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Published online by Cambridge University Press: 21 June 2018
Public works spending was an integral component of John F. Kennedy’s fiscal policy. Drawing on a wide range of archival evidence from the Kennedy Presidential Library, we show how the administration worked to pass a $2.5 billion infrastructure bill that would give the presidency unilateral authority in determining where and when those funds would be spent. Contrary to recent accounts that emphasize Kennedy’s role in promoting massive tax cuts in 1963–64, the 1962 Public Works Acceleration Act was a key fiscal instrument that Kennedy advocated prior to the administration’s push for tax reform. Moreover, the public works policy was strictly Keynesian—designed as a proactive countercyclical “stabilizer” that would generate budget deficits in order to make up for slack in a recession. Kennedy’s plan faced stiff resistance in Congress and the history of the law offers important lessons for why infrastructure programs are often disregarded as countercyclical instruments.
1. As a list of “canonical texts” on Kennedy and Kennedy’s presidency that do not mention the PWAA as significant, we include: Dallek, Robert, An Unfinished Life: John F. Kennedy, 1917–1963 (New York, 2004);Google Scholar Reeves, Richard, President Kennedy: Profile of Power (New York, 1994);Google Scholar Canterbery, Ray, Economics on a New Frontier (Belmont, Calif., 1968);Google Scholar Fairlie, Henry, The Kennedy Promise: The Politics of Expectation (Garden City, N.Y., 1973);Google Scholar Miroff, Bruce, Pragmatic Illusions: The Presidential Politics of John F. Kennedy (New York, 1976).Google Scholar Even then, among those who do note the PWAA’s passage, few address either the year-and-a-half-long struggle by the administration to secure the standby authority to disburse federal monies or the robust intellectual justifications offered by the White House in defense of that feature. For example, Theodore Sorensen mentions the standby provision sought by the administration just once in his esteemed biography of the Kennedy presidency. And, while he contrasts the administration’s view of public works spending with earlier liberal administrations—Truman and FDR—the reasons for “accelerated” or “targeted” public works spending is not placed in the context of larger theoretical developments within Keynesian economics. See Theodore Sorensen, Kennedy (New York, 1965). See also Schlesinger, Arthur M. Jr., A Thousand Days: John F. Kennedy in the White House (New York, 1965).Google Scholar
2. The PWAA would, in 2016 dollars, amount to over $4.8 billion spent between 1963 and 1970; Kennedy’s initial request would have amounted to approximately $13.87 billion in 2016 dollars. As a percentage of GNP, the $900 million authorization represented 0.16 percent of the 1962 economy. By contrast, the amount of federal monies spent on infrastructure development in the 2009 stimulus amounted to 0.78 percent of 2009 GNP. Kennedy’s original proposal of $2.5 billion would have comprised 0.43 percent of 1962 GNP, or a 2.87 percent increase in federal expenditures for FY1962.
3. Ott, David J. and Ott, Attiat F., Federal Budget Policy (Washington, D.C., 1977).Google Scholar
4. For example, see Kudlow, Lawrence and Domitrovic, Brain, JFK and the Reagan Revolution: A Secret History of American Prosperity (New York, 2016);Google Scholar Domitrovic, Brian, Econoclasts: The Rebels Who Sparked the Supply-Side Revolution and Restored American Prosperity (Wilmington, Del., 2012);Google Scholar Morgan, Iwan, The Age of Deficits: Presidents and Unbalanced Budgets from Jimmy Carter to George W. Bush (Lawrence, Kans., 2009);Google Scholar Mitchell, Daniel, “The Historical Lessons of Lower Tax Rates,” Heritage Foundation Reports (Washington, D.C., 1996).Google Scholar
5. On this idea of a “conversion” or even “vacillation,” see Matusow, Allen J., The Unraveling of America: A History of Liberalism in the 1960s (New York, 1984), 47;Google Scholar May, Dean L., From New Deal to New Economics: The Liberal Response to Recession (New York, 1981).Google Scholar
6. Contemporary portrayals of policy development in the 1950s seems to overlook the growing tension building between liberals and conservatives in their respective wings of both parties, suggesting that it is only with the 1960s election that politics once again becomes paramount in American society. See, for example, Burns, James MacGregor, The Deadlock of Democracy: Four-Party Politics in America (Englewood Cliffs, N.J., 1963);Google Scholar Sundquist, James L., Politics and Policy: The Eisenhower, Kennedy, and Johnson Years (Washington, D.C., 1968).Google Scholar See, alternatively, Mayhew, David, “The Long 1950s as a Policy Era,” in The Politics of Major Policy Reform in Postwar America, ed. Jenkins, Jeffery A. and Milkis, Sidney M. (Cambridge,2013).Google Scholar
7. Savage, James, Balanced Budget and American Politics (Ithaca, 1988).Google Scholar
8. After starting his career as an investment banker on Wall Street, Dillon had served as the State Department’s chief economic adviser for most of Eisenhower’s second term.
