NIXONIAN THERMIDOR
Nixon won in 1968—an election in which one candidate (RFK) and Martin Luther King were assassinated. Vietnam War protests and summer riots continued; Chicago’s Democratic convention/riot left the nation stunned, and fearful. Both houses of Congress remained Democrat. Nixon won by a plurality (43.5 percent), with 301 electoral votes (Humphrey 43 percent, 191 electoral); George Wallace won five Deep South states with 13.5 percent of the total vote/45 electoral. Wallace unhinged the southern Democratic Party, triggering a southern state Republican realignment. Republicans won 62 percent of governorships. Nixon’s 1972 presidential election was a landslide, exceeding Lyndon Johnson’s 1964 landslide.
New Federalism
Nixon could have attempted to repudiate the Great Society. He didn’t. With Congress Democratic, Nixon chose to consolidate programs but, counter-intuitively, also extended the federal government into environmental policy, creating the Environmental Protection Agency (EPA) through the National Environmental Policy Act (NEPA), the Occupational Safety and Health Administration (OSHA) and the 1972 Clean Water Act. As controversial as President Nixon proved to be, this history views his non-Watergate domestic activities as reshaping, even extending, certainly not repudiating, the Great Society. Nixon pressed for a “New Federalism” (Conlan, 1998), restoring the traditional balance between federal and state uprooted by Great Society’s Creative Federalism (Nathan, 2013). New Federalism meant creating ten regional federal councils to coordinate national programs and simplify regulations. Cornerstones of the New Federalism were revenue-sharing and block grants. Nixon’s New Federalism produced a mixed reaction and a mixed bag of legislation—complicated by a Watergate-troubled presidency in his last two years in office. He resigned, of course, in 1974 and Vice-President Ford became President through 1976.
Nixon’s reshaping of federalism directly affected economic development. Creative Federalism rested upon categorical grants bypassing state government to go directly to municipal/community-based recipients. Nixon’s New Federalism (1) combined many categorical grants into one “block” grant which (2) ran through the states and which (3) allowed the states meaningful discretion in its distribution (despite the existence of a formula) and administration (Finegold, 2004). There were three major block grants in the Nixon–Ford years, and economic development was caught up in two of them: the Housing and Community Development Act and the Comprehensive Employment and Training Act (CETA).
The 1972 State and Local Fiscal Assistance Act established the core revenue-sharing program, in many ways the heart of Nixon’s New Federalism (Reagan ended it). Revenue sharing was not important as a funding source for ED; in its first two years, ED received a whopping 2.2 percent allocation from eligible jurisdictions (Judd, 1984, p. 344, Table 11.5). The significance of revenue sharing was empowerment of states/ localities and a step back by the federal government.
Comprehensive Employment and Training Act
CETA was then, and the Workforce Investment Act of 1998 (WIA) remains today, the nation’s cornerstone manpower/skills training/trade adjustment, one-stop youth workforce program. It funds, at least partially, over 500 specialized workforce EDOs throughout the nation. CETA interfaced with educational systems, and offered productivity/training for business. Building on the “unemployment-oriented” Employment Act of 1946, the “education-oriented” GI Bill (1958) and Kennedy’s MDTA “structural” unemployment, skills deficiencies and occupational/trade displacement, CETA responded to a structural employment crisis induced by global technological changes by retraining “dislocated” workers transitioning from one sector to another. CETA evolved into the nation’s answer to deindustrialization (Comprehensive Employment and Training Act A-58, 1977).
Workforce programs such as these are a departure from the traditional “Go West Young Man” manpower program long practiced in the United States (Clague and Kramer, 1976). Restated, that cute expression translates into “get a job somewhere else.” People mobility has been America’s default structural unemployment program, as the Southern Diaspora testifies. All sorts of specific programs existed previous to CETA. Kennedy’s MDTA was the contemporary workforce’s pioneer legislation that targeted four objectives: counter labor shortages in key industry sectors; provide opportunities for the unemployed; upgrade labor force skills to render them more competitive; and provide an avenue out of poverty (Levitan and Mangum, 2003). Also, on-the-job, institutional, classroom-based instruction, remedial instruction, curricula design and some placement were handled through DOL and contracts with local vendors, community agencies and institutions. By 1970 estimates were DOL managed over 10,000 such contracts. Between 1962 and 1964, about 100,000 workers participated annually.
