The Ongoing Crisis Demands Jobs, Not Deficit Reduction

May 16, 2013David Woolner

Today's leaders must recognize that job creation is the key to boosting revenues for the government and the people.

Today's leaders must recognize that job creation is the key to boosting revenues for the government and the people.

Now, the rise and fall of national income—since they tell the story of how much you and I and everybody else are making—are an index of the rise and fall of national prosperity. They are also an index of the prosperity of your Government. The money to run the Government comes from taxes; and the tax revenue in turn depends for its size on the size of the national income. When the incomes and the values and transactions of the country are on the down-grade, then tax receipts go on the down-grade too. If the national income continues to decline, then the Government cannot run without going into the red. The only way to keep the Government out of the red is to keep the people out of the red. And so we had to balance the budget of the American people before we could balance the budget of the national Government.—Franklin D. Roosevelt, 1936

The news that the nation added 165,000 jobs in April and that the unemployment rate has dipped to 7.5 percent—its lowest since December 2008—is of course welcome. It has eased the fears of many economists that recent cuts in federal spending might stall our somewhat anemic recovery, helped boost the stock market to record levels, and has been cited by Alan Krueger, the Chairman of the President’s Economic Advisors, as “further evidence that the U.S. economy is continuing to recover from the worst downturn since the Great Depression.”

But as many economists have also reported, the April rate of job growth is still far too low to bring about the level of re-employment needed to bring us back to full employment, and, worse still, the slight improvement in the overall unemployment rate masks a good many far more disturbing statistics. Many of the jobs acquired in April are low-skill and low-paying. Some of the drop in the unemployment rate can be attributed to the fact that millions of Americans have stopped looking for work and have dropped out of the work force all together—496,000 people in March 2013 alone. Then there are the under-employed, who also rank in the millions. If we add their ranks to those who are unemployed or have dropped out of the work force altogether, we arrive at an overall “underemployment rate” of 13.9 percent, up from the previous month’s rate of 13.8 percent. Taken together this means that roughly 22 million Americans are either unemployed or under-employed—a staggering figure, which after four years of so-called “recovery” has some economists predicting that long-term un-and under-employment may now be a permanent fixture of the American landscape.

What is even more shocking, however, is that in spite of all of these grim statistics, grim statistics that reflect the hardship and pain of millions, much of the political discourse in Washington—and in the media—remains fixated on the debt and deficit and the Republican demand for a balanced budget. It is almost as if Washington has all but given up on trying to take direct action to bring about a better employment picture. This realization is perhaps best evidenced by the fact that one of the more significant contributors to our persistently high unemployment rate in the past year has been public sector layoffs. 

Calls for the federal government to balance its books are not new, of course. Thanks to the extremely effective public persuasion campaign of the conservative right, we have heard this refrain time and time again. It has now become de rigueur for most politicians— no matter what their party—to pay lip service to the need to get “our house in order” and cut the deficit no matter what the consequences for the average American.

It wasn’t always this way, however. In the mid-1930s, when faced with a similar economic crisis and similar calls for cuts in federal spending, Franklin Roosevelt took an entirely different tack. He insisted that in the midst of a crisis where—much like today—we faced both declining federal revenues and increasing unemployment, “a national choice had to be made” between those who argued that the government should do nothing and “let Nature take its course” and those who argued for federal intervention in the economy, even if it meant running a deficit. As FDR saw it, what stood between his administration and a balanced budget were “millions of needy Americans, denied the promise of a decent American life.” In light of this, he argued that “to balance our budget in 1933 or 1934 or 1935 would have been a crime against the American people,” which would have required either “a capital levy that would have been confiscatory” or accepting “human suffering with callous indifference." "When Americans suffered,” he went on, “we refused to pass by on the other side. Humanity came first.”

And so the Roosevelt Administration launched programs like the Works Progress Administration that built much of the infrastructure we still enjoy today and which gave millions of Americans, from common laborers to structural engineers, the joy and dignity of work. FDR admitted that “this cost money”—and the American people understood that this would continue to cost money “for several years to come.” But given the dire state of the economy and the lack of demand in the private sector, the American people understood that it was the right thing to do.

Unlike today’s politicians, however, FDR refused to pander to the sky-is-falling rhetoric of the conservative right on the disastrous consequences that would accrue to the country by running a deficit in the midst of an economic crisis. For them FDR had a simple answer. He flat out rejected “this foolish fear about the crushing load the debt will impose upon your children and mine.” On the contrary, he went on:

This debt is not going to be paid by oppressive taxation on future generations. It is not going to be paid by taking away the hard-won savings of the present generation. It is going to be paid out of an increased national income and increased individual incomes produced by increasing national prosperity.

In other words, FDR understood that the real crisis the country faced in the Great Depression was an employment crisis—not a deficit crisis—and that in the long run the “only way to keep the Government out of the red” was, as he said, “to keep the people out of the red.” And so he set his priority on the one thing he knew would help bolster the revenue of both the American people and their government: millions upon millions of jobs.

Unfortunately, much of our leadership in Washington today seems to have lost sight of this fact, and instead of taking meaningful action to help grow the economy and alleviate the suffering of the millions of unemployed, would prefer to cut spending and engage in another endless round of bickering about the debt and deficit. Such “callous indifference” to the plight of millions of Americans is no way to bring about an end to the current crisis or build a better future for our children.

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.

For more on solutions to the ongoing unemployment crisis, join the Roosevelt Institute in Washington, D.C. on June 4th for A Bold Approach to the Jobs Emergency: Setting the Political Agenda for 2014 and 2016.

 

Unemployment line image via Shutterstock.com.

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The WPA: A Flawed Model for Women, but an Inspiration for Progress

Apr 9, 2013Andrea Flynn

The New Deal left women behind, but it proved government can be a champion for the economically downtrodden.

The participation of women in the American work force has expanded dramatically in the 78 years since the Roosevelt administration launched the WPA to provide jobs to Americans out of work and on relief. Today women comprise nearly half the work force and typically work through the life cycle, not episodically, before and after childrearing, which for so long was considered their principal occupation.

The New Deal left women behind, but it proved government can be a champion for the economically downtrodden.

The participation of women in the American work force has expanded dramatically in the 78 years since the Roosevelt administration launched the WPA to provide jobs to Americans out of work and on relief. Today women comprise nearly half the work force and typically work through the life cycle, not episodically, before and after childrearing, which for so long was considered their principal occupation.

