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Works Progress Administration

The Works Progress Administration (WPA; renamed in 1939 as the Work Projects Administration) was an American New Deal agency that employed millions of jobseekers (mostly men who were not formally educated) to carry out public works projects, including the construction of public buildings and roads. It was set up on May 6, 1935, by presidential order, as a key part of the Second New Deal.

The WPA's first appropriation in 1935 was $4.9 billion (about $15 per person in the U.S., around 6.7 percent of the 1935 GDP). Headed by Harry Hopkins, the WPA supplied paid jobs to the unemployed during the Great Depression in the United States, while building up the public infrastructure of the US, such as parks, schools, and roads. Most of the jobs were in construction, building more than 620,000 miles (1,000,000 km) of streets and over 10,000 bridges, in addition to many airports and much housing. In 1942, the WPA played a key role in both building and staffing internment camps to incarcerate Japanese Americans.

At its peak in 1938, it supplied paid jobs for three million unemployed men and women, as well as youth in a separate division, the National Youth Administration. Between 1935 and 1943, the WPA employed 8.5 million people (about half the population of New York). Hourly wages were typically kept well below industry standards. Full employment, which was reached in 1942 and appeared as a long-term national goal around 1944, was not the goal of the WPA; rather, it tried to supply one paid job for all families in which the breadwinner suffered long-term unemployment.

In one of its most famous projects, Federal Project Number One, the WPA employed musicians, artists, writers, actors and directors in arts, drama, media, and literacy projects. The five projects dedicated to these were the Federal Writers' Project (FWP), the Historical Records Survey (HRS), the Federal Theatre Project (FTP), the Federal Music Project (FMP), and the Federal Art Project (FAP). In the Historical Records Survey, for instance, many former slaves in the South were interviewed; these documents are of immense importance to American history. Theater and music groups toured throughout the United States and gave more than 225,000 performances. Archaeological investigations under the WPA were influential in the rediscovery of pre-Columbian Native American cultures, and the development of professional archaeology in the US.

The WPA was a federal program that ran its own projects in cooperation with state and local governments, which supplied 10–30% of the costs. Usually, the local sponsor provided land and often trucks and supplies, with the WPA responsible for wages (and for the salaries of supervisors, who were not on relief). WPA sometimes took over state and local relief programs that had originated in the Reconstruction Finance Corporation (RFC) or Federal Emergency Relief Administration programs (FERA). It was liquidated on June 30, 1943, because of low unemployment during World War II. Robert D. Leininger asserted: "millions of people needed subsistence incomes. Work relief was preferred over public assistance (the dole) because it maintained self-respect, reinforced the work ethic, and kept skills sharp."

Establishment
On May 6, 1935, FDR issued executive order 7034, establishing the Works Progress Administration. The WPA superseded the work of the Federal Emergency Relief Administration, which was dissolved. Direct relief assistance was permanently replaced by a national work relief program—a major public works program directed by the WPA.

The WPA was largely shaped by Harry Hopkins, supervisor of the Federal Emergency Relief Administration and close adviser to Roosevelt. Both Roosevelt and Hopkins believed that the route to economic recovery and the lessened importance of the dole would be in employment programs such as the WPA. Hallie Flanagan, national director of the Federal Theatre Project, wrote that "for the first time in the relief experiments of this country the preservation of the skill of the worker, and hence the preservation of his self-respect, became important."

The WPA was organized into the following divisions:

 * The Division of Engineering and Construction, which planned and supervised construction projects including airports, dams, highways and sanitation systems.
 * The Division of Professional and Service Projects (called the Division of Women's and Professional Projects in 1937), which was responsible for white-collar projects including education programs, recreation programs, and the arts projects. It was later named the Division of Community Service Programs and the Service Division.
 * The Division of Finance.
 * The Division of Information.
 * The Division of Investigation, which succeeded a comparable division at FERA and investigated fraud, misappropriation of funds and disloyalty.
 * The Division of Statistics, also known as the Division of Social Research.
 * The Project Control Division, which processed project applications.
 * Other divisions including the Employment, Management, Safety, Supply, and Training and Reemployment.

Employment

"These ordinary men and women proved to be extraordinary beyond all expectation. They were golden threads woven in the national fabric. In this, they shamed the political philosophy that discounted their value and rewarded the one that placed its faith in them, thus fulfilling the founding vision of a government by and for its people. All its people."

The goal of the WPA was to employ most of the unemployed people on relief until the economy recovered. Harry Hopkins testified to Congress in January 1935 why he set the number at 3.5 million, using Federal Emergency Relief Administration data. Estimating costs at $1,200 per worker per year ($ in present-day terms), he asked for and received $4 billion ($ in present-day terms). Many women were employed, but they were few compared to men.

In 1935 there were 20 million people on relief in the United States. Of these, 8.3 million were children under 16 years of age; 3.8 million were persons between the ages of 16 and 65 who were not working or seeking work. These included housewives, students in school, and incapacitated persons. Another 750,000 were person age 65 or over. Thus, of the total of 20 million persons then receiving relief, 13 million were not considered eligible for employment. This left a total of 7 million presumably employable persons between the ages of 16 and 65 inclusive. Of these, however, 1.65 million were said to be farm operators or persons who had some non-relief employment, while another 350,000 were, despite the fact that they were already employed or seeking work, considered incapacitated. Deducting this 2 million from the total of 7.15 million, there remained 5.15 million persons age 16 to 65, unemployed, looking for work, and able to work.

Because of the assumption that only one worker per family would be permitted to work under the proposed program, this total of 5.15 million was further reduced by 1.6 million—the estimated number of workers who were members of families with two or more employable people. Thus, there remained a net total of 3.55 million workers in as many households for whom jobs were to be provided.

The WPA reached its peak employment of 3,334,594 people in November 1938. To be eligible for WPA employment, an individual had to be an American citizen, 18 or older, able-bodied, unemployed, and certified as in need by a local public relief agency approved by the WPA. The WPA Division of Employment selected the worker's placement to WPA projects based on previous experience or training. Worker pay was based on three factors: the region of the country, the degree of urbanization, and the individual's skill. It varied from $19 per month to $94 per month, with the average wage being about $52.50—$ in present-day terms. The goal was to pay the local prevailing wage, but limit the hours of work to 8 hours a day or 40 hours a week; the stated minimum being 30 hours a week, or 120 hours a month.

