Delivering for Young Families: The Resonance of the GI Bill

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.



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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.



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