Today married, as well as single, women play a critical role in the U.S. economy. In nearly half the country’s dual income families, women earn as much or more than men. And as a percentage of the total, there are many more single women heading households today. For these reasons, today’s employment policies must be sensitive to gender in ways they never have been before.

Women were an afterthought of policymakers back in the Roosevelt years. Prevailing cultural mores still viewed work among married women as a threat to the sanctity and moral fabric of the family. New Dealers actually passed legislation (over the objection of Eleanor Roosevelt and others with feminist leanings) that prevented two workers in any one family from claiming a government salary, which meant that women during the Depression often were fired or forced to quit their jobs.

Women actually claimed only 13.5 percent of the 8.5 million total jobs created by the WPA, the majority of them in traditionally female occupations such as sewing, childcare and eldercare, teaching and education, etc. No surprise, these jobs paid less than other positions occupied by men, with WPA salaries ranging from only $20 to nearly $100 dollars per month. And most of those jobs, in fact, went to women who were divorced, widowed or unmarried.

With the advent of World War II, record numbers of women entered the work force to fill jobs left by men conscripted to fight the war. Despite postwar conventions that again celebrated domesticity and pushed women out of positions reclaimed by returning veterans, the war actually ignited a behavioral shift that forever reshaped the U.S. labor force.

In 1948, women comprised 29 percent of the labor force overall, and 17 percent of married mothers worked outside the home. Most of them were part of families living at the edge of poverty and needing two salaries, but some were in the professions and in business and simply rejected prevailing values. Those numbers have steadily increased over the last 60 years. Today, women make up nearly 47 percent of the labor force, with more than 79 percent of mothers now working.

But old ways die hard. Women may make up nearly half the American work force, but they still face an ever-increasing number of obstacles to balancing work and family and to achieving economic security. A report recently released by the Ms. Foundation for Women illustrates the myriad challenges facing women workers:

  • The Bureau of Labor Statistics lists more than 440 occupations. Four out of five women are concentrated in only 20 of these jobs, most of them traditionally female roles such as secretaries, home health care and childcare workers, teachers, waitresses, etc. that barely afford women a living wage.
  • Approximately 63 percent of minimum- and sub-minimum-wage workers are women.
  • The recent recession has had a particularly negative impact on women. By 2011, women had regained only 11 percent of jobs lost (compared to men’s 24 percent), and by the end of 2012, the women had regained 46 percent (compared to men’s 50 percent).
  • Of families headed by single mothers, 28.7 percent — 4 million of them — live in poverty compared with 13 percent (or 670,000) of those headed by men.
  • Underemployment is a serious issue facing women workers. Approximately 26 percent of working women are in part-time jobs, which do not provide essential benefits and job security.

Though not sufficiently attentive to the needs of women at the time, Roosevelt’s New Deal and WPA exemplified the role government can and should play in guaranteeing a basic floor of well being for all Americans. We would be wise to revisit those ideals today as we think about how to protect and advance women workers across the United States.

President Obama has suggested many such initiatives: universal pre-school; better job training to equip students to pursue trades; a historic expansion of Medicaid and private health insurance that will guarantee all women basic preventative services (including reproductive health care and family planning); and pay equity and a raise in the minimum wage.

Indeed, the first piece of legislation President Obama signed upon entering office was the Lilly Ledbetter Fair Pay Act, which overturned the 180-day statute of limitations for women to contest pay discrimination. Today, in commemoration of National Pay Equity Day, President Obama said:

Wage inequality undermines the promise of fairness and opportunity upon which our country was founded… Our country has come a long way toward ensuring everyone gets a fair shot at opportunity, no matter who you are or where you come from. But our journey will not be complete until our mothers, our wives, our sisters, and our daughters are treated equally in the workplace and always see an honest day's work rewarded with honest wages. 

There are other significant steps we can take:

  • Congress should pass the Paycheck Fairness Act, legislation that has been introduced a number of times since 2009 but has failed to secure support from both chambers of Congress. The legislation – an update to the 1963 Equal Pay Act – would prohibit employers from paying a man more than a woman for the same job and would prevent employers from punishing women who call attention to pay disparities.
  • We should ensure that women who work as nannies, home health care workers, housekeepers, etc. – positions that are a major backbone to our economy – receive a fair wage and benefits necessary to lead healthy, financially secure lives.
  • We should ensure that all workers are guaranteed sick days and parental leave so their families don’t play second fiddle to a job.
  • We should task our best and brightest with creating innovative job training programs (and job creation initiatives) that will enable women to move beyond the 20 or so occupations the majority currently occupy. And we should think critically about how the federal government can provide better job security for women in part-time and seasonal jobs.
  • We should create affordable childcare programs that would allow women to know their children are being well-cared for while they earn a living to support their families. This would also give women greater flexibility to occupy full-time, more stable positions.

FDR may not have offered women their rightful place in the New Deal’s employment programs. But today we know better. Only by lifting the barriers that prevent women from achieving real economic equity, can we regain real security for American families and re-establish our country’s stronghold as a global economic leader. 

Andrea Flynn is a Fellow at the Roosevelt Institute.

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Where There's a Will, There's a WPA: Stopping the Slow-Motion Jobs Disaster

Apr 8, 2013Richard Kirsch

We can create the political will to tackle the jobs crisis by advancing a progressive economic narrative.

The question we must ask today, as we remember the Works Progress Administration is: why isn’t there the political will to take dramatic steps to address today’s jobs emergency?

We can create the political will to tackle the jobs crisis by advancing a progressive economic narrative.

The question we must ask today, as we remember the Works Progress Administration is: why isn’t there the political will to take dramatic steps to address today’s jobs emergency?

Let’s start with the obvious; there was a far greater share of Americans unemployed in the Great Depression. In 1934, unemployment peaked at 24.9%.  One-out-of-four people officially out of work is much more of a crisis than one-out-of ten (9.6%), the peak in the current recession in 2010. The impact is even greater than two-and-a-half times, as such a huge drop in consumer spending means that marginal businesses able to survive 10% unemployment rates were swept away in the Depression. And during the Depression – much more than now – it was impossible not to know people whose lives had been devastated.

The other obvious difference is that we have cushioned the impact on the unemployed through the establishment of New Deal programs, notably unemployment insurance, which is providing income to half of the more than 12 million people who have been laid off, and Social Security, which has helped older workers unable to find a job. In a broader sense, the bailout of the financial sector in 2009 was a lesson learned from the New Deal, stopping the Great Recession from becoming a second Great Depression.