The 1964 War on Poverty launched the Jobs Corps, the Neighborhood Youth Corps, Operation Mainstream, Adult Basic Education, the Work Experience Program, Public Service and New Careers Program; and, through Senator Kennedy’s Special Impact legislation (1966), the Concentrated Employment Program (CEP). About 65 percent of those served in these programs were low income. Another Great Society Program, Opportunities Industrialization Centers (OICs), started in 1964 but operated by special funding to nonprofit corporations accessible to low-income unemployed African-Americans. The Work Incentive Program (or WIN) operated out of the Social Security Administration, providing supportive services such as day care, social and medical assistance, and some skills and job training to those on public assistance. By 1967, an estimated 17 categorical programs existed in these workforce programs. Among other programs it funded, the CEP issued contracts to CAAs to coordinate this mélange of initiatives within their target areas—82 CAAs received these CEP contracts.15
DOL fragmentation and coordination were serious concerns; several administrative solutions were attempted, notably the Cooperative Area Manpower Planning System (CAMPS). CAMPS funded states (governors specifically) to set up area-wide planning/ advisory committees; in 1970 mayors were funded to do the same. By 1973, over 400 area-wide or local CAMPS committees were in place, each state had a “manpower planning council” and more than 1200 full- and part-time positions were funded with CAMPS dollars. In 1972 their composition was mandated and enlarged to include local elected officials, business and labor leaders and institutions. They “supposedly” were entrusted with making recommendations to chief elected officials on manpower funding and programmatic matters. Mayors and governors became in the process the chief coordinators of this manpower/workforce nexus. Whether any of this worked as was intended is unknown, but one might be skeptical. CAMPS served as the foundation for CETA.
Nixon’s Workforce Initiatives
Nixon’s 1969 Manpower Training Act proposed consolidating categorical programs into a New Federalism block grant. Winners and losers battled it out in Congress, along with Big Cities that feared they would not fare well competing with suburbs and second-tier cities. The legislation was defeated in 1971. A new bill was filed with manpower one of “six special revenue-sharing proposals” in an omnibus multi-policy area bill (the Manpower Revenue Sharing Act). Congress, it was said, reacted with hostility and apathy—which seem hard to combine—and so in 1973 the Nixon administration carved out a third special manpower bill, based upon existing presidential authority to oversee ongoing programs and offering locals a carrot by decentralizing manpower decision-making to the CAMPS planning councils. So we backed into the CETA framework.
Through a formula, about 70 percent of the appropriation went to the chief local elected officials (CLEOs) and governors where CAMPS did not exist for allocation to manpower programs. Nixon’s bold action finally got Congress motivated, and compromise produced a final bill that passed in 1973. What emerged was a hybrid block, revenue-sharing, categorical grant omnibus, fairly decentralized, federally financed workforce system. Most first-level decision-making and allocation of funds (compliant with federal guidelines and objectives du jour) was made by local/state “Prime Sponsors.” Accordingly, who would approve Prime Sponsors (the legislation was silent) became the next battleground. Governors wanted in, so did mayors; debate and compromise followed (Davidson, 1974). Congress approved the bill on December 20, 1973; eight days later Nixon signed the Comprehensive Employment and Training Act of 1973 (barely).
So what had tumbled out of this washer/dryer policy-making? Title I (consolidated 17 categorical grants) created a block grant to Prime Sponsors (either state or local government CLEOs) for a variety of manpower tools/programs (training programs, employment services, testing, counseling, placement and supportive services—the whole shebang). There was no required matching. Cities and counties (or consortiums) greater than 100,000 could become Prime Sponsors. The CAMPS planning council was used by CLEOs to operate/administer funds. To receive funds a comprehensive plan had to be approved. The Prime Sponsor determined the mix and allocation to the various eligible alternatives. Funds were allocated among Prime Sponsors through a formula based on: (1) previous funding level; (2) number unemployed; and (3) the number of low-income (with various set asides at the state level for vocational education and state-level manpower services). The Job Corps survived. With nips and tucks, ebbs and flows, this structural framework endures to the present—through JTPA, WIA and now the Workforce Innovation and Opportunity Act (WIOA).
1974 Housing and Community Development Act
The 1970 Housing and Urban Development Act, a creature of Congress, continued most 1968 Housing Act and Model Cities programs. Model Cities, rent supplements, rental housing and public housing funding increased. One interesting innovation was that the Urban Growth and New Communities Act picked up LBJ’s earlier “dream” to build new (suburban) towns, dispersing African-Americans throughout the metro area, deconcentrating ghettos. Consensus within black ghettos, however, had moved away from assimilation to separate neighborhoods controlled by residents. The Act created a Community Development Corporation with $500 million to guarantee debt by public and private developers (Smookler, 1975).
