THE GREAT SOCIETY
Upon entering office, LBJ crafted his domestic program. Calling it “the Great Society,” it was launched in his January 1964 State of the Union Address. Civil rights were his first priority. In July 1964 Congress approved the Civil Rights Act. In July LBJ signed the Urban Mass Transportation Act. LBJ’s second priority was his War on Poverty, also alluded to in the State of the Union Address. In August 1964 he signed the Equal Opportunity Act into law: “Today for the first time in history of the human race a great nation is able and willing to make a commitment to eradicating poverty among its people.” Less than eight months had elapsed since Kennedy’s death.
War on Poverty
LBJ’s War on Poverty smashed through municipal policy systems like a steamroller. The Equal Opportunity Act was only the first legislation in the War on Poverty. In short order, the 1964 Food Stamp Act, the 1965 Social Security Act (creating Medicare and Medicaid) and the Elementary and Secondary Education Act were passed. In no time, it was engaging low-income residents in policy change through community action implemented and financed by the War on Poverty’s new CDO, the Community Action Agency (CAA). Within 18 months nearly 1000 CAAs were established in each decent-sized municipality in the nation. The CAA led the charge for neighborhood-driven policy implementation. Empowered with a host of human, community service and education programs CAA’s potential program arsenal affected nearly every significant neighborhood and city-level institution or agency. The CAA itself did not implement these programs; it funded other CDOs and agencies with pass-through federal monies.
Mostly, CAAs coordinated local Head Start, VISTA, Upward Bound, community health centers, family planning and legal aid. The Job Corps and Neighborhood Youth programs were run out out of the DOL, and Title I of the Elementary and Secondary Education Act (ESEA) out of HEW. In many ways, the CAA story was less these programs and their implementation than their role in the community action empowerment objective. The OEO, headed by Sargent Shriver required CAAs to create boards of directors (and staff) with the “maximum feasible participation” (MFP) of neighborhood residents. While the origins of the phrase maximum feasible participation are still unclear, they wound up in the War on Poverty legislation. The remaking of the community/neighborhood/culture of poverty was not to be engineered from above by bureaucratic rule-making, but from below, by the people in the community. MFP meant action by the community, not for the community. The problems of the community could best be resolved by those within the community who would be empowered to control the institutions of the neighborhood—and the programs financed by the War on Poverty.
MFP meant CAAs “would provide a structure for poor communities to mobilize their own resources on behalf of their residents, and a platform for giving poor people more of a voice in the bureaucratic institutions that shaped their lives” (Halpern, 1995, p. 108).
Whatever else it was supposed to do, MFP unleashed a three-year civil war within most CAAs. Incessant power struggles followed over who was, or was not, to be on the board, between city hall and the board, between the CAA/board and its constituent institutions (school principals, for example). Some suggested it was better to watch sausage being made than to sit in a board meeting. Schools and city hall bureaucracies fared the worst.
It became clear that a personal history of hardship and exploitation did not incline a person to be community-minded … Community residents on the board did not necessarily represent the most disenfranchised segments … but rather a narrow set of interests, notably that of families, friends and allies. (Halpern, 1995, p. 110)
Moynihan (1969) compares CAA internal policy-making to the old machines— concerned with nepotism, services and patronage. Toward the end of 1966, Congress, prodded by mayors, wanted to rein in CAP and establish order and a measure of accountability. LBJ, after two years of complaints, backtracked.
In hindsight the OEO set up a direct funding/program link from the federal government to cities and community organizations—bypassing states and city halls. It was the prototype of Johnson’s creative federalism. Creative federalism was a radical departure from FDR’s cooperative federalism. Cooperative federalism, described as “marble cake” federalism, shared federal powers and program implementation with states; there were no direct federal–local grants. Social security, employment/ unemployment assistance and secondary education were excellent examples of cooperative federalism. Johnson’s Creative federalism, however, ran through categorical grants that bypassed state government and went to selected municipal- or community-based recipients (often as not political opponents of mayors and governors).