For most middle-class Americans, the Great Recession was not a sudden shock to a prosperous lifestyle. It was a deepening of a three-decade long trend of families seeing their incomes and lifestyles squeezed by stagnant wages and eroding benefits. Median household income increased in real terms by only 14% from 1972 to 2007.  During this period, the richest Americans captured most of the benefits of economic growth: their share of national pre-tax income of the top one-in-a thousand quadrupled from 3% to 12%. Much of the meager growth through 2007 was lost in the Great Recession; by 2011 median household income had dropped below 1996 levels.

Of course, the Great Recession did real harm to tens of millions of Americans, as Wall Street took away their retirement savings and banks took away their homes. The more than 20 million who are out of work or working less than they would like feel the pain every day. However, most people whose homes were foreclosed are not on the streets, and the long-term unemployed are scraping by and aren’t in bread lines. Additionally, the retirement crisis — another slow-moving crisis — represents a long-term crippling of prospects rather than an immediate disaster.

The New York Times coverage of Friday’s weak jobs report highlights the slow motion nature of today’s jobs crisis. The Times focused on a report by the National Employment Law Project, written by Roosevelt Institute Fellow Annette Bernhardt, that revealed most of the new jobs emerging from the Great Recession pay low wages. The Times article also highlighted the persistent growth in temporary jobs, and concluded with a quote from NELP Executive Director Christine Owens, underscoring the nature of today’s job crisis:

“This seems to be a long-term sleeper crisis too, as we think about long-term unemployed workers who are in midlife and older workers who are likely dipping into retirement savings in order to stay afloat. We’re setting ourselves up for somewhere, 10 years down the road, when a lot of retirees who didn’t expect to live in poverty are going to be in poverty.”

For those of us who understand that we do have a jobs emergency today — even if it is a slow-motion disaster — the question is, how do we create the political will to address the underlying crisis? The answer is to make jobs the central issue in the bigger story about the economy, so that the concerns of the unemployed are the same as the great majority of Americans who are employed.

The economy and jobs remains by far the top issue of concern to Americans. As a March Pew Research poll found, “Despite substantial public awareness of recent gains in the stock market and rebounding real-estate values, the percentage saying economic conditions will get worse over the next year has risen to its highest point in nearly eight years.”

We need to be consistently telling our story: the crushing of the middle class did not happen by accident. It is a result of decisions to cut taxes for the wealthy, stop investing in infrastructure, destroy the ability of unions to organize, saddle college students with huge debts, and deregulate Wall Street. We need to remind people that the stock market is at record levels because powerful corporations are making huge profits by cutting wages and benefits and shipping jobs overseas.

We need to champion our vision of an economy driven by working families and the middle class. We need to show how we can rebuild the middle class by deciding together to provide “good jobs for everyone in America.” We should put forth a bold program, which addresses all three aspects for our vision:

  • Good Jobs. We can assure that every job – private and public – pays enough to support a family, with decent wages, health and retirement benefits, and family-friendly leave policies. That will mean new wage standards, such as a higher minimum wage and paid sick days; social insurance programs for paid family leave and retirements; and modernization of labor laws so workers can effectively organize unions again.
  • Jobs for Everyone. We can create tens of millions of jobs for our future. Jobs for a green economy of energy independence. Jobs to rebuild our infrastructure and create a new infrastructure for the information age. Jobs to educate our children and take care of our seniors. Government must both make direct job investments and pave the way for businesses to create good jobs.
  • Good Jobs in America. We can create good jobs in America by enacting fair trade and currency policies, as well as government purchase of American-made goods and an end to tax breaks for companies that ship jobs overseas.

There are promising efforts already taking place to build a movement around these issues — efforts to innovate new approaches to organizing low-wage workers; campaigns to press for higher minimum wages and paid sick days; and local initiatives to create good paying green jobs. Progressives in Congress have put forth comprehensive jobs bills and President Obama is touring the country asking for investment in infrastructure.

Building a movement that is big enough to address the jobs emergency will require tackling the basic tenants of our financialized, trickle-down economic paradigm. For everyday Americans, the stakes could not be higher. We have no choice but to build the political will to create a 21st century America that works for all of us. 

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

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The WPA Had a Low Price Tag but a Lasting Legacy

Apr 8, 2013Ellen Chesler

The WPA looks like a small investment by today's standards, but it remade the country.

There’s hardly a community in the United States without a park, bridge, school, or library constructed by the WPA. Just think of the built legacy right here in New York: Hunter’s College’s handsome mid-century modern building on Park Avenue; LaGuardia Airport; the bucolic parkways, enduring beachfront facilities and swimming pools of Robert Moses; stunning murals in public spaces throughout the city.

The WPA looks like a small investment by today's standards, but it remade the country.

There’s hardly a community in the United States without a park, bridge, school, or library constructed by the WPA. Just think of the built legacy right here in New York: Hunter’s College’s handsome mid-century modern building on Park Avenue; LaGuardia Airport; the bucolic parkways, enduring beachfront facilities and swimming pools of Robert Moses; stunning murals in public spaces throughout the city.

So it is actually surprising to learn on this anniversary that the entire federal appropriation for the legislation in 1935 was only $4.9 billion. And total spending across the country reached only $13.4 billion before the program expired in 1943, when wartime conscription and the recovery of private industry and manufacturing finally ended the unemployment crisis brought on by the Great Depression.

Of course, money went a lot further back then. Salaries at 30 hours per week were pegged to prevailing wages and varied considerably by region, ranging from $20 to $100 per month. Federal spending on some WPA projects also leveraged state and local funds, adding by one estimate up to another 10-30 percent in investment. All together the program funded some 8 million jobs and put a meaningful dent in the number of unemployed who were looking for and able to work.

This was far from a foundation for state socialism or a “seed bed for Communists,” as some of the program’s strongest critics on the right then described it. Spending was also, by and large, not politically motivated or determined by partisanship, as many feared it would be – with jobs distributed across party lines and, just as meaningfully, across ethnic and racial divides, even in the south. To placate unions skeptics on the left, no formal job training was allowed, and yet evaluations of projects demonstrated high levels of efficiency and little corruption or waste.

Yet the WPA was most definitely a watershed in the history of American state building. The country’s entire GDP was only $860 billion in 1935. Of that, a mere 5 percent or so represented total government spending, and most of that money paid for local school teachers, police, fire, and sanitation.

