Tom Lewis: Obama should be the new EisenhowerRoundup: Historians' Take
In his Dec. 6 radio address, President-elect Barack Obama vowed to" create millions of jobs by making the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s." The story of President Eisenhower's decision in 1956 to create the interstate highway system, how it was funded and its effects on American commerce and culture holds lessons that the new president and the country would do well to heed.
Eisenhower was the first Republican to occupy the White House after Herbert Hoover, who in the 1950s still wore a mantle of shame for his role in the market crash of 1929 and its aftermath. Eisenhower had an almost pathological, but healthy, fear that he might be blamed for allowing the nation to fall into another depression. When a mild recession early in his first term pushed the unemployment rate above 5%, Eisenhower told his Cabinet that"we could be in terrible trouble" and asked for solutions.
The highwaymen at the Bureau of Public Roads (the precursor of today's Federal Highway Administration) heeded the call. They reported that each federal dollar invested in construction generated close to one half-hour of employment. Like a stone cast into a pond, a mile of modern, four-lane, limited-access highway would create waves that would ripple through the economy. Workers across America, not just those who built the roadways, would benefit -- in cement and steel plants (50 tons of concrete and 20 tons of reinforcing steel go into each mile), in paint and sign manufacturers and in heavy equipment factories and oil refineries.
Another impetus for the massive project was that the president knew firsthand the need for better roads. As a young lieutenant colonel, he traveled in 1919 over the Lincoln Highway in the Army's first transcontinental caravan, a journey that lasted 62 days and sometimes required oxen to pull the trucks through mires of mud. Eisenhower called it a trip"through darkest America in truck and tank." A quarter of a century later, a ride over Adolf Hitler's autobahn showed the general how highways might serve the defense of a nation.
Eisenhower realized that he could not fail with highways. Americans wanted more roads for their postwar cars. Construction would prime the economic pump (1950s language for"economic stimulus package") and help secure the nation's future. He signed a small highway bill in 1954 and, on June 29, 1956, the $25-billion Federal-Aid Highway Act to build a 42,000-mile interstate highway system by 1972. Ultimately the cost would escalate to more than $130 billion, and workers would not finish the roads until 1993, with the Century Freeway in Los Angeles County as the last link.
Eisenhower wasn't afraid to create a huge public works program, and unlike today's presidents, he wasn't afraid of taxes. (He even vetoed his Republican Congress' repeal of a 20% federal admission tax on motion pictures.) The 1956 highway bill levied a tax of 3 cents on each gallon of fuel -- equal to 24 cents today. The revenue went into a dedicated highway trust fund. Though it wasn't enough to support the entire program, it was a start. And the tax proved to be a Mobius strip of money. Each gallon of fuel pumped helped to create more highways, which enabled more cars to drive more miles -- and use more gas, which generated yet more money for the trust fund. ...
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Wyn Achenbaum - 12/27/2008
Eisenhower's Interstate Highway system created a far better tax base than the gas tax.
Every project within the interstate highway system -- bridges and highways, every exit! -- created land value. The increase in land value would have been sufficient to pay for the construction costs, if only we had chosen to collect it instead of permitted that Mobius strip to be cleaned off by the private landholders whose land values were sent sky-high by our public spending.
It could have been through local taxation of land values. It could have been through state taxation of land values. It could have been through federal taxation of land values.
A bridge to nowhere is not worth doing unless it creates more land value than the cost of the project. Think what fine gifts the George Washington Bridge, the Verrazano Narrows Bridge, the Tappan Zee Bridge each created for the landholders on both ends of the bridge.
Through the taxation of land value, those projects could have provided a permanent fountain of funding for future projects of all sorts, if only the municipalities, or the states, or the nation would have put out the cup to collect it.
Henry George (b. 1839, Philadelphia; d. 1897, NYC) provided the blueprint, in his landmark book, Progress & Poverty. You can read it online, unabridged, at http://www.schalkenbach.org/, or in a contemporary language abridgment at http://www.progressandpoverty.org/ or http://www.hgchicago.org/audio, or buy either at Amazon or Schalkenbach. Henry George's ideas provide solutions to problems which most of us are used to thinking are intractible.
To read four of Henry George's speeches, visit http://www.wealthandwant.com/; the URL is from the subtitle to Progress & Poverty. You might also appreciate the material at http://lvtfan.typepad.com/.
Vernon Clayson - 12/26/2008
Yes, yes, spend, spend, tax, tax, this is strange when the liberals and greens want us to stop using gas, global warming and all that rot. And "trust fund", the word trust should not be bandied about so lightly when speaking of government - and there is no trust fund, whatever money the government takes in goes to new schemes and even the new schemes requires the government borrowing from foreign countries. "Trust fund", Mr. Lewis, you make me laugh.
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