Being a voter or a Democrat was not a prerequisite for a relief job. Federal law specifically prohibited any political discrimination against WPA workers. Vague charges were bandied about at the time. The consensus of experts is that: "In the distribution of WPA project jobs as opposed to those of a supervisory and administrative nature politics plays only a minor in comparatively insignificant role." However those who were hired were reminded at election time that FDR created their job and the Republicans would take it away. The great majority voted accordingly.

Projects
WPA projects were administered by the Division of Engineering and Construction and the Division of Professional and Service Projects. Most projects were initiated, planned and sponsored by states, counties or cities. Nationwide projects were sponsored until 1939.

The WPA built traditional infrastructure of the New Deal such as roads, bridges, schools, libraries, courthouses, hospitals, sidewalks, waterworks, and post-offices, but also constructed museums, swimming pools, parks, community centers, playgrounds, coliseums, markets, fairgrounds, tennis courts, zoos, botanical gardens, auditoriums, waterfronts, city halls, gyms, and university unions. Most of these are still in use today. The amount of infrastructure projects of the WPA included 40,000 new and 85,000 improved buildings. These new buildings included 5,900 new schools; 9,300 new auditoriums, gyms, and recreational buildings; 1,000 new libraries; 7,000 new dormitories; and 900 new armories. In addition, infrastructure projects included 2,302 stadiums, grandstands, and bleachers; 52 fairgrounds and rodeo grounds; 1,686 parks covering 75,152 acres; 3,185 playgrounds; 3,026 athletic fields; 805 swimming pools; 1,817 handball courts; 10,070 tennis courts; 2,261 horseshoe pits; 1,101 ice-skating areas; 138 outdoor theatres; 254 golf courses; and 65 ski jumps. Total expenditures on WPA projects through June 1941 totaled approximately $11.4 billion—the equivalent of $ today. Over $4 billion was spent on highway, road, and street projects; more than $1 billion on public buildings, including the iconic Dock Street Theatre in Charleston, the Griffith Observatory in Los Angeles, and Timberline Lodge in Oregon's Mount Hood National Forest.

More than $1 billion—$ today—was spent on publicly owned or operated utilities; and another $1 billion on welfare projects, including sewing projects for women, the distribution of surplus commodities, and school lunch projects. One construction project was the Merritt Parkway in Connecticut, the bridges of which were each designed as architecturally unique. In its eight-year run, the WPA built 325 firehouses and renovated 2,384 of them across the United States. The 20,000 miles of water mains, installed by their hand as well, contributed to increased fire protection across the country.

The direct focus of the WPA projects changed with need. In 1935 priority projects were to improve infrastructure; roads, extension of electricity to rural areas, water conservation, sanitation and flood control. In 1936, as outlined in that year's Emergency Relief Appropriations Act, public facilities became a focus; parks and associated facilities, public buildings, utilities, airports, and transportation projects were funded. The following year saw the introduction of agricultural improvements, such as the production of marl fertilizer and the eradication of fungus pests. As the Second World War approached, and then eventually began, WPA projects became increasingly defense related.

One project of the WPA was funding state-level library service demonstration projects, to create new areas of library service to underserved populations and to extend rural service. Another project was the Household Service Demonstration Project, which trained 30,000 women for domestic employment. South Carolina had one of the larger statewide library service demonstration projects. At the end of the project in 1943, South Carolina had twelve publicly funded county libraries, one regional library, and a funded state library agency.

Federal Project Number One
A significant aspect of the Works Progress Administration was the Federal Project Number One, which had five different parts: the Federal Art Project, the Federal Music Project, the Federal Theatre Project, the Federal Writers' Project, and the Historical Records Survey. The government wanted to provide new federal cultural support instead of just providing direct grants to private institutions. After only one year, over 40,000 artists and other talented workers had been employed through this project in the United States. Cedric Larson stated that "The impact made by the five major cultural projects of the WPA upon the national consciousness is probably greater in total than anyone readily realizes. As channels of communication between the administration and the country at large, both directly and indirectly, the importance of these projects cannot be overestimated, for they all carry a tremendous appeal to the eye, the ear, or the intellect—or all three."

Federal Art Project
This project was directed by Holger Cahill, and in 1936 employment peaked at over 5,300 artists. The Arts Service Division created illustrations and posters for the WPA writers, musicians, and theaters. The Exhibition Division had public exhibitions of artwork from the WPA, and artists from the Art Teaching Division were employed in settlement houses and community centers to give classes to an estimated 50,000 children and adults. They set up over 100 art centers around the country that served an estimated eight million individuals.

Federal Music Project

Directed by Nikolai Sokoloff, former principal conductor of the Cleveland Orchestra, the Federal Music Project employed over 16,000 musicians at its peak. Its purpose was to create jobs for unemployed musicians, It established new ensembles such as chamber groups, orchestras, choral units, opera units, concert bands, military bands, dance bands, and theater orchestras. They gave 131,000 performances and programs to 92 million people each week. The Federal Music Project performed plays and dances, as well as radio dramas. In addition, the Federal Music Project gave music classes to an estimated 132,000 children and adults every week, recorded folk music, served as copyists, arrangers, and librarians to expand the availability of music, and experimented in music therapy. Sokoloff stated, "Music can serve no useful purpose unless it is heard, but these totals on the listeners' side are more eloquent than statistics as they show that in this country there is a great hunger and eagerness for music."

Federal Theatre Project
In 1929, Broadway alone had employed upwards of 25,000 workers, onstage and backstage; in 1933, only 4,000 still had jobs. The Actors' Dinner Club and the Actors' Betterment Association were giving out free meals every day. Every theatrical district in the country suffered as audiences dwindled. The New Deal project was directed by playwright Hallie Flanagan, and employed 12,700 performers and staff at its peak. They presented more than 1,000 performances each month to almost one million people, produced 1,200 plays in the four years it was established, and introduced 100 new playwrights. Many performers later became successful in Hollywood including Orson Welles, John Houseman, Burt Lancaster, Joseph Cotten, Canada Lee, Will Geer, Joseph Losey, Virgil Thomson, Nicholas Ray, E.G. Marshall and Sidney Lumet. The Federal Theatre Project was the first project to end; it was terminated in June 1939 after Congress zeroed out the funding.