Federal Social Security expenditures were just ramping up. Defense spending was still negligible, with U.S. foreign policy focused mainly on being a “good neighbor” as FDR memorably put it. Even as the president promised to invest in public works and social welfare to reboot the economy, he also committed to rebalance the budget, and by attempting to do so in his second term actually prolonged the economic downturn. More public works, not less, would have been a good thing, stimulating and vastly expanding the private economy, as World War II wound up doing only a few years later.

Today, U.S. government spending, inclusive of local, state, and federal, domestic, foreign, and military expenditures, represents some 40 percent of our giant $13.67 trillion GDP. Years of Republican presidencies notwithstanding, we live in a mixed-economy and a country remade by Franklin Roosevelt.

This 78th anniversary of the WPA inspires us to find in our history a model for increased investment in public works today, perhaps leveraging the private sector, not just hard-strapped states and municipalities. With the WPA as a model, federal resources can easily capitalize a U.S. infrastructure bank, which could in turn raise capital in markets across the globe. The financial structure is not complicated. All we need is the political will.

Might it be helpful to remind deficit hawks that Roosevelt was reelected in 1936 with 60 percent of the popular vote and 98 percent of the electoral vote in 1936, with a budget in deficit but the WPA underway?

Ellen Chesler is a Senior Fellow at the Roosevelt Institute and author of Woman of Valor: Margaret Sanger and the Birth Control Movement in America.

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To Build a Nation and a People: FDR and the WPA

Apr 8, 2013David Woolner

Today's Congress needs to step up as it did in the 1930s to address high unemployment and crumbling infrastructure.

Today's Congress needs to step up as it did in the 1930s to address high unemployment and crumbling infrastructure.

To those who say that our expenditures for Public Works and other means for recovery are a waste that we cannot afford, I answer that no country, however rich, can afford the waste of its human resources. Demoralization caused by vast unemployment is our greatest extravagance. Morally, it is the greatest menace to our social order. Some people try to tell me that we must make up our minds that for the future we shall permanently have millions of unemployed… But…I stand or fall by my refusal to accept as a necessary condition of our future a permanent army of unemployed. On the contrary, we must make it a national principle that we will not tolerate a large army of unemployed and that we will arrange our national economy to end our present unemployment as soon as we can and then to take wise measures against its return. I do not want to think that it is the destiny of any American to remain permanently on relief rolls.—Franklin D. Roosevelt, September 30, 1934

One of the most alarming statistics about America’s persistently high unemployment rate over the past four years is the large number of long-term unemployed. Current estimates by the Bureau of Labor Statistics put the total number of these largely forgotten workers at 4.8 million people—or roughly 40 percent of the total number of jobless Americans. Unlike previous recessions, where there was a good deal of movement in and out of the job market, loss of employment is much more serious in today’s Great Recession, as an individual’s chances of getting back to work are much lower. This leads to what one recent article terms a “loss of skills, loss of trust, and loss of networks,” all of which exacerbates the problem.

Worse still, there seems to be little political will to tackle this problem in Washington, as any serious effort to address the issue of the long-term unemployed has been sidelined by the endless budget debates in Congress and the sky-is-falling rhetoric of the extreme right, which remains ideologically opposed to government intervention in the economy. Perhaps the great symbol of this callous indifference can be found in the fact that while the recent sequester did not result in any loss of pay among the members of Congress, the long-term unemployed will see their benefits cut by 10 percent.

In the meantime, a recent report by the American Society for Civil Engineers notes that while there has been a slight improvement in the overall state of America’s infrastructure in the past four years, the current state of our nation’s roads, bridges, water systems, energy grid, and other transportation networks remains dismally low—receiving a grade of D+ as opposed to the nearly failing grade of D- four years ago. Thanks to this persistent neglect and Congress’s reluctance to appropriate the funds needed to fix our crumbling roads and other facilities, the U.S. now ranks 25th in the world in terms of infrastructure, far behind the rest of the industrialized world.

This juxtaposition of long-term unemployment and a failing infrastructure is not unlike the situation that Franklin Roosevelt faced in 1935 when, in a bold and unprecedented effort to alleviate the suffering of the long-term unemployed, FDR pushed Congress to pass the Emergency Relief Appropriations Act. It was through this piece of legislation passed 78 years ago today that Congress appropriated the funds FDR needed to launch the most ambitious public works program in American history—the Works Progress Administration, or WPA.

As the generation that lived through the Great Depression passes away, fewer and fewer Americans may be aware of what a great debt this nation owes to this remarkable government program. Indeed, the WPA not only employed 8.5 million people, it also built much of the infrastructure we still use today. How many New Yorkers, for example, are aware that the WPA is responsible for the construction of the Lincoln Tunnel, Tri-borough Bridge, the Belt, Grand Central, and Henry Hudson Parkways, the East River (FDR) Drive, or LaGuardia Airport? How many Chicagoans know that Midway Airport and much of Lake Shore Drive were built by the WPA? What about the fabled “river walk” of San Antonio, Texas? Do the residents of this community know that this critical piece and driver of much of their local economy was conceived and constructed by WPA architects and engineers? Are the people of New Jersey aware that they owe the Palisades Parkway to the WPA? What about those of us who have enjoyed the beauty of a drive along the Blue Ridge Parkway in North Carolina – are we aware that it too was built by the WPA? And what about Los Angeles International Airport or the Glendale Viaduct and countless other public works projects in California? Or the many WPA constructed buildings, parks, and other facilities constructed in New Mexico and other parts of the Southwest?

This list could go on and on, for before it was through the WPA would construct nearly 600,000 miles of rural roads, 67,000 miles of urban streets, 122,000 bridges, 1,000 tunnels, 1,050 airfields, 500 water treatment plants, 1,500 sewage treatment plants, 36,900 schools, 2,552 hospitals, 2,700 firehouses, and nearly 20,000 other state, county, and local government buildings. Most importantly, it would also give meaningful employment to millions of skilled and unskilled workers, providing our nation with the infrastructure it needed to become the most efficient and productive economy in the world and the long-term unemployed with the one thing they needed above all else—a job.