During Johnson’s five years more than 200 new categorical grants were created (Bowman and Kearney, 1999, p. 42). This was the famous “picket fence” (silos) that permitted the federal government to directly fund an eligible recipient, requiring the eligible recipient to follow federal regulations and policy priorities. These grants, often very specific in scope, weakened state and local government and empowered their recipient. Creative federalism lasted until Nixon’s 1974 block grants, which flowed through states, returned to business as usual.
The War on Poverty and the SBA
The War on Poverty left a lasting impression on the SBA. Title IV of the Equal Opportunity Act directed SBA to both “advance the Negro in the business world” and to expand its programs (Bean, 2001, p. 47). Title IV funds were linked to community action programs and provided resources for lending to minority businesses (Equal Opportunity Loans). Title IV also mandated establishing Small Business Development Centers (SBDCs) to recruit EOL applicants and provide management assistance. The funds, however, were largely diverted to natural disaster loans (Alaskan earthquake) and satisfy high demand for traditional SBA loans. Only $10 million was spent on EOLs. The SBA’s “banker culture” allegedly inhibited SBA involvement in OEO and community action. Still, by the end of 1965, the SBA had established an SBDC in each of the 35 community action-designed cities (Bean, 2001, p. 49).
The 1965 Watts riots intensified SBA’s involvement in the War on Poverty. SBA director Eugene Foley became the first head of the newly formed Economic Development Administration/EDA (see below). He attempted to merge SBA and EDA, but congressional opposition ended that idea. Foley (in 1964) recruited volunteer retired business executives and formed them into experimental “chapters” in New England. These chapters offered counseling, mentoring and expertise to small business. The innovation was successful, and he expanded it nationwide, so by 1967 there were 3500 SCORE volunteer and institutionalized within SBA. In 2013, there were 348 SCORE chapters and 13,000 counselors.
After Foley’s departure and an interregnum, the new SBA director, Bernard Boutin, conducted a serious reorganization/revitalization of SBA processes. In particular, he revamped the Small Business Investment Company (SBIC) which had imploded in the 1962 stock market crash. An internal investigation uncovered several scandals, including an organized crime money-laundering scheme. Boutin also secured congressional legislation permitting SBICs to expand capacity and size—and to acquire independent expertise for its program implementation. He increased the program’s definition of “small” to include AMC with 30,000 employees. SBIC was “saved,” but its position was precarious and it suffered a rollercoaster-like ride for the next decade. SBIC stagnated as private-venture firms competed with SBICs.
Following Boutin, in 1968 another short-lived director, Howard Samuels, launched the Section 8(a) program for minority contractors. SBA had always been authorized to act as an intermediary (prime contracts) between federal departments and small business, but in 1967 a Defense Department innovator urged SBA to use that authority to “set aside” contracts for minority small business. In 1968 SBA accepted the idea and issued eight prime contracts. The program has subsequently generated its fair share of controversy, but that has not stopped its long-term growth. By 1980, $1 billion in contracts had been issued, and by 1999 nearly $7 billion (Bean, 2001, pp. 143, Appendix B).
Housing Act of 1964
Greatly underappreciated War on Poverty legislation included the Housing Act of 1964, an Act intended to “reform” but also preserve and expand urban renewal. By this time, Martin Anderson’s, The Federal Bulldozer had hit the bookshelves, describing in great detail deficiencies in the federal urban renewal program. Resident reaction, Jane Jacobs, Herbert Gans and anti-Moses sentiment was also pushing back on urban renewal projects. The bloom was indeed off the urban renewal rose. Still, the Housing Act provided $750 million for urban renewal (as opposed to $375 million included in the 1964 Urban Mass Transit Act). It did, however, shift the program away from large-scale blighted neighborhood slum removal to housing rehabilitation and preservation, where feasible, of existing units. The Act directed municipal planners to pay more attention to resident dislocation.
