirely individual and the two-tier schemes would jeopardize the significant redistributions from richer to poorer employees that now enable Social Security to provide decent and secure retirement benefits to Americans with average or less-than-average incomes during their working lives. Both kinds of schemes, moreover, would foster individualism, increased market competition, and heightened class inequalities. Yet such individual savings account plans for reforming both Social Security and Medicare may have a certain political appeal for younger American workers today, because these plans imply the (largely illusory) promise of reduced taxation and more individual control over savings for the future.
In the debates over revamping Social Security for the period after 2010, progressives tend to support collective investment options. Former Social Security Commissioner Robert Ball and others advocate allowing special, politically insulated trustees to invest a portion of the Social Security Trust Fund in stocks and bonds, not just government securities, in order to generate a higher rate of return to keep the trust fund solvent into the future. Barry Bluestone's educational loan plan can be seen as a variant of this approach, one that would invest Social Security surpluses not just in higher-yielding financial instruments, but also in loans that have immediate payoffs for younger adult Americans, as well as a positive effect on national economic growth. Perhaps, as the Social Security debate develops, there will turn out to be still other ways to maintain the solidaristic nature of the Social Security Trust Fund and give younger Americans a more direct stake in it-while at the same time promoting national economic growth and higher investment returns.
Either progressives will come up with ways to give younger Americans-especially working-age parents-a larger stake in doing things together through government, or conservative critics of government will soon succeed in dismantling the core public social programs-Social Security and Medicare-in which the employed middle class has a stake.
The history of the GI Bill suggests that, sometimes, surprising political alliances can come together to mark watersheds in the development of American public social provision. The GI Bill was not a purely, or even primarily, liberal New Deal policy. It was a compromise between liberal policy aspirations and popular pressures registered through Congress. At the close of the twentieth century, populist concerns remain up for grabs in American politics and public policymaking. Most Republicans can be expected to emphasize lower taxes and the dismantling of social spending programs in their quest to appeal to less-privileged working parents along with the rich. In response, Democrats of a progressive bent need to come up with imaginative ways to extend social benefits and investments to young families, building new political coalitions in the process.
The leadership of the American Association of Retired Persons has demonstrated an awareness during the 1990s that elderly beneficiaries of Social Security and Medicare have a stake in developing political alliances with supporters of social programs for younger Americans. Working hand in hand with groups ranging from populist moderates and some business groups to unionists and people with a vested interest in higher education, the AARP and kindred groups could pressure politicians and Congress, much as the American Legion once did. The battle pitting allegedly big-government liberals and elderly special interests against conservative advocates of choice and national economic growth might end. Progressives and populists could come together around their vision of "growth and security for all."
The real moral of this story is that progressives must not remain on the defensive in the face of burgeoning conservative attacks on government, taxes, and solidarity security programs. Americans who believe that the federal government can again be an agent of democratic destiny must come up with bold new ways to marry social entitlements and responsibilities, as the GI Bill once did so compellingly. Above all, new ways must be found to give young workers and families a strong moral and material stake in the future of American social provision.