Channeling FDR on Public Works
President-elect Obama's thematic speech on his "recovery" package on January 8 served as a reminder of the mixed feelings harbored by Americans when it comes to government spending. On the one hand, the public wants action. On the other, Americans are skeptical about government's ability to solve problems. Congress can't politically afford to ignore either of these concerns.
Obama's speech accordingly mixed his promises for government programs with promises of careful scrutiny, transparency, and planning, especially on public works spending. (No earmarks, he said; no pork barrel spending either; no bridges to nowhere, in other words.)
For anyone interested in history, it was striking how much the president-elect was channeling Franklin D. Roosevelt. The question is whether he will channel Roosevelt's mistakes as well.
Though the Roosevelt era invented the modern American welfare state, Roosevelt himself had the same mixed feelings about government spending, at least in his first years in office. One result was a public works program that fizzled at the outset.
Campaigning for president in 1932, Roosevelt famously promised a "New Deal" but also a balanced budget. Often in his first term as president, he mixed new spending proposals with spending cutbacks and tax increases elsewhere, impeding recovery from the Great Depression.
Upon taking office, the new president faced a Congress clamoring for a $5 billion public works program. Then as now, the money was to be channeled through states and local governments. Then as now, governors and mayors said they had projects ready to go.
But according to the historian David M. Kennedy (in his magisterial, Pulitzer Prize winning book Freedom From Fear: The American People in Depression and War, 1929–1945), Roosevelt had some of the same concerns about public works spending as his hapless predecessor, Herbert Hoover.
Roosevelt "endorsed Hoover's conclusion that only about $900 million worth of acceptable projects were on the shelf," Kennedy writes. When his Labor Secretary, Frances Perkins, pressed the $5 billion list on him, Roosevelt countered by "going through the New York projects item by item, pointing out in well-informed detail how unsound most of them were," Kennedy says. "In the end, Roosevelt caved to political pressures and allowed an appropriation for $3.3 billion to be made for the new Public Works Administration. But he also took steps to ensure that the PWA would be cheese-paring and tightfisted in its disbursement of those funds."
Instead of assigning the PWA to his pugnacious, occasionally out-of-control recovery director, the retired Brigadier General Hugh S. Johnson, FDR put Harold Ickes, the Interior Secretary, in charge. "Penny-pinching and cautious to a fault, Ickes was hypervigilant to forestall accusations of waste or fraud," Kennedy writes. "He spent just $110 million of PWA money in 1933….Under Ickes's obsessively prudent management, PWA contributed nothing in 1933 to economic stimulus, rendering NRA [the National Recovery Administration] dead on arrival as a recovery measure."
History doesn't repeat itself, the old saying goes, but it does rhyme. How Obama navigates the challenge of being both urgent and vigilant will be one of the dramas of his presidency.