Between 1970 and 1973, HUD was hit with a series of major scandals—chiefly involving Sections 235 (homeownership) and 236 (rental housing). In 1973 an even worse scandal reached into the FHA and several other HUD programs. The poor were sold sub-standard, excessively priced, over-appraised homes by real estate speculators. Granting FHA insurance to Section 235/236 bordered on fraud, and HUD’s administrative competence was seriously questioned. Nixon announced a moratorium on HUD spending until studies, audits and analyses could be conducted (Sullivan, 1979, pp. 389–91). By 1974, with Nixon leaving office, the stage was set for a fundamental re-pivot of HUD and the nation’s housing programs. The result was the 1974 Community Development Block Grant Act (CDBG), signed by President Ford, taking effect in 1975.
The 1974 Act, built around Nixonian block grant, revenue-sharing and administrative decentralization, established the present-day Community Development Block Grant, funding it at $7.9 billion. Combining seven categorical grants distributed by formula to eligible grantees (including states, municipalities), the HUD block grant included economic development programs such as historic preservation, revolving loan funds, fair housing and urban renewal. The key control was the Housing Assistance Plan required of recipients. Decentralization of decision-making and local administrative flexibility were key objectives—as was limiting the role of the federal government in public housing.
The Act pivoted the federal government away from public housing projects and landlord role for the nation’s poor into Section 8 housing. Section 8 provided direct rent subsidies to low-income recipients that covered gaps between the rent able to be paid by the recipient and the privately owned rental unit rate. This pivot from public housing marked the end of CD’s long-standing and controversial CD public houser housing movement. The Age of Urban Renewal and Public Housing was over! Section 8 offered a new tool for Community Development Corporations, which now worked with private developers to construct low-income housing in depressed, low-income neighborhoods—while at the same time permitting (indeed, later requiring) middleclass neighborhoods and suburban communities to house low-income families and individuals. Section 8, with its strengths and weaknesses, continues to this day as the cornerstone housing policy of the nation. CDBG authorized staff/administrative cost reimbursement, fostering growth in sub-state CDCs/EDOs.
Historic Preservation Act of 1976
This Act partnered the Internal Revenue Service (IRS) with the National Park Service to create a historic preservation tax incentive program appropriate to private restoration of historic properties, often in partnership with State Historic Preservation Offices (SHPOs).16 The legislation provides public subsidy to properties that are incomeproducing so long as they are listed on the National Register and rehabilitated according to Department of Interior standards. Since 1976, the Act has leveraged more than $33 billion in private sector investment in over 32,000 historic properties, creating about 185,000 housing units, of which 75,000 are low–moderate (Ryberg-Webster, 2014).
EDA Changes its Stripes
EDA couldn’t sit still during the seventies—six legislative acts were approved in the decade. Congress added three new titles that established EDA as a home for mainstream urban physical redevelopment and business assistance ED to counterbalance HUD as the home base for community development. CUED was no small part of that. Lost to history was an agency formerly dedicated to rural ED. No consensus existed in Congress as to what role the federal government should play in sub-state mainstream business assistance and physical redevelopment. That was really nothing new—with periodic exceptions, the policy area has been conflict-ridden since the National Highway and canal-building days. Many believed the feds could accomplish very little outside of infrastructure (and macroeconomic policy), except distort the marketplace. Since FDR, however, Congress (and JFK) had argued for a comprehensive program to combat distress in severely distressed and depressed areas. The Great Society in 1965 created the Economic Development Administration to support, through physical development and infrastructure, the Appalachian Regional Commission’s efforts to reduce rural area-wide poverty and economic distress.
The six legislative acts between 1965 and 1975 refocused EDA away from that function, and moved it into the federal vehicle used to:
provide direct assistance to urban areas … address issues confronting communities experiencing sudden and abrupt economic dislocation caused by factory shutdowns, foreign competition, base closures, and disasters … [provide] anti-recessionary [funding] … for public works projects as a means of creating jobs and priming the economic pump. (Boyd, 2011)
In hindsight, the “toe-in-the-door” refocusing legislative act was a 1971 EDA amendment, vetoed by Nixon that somehow got included in another legislative bill to extend EDA through 1973. That legislation was approved and signed. Nixon never supported EDA. He usually included some statement with his signing, asserting EDA or its programs did not create jobs for the poor, overlapped with other federal programs and should spend more effort on rural areas.
The 1971 two-year extension also included a previously vetoed bill creating “special impact areas” as eligible for Title I programs. In fact 25 percent of EDA’s Title I funding was tied to these areas, defined as areas with large concentrations of low-income households, high or abrupt increases in unemployment, such as the closure of a factory—all of which applied to urban as well as rural areas. The legislation encouraged short-term job-creating projects as well as EDA’s original goal to produce long-term ED benefit for distressed areas. These additions were included in new legislation extending EDA for two years (until 1976), signed by Nixon because his bill, the Rural and Urban Community Development Revenue Sharing Act, had gotten nowhere. In 1974 Nixon proposed that EDA address the needs of local areas affected by natural disasters. Congress agreed and approved the Disaster Relief Act of 1974 that added a new title. The disaster relief initiatives included authorization to capitalizing RLFs to help businesses access capital. This turned out to be one of EDA’s most helpful and utilized programs.