Federal Writers' Project
This project was directed by Henry Alsberg and employed 6,686 writers at its peak in 1936. By January 1939, more than 275 major books and booklets had been published by the FWP. Most famously, the FWP created the American Guide Series, which produced thorough guidebooks for every state that include descriptions of towns, waterways, historic sites, oral histories, photographs, and artwork. An association or group that put up the cost of publication sponsored each book, the cost was anywhere from $5,000 to $10,000. In almost all cases, the book sales were able to reimburse their sponsors. Additionally, another important part of this project was to record oral histories to create archives such as the Slave Narratives and collections of folklore. These writers also participated in research and editorial services to other government agencies.

Historical Records Survey
This project was the smallest of Federal Project Number One and served to identify, collect, and conserve United States' historical records. It is one of the biggest bibliographical efforts and was directed by Luther H. Evans. At its peak, this project employed more than 4,400 workers.

Library Services Program
Before the Great Depression, it was estimated that one-third of the population in the United States did not have reasonable access to public library services. Understanding the need, not only to maintain existing facilities but to expand library services led to the establishment of the WPA's Library Projects. With the onset of the Depression local governments facing declining revenues were unable to maintain social services, including libraries. This lack of revenue exacerbated problems of library access that were already widespread. In 1934 only two states, Massachusetts and Delaware, provided their total population access to public libraries. In many rural areas, there were no libraries, and where they did exist, reading opportunities were minimal. 66% of the South's population did not have access to any public library. Libraries that existed circulated one book per capita. The early emphasis of these programs was on extending library services to rural populations, by creating libraries in areas that lacked facilities. The WPA library program also greatly augmented reader services in metropolitan and urban centers.

By 1938, the WPA Library Services Project had established 2,300 new libraries, 3,400 reading rooms in existing libraries, and 53 traveling libraries for sparsely settled areas. Federal money for these projects could only be spent on worker wages, therefore local municipalities would have to provide upkeep on properties and purchase equipment and materials. At the local level, WPA libraries relied on funding from county or city officials or funds raised by local community organizations such as women's clubs. Due to limited funding, many WPA libraries were "little more than book distribution stations: tables of materials under temporary tents, a tenant home to which nearby readers came for their books, a school superintendents' home, or a crossroads general store." The public response to the WPA libraries was extremely positive. For many, "the WPA had become 'the breadline of the spirit.'"

At its height in 1938, there were 38,324 people, primarily women, employed in library services programs, while 25,625 were employed in library services and 12,696 were employed in bookbinding and repair.

Because book repair was an activity that could be taught to unskilled workers and once trained, could be conducted with little supervision, repair and mending became the main activity of the WPA Library Project. The basic rationale for this change was that the mending and repair projects saved public libraries and school libraries thousands of dollars in acquisition costs while employing needy women who were often heads of households.

By 1940, the WPA Library Project, now the Library Services Program, began to shift its focus as the entire WPA began to move operations towards goals of national defense. WPA Library Programs served those goals in two ways: 1.) existing WPA libraries could distribute materials to the public on the nature of an imminent national defense emergency and the need for national defense preparation, and 2.) the project could provide supplementary library services to military camps and defense impacted communities.

By December 1941, the number of people employed in WPA library work was only 16,717. In May of the following year, all statewide Library Projects were reorganized as WPA War Information Services Programs. By early 1943, the work of closing war information centers had begun. The last week of service for remaining WPA library workers was March 15, 1943.

While it is difficult to quantify the success or failure of WPA Library Projects relative to other WPA programs, "what is incontestable is the fact that the library projects provided much-needed employment for mostly female workers, recruited many to librarianship in at least semiprofessional jobs, and retained librarians who may have left the profession for other work had employment not come through federal relief...the WPA subsidized several new ventures in readership services such as the widespread use of bookmobiles and supervised reading rooms – services that became permanent in post-depression and postwar American libraries."

In extending library services to people who lost their libraries (or never had a library to begin with) WPA Library Services Projects achieved phenomenal success, made significant permanent gains, and had a profound impact on library life in America.

Incarceration of Japanese Americans in internment camps
The WPA spent $4.47 million on removal and internment between March and November 1942, slightly more than the $4.43 million spent by the Army for that purpose during that period. Jason Scott Smith observes that "the eagerness of many WPA administrators to place their organization in the forefront of this wartime enterprise is striking.” The WPA was on the ground helping with removal and relocation even before the creation of the WRA. On March 11, Rex L. Nicholson, the WPA's regional director, took charge of the “Reception and Induction” centers that controlled the first thirteen assembly centers. Nicholson's old WPA associates played key roles in the administration of the camps.

WPA veterans involved in internment included Clayton E. Triggs, the first manager of the Manzanar Relocation Center in California, a facility that, according to one insider, was “manned just about 100% by the WPA.” Drawing on experiences derived from New Deal era road building, he supervised the installation of such features as guard towers and spotlights. Then Secretary of Commerce Harry Hopkins praised his successor as WPA administrator, Howard O. Hunter, for the “building of those camps for the War Department for the Japanese evacuees on the West Coast.”

African Americans
The share of Federal Emergency Relief Administration and WPA benefits for African Americans exceeded their proportion of the general population. The FERA's first relief census reported that more than two million African Americans were on relief during early 1933, a proportion of the African-American population (17.8%) that was nearly double the proportion of white Americans on relief (9.5%). This was during the period of Jim Crow and racial segregation in the South, when black Americans were largely disenfranchised.

By 1935, there were 3,500,000 African Americans (men, women and children) on relief, almost 35 percent of the African-American population; plus another 250,000 African-American adults were working on WPA projects. Altogether during 1938, about 45 percent of the nation's African-American families were either on relief or were employed by the WPA.

Civil rights leaders initially objected that African Americans were proportionally underrepresented. African American leaders made such a claim with respect to WPA hires in New Jersey, stating, "In spite of the fact that Blacks indubitably constitute more than 20 percent of the State's unemployed, they composed 15.9% of those assigned to W.P.A. jobs during 1937." Nationwide in 1940, 9.8% of the population were African American.