Seventy-eight years ago, our leaders in Congress had the courage and vision to engage in what FDR called “bold, persistent, experimentation.” In the face of the worst economic crisis in our history, they came to recognize that there are times when government itself must step in to provide employment if the free market fails to do so. They had no plans “to take the country down the path to socialism” as some critics charged, or to make the WPA into a permanent institution. What they did see was a need—a critical need to provide employment and to secure the skills of an entire generation of workers, juxtaposed with an equally important need to bring America’s rickety 19th century infrastructure into the modern world. They understood that this would cost money, but they also understood that in the long run this investment—even if it required deficit spending—would pay off.

They were right. Just ask any member of the “greatest generation” who lived through the seemingly massive federal investments and spending of the 1930s and 40s and then went on to enjoy the largest expansion of the American middle class in our nation’s history. Or ask yourself, the next time you land at LaGuardia Airport or enjoy an evening out among the many shops, cafes, and restaurants that cluster around San Antonio’s River Walk.

If today’s Congress had the same vision and courage that existed in Washington in 1935, it would see that with nearly 5 million people suffering the ill effects of long-term unemployment, and with an infrastructure that is now ranked 25th in the world, the least it could do is get behind President Obama’s nearly forgotten call for a modest $50 billion in spending for infrastructure. But unfortunately it does not appear that today’s Congress—particularly the conservative membership of the House—possesses anything like the vision of its counterparts in 1935. This is very bad news, for as FDR remarked about the “generation of self-seekers” that brought the country to ruin in 1933, “they have no vision, and when there is no vision, the people perish.”

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.

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Rediscovering Government

Defeating Laissez Faire Thinking in the Name of the WPA

Apr 8, 2013Jeff Madrick

Winning the war of ideas will be vital if we ever hope to implement such a successful program again.

Winning the war of ideas will be vital if we ever hope to implement such a successful program again.

Many thinking people are surprised that the lessons of the Great Depression have been so easily forgotten as the rich world struggles to get economies back on track after the worst recession since the 1930s. Keynes himself would have been surprised, because he thought the end of laissez-faire economics was well on its way even before the Great Depression. He wrote an essay in 1930 to that end called "The End of Laissez Faire," nicely summarized in a new book by Angus Burgin, The Great Persuasion, which predated his magnum opus, The General Theory, by six years.

But laissez-faire rose again with a vengeance under the articulate, if simplistic, preachings of Milton Friedman. It remains a guiding principle today partly because of the very allure of its simple core principle. For those of us who believe government is needed not merely to tame capitalism but to make it work, as well as to provide for a decent society that rewards all fairly and promotes social cohesion and optimism, we should remind ourselves how profoundly appealing laissez-faire is and what a battle we face. It is a set of elegant principles, while the correct critiques of it are ugly by comparison. Also, it was in the 1920s, and is today, the philosophy of the rich and powerful, not a small matter.

The rise, momentary fall in 2008, and rise again of laissez faire is therefore not really a stunning historical event. Fiscal stimulus, the main legacy of John Maynard Keynes, was derided when President Obama got an $800 billion stimulus passed. Then it was said by many that it didn’t either save or create new jobs. Meanwhile, Europe is overwhelmed by the disease of austerity economics. Only Germany stays above water based on exports made cheap by the low value of the euro -- something it would not be able to enjoy if it were independent of the Eurozone and had its own currency. Austerity economics has spread to the U.S. in the form of allegedly sensible budget balancing commissions that are not sensible at all. They helped foment the pressure to balance the budget as soon as possible, even with unemployment at nearly 8 percent.

It is not only fiscal stimulus that is derided. Programs to spur job growth have been limited to relatively modest infrastructure investments and tax cuts, especially payroll tax cuts. Less obvious, the push by mainstream economists to explain income inequality almost solely in terms of inadequate education is deeply misleading. Such an expalantion neglects the low minimu wage, persistently high unemployment rates, the failure to implement labor organization laws, and on.

There have been new programs. A modest investment in infrastructure and tax cuts. We do have a healthcare bill, which we should applaud on balance. But none of this compares to the adventure of the New Deal, and in particular the Works Progress Administration, whose anniversary we are celebrating today. The WPA went out and hired Americas to do jobs, including building infrastructure. By some estimates, some 8 million jobs were created.

We need a wide range of New Deal ideas made contemporary: higher minimum wages, living wages, aggressive public investment, green investments, and on. Government will be the generator of these jobs. Some, but very few, argue we need outright public employment programs, just like the WPA.

What made that happen then? A more severe recession than now, for one thing. A far bolder president, for another.   

But the ideology of laissez faire still had to be defeated. Laissez faire was not mentioned by Smith, Ricardo, or Mathus, Keynes wrote. “Even the idea is not present in any form in these authors,” he said in “The End of Laissez Faire.” He went on, the public had “come to regard the simplified hypothesis as health and the further complications as disease.”

Keynes blindly believed reason would prevail. The many over-simplifcations of laissez faire would become obvious, he optimistically thought. Sane criticism would prevail over simple ideology. For a while, he was right—a pretty long while. Arguably a version of Keynesian progressivism, which even included fixed exchange rates and plenty of social programs, especially in Europe, prevailed until the 1970s. Then it turned to over-simplifications and scapegoats, mainly driven by the painful inflationary economy of the 1970s.

Many are enamored of the idea that a revitalized right wing of effective think tanks, lobbying, and media disinformation ended progresssivm in the U.S. But that misreads history. Margaret Thatcher introduced stern anti-Keynesian policies well before the U.S. did at the start of the 1980s. Germany was anti-Keynesian throughout the 1970s. Ideas matter, and the acceptance of the idea of laissez faire regained the upper hand.

As we battle in memory of the marvelous WPA, we should keep in mind how intensely compelling laissez faire ideology is. It has captured, without their really noticing, the hearts and minds of most orthodox economists. As usual, it has the rich mostly on its side. If we recognize it is a tough, ongoing battle to defeat the simple version of it, we will fight it better. In the meantime, we can rejoice in how well we once did. That is the proof that we can win. American history can be repeated.

Roosevelt Institute Senior Fellow Jeff Madrick is the Director of the Roosevelt Institute’s Rediscovering Government initiative and author of Age of Greed. 

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The FDR Library Counts Down to a New Deal for a New Generation

Mar 26, 2013
Download: WAMC - The Roundtable

Last week, our partners at the Franklin D. Roosevelt Presidential Library and Museum in Hyde Park, NY began their "100 Days" Countdown to the opening of their new permanent exhibits on June 30. This is the culmination of a full-scale renovation that began in May 2010, and the exhibits, which will bring the Roosevelt presidency to life through an interactive and immersive audio-visual experience, will be well worth the wait.