9. Cited in Harris, Seymour E., “Economics and the Kennedy Years,” in John F. Kennedy and the New Frontier, ed. Donald, Aїda DiPace (New York, 1966).Google Scholar
10. Washington Post, 8 February 1961, A7.
11. Echoing Kennedy’s own cabinet officials, for example, Jim Heath suggests that what is noteworthy about this early phase in Kennedy’s administration is that it points to the young president’s “remarkable ability to learn while in office.” See Heath, Jim F., John F. Kennedy and the Business Community (Chicago, 1969), 31–32.Google Scholar
12. Stein, Herbert, The Fiscal Revolution in America (Chicago, 1969), 402.Google Scholar
13. Heller, Walter, “Recap: Conversation with Senator Kennedy on Economic Issues,” 4 October 1960. Walter W. Heller Personal Papers (#103), Box 004, John F. Kennedy Presidential Library.Google Scholar
14. Heller, Walter, New Dimensions of Political Economy (Cambridge, Mass., 1967), 27.Google Scholar
15. Joining Heller were three soon-to-be Nobel laureates—James Tobin, Robert Solow, and Kenneth Arrow—whose work advanced central tenants of neo-Keynesian orthodoxy. They joined other leading, “public intellectual” economists like John Kenneth Galbraith, Kermit Gordon, and Arthur Okun. As Harper’s Magazine editorialized, “They would initiate a new economic era in which the neurotic Republican fear of deficits would be replaced by a modern fiscal policy devised by the best brains available.” See Rowen, Hobart, “Kennedy’s Economists: What They Were, Where They Disagree, Where the Power Lies, What They Are Likely to Do,” Harper’s Magazine, 1 September 1961, 25.Google Scholar
16. Chicago Daily Tribune, 2 January 1961, 1; Los Angeles Times, 2 January 1961, 1; New York Times, 2 January 1961, 1.
17. “January 1961 Economic Report of the President and the Economic Situation and Outlook,” printed for the Use of the Joint Economic Committee, U.S. Congress.
18. New York Times, 8 January 1961, 1.
19. As Gardner Ackley later recounted, Kennedy told them all that if “we go up there with that and they’ll piss all over us.” Council of Economic Advisers Oral History Interview, Joseph Pechman (interviewer), 1 August 1964. Fort Ritchie, Md., 372.
20. Ibid., 369–70.
21. The initial planning for an accelerated public works package is traced from correspondence between the Bureau of Budget and the Council of Economic Advisers, of which Kennedy gave coordinating authority for the plan. See Walter Heller Personal Files (#108), Box 008, John F. Kennedy Presidential Library; Heller, Walter W. to Bell, David E., “Memorandum: Appraisal of Project Inventories,” 20 February 1961Google Scholar CEA to Bowman, Raymond T., “Memorandum on the 1962 Budget,” 23 February 1961Google Scholar; Bell, David E., “Memorandum for the President: Inventory of Construction and Other Work,” 1 March 1961Google Scholar Council of Economic Advisers, “Actions Taken and Recommendations Made by the Administration which Would Aid Economic Recovery and Growth,” 24 May 1961.Google Scholar
22. Walter W. Heller, “Notes on Meeting with President-Elect Kennedy (Attended by Messrs. Samuelson, Sorensen, Tobin, and Heller), Carlyle Hotel, New York City,” 5 January 1961, Walter W. Heller Personal Papers (#103), Box 008, John F. Kennedy Presidential Library.
23. As the Wall Street Journal reported—“Democratic strategists have concluded it will be impossible to push President Kennedy’s public works spending proposals through the House in their present form. Instead, they are preparing a new plan of their own that would both raise the amount of federal money available for immediate spending and reduce—or abandon altogether—the President’s proposed standby spending authority.” Wall Street Journal, 1 May 1962.
24. Draft of the report found in Walter W. Heller Personal Papers (#108), Major Issues File, Box 021, John F. Kennedy Presidential Library.