However, by 1941, the perception of discrimination against African Americans had changed to the point that the NAACP magazine Opportunity hailed the WPA:

"It is to the eternal credit of the administrative officers of the WPA that discrimination on various projects because of race has been kept to a minimum and that in almost every community Negroes have been given a chance to participate in the work program. In the South, as might have been expected, this participation has been limited, and differential wages on the basis of race have been more or less effectively established; but in the northern communities, particularly in the urban centers, the Negro has been afforded his first real opportunity for employment in white-collar occupations."

The WPA mostly operated segregated units, as did its youth affiliate, the National Youth Administration. Blacks were hired by the WPA as supervisors in the North; however of 10,000 WPA supervisors in the South, only 11 were black. Historian Anthony Badger argues, "New Deal programs in the South routinely discriminated against blacks and perpetuated segregation."

People with physical disabilities
The League of the Physically Handicapped in New York was organized in May 1935 to end discrimination by the WPA against the physically disabled unemployed. The city's Home Relief Bureau coded applications by the physically disabled applicants as "PH" ("physically handicapped"). Thus they were not hired by the WPA. In protest, the League held two sit-ins in 1935. The WPA relented and created 1,500 jobs for physically disabled workers in New York City.

Women
About 15% of the household heads on relief were women, and youth programs were operated separately by the National Youth Administration. The average worker was about 40 years old (about the same as the average family head on relief).

WPA policies were consistent with the strong belief of the time that husbands and wives should not both be working (because the second person working would take one job away from some other breadwinner). A study of 2,000 female workers in Philadelphia showed that 90% were married, but wives were reported as living with their husbands in only 18 percent of the cases. Only 2 percent of the husbands had private employment. Of the 2,000 women, all were responsible for one to five additional people in the household.

In rural Missouri, 60% of the WPA-employed women were without husbands (12% were single; 25% widowed; and 23% divorced, separated or deserted). Thus, only 40% were married and living with their husbands, but 59% of the husbands were permanently disabled, 17% were temporarily disabled, 13% were too old to work, and remaining 10% were either unemployed or disabled. Most of the women worked with sewing projects, where they were taught to use sewing machines and made clothing and bedding, as well as supplies for hospitals, orphanages, and adoption centers.

One WPA-funded project, the Pack Horse Library Project, mainly employed women to deliver books to rural areas in eastern Kentucky. Many of the women employed by the project were the sole breadwinners for their families.

Criticism
The WPA had numerous critics. The strongest attacks were that it was the prelude for a national political machine on behalf of Roosevelt. Reformers secured the Hatch Act of 1939 that largely depoliticized the WPA.

Others complained that far left elements played a major role, especially in the New York City unit. Representative J. Parnell Thomas of the House Committee on Un-American Activities claimed in 1938 that divisions of the WPA were a "hotbed of Communists" and "one more link in the vast and unparalleled New Deal propaganda network."

Much of the criticism of the distribution of projects and funding allotment is a result of the view that the decisions were politically motivated. The South, despite being the poorest region of the United States, received 75% less in federal relief and public works funds per capita than the West. Critics would point to the fact that Roosevelt's Democrats could be sure of voting support from the South, whereas the West was less of a sure thing; swing states took priority over the other states.

There was a perception that WPA employees were not diligent workers, and that they had little incentive to give up their busy work in favor of productive jobs. Some employers said that the WPA instilled poor work habits and encouraged inefficiency. Some job applicants found that a WPA work history was viewed negatively by employers, who said they had formed poor work habits.

A Senate committee reported that, "To some extent the complaint that WPA workers do poor work is not without foundation. ... Poor work habits and incorrect techniques are not remedied. Occasionally a supervisor or a foreman demands good work." The WPA and its workers were ridiculed as being lazy. The organization's initials were said to stand for "We Poke Along" or "We Putter Along" or "We Piddle Around" or "Whistle, Piss and Argue." These were sarcastic references to WPA projects that sometimes slowed down deliberately because foremen had an incentive to keep going, rather than finish a project.

The WPA's Division of Investigation proved so effective in preventing political corruption "that a later congressional investigation couldn't find a single serious irregularity it had overlooked," wrote economist Paul Krugman. "This dedication to honest government wasn't a sign of Roosevelt's personal virtue; rather, it reflected a political imperative. FDR's mission in office was to show that government activism works. To maintain that mission's credibility he needed to keep his administration's record clean. And he did."

Many complaints were recorded from private industry at the time that the existence of WPA works programs made hiring new workers difficult. The WPA claimed to counter this by keeping hourly wages well below private wages and encouraging relief workers to actively seek private employment and accept job offers if they got them.

Evolution
On December 23, 1938, after leading the WPA for three and a half years, Harry Hopkins resigned and became the Secretary of Commerce. To succeed him Roosevelt appointed Francis C. Harrington, a colonel in the Army Corps of Engineers and the WPA's chief engineer, who had been leading the Division of Engineering and Construction.

Following the passage of the Reorganization Act of 1939 in April 1939, the WPA was grouped with the Bureau of Public Roads, Public Buildings Branch of the Procurement Division, Branch of Buildings Management of the National Park Service, United States Housing Authority and the Public Works Administration under the newly created Federal Works Agency. Created at the same time, the Federal Security Agency assumed the WPA's responsibility for the National Youth Administration. "The name of the Works Progress Administration has been changed to Work Projects Administration in order to make its title more descriptive of its major purpose," President Roosevelt wrote when announcing the reorganization.

As WPA projects became more subject to the state, local sponsors were called on to provide 25% of project costs. As the number of public works projects slowly diminished, more projects were dedicated to preparing for war. Having languished since the end of World War I, the American military services were depopulated and served by crumbling facilities; when Germany occupied Czechoslovakia in 1938, the U.S. Army numbered only 176,000 soldiers.