Last week, our partners at the Franklin D. Roosevelt Presidential Library and Museum in Hyde Park, NY began their "100 Days" Countdown to the opening of their new permanent exhibits on June 30. This is the culmination of a full-scale renovation that began in May 2010, and the exhibits, which will bring the Roosevelt presidency to life through an interactive and immersive audio-visual experience, will be well worth the wait. Library Director Lynn Bassanese and Roosevelt Institute President and CEO Felicia Wong joined the WAMC Roundtable to mark the occasion and explain how the revamped Library will bring the New Deal to a New Generation.

Lynn notes that June 30 was chosen for the rededication "because on June 30, 1941, FDR opened his presidential library and museum for the first time to the public." She promises that "visitors will see a whole new museum," but one that maintains the vision and spirit of the library as designed by FDR himself. "The legacy of Franklin and Eleanor Roosevelt has never been so relevant as it is today," she says, "but there are fewer and fewer people who actually remember" them. A wide range of new exhibits will allow visitors to listen to Fireside Chats in an authentic 1930s kitchen or recreate FDR's secret White House map room, providing "access to that essential evidence that people need to understand what the Roosevelts did."

Felicia explains that the Roosevelt Institute supports the federally funded Library with additional resources for public outreach and education -- in this case, funding for the new exhibits. "Everybody loves FDR and Eleanor Roosevelt," Felicia says, "so in that sense, helping people to re-remember their importance to our culture today -- as Lynn often says, FDR and Eleanor Roosevelt built the world that we live in today -- the social contract that we still enjoy, the role that government plays, that's something that Franklin and Eleanor Roosevelt really ushered in in the early part of the 20th century, so as long as we can remind people of that and remind them of the heroism that they embody, it's not that hard a sell."

Follow along with the countdown on Twitter with hashtag #NewDealNewGen, and mark your calendars for June 30.

 

Countdown from 100 image via Shutterstock.com.

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FDR Put Humanity First. The Sequester Puts It Last.

Mar 1, 2013David Woolner

FDR placed the needs of the American people above petty budgetary concerns, but today's leaders lack his courage and vision.

In 1933 we reversed the policy of the previous Administration. For the first time since the depression you had a Congress and an Administration in Washington which had the courage to provide the necessary resources which private interests no longer had or no longer dared to risk.

FDR placed the needs of the American people above petty budgetary concerns, but today's leaders lack his courage and vision.

In 1933 we reversed the policy of the previous Administration. For the first time since the depression you had a Congress and an Administration in Washington which had the courage to provide the necessary resources which private interests no longer had or no longer dared to risk.

This cost money. We knew, and you knew, in March, 1933, that it would cost money. We knew, and you knew, that it would cost money for several years to come. The people understood that in 1933. They understood it in 1934, when they gave the Administration a full endorsement of its policy. They knew in 1935, and they know in 1936, that the plan is working.—FDR, 1936

Eighty years ago this month, at the height of the worst economic crisis in our nation’s history, Franklin D. Roosevelt delivered on his promise to launch a New Deal for the American people. Not wedded to any one program, idea, or ideology, the New Deal was founded on the very simple premise that when the free market failed to provide basic economic security for the average American, government had a responsibility to provide that security. In Roosevelt’s day, this meant imposing the first-ever meaningful regulation of the stock market, shoring up the nation’s financial system by guaranteeing private deposits and separating commercial from investment banking, and providing jobs to the millions of unemployed through government expenditures on infrastructure. The Roosevelt administration also launched the country’s first nation-wide program of unemployment insurance to help the unemployed bridge the gap between jobs as well as Social Security to ensure that the elderly, after years of work and toil, would not suddenly find themselves utterly destitute.

Conservative critics of FDR’s polices say that these programs did not work—that unemployment remained high throughout the 1930s and that it was only World War II that brought us out of the Great Depression. As such, these same critics continually argue that the deficit spending that fueled the New Deal was the root cause of its inability to bring the unemployment rate down to acceptable levels. In short, they argue that government spending and government programs do not work, and that only the free market can provide the economic stimulus necessary to get the economy back on its feet again. 

But as is the case today with the naysayers on climate change, the empirical evidence suggests that nothing could be further from the truth. During FDR’s first term, for example, the average annual growth rate for the U.S. economy was 11 percent. Compare that to the paltry 0.8 percent we have witnessed in the first term of the Obama administration. The nationwide unemployment rate also fell, from its all-time high of 25 percent in 1933 to 14 percent by 1935, which at the time represented the largest and fastest drop in unemployment in our nation’s history.

But far more damning to the conservative critique is the argument that tries to invalidate the New Deal by positing that it was World War II and not the relief programs of the 1930s that brought us out of the Great Depression. Conservatives love to trumpet this fact and often use it as part of their argument against deficit spending, never stopping for a moment to consider that government expenditures—and deficits—in World War II made the New Deal look like small potatoes. In fact, deficit spending in the New Deal never topped 6 percent of GNP, while in World War II it ran as high as 28 percent. In other words, World War II was the New Deal on steroids. Viewed from this perspective, it is FDR’s critics on the left—not the right—who possess the stronger argument. The problem with the New Deal was that it did not go far enough. In other words, the government should have spent more money, not less, if it was going to be successful in bringing the economic crisis to an end.

All this is not to say that free enterprise is incapable of producing economic growth—it most certainly is. But there are times when capitalism, left to its own devices, can fail. Franklin Roosevelt was willing to acknowledge this, and he spent the better part of his tenure in office trying to put in place programs that would make capitalism work for the average American, not just those at the top. Hence, his agenda was not to subvert or destroy the free market system, but rather to save it.

It took vision and courage to launch the New Deal—the vision to understand that when the free market systems falls short or fails, government has a responsibility to take direct measures to get the economy moving again, and the courage to engage in deficit spending at a time when orthodox economic theory argued that the only proper response to an economic recession or depression was to slash government spending and balance the budget.

Unfortunately, the leadership we possess in Washington today lacks the vision and the courage to follow FDR’s example and put in place the sort of common-sense programs that would stimulate the economy and put people back to work. Instead of providing jobs for millions by spending money on our failing infrastructure—now ranked 24th in the world—or investing in programs that would reverse the falling education rates of our children, or providing greater federal support for the basic scientific research that may unlock untold benefits for future generations, we instead speak of nothing but the deficit and the sequester, as if cutting spending in the midst of recession is the magic bullet that will lead us out of our economic malaise.