25. Ibid., 2.
26. See, for example, in Walter W. Heller Personal Papers (#108), John F. Kennedy Presidential Library, Major Issues File, box 021: Robert C. Turner to Kermit Gordon, 11 April 1961. “Alternative to Stand-By Expenditure Program”; Arthur Goldberg, Secretary of Labor, 19 April 1961, “Memorandum for the Honorable Theodore C. Sorensen”; David E. Bell to Kermit Gordon, 19 April 1961, “Stand-By Program”; Robert Solow to Walter Heller, 22 April 1961, “Treasury Comments on the Second Stage Program.”
27. Council of Economic Advisers, Oral History Interview, 1 August 1964, Joseph Pechman (interviewer), available through the JFK Presidential Library and Museum, 372–75. See also Walter W. Heller, 19 June 1961, “Memorandum for the President: Agency Views on Principles of the Clark Community Facilities Bill,” in Walter W. Heller Personal Papers (#108), John F. Kennedy Presidential Library, Box 009.
28. Council of Economic Advisers, 27 April 1961, “Triggering a Stand-By Program,” in Heller, Walter W. Personal Papers (#108), John F. Kennedy Presidential Library, Major Issues File, box 021.Google Scholar
29. Walter W. Heller, “Memorandum for the President: Second Report of Agency Views on the Clark Community Facilities Bill (S. 986),” 6 July 1961, in Walter W. Heller Personal Papers (#108), John F. Kennedy Library, Major Issues File, Box 021.
30. Clark would later claim that “that public works program was the most effective bit of legislation passed in the Kennedy Administration as far as Pennsylvania was concerned,” in Joseph S. Clark, Oral History Interview, Ronald J. Grele (interviewer), 16 December 1965, Philadelphia, available through the JFK Presidential Library and Museum, 69–70.
31. Kennedy appears to have taken a great interest in getting the wording of the Clark letter just right to ensure Clark’s support during the next legislative session. Various memoranda and drafts of the letter appear through the CEA files and often summarize Kennedy’s own recommendations on the wording. See Walter W. Heller Personal Papers (#108), John F. Kennedy Library, Major Issues File, Box 021: CEA, “Memorandum for the President: Agency Views on Principles of the Clark Community Facilities Bill,” 19 June 1961; Walter Heller, “Memorandum for the President: The Clark Reactions to the Clark Letter,” 8 August 1961; Walter W. Heller, Memorandum for the President, “Clark’s Speech on Your Letter to Him,” 25 August 1961.
32. Kennedy, John F. to Clark, Joseph S., 7 August 1961, letter printed, in part, in Chicago Daily Tribune, 23 August 1961 and New York Times, 23 August 1961, 29.Google Scholar
33. CEA “Memorandum for the President: Agency Views on Principles of the Clark Community Facilities Bill,” 19 June 1961.Google Scholar
34. See Stein, Fiscal Revolution in America, 384, for a lengthier discussion of Heller’s views on economic forecasting.
35. For a public reporting of the proposal, see Los Angeles Times, 8 January 1962, 1; New York Times, 8 January 1962, 1.
36. Wall Street Journal, 8 January 1962, 1.
37. Kennedy, John F., 1962 State of the Union Address.Google Scholar
38. Chicago Daily Tribune, 12 January 1962, 1.
39. U.S. Congress, Joint Economic Committee, January 1962 Economic Report of the President: Hearings Before the Joint Economic Committee, 87th Cong., 2nd sess., 1962, 16–17.Google Scholar
40. The five federal agencies were the Housing and Home Finance Agency, Federal Home Loan Bank, FDIC, Federal Savings and Loan Insurance Corporation, and the United States subscription to the International Bank for Reconstruction and Development.
41. U.S. Congress, Joint Economic Committee, January 1962 Economic Report of the President, 37.
42. Ibid., 284.
43. Ibid., 812. Kennedy also met with leaders of the AFL-CIO several weeks after this testimony in an hour and a half long meeting with Kennedy at the White House. They told members of the press that they were satisfied with the amounts, and with presidential control, but continued to argue that the spending program should “be made to take effect not instead of waiting until there is another recession.” See Wall Street Journal, 13 March 1962, 9.
44. Ibid., 714.
45. Ibid., 674.
46. Dirksen, an institutional protector of the Congress, argued that “Congress has the feeling that it is accessible. If the need develops to take action to ward off a depression it could act with reasonable dispatch.” Chicago Daily Tribune, 20 February 1962, 1.