On May 26, 1940, FDR delivered a fireside chat to the American people about "the approaching storm", and on June 6 Harrington reprioritized WPA projects, anticipating a major expansion of the U.S. military. "Types of WPA work to be expedited in every possible way to include, in addition to airports and military airfields, construction of housing and other facilities for enlarged military garrisons, camp and cantonment construction, and various improvements in navy yards," Harrington said. He observed that the WPA had already made substantial contributions to national defense over its five years of existence, by building 85 percent of the new airports in the U.S. and making $420 million in improvements to military facilities. He predicted there would be 500,000 WPA workers on defense-related projects over the next 12 months, at a cost of $250 million. The estimated number of WPA workers needed for defense projects was soon revised to between 600,000 and 700,000. Vocational training for war industries was also begun by the WPA, with 50,000 trainees in the program by October 1940.

"Only the WPA, having employed millions of relief workers for more than five years, had a comprehensive awareness of the skills that would be available in a full-scale national emergency," wrote journalist Nick Taylor. "As the country began its preparedness buildup, the WPA was uniquely positioned to become a major defense agency."

Harrington died suddenly, aged 53, on September 30, 1940. Notably apolitical—he boasted that he had never voted —he had deflected Congressional criticism of the WPA by bringing attention to its building accomplishments and its role as an employer. Harrington's successor, Howard O. Hunter, served as head of the WPA until May 1, 1942.

Termination
Unemployment ended with war production for World War II, as millions of men joined the services, and cost-plus contracts made it attractive for companies to hire unemployed men and train them.

Concluding that a national relief program was no longer needed, Roosevelt directed the Federal Works Administrator to end the WPA in a letter December 4, 1942. "Seven years ago I was convinced that providing useful work is superior to any and every kind of dole. Experience had amply justified this policy," FDR wrote:

"By building airports, schools, highways, and parks; by making huge quantities of clothing for the unfortunate; by serving millions of lunches to school children; by almost immeasurable kinds and quantities of service the Work Projects Administration has reached a creative hand into every county in this Nation. It has added to the national wealth, has repaired the wastage of depression, and has strengthened the country to bear the burden of war. By employing eight millions of Americans, with thirty millions of dependents, it has brought to these people renewed hope and courage. It has maintained and increased their working skills; and it has enabled them once more to take their rightful places in public or in private employment."

Roosevelt ordered a prompt end to WPA activities to conserve funds that had been appropriated. Operations in most states ended February 1, 1943. With no funds budgeted for the next fiscal year, the WPA ceased to exist after June 30, 1943.

Legacy
"The agencies of the Franklin D. Roosevelt administration had an enormous and largely unrecognized role in defining the public space we now use", wrote sociologist Robert D. Leighninger. "In a short period of ten years, the Public Works Administration, the Works Progress Administration, and the Civilian Conservation Corps built facilities in practically every community in the country. Most are still providing service half a century later. It is time we recognized this legacy and attempted to comprehend its relationship to our contemporary situation."

title: Works Progress Administration


text:
Gramm–Rudman–Hollings Balanced Budget Act

The Gramm–Rudman–Hollings Balanced Budget and Emergency Deficit Control Act of 1985 and the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987 (both often known as Gramm–Rudman) were the first binding spending constraints on the federal budget.

After enactment, these Acts were often referred to as "Gramm-Rudman-Hollings I" and Gramm-Rudman-Hollings II) after U.S. Senators Phil Gramm (R-Texas), Warren Rudman (R-New Hampshire), and Fritz Hollings (D-South Carolina), who were credited as their chief authors.

Provisions of Acts
The term "budget sequestration" was first used to describe a section of the Gramm–Rudman–Hollings Deficit Reduction Act of 1985.

The Acts aimed to cut the United States federal budget deficit. This deficit is the amount by which expenditures by the federal government exceed its revenues each year and was at the time the largest in history in dollar terms. The Acts provided for automatic spending cuts ("cancellation of budgetary resources", called "sequestration") if the total discretionary appropriations in various categories exceed in a fiscal year the budget spending thresholds. That is, if Congress enacts appropriation bills providing for discretionary outlays in each fiscal year that exceed the budget totals, unless Congress passes another budget resolution increasing the budget amount, an across-the-board spending cut in discretionary expenditure is automatically triggered in these categories, affecting all departments and programs by an equal percentage. The amount exceeding the limit is held back by the Treasury and not transferred to the agencies specified in the appropriation bills.

Under the 1985 Act, allowable deficit levels were calculated in consideration of the eventual elimination of the federal deficit. If the budget exceeded the allowable deficit, across-the-board cuts were required. Directors of the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO) were required to report to the Comptroller General regarding their recommendations for how much must be cut. The Comptroller General then evaluated these reports, made his own conclusion, and gave a recommendation to the President, who was then required to issue an order effecting the reductions recommended by the Comptroller General unless Congress made the cuts in other ways within a specified amount of time.

The Comptroller General is nominated by the President from a list of three people recommended by the presiding officers of the House and Senate. He is removable only by impeachment or a joint resolution of Congress, which requires majority votes in both houses and is subject to a Presidential veto. Congress can give a number of reasons for this removal, including "inefficiency," "neglect of duty," or "malfeasance".

Passage of law
The House passed the 1985 bill by a vote of 271–154 and the Senate by 61–31, and President Ronald Reagan signed the bill on December 12, 1985.

On August 12, 1986, Representative Dan Rostenkowski introduced the Balanced Budget and Emergency Deficit Control Reaffirmation Act. The Senate passed the bill with two amendments by a vote of 36–35, and the House approved the Senate's first amendment by voice vote but rejected the second amendment. The Senate rescinded that amendment by voice vote and President Reagan signed the bill on August 21.

Legacy
The process for determining the amount of the automatic cuts was found unconstitutional in the case of Bowsher v. Synar, as an unconstitutional usurpation of executive power by Congress because the Comptroller General's function under the Act is the "very essence" of execution of the laws, which is beyond the power of a legislative body. It was noted: "Once Congress passes legislation, it can influence only its execution by passing new laws or through impeachment."

Congress enacted a reworked version of the law in the 1987 Act. Gramm–Rudman failed, however, to prevent large budget deficits.

The Budget Enforcement Act of 1990 supplanted the fixed deficit targets, which replaced sequestration with a PAYGO system, which was in effect until 2002.