Franklin Roosevelt faced similar critics, who, much like today’s deficit hawks, insisted that he must cut spending and balance the budget no matter what the consequences for the average American. But FDR would have none of this. “To balance our budget in 1933 or 1934 or 1935,” he said,

would have been a crime against the American people. To do so we should either have had to make a capital levy that would have been confiscatory, or we should have had to set our face against human suffering with callous indifference. When Americans suffered, we refused to pass by on the other side. Humanity came first.

As it turns out, FDR’s decision to put “humanity first” was not only the right moral decision, it was also the right economic decision. For the deficit spending that he finally unleashed in World War II, coupled with the social and economic reforms put in place during the New Deal, led to one of the longest periods of economic prosperity in America’s history and the birth of the modern American middle class.

Sadly, all of the evidence to date suggests that our leaders in Washington are quite happy “to pass by on the other side” and let the sequester proceed without so much as a fight. With roughly 16 million people across the country still unemployed, this is surely “a crime against the American people.”

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.

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The Real State of the Union Requires a Stronger Government

Feb 15, 2013David Woolner

Instead of downplaying the role of government, we should recommit to a "spirit of charity."

We of the Republic sensed the truth that democratic government has innate capacity to protect its people against disasters once considered inevitable, to solve problems once considered unsolvable…

In this we Americans were discovering no wholly new truth; we were writing a new chapter in our book of self-government . –Franklin D. Roosevelt, 1937

Instead of downplaying the role of government, we should recommit to a "spirit of charity."

We of the Republic sensed the truth that democratic government has innate capacity to protect its people against disasters once considered inevitable, to solve problems once considered unsolvable…

In this we Americans were discovering no wholly new truth; we were writing a new chapter in our book of self-government . –Franklin D. Roosevelt, 1937

In his State of the Union address, President Obama challenged the Congress and the American people to join him in a common effort to make the United States a better nation; to recognize that while we “may do different jobs, and wear different uniforms” we are all “citizens” imbued with the rights and responsibility “to be the authors of the next great chapter in our American story.”

Certainly, the president’s call for “investments” in setting up universal preschool, increasing access to higher education, promoting research and development, fixing our broken infrastructure, and establishing a higher minimum wage so that in “the wealthiest nation on earth, no one who works full-time should have to live in poverty,” is a welcome development. So too is the president’s acknowledgment that there are still communities in this country where, thanks to inescapable pockets of rural and urban poverty, young adults find it virtually impossible to find their first job. “America,” he insisted, should “not [be] a place where chance of birth or circumstance should decide our destiny.”

And yet, if we examine the state of our union honestly, it not only becomes apparent that we are indeed a society where “chance of birth or circumstance” decides our destiny, but also a society that has fallen far behind the rest of the world in education, health care, infrastructure, and a host of other indicators that determine the overall quality of life.

In study after study, for example, Americans are found to be far less economically mobile than their counterparts in Canada and Europe. In education, the U.S. now ranks 17th in the developed world overall, while we are ranked 25th in math, 17th in science, and 14th in reading, well behind our Asian and European counterparts. For decades the U.S, was ranked number 1 in college graduation, but we now stand at number 12, and even more shocking, we are now ranked 79th in primary school enrollment. This is no way to sustain or build a competitive edge in a global economy.

Other statistics tell a similar tale. How many Americans, for example, are aware that out of the 35 most economically advanced countries in the world, the U.S. now holds the dubious distinction of ranking 34th in terms of child poverty, second only to Romania? In infant mortality, the U.S. ranks 48th. As for overall health and life expectancy, a recent report by the Institute of Medicine and the National Research Council found that among the 17 advanced nations it surveyed, the U.S.—which in the 1950s was ranked at the top for life expectancy and disease—has declined steadily since the 1980s. Today, “U.S. men rank last in life expectancy among the 17 countries in the study and US women rank second to last.” In infrastructure, the World Economic Forum recently ranked the U.S. 25th in the world, behind virtually all other advanced industrialized nations and even some in the developing world.

Still, there are some categories where the United States ranks number one: we have the highest incarceration rate in the world—far higher than countries like Russia, China, or Iran. We have the highest obesity rate in the world and we use more energy per capita than any other nation. And while the U.S. does not possess the highest homicide rate in the world—that distinction goes to Honduras—the rate of death from firearms in the U.S. is nearly 20 times higher than it is among our economic counterparts. And on a city-by-city basis, we would find that if New Orleans were a country, for example, its homicide rate would rank number 2 in the world.

Eighty years ago, when the United States found itself in an even more precarious state than it does today, Franklin Roosevelt used the occasion of his first inaugural address to say to the American people that “this is preeminently the time to speak the truth, the whole truth, frankly and boldly,” to avoid the temptation “to shrink from honestly facing conditions in our country today.” The president then went on to implore the American people to reject the fear and apprehension that had paralyzed the nation by reminding them that “in every dark hour of our national life, a leadership of frankness and of vigor has met with that understanding and support of the people” which is essential to overcoming the challenges we face.

Four years later, in the first State of the Union address of his second term, President Roosevelt observed that “the deeper purpose of democratic government is to assist as many of its citizens as possible, especially those who need it most, to improve their conditions of life…” But, he went on, even with the “present recovery,” the United States was “far from the goal of that deeper purpose, for there were still “far-reaching problems… for which democracy must find solutions if it is to consider itself successful.”

President Obama certainly echoed these sentiments when he spoke about the meaning of citizenship and “the enduring idea that this country only works when we accept certain obligations to one another and to future generations; that our rights are wrapped up in the rights of others.” But the president said little about the role of government in ensuring that these obligations are met, and he qualified his remarks by opening his speech with his oft-repeated maxim that the American people do not expect government “to solve every problem.”

FDR took a different tack. For him government was the instrument of the common people, and as such its primary responsibility was not to serve as an arbiter between the demands of the rich and the needs of the poor, but rather as the vehicle through which the hopes and aspirations of all Americans could be met. In this he argued that:

The defeats and victories of these years have given to us as a people a new understanding of our government and of ourselves…It has been brought home to us that the only effective guide for the safety of this most worldly of worlds, the greatest guide of all, is moral principle.