In its place a modified Baltimore Plan, centered on enforcement of health, sanitary and occupancy codes, was included in eligible costs. By 1967, cities would lose UR eligibility if comprehensive plans did not take into account social costs and make available loans for resident rehabilitation. Yet, although all conceded that urban renewal disruption was made worse unless alternate public housing were first built, the Act reduced funding for public housing to 37,500 units (from 50,000). Interestingly, LBJ included a “new towns” initiative with all public services and industry needed to provide jobs, housing and recreation facilities for moderate- and low-income families. This was intended to provide suburban alternatives to the central city ghetto. The section was noticed by Congressmen from suburban districts—and it was not approved.
The War on Poverty/CAP, however, had a serious effect on social service and planning municipal bureaucracies (Lipsky, 1980). Aside from making life generally miserable for public servants, community action and the rising tide of citizen activism challenged the prevailing physical economic development/planning paradigm. As early as spring 1965, architect/urban planner Harvey Perloff—in a milestone presentation “Common Goals and Linking of Physical and Social Planning”—alerted professions to the new world, a world that included social and personal costs associated with programs and plans. There was a need to bring together social and physical planners in a new planning paradigm—the juncture of the two could result in new opportunities that anticipated much of the 1966 Model Cities legislation (Scott, 1969, pp. 606–10). From this point on, planners in particular debated—and struggled—to reconcile its centrality in urban renewal, highways and suburban subdivision development. Over the following decades, a community development form of planning would evolve—and arguably evolve to become planning’s dominant paradigm (incorporating environmentalism and sustainability).
Whatever else it accomplished, the 1964 War on Poverty elevated the federal government to the dominant actor in Big City sub-state urban and economic development policy-making. Not exactly puppets, Big City mayors (and policy systems) in these years were dancing to music not of their own making. In protest many yanked on Washington’s policy strings and demanded to be heard. Also, the War on Poverty had Kennedy fingerprints (RFK’s) all over it, and LBJ, no later than the 1964 election, was moving in his own direction, with his own people. Post-War on Poverty legislative acts arguably constitute the second phase of the Great Society.
LBJ’S “OTHER” GREAT SOCIETY LEGISLATION
There were five major post-War on Poverty ED-related pieces of legislation:
- the Housing and Urban Development Act of 1965 (creating HUD);
- the 1965 Appalachian Regional Development Act;
- the Public Works and Economic Development Act of 1965 (creating EDA);
- the Demonstration Cities and Metropolitan Development Act of 1966 (Model Cities); and the Housing Act of 1968.
Taken in aggregate, these Acts radically altered the sub-state economic development landscape; legitimized the fledgling community development redefinition; and were critically important elements in the next decade’s reshaping of Big City policy systems. They also exerted considerable impact on economic development professionalization through EDA’s sponsorship of a new professional association: the Council of Urban Economic Development. These legislative Acts:
- moderated (almost repudiated MFP, for example), but integrated War on Poverty with older mainstream federal economic development;
- established a federal home base for future federal community development leadership; and for future community development leadership, and
- (eventually) did the same for mainstream physical/infrastructure/urban renewal and business assistance economic development EDA).
The last provided funding for a new set of public departments and agencies that over the next decade increasingly displaced chambers of commerce from their exalted position as lead agency in municipal economic development.
Housing and Urban Development (HUD)
In August 1965 LBJ signed the Housing and Urban Development Act of 1965, which he described as the “single most important breakthrough in housing policy since the 1920s.” Four weeks later, separate legislation created a new cabinet Department of Housing and Urban Development (HUD) into which were placed most of the housing agencies mentioned in this history. The legislation:
+ greatly expanded financing for most housing programs;
+ added new rent subsidy for the elderly and disabled;
+ provided housing rehabilitation grants to impoverished homeowners and veteran homeowner subsidies;
+ initiated “Section 8” housing;7
+ provided matching grants to localities to construct water/sewer facilities, community centers and urban beautification programs in distressed neighborhoods.
