President Obama's $825 billion economic-stimulus package needs a lot less PWA and a lot more CWA.
The PWA was the Public Works Administration, led by Harold Ickes Sr. The CWA was the Civil Works Administration, led by Harry Hopkins. Both were New Deal agencies created in 1933 to get Americans quickly back to work at a time when unemployment reached 25 percent, its highest point in U.S. history. The PWA failed. The CWA succeeded.
The strategy behind Obama's stimulus bill resembles that of the PWA. Like the stimulus, the PWA tackled unemployment indirectly by spending money largely through private contractors. That handicap—worsened by Ickes' cautious-to-a-fault management style—resulted in only $110 million of the program's authorized $3.3 billion getting spent during the program's crucial first year. Frustrated by Ickes' poky pace, Roosevelt yielded to the pleas of his relief administrator, Harry Hopkins, to help get unemployed workers through the coming winter by putting them directly onto the federal payroll. Roosevelt had been reluctant to create a federal work program for fear of alienating organized labor. Hopkins overcame that worry by pointing out that Samuel Gompers, founder of the American Federation of Labor, had in 1898 proposed essentially the same idea. Roosevelt diverted not quite one-third of Ickes' PWA budget to Hopkins' CWA with the goal of putting to work 4 million people. As a percentage of the population, that would be the equivalent of putting 10 million people to work today. In his first weekly radio address, Obama pledged that the stimulus package would "save or create 3 to 4 million jobs over the next few years." (His budget director estimates that 75 percent of the money will be spent within 18 months.) Hopkins got there within two months.
The current economic downturn has yet to bring us near the depths of the Great Depression, but the situation is dire. The official unemployment rate now stands at 7.2 percent, a figure that rises to more than 13 percent when you add in people who've given up looking for work and people working part-time only because they can't find full-time work. The economy shed more jobs last year than in any single year since 1945. "Three to 4 million jobs over the next few years"? With the country currently losing half a million jobs each month, that won't be fast enough.
The CWA moved more swiftly than the PWA in part because of the difference in temperament between Hopkins and Ickes. Ickes was so fearful that the PWA would appropriate funds to an unworthy or scandalous project that he dotted every I and crossed every T before spending a nickel. The advantage to this approach in the long run was that it led to many significant projects, including New York's Triborough Bridge. The disadvantage was that it didn't create jobs quickly. Hopkins' anxieties were focused on the prospect that the CWA would fail to provide a sufficient number of jobs to the people who desperately needed them. Better to get the money out the door, Hopkins believed, and to address any irregularities immediately as they came up. The CWA's field investigators, who included journalists Lorena Hickock and Martha Gellhorn, helped keep Hopkins on the right track. The CWA's programs were further scrutinized by Roosevelt's friend Frank Walker, who as president of the National Emergency Council supervised all the president's new alphabet agencies, and by Army Lt. Col. John C.H. Lee (at the direction of the War Department). Both men were deeply impressed by Hopkins' leadership. "I'd pay little attention to those who criticize the creation of CWA or its administration," Walker reported to Roosevelt after touring CWA projects around the country. "You have every reason to be proud." Lee, a military engineer, had the reputation of a hanging judge—serving later as one of Dwight Eisenhower's top generals during World War II, he earned the nickname "John Court House Lee." Yet Lee had nothing but admiration for Hopkins' "loose fluidity of organization" and marveled that Hopkins had in two months enlisted as many people as the Army had in 18 when the U.S. entered World War I. The CWA even won praise from Kansas Gov. Alf Landon, Roosevelt's future Republican opponent in the 1936 presidential election. "This civil-works program is one of the soundest, most constructive policies of your administration," Landon wrote FDR, "and I cannot urge too strongly its continuance."
The PWA's poor performance relative to the CWA was more than just a matter of being ruled by the wrong Harry. Structurally, the CWA was much better able than the PWA to mobilize quickly because it could avoid the cumbersome process of putting contracts out to bid and all the other obstacles to swift action that arise with public-private partnerships. (Government by contract was popular then, and remains so today, because it allows a politician to create the semblance of government action without expanding the government work force. It also caters to the public's belief that the private sector is more capable, an illusion punctured by recent scandals surrounding Blackwater and other U.S. contractors in Iraq.) Hopkins enjoyed immediate carte blanche to apply directly the apparatus of the federal government. He shifted staff from the federal relief program he'd headed up, seized tools and equipment from Army warehouses, and cut checks through the Veterans Administration's vast disbursement system. The CWA laid 12 million feet of sewer pipe and built or made substantial improvements to 255,000 miles of roads, 40,000 schools, 3,700 playgrounds, and nearly 1,000 airports (not to mention 250,000 outhouses still badly needed in rural America). Most of the jobs involved manual labor, to which most of the population, having been raised on the farm, was far more accustomed than it would be today. But the CWA also provided considerable white-collar work, employing, among others, statisticians, bookbinders, architects, 50,000 teachers, and 3,000 writers and artists. ("Hell, they've got to eat like other people," Hopkins noted matter-of-factly.) This was achieved with a remarkable minimum of overhead. Of the nearly $1 billion—the equivalent today of nearly $16 billion—that Hopkins spent during the CWA's five-month existence, 80 percent went directly into workers' pockets and thence stimulated the economy by going into the cash registers of grocers and shop owners. Most of the rest went to equipment costs. Less than 2 percent paid for administration.
The only serious obstacle the CWA encountered is the same one that President Obama would face today: politics. Republicans and conservative Democrats in Congress screamed bloody murder about Roosevelt's dalliance with state socialism—Republicans like Landon who were willing to admit a government program might actually work were as rare then as they are today—and the segregationist Georgia Gov. Eugene Talmadge was apoplectic to learn that black laborers were being paid as much as white ones. Once winter had passed, Roosevelt, worried that the controversy would cost him Democratic seats in the coming midterm congressional elections, ordered Hopkins to shut the CWA down. Hopkins promptly and uncomplainingly did so. A year later, though, Roosevelt recognized his error and put Hopkins in charge of the Works Progress Administration (later the Work Projects Administration). Over its life, the WPA would create, on the model of the CWA, more than 8 million jobs, which today would be equivalent to creating more than 20 million.
Let's hope that the current economic crisis won't worsen to the point that the U.S. needs a government program on that scale. But if it does, please don't say the job can't be done. In his inaugural address, President Obama said, "The question we ask today is not whether our government is too big or too small but whether it works." That may presage a departure from Republican orthodoxy ("government is the problem") and Democratic surrender to it ("the era of big government is over"). If government can do the job best, let it.
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