Balanced budgets did not actually emerge until the late 1990s when budget surpluses (not accounting for liabilities to the Social Security Trust Fund) emerged. The budgets quickly fell out of balance after 2000 and have run consistent and substantial deficits since then.

license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


text:
Gramm–Latta Budget

The Gramm-Latta Budget (aka Gramm–Latta Bill) 1981 and the Gramm–Latta Omnibus Reconciliation Bill of 1981, sponsored by Representatives Phil Gramm (a Democrat, later Republican, from Texas) and Delbert Latta (a Republican from Ohio), implemented President Ronald Reagan's economic program. This included an increase in military spending and major cuts in discretionary and entitlement spending. The law also mandated the controversial 1981 Kemp–Roth Tax Cut.

In a 2001 press conference to announce his retirement, Gramm had this to say about the bill: "I wrote the first Reagan budget – the Gramm–Latta budget that rebuilt national defense and that laid the foundation for a program of peace through strength; the Reagan program that tore down the Berlin Wall, that liberated Eastern Europe, that transformed the Soviet Union and that changed the world."

title: Gramm–Latta Budget


text:
Economic Recovery Tax Act of 1981

The Economic Recovery Tax Act of 1981 (ERTA), or Kemp–Roth Tax Cut, was an Act that introduced a major tax cut, which was designed to encourage economic growth. The Act was enacted by the 97th US Congress and signed into law by US President Ronald Reagan. The Accelerated Cost Recovery System (ACRS) was a major component of the Act and was amended in 1986 to become the Modified Accelerated Cost Recovery System (MACRS).

Representative Jack Kemp and Senator William Roth, both Republicans, had nearly won passage of a tax cut during the Carter presidency, but President Jimmy Carter feared an increase in the deficit and so prevented the bill's passage. Reagan made a major tax cut his top priority once he had taken office. The Democrats maintained a majority in the US House of Representatives during the 97th Congress, but Reagan convinced conservative Democrats like Phil Gramm to support the bill. The Act passed the US Congress on August 4, 1981, and it was signed into law by Reagan on August 13, 1981. It was one of the largest tax cuts in US history, and ERTA and the Tax Reform Act of 1986 are known together as the Reagan tax cuts. Along with spending cuts, Reagan's tax cuts were the centerpiece of what some contemporaries described as the conservative "Reagan Revolution."

Included in the act was an across-the-board decrease in the rates of federal income tax. The highest marginal tax rate fell from 70% to 50%, the lowest marginal rate from 14% to 11%. To prevent future bracket creep, the new tax rates were indexed for inflation. Also reduced were estate taxes, capital gains taxes, and corporate taxes.

Critics of the act claim that it worsened federal budget deficits, but supporters credit it for bolstering the economy during the 1980s. Supply-siders argued that the tax cuts would increase tax revenues. However, tax revenues declined relative to a baseline without the cuts because of the tax cuts, and the fiscal deficit ballooned during the Reagan presidency.

Much of the 1981 Act was reversed in September 1982 by the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), which is sometimes called the largest tax increase of the postwar period.

Summary
The Office of Tax Analysis of the United States Department of the Treasury summarized the tax changes as follows:
 * phased-in 23% cut in individual tax rates over 3 years; top rate dropped from 70% to 50%
 * accelerated depreciation deductions; replaced depreciation system with the Accelerated Cost Recovery System (ACRS)
 * indexed individual income tax parameters (beginning in 1985)
 * created 10% exclusion on income for two-earner married couples ($3,000 cap)
 * phased-in increase in estate tax exemption from $175,625 to $600,000 in 1987
 * reduced windfall profit taxes
 * allowed all working taxpayers to establish IRAs
 * expanded provisions for employee stock ownership plans (ESOPs)
 * replaced $200 interest exclusion with 15% net interest exclusion ($900 cap) (begin in 1985)

The accelerated depreciation changes were repealed by the Tax Equity and Fiscal Responsibility Act of 1982, and the 15% interest exclusion was repealed before it could take effect by the Deficit Reduction Act of 1984. The maximum expense in calculating credit was increased from $2000 to $2400 for one child and from $4000 to $4800 for at least two children. The credit increased from 20% or a maximum of $400 or $800 to 30% of $10,000 income or less. The 30% credit is diminished by 1% for every $2,000 of earned income up to $28,000. At $28,000, the credit for earned income was 20%.

The amount for a married taxpayer to file a joint return increased under the Economic Recovery Tax Act to $125,000 from the $100,000 allowed under the 1976 Act. A single person was limited to an exclusion of $62,500. Also increased was the one-time exclusion of gain realized on the sale of a principal residence by someone aged at least 55.

Legislative history
Representative Jack Kemp and Senator William Roth, both Republicans, had nearly won passage of a major tax cut during the Carter presidency, but President Jimmy Carter prevented the bill from passing out of concern about the deficit. Advocates of supply-side economics like Kemp and Reagan asserted that cutting taxes would ultimately lead to higher government revenue because of economic growth, a proposition that was challenged by many economists.

Upon taking office, Reagan made the passage of the bill his top domestic priority. As Democrats controlled the House of Representatives, the passage of any bill would require the support of some House Democrats in addition to that of Republicans. Reagan's victory in the 1980 presidential campaign had united Republicans around his leadership, and conservative Democrats like Phil Gramm of Texas (who would later switch parties) were eager to back some of Reagan's conservative policies.

Throughout 1981, Reagan frequently met with members of Congress and focused especially on winning the support from conservative Southern Democrats. In July 1981, the Senate voted 89–11 for the tax cut bill favored by Reagan, and the House approved the bill in a 238–195 vote. Reagan's success in passing a major tax bill and cutting the federal budget was hailed as the "Reagan Revolution" by some reporters. One columnist wrote that Reagan's legislative success represented the "most formidable domestic initiative any president has driven through since the Hundred Days of Franklin Roosevelt."

Accelerated Cost Recovery System
The Accelerated Cost Recovery System (ACRS) was a major component of the Act and was amended in 1986 to become the Modified Accelerated Cost Recovery System.

The system changed how depreciation deductions are allowed for tax purposes. The assets were placed into categories: 3, 5, 10, or 15 years of life. Reducing the tax liability would put more cash into the pockets of business owners to promote investment and economic growth.

For example, the agriculture industry saw a re-evaluation of their farming assets. Items such as automobiles and swine were given 3-year depreciation values, and things like buildings and land had a 15-year depreciation value.

