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Obama should follow in FDR's footsteps

The Depression-era president put 3.4 million people to work with his Works Progress Administration. Such aggressive stimulus could help us out of our current rut.

September 10, 2010|By Nick Taylor

As President Obama weighs his options for adding jobs and pumping up the economy — amid ever-louder calls for spending cuts — he might look back for guidance to Franklin Roosevelt.

Indeed, Obama's experience so far resembles FDR's first uneven stabs at job creation. Roosevelt accepted the Democratic nomination in 1932 touting a plan to put a million men to work in national parks and forests. When he took office, with the unemployment rate at 24.9%, he created the Civilian Conservation Corps, his first jobs program.

But it was too limited to make much of a dent in joblessness. Estimates of the number of people out of work ranged as high as 15 million. The "CCC boys," as the young men who worked out of military-style camps doing erosion control and reforestation work were known, never numbered more than 300,000 at any given time.

Roosevelt continued his efforts with the Federal Emergency Relief Administration. The agency's first charge was to feed the hungry and see that they had clothes and shelter, and in tackling that mission, it put 2 million people to work by the fall of 1933 as well.

These efforts still left far too many people out of jobs. As winter approached, relief administrator Harry Hopkins persuaded Roosevelt to create a temporary jobs program that would give the private economy a few more months to pick up steam. The Civil Works Administration put more than 4 million workers into jobs during the winter of 1933-34. They mostly repaired roads, parks and public buildings, but there were jobs for teachers and other white-collar workers too.

The CWA ended, as designed, after just five months. But unemployment remained unacceptably high. Like Obama today, Roosevelt had midterm elections to think about. His critics accused him of socialism and fretted publicly that large deficits would ruin the country. They insisted that workers would grow so accustomed to public jobs that they could never be weaned off the government's largesse.

But despite his vocal opponents, in January 1935, FDR announced his intention to launch the massive jobs program that became the Works Progress Administration.

The president's promise that the country would "see the dirt fly" was realized that fall, more than two years after he took office. The WPA addressed a range of long-standing infrastructure needs, including roads and bridges, hospitals and water treatment plants, and airports. Its workers fought floods and forest fires and cleaned up after hurricanes. Its sewing rooms made clothing and blankets that went out to disaster victims. The WPA also employed nurses, doctors, teachers, librarians and artists. By the fall of 1936, 3.3 million people were on the WPA payroll. The stimulus provided by those jobs buoyed the economy. By the spring of 1937, after Roosevelt's landslide reelection, the country's unemployment rate had dropped to 14%.

FDR then, again like Obama, heard calls to cut spending and balance the budget. These calls were not just from his opponents; some of his own advisors, including Treasury Secretary Henry Morgenthau, also urged him to cut back. And he heeded them. He slashed WPA spending by two-thirds, from its original $4.8-billion appropriation to $1.5 billion for the year starting July 1937. Half as many workers — 1.65 million — would get WPA paychecks.

At the same time, Roosevelt tightened bank reserve requirements. Deductions for the new Social Security System took more money out of the economy. Business responded with its usual self-protective caution and stopped spending. That fall, industrial production fell, the stock market plunged and, by the end of the year, unemployment had surged, with another 2 million workers losing their jobs. Republicans called it the Roosevelt recession.

In the spring of 1938, Roosevelt decided he'd had enough of budget-cutting. He resumed spending, and soon the WPA rolls were back above 2 million, on their way to an all-time high of 3.4 million.

The lesson for Obama in all this is that stimulus works, and the sooner and more aggressive, the better. The vast infrastructure upgrades that were achieved by the WPA were in many ways a side-product, but an important one that is still paying national benefits. Given the country's potholes, sagging bridges, rickety electric grid and spotty broadband coverage, a push today on new infrastructure would also provide lasting and necessary benefits. In the first round of stimulus spending, jobs were saved and some infrastructure projects got underway, but there's still much more to do.

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