Also included were sections calling for more metropolitan planning, especially for water/sewer projects and further encouragement for the formation of metro-wide planning entities such as the Council of Governments. But even this early, suburban Congressional resistance to low-income housing (and the ill-fated LBJ New Towns initiative) led to strong statutes and program innovation—but inadequate funding. Two years of additional funding for urban renewal (at $750 million annually) was also provided. A housing and research entity was also approved—leading in 1968 to the Urban Institute as a private nonprofit.
Appalachian Regional Development Act: the South and Great Society
The 1965 Tennessee Valley Authority (TVA) Development District Act, the Appalachian Development Act—creating the Appalachian Regional Commission and sub-state development districts—and OMB-Cir-A-80 (Gray and Johnson, 2005, pp. 66–7)— continued the Kennedy area-wide strategy. HUD and EDA were also included in this 12-state regional planning and development initiative. For some southerners, the aggregation of these Great Society initiatives represented a first-class economic development assault (Schulman, 1994, p. 186). Reality was more complicated.
The South brought this “assault” upon themselves. A 1960 conference of Appalachian governors demanded federal action to address the region’s woes, and the Kennedy administration was sympathetic to the issue. Approved in 1962, ARA undertook a review of the region’s problems. By 1963, ARA assembled a joint federal–state commission composed of representatives of the Appalachian states and federal agencies, chaired by Franklin Roosevelt Jr. The commission’s purpose identified four problem areas:
- lack of access to, and within, the region;
- technological inability to efficiently utilize the region’s plentiful natural resources;
- lack of facilities to control/exploit the abundance of rainfall and channel it for low-cost energy generation; and
- an inadequately educated and trained workforce.
They called for a coordinated federal/state/local program to address these needs. On April 29, 1964 LBJ submitted to Congress the Appalachian Redevelopment Act, which provided public works, various ED programs and, above all, planning and implementation of a multi-faceted, area-wide redevelopment program. ARA’s programs were viewed by many northern/midwestern Congressmen/Senators as little more than a redistribution of their money to the South—a South that was stealing their jobs, tax base and manufacturing firms. LBJ’s legislation triggered such opposition that the Great Society steamroller, then in full gear, was not equal to the task. ARA failed to be approved in 1964. Resubmitted in 1965, the LBJ juggernaut was victorious, authorizing $1.1 billion. In tandem with ARA, Congress also approved the Public Works and Economic Development Act, which was also intended to play a significant role in Appalachian development. The 12 states welcomed the legislation as an opportunity.
There are several reasons for this southern openness to federal involvement. ARC was from the get-go effectively controlled by its member states. Each state had a voting member on the commission and the federal government was restricted to the two votes of commission co-chairs. Since ARC’s informal mission was allocate the federal largesse, its operation was acceptable to Southern governors, and log-rolling and back-scratching ensured each state’s projects received a speedy ARC approval. Secondly, unlike EDA which distributed its dollars on the basis of need, low income and high unemployment, ARC dispersed funds on “growth potential”—as defined by the affected states. Growth areas often were the state’s more affluent areas. Thirdly, ARC programs were compatible with traditional southern priorities—infrastructure (highways, dams), workforce training and enhanced technology capacity: ARC “never interposed federal administrators between southern governments and their citizens, never built a constituency for direct federal intervention as the TVA and [welfare] programs had” (Schulman, 1994, pp. 186–7).
By funding regional economic development districts throughout the East South Central and South Atlantic census divisions, the federal government created a network of planning, housing, human service, transportation and economic development regional organizations that were a remarkable, arguably page-turning departure from past ED state history. Many persist to this day. Over the next 15 years, ARC program expenditures primarily went to highway construction (estimated 60 percent of total expenditures). Highways opened up isolated areas of the region and, when combined with land stabilization and water drainage programs, garnered the bulk of ARC funds. ARC was an exception to the CD thrust of Great Society programs. EDA however, with its stress on formula-defined distressed communities, meshed poorly with ARC’s focus on affluent growth areas; the two clashed. EDA was perceived as a federal intruder, and its attempts to establish coordination districts ran into considerable difficulty, especially in Kentucky, Tennessee and Georgia where ARC district-led coordination was preferred (Schulman, 1994, p. 188). Confrontation with OEO’s community action programs, however, triggered a lot more controversy and “heat” than EDA.