We do not see faith, hope, and charity as unattainable ideals, but we use them as stout supports of a nation fighting the fight for freedom in a modern civilization…

We seek not merely to make government a mechanical implement, but to give it the vibrant personal character that is the very embodiment of human charity.

We are poor indeed if this nation cannot afford to lift from every recess of American life the dread fear of the unemployed that they are not needed in the world. We cannot afford to accumulate a deficit in the books of human fortitude.

In the place of the palace of privilege we seek to build a temple out of faith and hope and charity.

To bring about a government guided by the “spirit of charity,” FDR initiated the most far-reaching social and economic reforms in our nation’s history; reforms designed to provide the average American with a measure of economic security; reforms that reduced the vast, unjust, and unsustainable economic inequality that had brought the country to ruin just a few short years before.

If we are going to “honestly” face “conditions in our country today,” then we need to recognize that the steady abandonment of the principles of governance put in place by Franklin Roosevelt in the past three decades have done enormous harm to the state of the union. In light of this, rather than repeat the conservative mantra that government cannot solve every problem, perhaps President Obama should follow the example of President Roosevelt by reminding the Congress and the American people that even though

Governments can err, [and] presidents do make mistakes… the immortal Dante tells us that Divine justice weighs the sins of the cold-blooded and the sins of the warm-hearted on different scales.

Better the occasional faults of a government that lives in a spirit of charity than the consistent omissions of a government frozen in the ice of its own indifference.

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.

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The Bad GDP Report is a Warning Not to Create Another Roosevelt Recession

Jan 31, 2013David Woolner

President Obama should begin his second term much like the first and demand stimulus to bolster a sagging economy.

The only real capital of a nation is its natural resources and its human beings. So long as we take care of and make the most of both of them, we shall survive as a strong nation, a successful nation and a progressive nation—whether or not the bookkeepers say other kinds of budgets are from time to time out of balance.

President Obama should begin his second term much like the first and demand stimulus to bolster a sagging economy.

The only real capital of a nation is its natural resources and its human beings. So long as we take care of and make the most of both of them, we shall survive as a strong nation, a successful nation and a progressive nation—whether or not the bookkeepers say other kinds of budgets are from time to time out of balance.

This capital structure—natural resources and human beings—has to be maintained at all times. The plant has to be kept up and new capital put in year by year to meet increasing needs. If we skimp on that capital, if we exhaust our natural resources and weaken the capacity of our human beings, then we shall go the way of all weak nations. —Franklin D. Roosevelt, 1938

In a somewhat surprising announcement, the Commerce Department noted yesterday that the U.S. economy actually shrank in the fourth quarter of last year, contracting by 0.1 percent. This sharp decline from the 3.1 percent growth rate posted in the previous quarter has not as yet lead to widespread fears that the United States is about to enter another recession, but given that much of the cause of the decline can be attributed to cuts in government spending, some economists worry that this news is but a harbinger of things to come. We are, after all, facing another government-manufactured showdown on March 1, as well as a possible government shut down near the end of March when the stopgap measure financing the federal government expires. Then there is the expected fight over raising the federal debt ceiling, which could lead the U.S. to default on its debts.

Most economists agree that the uncertainty brought about by the dysfunctional nature of Washington is having a negative effect on the economy. But we hear little about the direct effects that cuts in government spending have had on job growth. How many Americans, for example, are aware that one of the primary drivers of our persistently high unemployment rate is the sharp decline in public sector employment—the massive layoffs of teachers, firefighters, police officers, and other public sector employees over the past two years? We might also ask how many Americans recognize that one of the primary ways President Obama managed to stop the downward economic spiral at the start of his first term was through the funding of public sector jobs via the stimulus funds that were channeled to state and local governments. Indeed, it was the expiration of that federal support, and Congress’s refusal to support the president’s modest request for additional federal dollars to support state and local governments in his jobs bill, that initiated the recent public sector decline.

Now at the start of President Obama’s second term, with the U.S. economy still in a very fragile state, we are reminded once again of the direct link between government spending and jobs. For it was the deep cuts in federal defense spending that helped push the economy into negative territory in the past quarter.

One would assume, in the face of such economic realities, that Congress would support the type of modest spending proposals President Obama put forward in the American Jobs Act. But rather than provide funding for the employment of teachers, firefighters, police officers, and the like, rather than put hard-pressed Americans to work rebuilding our dismal infrastructure (now rated 23rd in the world), Congress would rather engage in another endless round of bickering about the perils of deficit spending. Once again heeding the siren song of the deficit hawks, those soothsayers of doom who insist that without an immediate and massive reduction in the level of federal spending we face an imminent economic collapse.

Interestingly, roughly three-quarters of a century ago President Roosevelt faced a similar argument at the start of his second term. Thanks to the stimulus spending of the New Deal, the U.S. economy had been growing at an average annual rate of over 11 percent. Fearing inflation, his more conservative economic advisors, like Treasury Secretary Henry Morgenthau, urged the president to cut spending, balance the budget, and tighten the money supply. But the U.S. economy—which had seen the largest drop in the unemployment rate in history—was still fragile, and the results of the spending cuts were a disaster. Unemployment shot up, industrial production declined, and the country soon found itself in the midst of a recession.

Thankfully, FDR quickly reversed course, and his re-instigation of the essentially Keynesian economic policies (counter-cyclical deficit spending) he had been following since the start of his tenure as president soon turned the U.S. economy around. But the cost to the American people and to FDR’s political fortunes was high. Millions lost their jobs unnecessarily, and the president took a real beating in the 1938 midterm elections, rendering his social and economic reform agenda much more difficult to accomplish.

President Obama, who is fond of history, might do well to study what happened to FDR in 1937. At the very least he should not give up on his demand that Congress provide a modest level of support for further federal spending on behalf of state and local governments. He should also insist on further federal spending on infrastructure. As FDR once said, these measures do not represent wasteful spending; they represent an investment in the American people, an investment in what he liked to call “human capital.” Human capital whose health and well being was not only critical for the present but also for the future. Indeed, FDR insisted that:

Before we can think straight as a nation, we have to consider, in addition to the old kind, a new kind of government balance sheet—a long-range sheet which shows survival values for our population and for our democratic way of living, balanced against what we have paid for them. Judged by that test—history's test—I venture to say that the long-range budget of the present Administration of our government has been in the black and not in the red.

Let us hope that the president and Congress will take heed of this lesson. For, like FDR, they too will one day have to pass the test of history.

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.

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