47. Full letter reprinted in New York Times, 20 February 1962, 19.
48. The immediate public works program would concentrate on projects that were already underway and supported by the less-than-year-old Area Redevelopment Administration inside the Commerce Department, which offered support to localities through loans, grants, technical assistance, and federal research capabilities. Major areas included Fall River, Lowell, and New Bedford, Mass.; Atlantic City; Johnstown, Washington; Pottsville, Scranton, and Wilkes-Barre, Pennsylvania; Providence, R.I., and several smaller municipalities in West Virginia.
49. New York Times, 24 March 1962, 1.
50. The word “coordination” was dropped from the bill’s title later in the legislative session as House Democratic leaders scrapped plans to funnel monies through a new coordinating agency, relying instead on the recently established Area Redevelopment Administration. The Senate bills mirrored these House drafts as S. 2965 and S. 2817.
51. H.R. 10113, 87th Cong., 2nd sess.; H.R. 10318, 87th Cong., 2nd sess.
52. U.S. House of Representatives, Committee on Public Works, Standby Capital Improvement Act of 1962: Hearings Before the Committee on Public Works, 87th Cong., 2nd sess., 1962, 12.
53. Ibid., 44.
54. Ibid., 51.
55. Ibid., 220–23.
56. Ibid., 326.
57. Batt, William L., Oral History Interview, Larry J. Hackman (interviewer), 16 November 1966, Washington, D.C., available through the JFK Presidential Library and Museum, 141.Google Scholar
58. Liberal Democrats, in addition to protecting their congressional power, were also concerned over the specific financing mechanism that would cipher funds from several key agencies. Frank Lausche (D-Ohio)—“If a business man diverted money from trust funds under his supervision to other purposes, he would be guilty of a crime,” in Chicago Daily Tribune, 16 May 1962, 14; Chicago Daily Tribune, 16 May 1962, 14.
59. The Wall Street Journal editorial board was one of the most voracious critics of the public works policy, with dozens of editorials decrying the administration’s emphasis on public works. For example: “Indeed, the dispiriting thing about the whole mixed-up approach is its backwardness. Instead of seriously analyzing the complex problems of unemployment and economic growth, the advocates of such legislation merely propose the first thing that occurs to the political mind. That confuses the real issues and delays the day when they can be sensibly tackled.” Wall Street Journal, 27 March 1962, 12.
60. Hargrove, Erwin C. and Morley, Samuel A., The President and the Council of Economic Advisers: Interviews with CEA Chairmen (Boulder, 1984).Google Scholar
61. Printed in Wall Street Journal, 9 May 1962, 20.
62. Chicago Daily Tribune, 23 May 1962, C11; Wall Street Journal, 23 May 1962, 5.
63. Thirty-nine Democrats and five Republicans voted in favor of the final proposal, with standby authority against eight Democrats and twenty-four Republicans.
64. On the floor, leaders convinced Howard Cannon of Nevada and John McClellan of Arkansas to vote in “pairs.” By voting in pairs, members withheld their votes with the understanding that an absent member would have voted “aye” if present. The Congressional Record lists their vote choice, but their votes do not count. For a journalistic account of the on-the-floor drama, see New York Times, 29 May 1962.
65. Goldwater, Barry, “Public Works Plan Would Open U.S. Purse Wider to the President,” 7 June 1962, Los Angeles Times, A5.Google Scholar
66. Wall Street Journal, 25 June 1962, 3.
67. Goldwater, Barry, “Kennedy’s Economic Medicine May Hurt Rather Than Help the Patient,” 9 August 1962, Los Angeles Times, A5.Google Scholar
68. The Wall Street Journal editorial board most adequately captures the fiscal conservative position: “All this is fragile theorizing, not least because it omits the human factor. No one can know, for example, what consumers may do with extra ‘purchasing power’ generated by increased Government spending or tax cuts or both. . . . In short, there is no guarantee that the Government can keep the economy from falling, or turn it up when it does, by tinkering with its “stabilizers.” The more the government fiddles, in fact, the worse trouble it may create.” Wall Street Journal, 12 July 1962, 14.
69. On the relationship between the discretionary public works proposal and the discretionary tax cut plan, which never appeared likely to pass the Congress, see Heller, Walter W. to JFK, “Memorandum for the President: The Power to Untax Is the Power to Create,” 22 January 1962, in Walter W. Heller Personal Papers (#108), John F. Kennedy Presidential Library, Box 010.Google Scholar
70. Chicago Daily Tribune, 8 June 1962, 1; Washington Post, 8 June 1962; Wall Street Journal, 8 June 1962, 3; Chicago Daily Tribune, 23 June 1962, 1–3.