The 1965 Tennessee Development District Act authorized the “creation of development districts to provide ‘the various counties and cities … general and comprehensive planning and development activities [and make] the maximum use of federal, state and local programs designed to stimulate economic development.”8 These ED districts, managed by sub-state EDOs, spread throughout the states. In Alabama, a network of regional Planning and Development Councils were initially authorized in 1963 and further empowered by Governor George Wallace in 1969 and 1971. The network continues to play an important role in Alabama’s ED system. Mississippi, in 1967, first established the Southern Mississippi Planning and Development District. Subsequent federal prodding to extend the district’s authorizing legislation state-wide bogged down—until the passage of the 1968 federal Intergovernmental Cooperation Act’s Circular-A-95. Governor John Bell Williams finally issued Executive Order 81 (July 1971), designating and renaming the existing ten nonprofit corporations as official sub-state regions. Mississippi was one of several states to utilize nonprofit corporations through executive order. To this day Mississippi has neither passed enabling legislation nor appropriated funding for planning and development district operations.9 Instead, Mississippi approved its own, ED legislation, the Mississippi Code of 1972, to implement the ARC’s programs. The Mississippi Code set up the structural outline of the state’s current state ED system.
Economic Development Administration (EDA)
The 1965 Public Works and Economic Development Act was intended to replace Kennedy’s Area Redevelopment Administration (ARA) and supplement ARC and TVA. The EDA, housed in the Department of Commerce, was the legislation’s engine. EDA ironically evolved into the de facto “home base” for Big (and Small) City EDOs, the go-to agencies for local mainstream ED professionals interested in infrastructure, physical/central city redevelopment and business assistance to firms—revolving loan funds (RLFs). It didn’t start out that way, however. EDA’s original legislative goals and eligibility criteria (Titles III and IV), centering on jurisdictional job loss and population decline, focused on rural, area-wide economic development.
The EDA mandate was similar to that of the ARA … conceived as a depressed area agency with a rural focus, have a supply-side orientation, contain minor countercyclical provisions, and increase [federal] government’s role in supplying infrastructure to lagging areas.10
Johnson intended EDA to counter the flow of rural population to the central cities—by stimulating the depressed areas through enhanced infrastructure and business development, urban migration could be slowed:
If we ignore people in distressed rural areas we make certain that thousands upon thousands of families will be compelled to move away and go into the great cities. And when they get there, they are going to be concentrated in slums; they are going to live on the edge of poverty.11
EDA grants (50 percent match required) could be obtained by state or local governments after development of a comprehensive economic development strategy/plan. Eligibility was limited to areas with persistently high unemployment and disproportionate low-income population or economic adjustment resulting from “severe changes in economic conditions.” As LBJ wrote, “There is little hope of establishing new industry in an area which does not have the public works and development facilities to support industrial growth.” There was no legislative mention of cities and “urban” areas. The muscle in the Act (Titles III and IV) was oriented toward the formation of area-wide economic development districts, with a primary focus on Appalachia.
EDA, as described above, had a rough go in Appalachia. Internally, the agency leadership pursued a strategy to redirect itself away from ARC and rural areas to an urban mission. Between 1967 and 1978, EDA empowered its regional offices and developed close ties with economic developers in each region. Earlier, behind-the scenes EDA officials met with urban economic development officials to encourage them to involve themselves with EDA and to support legislatively EDA’s redirection. In fairly short order, Big City economic developers formed a professional association, the Council of Urban Economic Development (CUED), and sustained itself with EDA support and financial assistance (see below). With CUED’s close involvement, EDA developed legislative support and a track record in urban economic development.
EDA’s central place in urban affairs would take a few years to evolve. A permanent redirection was only achieved by adding Title IX in 1974.
Ron W. Coan 