Aftermath
The most lasting impact and significant change of the Act was indexing the tax code parameters for inflation starting in 1985. Six of the nine federal tax laws between 1968 and 1981 were tax cuts compensating for inflation-driven bracket creep. Inflation was particularly high in the five years preceding the Act, and bracket creep alone caused federal individual income tax receipts to increase from 7.94% to over 10% of the GDP. Even after the Act was passed, federal individual income tax receipts never fell below 8.05% of the GDP. Combined with indexing, that eliminated the need for future tax cuts to address it.

The first 5% of the 25% total cuts took place beginning on October 1, 1981. An additional 10% began on July 1, 1982, followed by a third decrease of 10% starting July 1, 1983.

As a result of that and other tax acts in the 1980s, the top 10% were paying 57.2% of total income taxes by 1988, up from 48% in 1981, but the bottom 50% of earners' share dropped from 7.5% to 5.7% during the same period. The total share borne by middle incomes of the 50th to 95th percentiles decreased from 57.5% to the 48.7% between 1981 and 1988. Much of the increase can be attributed to the decrease in capital gains taxes. Also, the ongoing recession and high unemployment contributed to stagnation among other income groups until the mid-1980s.

Under ERTA, marginal tax rates dropped (top rates from 70% to 50%)and capital gains tax was reduced from 28% to 20%. Revenue from capital gains tax increased 50% from $12.5 billion in 1980 to over $18 billion in 1983. In 1986, revenue from the capital gains tax rose to over $80 billion; after the restoration of the rate to 28% from 20% from 1987, capital gains revenues declined until 1991.

Critics claim that the tax cuts worsened budget deficits. Reagan's supporters credit them with helping the 1980s economic expansion that eventually lowered the deficits. After peaking in 1986 at $221 billion the deficit fell to $152 billion by 1989. The Office of Tax Analysis estimated that the act lowered federal income tax revenue by 13% from what it would have been in the bill's absence.

Canada, which had adopted the indexing of income tax in the early 1970s, saw deficits at similar and even larger levels to the United States in the late 1970s and the early 1980s.

The non-partisan Congressional Research Service (in the Library of Congress) issued a report in 2012 analyzing the effects of tax rates from 1945 to 2010. It concluded that top tax rates have no positive effect on economic growth, saving, investment, or productivity growth. However, the reduced top tax rates increase income inequality:
 * The reduction in the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.

Tax revenue from the wealthy dropped, and much of the increased wealth collected was at the top of the tax bracket.

Reagan came into office with a national debt of around $900 billion, high unemployment rates, and public distrust in government. The Act was designed to give tax breaks to all citizens in hopes of jumpstarting the economy and creating more wealth in the country. By the summer of 1982, the double-dip recession, the return of high-interest rates, and the ballooning deficits had convinced Congress that the Act had failed to create the results for which the Reagan administration had hoped. Largely at the initiative of Senate Finance Committee chairman Robert Dole, most of the personal tax cuts were reversed in September 1982 by the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) but, most significantly, not the indexing of individual income tax rates. When Reagan left office, the national debt had tripled to around $2.6 trillion.

The sociologist Monica Prasad contends that these kinds of tax cuts became popular among Republican candidates because the cuts were well received by voters and could help candidates get elected.

title: Economic Recovery Tax Act of 1981


text:
Tax Reform Act of 1986

The Tax Reform Act of 1986 (TRA) was passed by the 99th United States Congress and signed into law by President Ronald Reagan on October 22, 1986.

The Tax Reform Act of 1986 was the top domestic priority of President Reagan's second term. The act lowered federal income tax rates, decreasing the number of tax brackets and reducing the top tax rate from 50 percent to 28 percent. The act also expanded the earned income tax credit, the standard deduction, and the personal exemption, removing approximately six million lower-income Americans from the tax base. Offsetting these cuts, the act increased the alternative minimum tax and eliminated many tax deductions, including deductions for rental housing, individual retirement accounts, and depreciation.

Although the tax reform was projected to be revenue-neutral, it was popularly referred to as the second round of Reagan tax cuts (following the Economic Recovery Tax Act of 1981). The bill passed with majority support in both the House of Representatives and the Senate, receiving the votes of majorities among both congressional Republicans and Democrats, including Democratic Speaker of the House Tip O'Neill.

Passage
After his victory in the 1984 presidential election, President Ronald Reagan made simplification of the tax code the central focus of his second term domestic agenda. Working with Speaker of the House Tip O'Neill, a Democrat who also favored tax reform, Reagan overcame significant opposition from members of Congress in both parties to pass the Tax Reform Act of 1986.

Income tax rates
The top tax rate for individuals for tax year 1987 was lowered from 50% to 33%. Many lower level tax brackets were consolidated, and the upper income level of the bottom rate (married filing jointly) was increased from $5,720/year to $29,750/year. This package ultimately consolidated tax brackets from fifteen levels of income to four levels of income. The standard deduction, personal exemption, and earned income credit were also expanded, resulting in the removal of six million poor Americans from the income tax roll and a reduction of income tax liability across all income levels. The higher standard deduction substantially simplified the preparation of tax returns for many individuals.

For tax year 1987, the Act provided a graduated rate structure of 15%/28%/33%. Beginning with tax year 1988, the Act provided a nominal rate structure of 15%/28%/33%. However, beginning with 1988, taxpayers having taxable income higher than a certain level were taxed at an effective rate of about 28%. This was jettisoned in the Omnibus Budget Reconciliation Act of 1990, otherwise known as the "Bush tax increase", which violated his Taxpayer Protection Pledge.

Tax incentives
The Act also increased incentives favoring investment in owner-occupied housing relative to rental housing. Prior to the Act, all personal interest was deductible. Subsequently, only home mortgage interest was deductible, including interest on home equity loans. The Act phased out many investment incentives for rental housing, through extending the depreciation period of rental property from 15–19 years to 27.5 years. It also discouraged real estate investing by eliminating the deduction for passive losses. To the extent that low-income people may be more likely to live in rental housing than in owner-occupied housing, this provision of the Act could have had the tendency to decrease the new supply of housing accessible to low-income people. The Low-Income Housing Tax Credit was added to the Act to provide some balance and encourage investment in multifamily housing for the poor.

