The Legacy of the New Deal

-- Posted by Neil H. Buchanan

Last Friday, I participated in Lewis & Clark Law School's "15th Annual Business Law Fall Forum: Taxation and the Environment." A gathering of law professors and economists (and, in my case, both), the Forum was an extremely productive day of discussion about how environmental damage has been caused by -- yet might be mitigated by -- tax incentives and fiscal policy. I presented some thoughts in the vein of my ongoing work on justice between generations, arguing that environmental mitigation is an especially compelling example of a moral obligation on the part of currently-living people toward unborn generations to come. As compared to overwrought concerns about, say, the Social Security program, it is not even a close call. The Lewis & Clark Law Review will publish a symposium issue in the Spring.

Early in the conference, one of the law professors who specializes in pro-environmental tax policies argued that such taxes would be especially appealing because of "our obvious deficit problem," or words to similar effect. During the Q&A, I suggested that it would be helpful if we could avoid reinforcing the idea that deficits are per se horrible. Even though I agree that eco-friendly tax incentives are a wise way to raise revenue, there are very good reasons to avoid arguing (or suggesting, or seeming to concede) that deficits are always bad and must be reduced at all costs. Yes, it might be tempting to appeal to Congress by saying, "... and here's some revenue that you might otherwise have a hard time raising, to fight the deficit"; but at this point, we all know only too well where that kind of rhetoric leads. My suggestion was taken in the spirit in which it was offered; but it is notable that even well-informed tax specialists all too readily default to anti-deficit arguments.

This issue became a bit of an unplanned theme of the conference, as the issue arose in subsequent sessions, in slightly different guises. The keynote speech was delivered by the local congressman, Earl Blumenauer, a Democrat who serves on the Ways & Means Committee. During Q&A, I managed to force myself not to respond to his argument that Social Security should be "fixed" and asked him about the prospects for protecting long-term public investments from anti-deficit mania. To my pleasant surprise, the congressman's answer indicated that he well understands the difference between public consumption and public investment, and the different financing methods that should be used for each. He did not have anything encouraging to say about broader congressional understanding of such issues, but there is at least some comfort in knowing that some members of Congress understand these matters.

The day after the conference, the host (Professor Jack Bogdanski) led the conference participants on a day-long tour of the region around Portland, Oregon. Never having visited the state, I was especially delighted to have the opportunity to see the local natural wonders for myself. Even with the inevitable rain showers, Oregon is a gorgeous place. It is easy to see why Lewis & Clark Law School has built such a strong environmental law program. With the Columbia Gorge only minutes away, the only wonder is how anyone gets any work done, rather than spending all their time hiking.

Even in the midst of an eco-tour, however, the issue of public spending was never far from view. We drove along the Columbia River Highway, a century-old road that was (according to the information provided) the first paved road in Oregon. Built into the sides of mountains -- in many cases forced by railroad owners to build not on adjacent flat land but by tunneling through rock -- the highway is a classic example of a public investment, allowing the state to develop while providing ongoing economic payoff to the people of the region. When we arrived at the Bonneville Lock & Dam, this theme was even more obvious. It turns out that then-candidate Franklin Delano Roosevelt promised Oregon's voters in a 1932 campaign stop that Bonneville would be the first public works project that he would approve, if elected. He kept his word, and the dam still operates today, public-built and publicly-operated. The visitors' information provided at the site was a virtual guidebook for sensible economic policy, noting the short-term employment effects of the project during the Depression, as well as the continuing benefits that the hydroelectric station provides today.

Indeed, it is difficult to travel in this country without seeing the legacy of public investment projects, especially (but, as in the Columbia River Highway, hardly limited to) New Deal projects. In Toledo, Ohio, where I grew up, one of the local attractions is the Toledo Zoo, which was completed in 1935 as a WPA project. (Note: As a vegan, I obviously have issues with zoos. Nothing I say here should be construed as an endorsement of mistreating animals.) I also recall walking around Oakland, California one day, only to notice that the sidewalks on which I was walking had been built as New Deal projects. And then there is the New York subway system (built largely before the New Deal, but substantially improved during the Thirties with federal money), electrical grids, railroads, ports, and so on.

And now we are finished with all that. Earlier this week, the new Hoover Dam Bridge was dedicated, after an eight-plus-year building process. (See story here, and awesome images here.) In the era of inane opposition to all government spending, engaging in new long-term investments -- even those with huge short-term payoffs -- are simply not thinkable. During last year's debate over the stimulus (which now seems eons ago), the argument was that we must not engage in public works projects, because they are not "shovel ready" and thus take too long to build to do any good. Almost 100 years later, the Columbia River Highway begs to differ.