71. Wall Street Journal, 10 August 1962, 2.
72. The official, spoken version of the speech, which excludes this passage, is documented in John F. Kennedy: “Radio and Television Report to the American People on the State of the National Economy,” 13 August 1962, online by Peters, Gerhard and Woolley, John T., The American Presidency Project, http://www.presidency.ucsb.edu/ws/?pid=8812.Google Scholar The “reading copy,” including the paragraph on standby provisions in tax authority, is available in Papers of John F. Kennedy, Presidential Papers, President’s Office Files, Speech Files (03), Radio and television address to the nation on the economy, 13 August 1962.
73. Chicago Daily Tribune, 15 August 1962, 7; New York Times, 15 August 1962, 1.
74. The new administrative agency would help coordinate local, state, and national development projects and requests. Republicans pointed to the potential of a new public works “czar” as proof of the political ploy motivating the Democrats’ push for public works. Such erasure thereby ensured that the federal government would remain, in part, dependent on existing state agents to disburse the monies, especially in the west, where many Democrats already bemoaned the Interior Department’s aggressive reclamation projects. Another change, primarily aimed at quelling southern fears, prohibited any of the money to be used for school construction, lest it further extend the federal government’s role in aiding local education or furthering school desegregation.
75. Nineteen Republicans voted for the bill; nine from Pennsylvania, two from New York and Michigan, and one each from Indiana, Maine, Nevada, Wisconsin, Maryland, and West Virginia. Immediately following the vote, forty-four southern Democrats voted to recommit the bill to committee in a last-ditch hope to table the plan.
76. A brief clerical error (“Section 3” was mistakenly labeled “Section 9,” therefore ambiguously detailing the responsibilities of the Housing and Home Finance Agency) gave House and Senate Republicans one more chance to scuttle the bill and send it back to committee, but nine Senate Republicans, largely supportive of the House measure, which was, after all, a reduction in overall spending authority, backed the plan to send it to the president’s desk, 45–22. See 87 Cong. Record. 18299–18300 (1962); New York Times, 1 and 11 September 1962.
77. New York Times, 13 September 1962, 36.
78. Heller, Walter W. to JFK, “Memorandum for the President: Senate Committee Mark-up of Capital Improvements Bill,” 14 April 1962, in Walter W. Heller Personal Papers (#108), John F. Kennedy Presidential Library, Box 010.Google Scholar
79. Council of Economic Advisers, “Staff Memorandum: Considerations Relating to Resubmission of Stand-By Public Works Legislation,” 4 December 1962, in Walter W. Heller Staff Files (#8.34), John F. Kennedy Library, Box 38.Google Scholar
80. William Batt, Oral History, 122.
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83. Washington Post, 21 December 1962, A6.
84. Dillon, The Area Redevelopment Administration, 74.
85. Gordon, Kermit to Brewer, Michael, “Evaluation of the Public Works Acceleration Program,” 19 December 1962, in Walter W. Heller Staff Files (#8.34), John F. Kennedy Library, Box 38;Google Scholar Staats, Elmer B., “Memorandum for Mr. Heller,” 25 September 1964, in Walter W. Heller Staff Files (#8.34), John F. Kennedy Library, Box 38.Google Scholar
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91. Interestingly enough, Walter Heller recognized this omission in the histories of the Kennedy administration as early as 1984: “At the same time, we were failing to get economic stimulus by the expenditure route. The White House was butting its head against a brick wall as far as spending programs were concerned. This is something I underscore because some amateur historians say we just folded under and decided to give in to the conservative forces in the country and forgo the expenditure route. Nothing could be further from the truth. The expenditure route had been tried again and again. Kennedy said to me flatly, ‘Look, I’m not against spending money. If you fellows could figure out a way for me to get the programs out of Congress, let’s go to it.’” Recorded during an oral interview, in Hargrove, Erwin C. and Morley, Samuel A., The President and the Council of Economic Advisers: Interviews with CEA Chairmen (Boulder, 1984).Google Scholar
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95. Of the $831 billion ultimately spent under the 2009 stimulus, just $150 million (about two-tenths of one percent) went to projects under the Economic Development Administration’s discretion. See Pub.L. 111–5, “The American Recovery and Reinvestment Act of 2009,” Title II, 122.