Government against itself
Harold Meyerson and I don’t see eye to eye on every issue involving the Obama administration’s job-creation and economic stimulus efforts. But we do agree on this: If you’re going to borrow and spend money to create jobs in the short run, a good model would be the New Deal’s Civil Works Administration, which reduced unemployment from 13 million to 9 million between November 1933 and February 1934. As Meyerson explains in this excellent article, the CWA worked because the executive branch officials in charge, led by the redoubtable Harry Hopkins, were fully empowered to approve projects and spend money with practically no bureaucratic hassle in between. The result was a swift and highly visible improvement of the nation’s infrastructure. That was good economically for the country, and good politically for FDR.
If anything frustrates me about the federal response to this recession, it is the conspicuous absence of CWA-like teams – perhaps dressed in bright yellow T-shirts with a recognizable logo on the front? – toiling on the nation’s roads, bridges and schools.
Meyerson also correctly diagnoses a major cause of this failure: “the checks that liberals created to keep the government from building roads, rails, and other infrastructure by executive fiat,” a.k.a., the forest of regulation and bureaucracy that has grown up since the New Deal. In today’s America, the government can’t act like Harry Hopkins did in 1933 because of, well, government.
California, Meyerson’s home state, received $620 million in stimulus funds in 2009 to support weatherization projects -- but only spent about 1 percent of that money because the stimulus bill did not waive the usual environmental impact, competitive bidding and historic preservation review requirements. Notwithstanding the fact that the country was facing a once-a-century economic emergency, the Obama administration left all of this standard procedure intact, and added more.
To be sure, some of the bureaucratic burden was imposed to counter Republican charges of corruption. But most of it was not. In fact, at organized labor’s behest, Obama and Congressional Democrats imposed a new requirement on the Energy Department’s weatherization grants: that they pay “prevailing,” i.e., union, wage rates. The impact of this provision was especially poignantly irrational, Meyerson reports, since it priced local community organizations -- the very people the stimulus bill was supposed to favor -- out of the business. “Weatherization work in Los Angeles ground to a halt,” Meyerson writes. (Why buildings in sunny LA needed so much protection against the weather is a question for another day.) LA’s experience was replicated nationally, with the result that a $5 billion weatherization program that was supposed to create 87,000 jobs in its first year created practically none.
Where Meyerson and I disagree is on the lessons of all of this. He argues that it would have been easier to cut through the red tape if Gov. Arnold Schwarzenegger had not laid off so many state staffers to ease the state’s budget deficit. But where was Schwarzenegger supposed to get the money?
The real question is why you have to meet so many officious requirements to get anything done in the first place. Meyerson describes the dilemma as a collision of big government (spending) and good government (regulation). Having breezed through the California State Office of Historic Preservation’s prolix rules, I’m not so sure about that. It might be more accurate to speak of a clash between urgently necessary government and mind-numbingly excessive government. To be sure, Meyerson argues that liberals should exercise “a preferential option” for job creation over punctilious environmental impact statements. But he doesn’t get very specific about how to square that circle -- except to suggest, not that plausibly (as he admits) that Obama should try funding more home health care jobs.
What Meyerson can’t or won’t concede is that some liberal institutions have, over the years, become the enemies of some liberal policy goals -- and that this economic crisis has starkly exposed the contradiction. Some of the very groups that populate and fund the Democratic Party – lawyers and labor unions come to mind – have accumulated and used political power to advantage themselves or their causes with no benefit for the poor and jobless. For all his promises of change, President Obama seems never to have considered using the crisis to do something about that. If anything, his policies, parts of the stimulus bill included, have made the problem worse.
UPDATE, 3:09 p.m.: An earlier version of this post mistakenly said that the New Deal's CWA program reduced unemployment from 13 million to 4 million between November 1933 and February 1934. Actually, it cut unemployment from 13 million to 9 million, a total reduction of 4 million. Sorry.
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