Moreover, interest on consumer loans such as credit card debt was no longer deductible. An existing provision in the tax code, called Income Averaging, which reduced taxes for those only recently making a much higher salary than before, was eliminated (although later partially reinstated, for farmers in 1997 and for fishermen in 2004). The Act, however, increased the personal exemption and standard deduction.

The individual retirement account (IRA) deduction was severely restricted. The IRA had been created as part of the Employee Retirement Income Security Act of 1974, where employees not covered by a pension plan could contribute the lesser of $1500 or 15% of earned income. The Economic Recovery Tax Act of 1981 (ERTA) removed the pension plan clause and raised the contribution limit to the lesser of $2000 or 100% of earned income. The 1986 Tax Reform Act retained the $2000 contribution limit, but restricted the deductibility for households that have pension plan coverage and have moderate to high incomes. Non-deductible contributions were allowed.

Depreciation deductions were also curtailed. Prior to ERTA, depreciation was based on "useful life" calculations provided by the Treasury Department. ERTA set up the "accelerated cost recovery system" (ACRS). This set up a series of useful lives based on three years for technical equipment, five years for non-technical office equipment, ten years for industrial equipment, and fifteen years for real property. TRA86 lengthened these lives, and lengthened them further for taxpayers covered by the alternative minimum tax (AMT). These latter, longer lives approximate "economic depreciation," a concept economists have used to determine the actual life of an asset relative to its economic value.

Defined contribution (DC) pension contributions were curtailed. The law prior to TRA86 was that DC pension limits were the lesser of 25% of compensation or $30,000. This could be accomplished by any combination of elective deferrals and profit sharing contributions. TRA86 introduced an elective deferral limit of $7000, indexed to inflation. Since the profit sharing percentage must be uniform for all employees, this had the intended result of making more equitable contributions to 401(k)'s and other types of DC pension plans.

The 1986 Tax Reform Act introduced the General Nondiscrimination rules which applied to qualified pension plans and 403(b) plans that for private sector employers. It did not allow such pension plans to discriminate in favor of highly compensated employees. A highly compensated employee for the purposes of testing a plan's compliance for the 2006 plan year is any employee whose compensation exceeded $95,000 in the 2005 plan year. Therefore, all new hires are by definition nonhighly compensated employees. A plan could not give benefits or contributions on a more favorable basis for the highly compensated employees if it cannot pass the minimum coverage test and the minimum participation test.

Fraudulent dependents
The Act required people claiming children as dependents on their tax returns to obtain and list a Social Security number for every claimed child, to verify the child's existence. Before this act, parents claiming tax deductions were on the honor system not to lie about the number of children they supported. The requirement was phased in, and initially Social Security numbers were required only for children over the age of 5. During the first year, this anti-fraud change resulted in seven million fewer dependents being claimed, nearly all of which are believed to have involved either children that never existed, or tax deductions improperly claimed by non-custodial parents.

Changes to the AMT
The original alternative minimum tax targeted tax shelters used by a few wealthy households. However, the Tax Reform Act of 1986 greatly expanded the AMT to aim at a different set of deductions that most Americans receive. Things like the personal exemption, state and local taxes, the standard deduction, private activity bond interest, certain expenses like union dues and even some medical costs for the seriously ill could now trigger the AMT. In 2007, the New York Times reported, "A law for untaxed rich investors was refocused on families who own their homes in high tax states."

Passive losses and tax shelters
(relating to limitations on deductions for passive activity losses and limitations on passive activity credits) removed many tax shelters, especially for real estate investments. This contributed to the end of the real estate boom of the early-to-mid 1980s, which in turn was the primary cause of the U.S. savings and loan crisis.

Prior to 1986, passive investors were able to use real estate losses to offset taxable income. When losses from these deals were no longer able to be deducted, many investors sold their assets, which contributed to sinking real estate prices.

To help small landlords, The Tax Reform Act of 1986 included a temporary $25,000 net rental loss deduction, provided that the property was not personally used for the greater of 14 days or 10% of rental days, and adjusted gross income was less than $100,000.

Tax treatment of technical service firms employing certain professionals
The Internal Revenue Code does not contain any definition or rules dealing with the issue of when a worker should be characterized for tax purposes as an employee, rather than as an independent contractor. The tax treatment depends on the application of (20) factors provided by common law, which varies by state.

Introduced by Senator Daniel Patrick Moynihan, Section 1706 added a subsection (d) to Section 530 of the Revenue Act of 1978, which removed "safe harbor" exception for independent contractor classification (which at the time avoided payroll taxes) for workers such as engineers, designers, drafters, computer professionals, and "similarly skilled" workers.

If the IRS determines that a third-party intermediary firm's worker previously treated as self-employed should have been classified as an employee, the IRS assesses substantial back taxes, penalties and interest on that third-party intermediary company, though not directly against the worker or the end client. It does not apply to individuals directly contracted to clients.

The change in the tax code was expected to offset tax revenue losses of other legislation Moynihan proposed that changed the law on foreign taxes of Americans working abroad. At least one firm simply adapted its business model to the new regulations. A 1991 Treasury Department study found that tax compliance for technology professionals was among the highest of all self-employed workers and that Section 1706 would raise no additional tax revenue and could possibly result in losses as self-employed workers did not receive as many tax-free benefits as employees.

In one report in 2010, Moynihan's initiative was labeled "a favor to IBM." A suicide note by software professional Joseph Stack, who flew his airplane into a building housing IRS offices in February 2010, blamed his problems on many factors, including the Section 1706 change in the tax law while even mentioning Senator Moynihan by name, though no intermediary firm is mentioned, and failure to file a return was admitted.

Name of the Internal Revenue Code
Section 2(a) of the Act also officially changed the name of the Internal Revenue Code from the Internal Revenue Code of 1954 to the Internal Revenue Code of 1986. Although the Act made numerous amendments to the 1954 Code, it was not a re-enactment or a substantial re-codification or reorganization of the overall structure of the 1954 Code. Thus, the tax laws since 1954 (including those after 1986) have taken the form of amendments to the 1954 Code, although it is now called the 1986 Code.

title: Tax Reform Act of 1986