Overriding a Ford veto, Congress in 1976 approved the Public Works Employment Act that enlarged EDA involvement in public works as job-creating projects. In the same year, Congress also passed amendments to EDA’s basic legislation, extending it through 1979, making explicit its ability to operate in urban as well as rural areas. The 1976 amendments liberalized several EDA programs, reducing local match, making eligible private sector costs like interest on loan guarantees an interest-free loans to redevelopment areas (urban renewal) to facilitate land acquisition and redevelopment. They also required newly elected President Carter to convene a White House Conference of Balanced National Growth and Economic Development (held from January 29 to February 2, 1978). The report from that conference called for no new federal programs, rather for more effective government and a “real” partnership among levels of government and the private sector.
Carter was also unable to secure permanent funding for EDA in 1979—he did secure legislation extending it through 1982; but no permanent reauthorization of Congress occurred until 1998. EDA survived on periodic legislation that extended its funding for a few more years. Said and done, it took EDA 33 years to achieve permanent status as a federal agency.
SBA
During the Nixon years, SBA started its successful Small Business Institute program (SBI-1970) by reaching agreements with four professional organizations to provide counseling to small business. This was quickly extended by 1975 to include over 400 colleges and universities, 20,000 students and 8000 firms (Bean, 2001, p. 83). SBI offered education-based expertise from business students and advisors to small companies. In 1996 it became independent of SBA, continuing to this day self-funded, complete with a journal and annual conference. Conversely, a Nixonian initiative to transfer the successful SCORE program to ACTION (Allegheny Council to Improve Our Neighborhoods) generated a four-year struggle with the volunteer-based program, culminating in SCORE’s establishment of its own nonprofit in 1975. SCORE would be independent, but coordinated through the SBA. Given SBA’s alleged long-standing indifference to SCORE, in the long run this may have been a positive.
THE GREAT SOCIETY: LAST THOUGHTS
The Great Society, including its Nixonian Thermidor, was a game-changer for sub-state ED—and a revolution for community development. It left a “permanent” legacy in the form of a substantial nexus of federally funded local CDOs/EDOs operating in most communities/regions in the nation: literally thousands of workforce (CETA)-related Prime Sponsors, a greatly expanded SBA and Nixon’s EPA and clean water initiatives. Great Society programs fostered emerging government departments/offices through HUD and EDA funding; created networks of regional planning/economic development entities, mostly in the South but also A-95 and metropolitan clearing houses that fostered regional planning—and, of course, the controversial CAP and its successor neighborhood level CDOs. Left behind was industrial decentralization.
The physical landscape of American sub-state economic development has never been so dramatically enlarged in so short a time. During these years the federal government injected a programmatic and financial pipeline directly into most American jurisdictions. Buried under this avalanche was classic chamber-based ED. Most ED/CD eyes and grant applications were fixed on Washington. Through block grants the federals had roused (and fed) the state beast, and it too took more notice of sub-state ED.
The nearly four-decade-old slum clearance, public housing/urban renewal CD/ED strategy juggernaut intended to preserve Big City metro hegemony was, for all practical purposes, redirected to “softer,” more people-focused neighborhood-based empowerment—and CBD-related revitalization. Public housing was effectively abandoned in favor of neighborhood-based CDO and private housing redevelopment—and individual Section 8 vouchers for privately owned housing. In its wake, the Great Society had not simply rejuvenated American community development; it had actually forged an updated community development that accommodated the Second (and Third) Ghetto. The explosion of CD strategies and tools has added a robustness to the profession it formerly lacked. A Policy World network and an enhanced CD-foundation complex had formed as well.
Of course, the Great Society did not single-handedly “create” contemporary economic development. Rather, it was a shotgun whose programmatic discharges flew in any number of directions—from southern sub-state ED policy systems to Big City inner neighborhoods, periphery suburbs, to the formation of intended and unintended wings of a new contemporary community development. Its short, profound and widely dispersed disruption—accompanied by the fury, confusion and dynamic reaction it unleashed—revealed to us all that the “page of history” was turning. By 1974, American economic development looked very different from how it did a decade earlier.
As for the riots. The Great Society did not “cause” the riots. Big City upheaval had been brewing for some time, awaiting critical mass and a crack in the system. The Great Society knocked down the Big City’s municipal policy system’s house of cards. It cracked open local policy systems, and into the gap poured the activism and resentment inspired by unsettling population movements and generational cohort change. It coincided with the loudest civil rights crescendo and the soon-to-be evident implosion of the northern/midwestern hegemony. Timing is everything they say.
Ron W. Coan 