When Government Was the Solution

Jean Edward Smith
Campaigning for History
The New York Times
May 21, 2007

For more than a generation, Americans have been told that government is the problem, not the solution. The mantra can be traced back to Barry Goldwater’s presidential bid in 1964. It provided the mind-set for the Reagan administration, and it has come to ultimate fruition during the presidency of George W. Bush.

On college campuses and at think tanks across the country, libertarian scholars stoke the urge to eliminate government from our lives. This thinking has led to the privatization of vital government functions such as the care of disabled veterans, the appointment to regulatory commissions of members at odds with the regulations they are sworn to enforce, the refusal of the Environmental Protection Agency to protect the environment, and the surrender of the government’s management of military operations to profit-seeking contractors.

A look back at Franklin D. Roosevelt’s presidency shows how differently Americans once viewed the government’s role, how much more optimistic they were and how much more they trusted the president.

F.D.R., like his cousin Theodore, saw government in positive terms. In 1912, speaking in Troy, N.Y., F.D.R. warned of the dangers of excessive individualism. The liberty of the individual must be harnessed for the benefit of the community, said Roosevelt. “Don’t call it regulation. People will hold up their hands in horror and say ‘un-American.’ Call it ‘cooperation.’ ”

When F.D.R. took office in 1933, one third of the nation was unemployed. Agriculture was destitute, factories were idle, businesses were closing their doors, and the banking system teetered on the brink of collapse. Violence lay just beneath the surface.

Roosevelt seized the opportunity. He galvanized the nation with an inaugural address that few will ever forget (”The only thing we have to fear is fear itself.”), closed the nation’s banks to restore depositor confidence and initiated a flurry of legislative proposals to put the country back on its feet. Sound banks were quickly reopened, weak ones were consolidated and, despite cries on the left for nationalization, the banking system was preserved.

Roosevelt had no master plan for recovery but responded pragmatically. Some initiatives, such as the Civilian Conservation Corps, which employed young men to reclaim the nation’s natural resources, were pure F.D.R. Others, such as the National Industrial Recovery Act, were Congressionally inspired. But for the first time in American history, government became an active participant in the country’s economic life.

After saving the banks, Roosevelt turned to agriculture. In Iowa, a bushel of corn was selling for less than a package of chewing gum. Crops rotted unharvested in the fields, and 46 percent of the nation’s farms faced foreclosure.

The New Deal responded with acreage allotments, price supports and the Farm Credit Administration. Farm mortgages were refinanced and production credit provided at low interest rates. A network of county agents, established under the Agricultural Adjustment Act, brought soil testing and the latest scientific advances to every county in the country.

The urban housing market was in equal disarray. Almost half of the nation’s homeowners could not make their mortgage payments, and new home construction was at a standstill. Roosevelt responded with the Home Owners’ Loan Corporation. Mortgages were refinanced. Distressed home owners were provided money for taxes and repairs. And new loan criteria, longer amortization periods and low interest rates made home ownership more widely affordable, also for the first time in American history.

The Glass-Steagall Banking Act, passed in 1933, authorized the Federal Reserve to set interest rates and established the Federal Deposit Insurance Corporation to insure individual bank deposits. No measure has had a greater impact on American lives or provided greater security for the average citizen.

The Tennessee Valley Authority, also established in 1933, brought cheap electric power and economic development to one of the most poverty-stricken regions of the country. Rural electrification, which we take for granted today, was virtually unknown when Roosevelt took office. Only about one in 10 American farms had electricity. In Mississippi, fewer than 1 in 100 did. The Rural Electrification Administration, which F.D.R. established by executive order in 1935, brought electric power to the countryside, aided by the construction of massive hydroelectric dams, not only on the Tennessee River system, but on the Columbia, Colorado and Missouri rivers as well.

To combat fraud in the securities industry, Roosevelt oversaw passage of the Truth in Securities Act, and then in 1934 established the Securities and Exchange Commission. As its first head he chose Joseph P. Kennedy. “Set a thief to catch a thief,” he joked afterward.

By overwhelming majorities, Congress passed laws establishing labor’s right to bargain collectively and the authority of the federal government to regulate hours and working conditions and to set minimum wages.

An alphabet soup of public works agencies — the C.W.A. (Civil Works Administration), the W.P.A. (Works Progress Administration) and the P.W.A. (Public Works Administration) — not only provided jobs, but restored the nation’s neglected infrastructure. Between 1933 and 1937, the federal government constructed more than half a million miles of highways and secondary roads, 5,900 schools, 2,500 hospitals, 8,000 parks, 13,000 playgrounds and 1,000 regional airports. Cultural projects employed and stimulated a generation of artists and writers, including such luminaries as Willem de Kooning, Jackson Pollock, John Cheever and Richard Wright.

Roosevelt saw Social Security, enacted in 1935, as the centerpiece of the New Deal. “If our Federal Government was established … ‘to promote the general welfare,’ ” said F.D.R., “it is our plain duty to provide for that security upon which welfare depends.”

For the first time, the government assumed responsibility for unemployment compensation, old-age and survivor benefits, as well as aid to dependent children and the handicapped. At F.D.R.’s insistence, Social Security was self-funding – supported by contributions paid jointly by employers and employees. (In most industrialized countries, the government provides the major funding for pension plans.) “Those taxes are in there,” Roosevelt said later, “so that no damn politician can ever scrap my Social Security program.”

The government’s positive role did not end when the New Deal lost effective control of Congress in 1938. Neither Wendell Willkie, the G.O.P. standard-bearer in 1940, nor Thomas E. Dewey, in 1944 and ’48, advocated turning back the clock.

The G.I. Bill of Rights, adopted unanimously by both houses of Congress in 1944, provided massive government funding to provide university and vocational training for returning veterans. The G.I. Bill changed the face of higher education by making universities accessible to virtually every American.

The Eisenhower administration continued to see government in positive terms. President Eisenhower added 15 million low-income wage earners to Social Security, and he launched the interstate highway system – which also was self-funding, through additional gasoline taxes. Only the federal government could have organized so vast an undertaking, the benefits of which continue to accrue.

The ideological obsession of the Bush administration to diminish the role of government has served the country badly. But perhaps this government’s demonstrated inability to improve the lives of ordinary Americans will ensure that future efforts to “repeal the New Deal” are not successful.