THE BLOG
02/07/2009 05:12 am ET | Updated May 25, 2011

The New Deal Redux

Political pundits often draw comparisons between current events and the good (or bad) old days. Especially now. Last year's stock market rollercoaster seems to be a replica of the 1929 crash that led to the Great Depression of the 1930's. Furthermore, President-elect Obama is channeling President Franklin Roosevelt when he calls for "action and action now," when he suggests that massive public works programs will not only put the unemployed to work but will help jump start a stagnant economy, and when he promises a new direction than that of the hidebound business-government partnership of a previous Republican president with a basement-level approval rating.

The parallels between 1932 and 2008 have triggered a spate of articles and radio commentaries on Roosevelt's "Alphabet Soup" agencies instituted to address the high unemployment brought about by the Great Depression. However, there is clearly some confusion about what these programs did and what problems they were targeted to solve. The Works Progress Administration (WPA), run by my grandfather Harry L. Hopkins, became the centerpiece of the New Deal work relief programs in 1935. Many confuse the WPA with the Public Works Administration (PWA), which was run by Harold Ickes beginning in 1933. The differences between the two programs are significant and define the binary that has so saturated the current discourse on government relief programs.

The WPA emerged in response to FDR's 1935 State of the Union speech in which he told a worried nation that he would put the "vast army of unemployed" to work. It is important to understand that the WPA was a jobs program whose goal it was to put money in the pockets of as many workers as possible so that they could become consumers. WPA projects did not involve long-term planning and did not require a lot of overhead dollars. The majority of WPA funds were spent on employing people in labor-intensive and relatively small construction projects improving the nation's infrastructure, including repairs to roads, bridges, parks, playgrounds, air landing fields and public buildings. However, WPA workers also provided disaster relief, did scientific research, restored historic shrines, and engaged in conservation programs. Over the course of seven years the WPA generated over three million jobs per year at a total cost of $10.7 billion (or $160 billion in today's dollars).

The PWA, on the other hand, was top-heavy, long in the planning, and made use of heavy machines instead of men. It built bridges and highways to stimulate business which, Ickes argued, would help in the long run. Hopkins responded, probably out of the side of his mouth, "But people don't eat in the long run, they eat every day."

The PWA was Wall Street; the WPA was Main Street. The PWA served to stimulate business; the WPA employed Americans. Both served to boost the economy and rebuild the nation's infrastructure. Both types of public works projects are useful models for recovery.

The benefits from the PWA as well as the WPA can be seen in our national parks, airports, libraries, and schools. The skills maintained through public works jobs preserved the workforce that allowed America to become the Arsenal of Democracy during World War II, a crucial prerequisite for economic recovery, and the Americans who lived during the Depression and worked for the WPA recall that the opportunity to work greatly lifted American spirits. Government programs that have immediate benefits, like the WPA, and programs that emphasize long-term benefits, like the PWA, are both necessary for economic recovery.

Great crises demand great leadership and we might well look to the Roosevelt years for answers. Relying exclusively on piecemeal government bailouts for car companies and financial institutions, whose executives make obscenely high salaries despite the fact that they made grossly wrong decisions, seem to replicate the mistakes made by Herbert Hoover during the first two and a half years of the Depression. FDR's inauguration brought welcome changes to the White House in 1933, as Barack Obama has promised to bring once he is sworn in on January 20th. The massive stimulus package aimed at infrastructural job creation demonstrates that he fully understands the immediate role that government can play in reorienting the economic and social direction of our nation. His willingness to address the current crisis with positive and creative government action and attention to the lessons of history could very well prevent the Second Great Depression.