Like a “Good” Neighbor: The Poverty of National-Local Relations

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Michael Hoover, “Whose Domain? Private Power, Public Policy, and Local Politics” (17 March 2006); “Zoned Out: The Politics of Community Exclusion” (8 April 2006)

Until the 1930s, the U.S. government had little direct involvement with local governments. In altering that situation, the New Deal response to the Great Depression included direct grants of federal money to cities. Not until the 1960s, however, did Washington, D.C.’s role expand to include initiatives such as community action, development, and investment programs. While such policies generally called for some degree of citizen involvement, activists and advocates would be largely disappointed by the limited substantive accomplishments. Among other things, Washington’s foray into “community politics” reveals a gap between nationally created and authorized policies and locally implemented and administered programs. Federal officials themselves do not always agree about their intent, sending out mixed messages and signals to local officials and citizens.

On January 8, 1964, Lyndon Johnson, in his first State of the Union address after assuming the presidency following John Kennedy’s assassination, declared an “unconditional war on poverty in America.” What followed Johnson’s clarion call was a shift to an activist-oriented social welfare policy agenda that included, among its many programs, educational opportunities, food assistance, and health care. Encapsulated as the “Great Society” and identified with the Office of Economic Opportunity (OEO), the outcome of this federal government effort is still debated forty years thence, with critics claiming that anti-poverty programs created a permanently dependent class of poor people and defenders seeing such projects as having reduced privation. Created to coordinate Johnson Administration (1964-1968) poverty policies, OEO owed its existence to the Economic Opportunity Act (EOA) of 1964, an omnibus package stressing education and training through such programs as the Job Corps, work-study, and Volunteers in Service to America (VISTA). Under EOA, community action agencies (CAA) were encouraged to stimulate local efforts to meet the needs of low-income people. In allocating federal funds to community action programs (CAP), Title II of the Act called for the “maximum feasible participation of residents of the areas and members of the group served” — in other words, the poor themselves. As such, the federal government contracted with independent, non-governmental groups rather than municipal and county governments or traditional charitable aid organizations. Unsurprisingly, CAP efforts aimed at “empowering the poor” became the most controversial pieces in a complex puzzle of federal programs aimed at addressing poverty.

Some portion of community action program difficulties stemmed from the fact that the concept of “maximum feasible participation” meant different things to different people. One consequence was that initial CAP grants failed to specify criteria for including low-income citizens in decision-making. OEO did eventually announce that all CAAs would be required to reserve 33% of the seats on their governing boards for the poor (a policy later codified in the Quie Amendment, named for its congressional sponsor, Rep. Al Quie [R-MN]). Nevertheless, programs were caught between two objectives — reducing poverty and creating more equal opportunities — and they were constrained by limited finances. The total federal CAP allocation for years 1965-1969 was just under $3.5 billion, distributed among more than 1,000 community action agencies covering about two-thirds of the nation’s 3,000 counties. Put another way, less than two cents of each federal tax dollar went to finance economic opportunity programs. Most community action agencies were relegated to small-staff operations largely confined to Head Start. Even then, community action program money was too thinly spread; in Orange County, Florida, for example, the local OEO agency had Head Start funding for about 20% of the approximately 3,000 children it had on a waiting list. When Congress decided to limit local flexibility and initiative in favor of “national emphasis” programs, legislators directed 40% of all funds to Head Start alone. Then, in late 1967, Congress further reined in CAAs by enacting the so-called Green Amendment — named for Rep. Edith Green (D-OR) — which granted local elected officials the authority to designate the agency in their area.

Intersecting race and class factors were impossible to avoid in discussion as well as implementation of community action programs. In the South, white politicians opposed EOA because they feared that it would hasten racial integration. Elsewhere, local officials expressed concern that “community action” would upset traditional political arrangements. Even some erstwhile supporters have since claimed that race-identified politics weakened what support poverty programs had. Still, most places, including ones in the south, proved reluctant to reject federal monies outright even as local organizations strengthened African-American demands for self-determination and institutional control of communities in which they lived. In any event, the Great Society would be waylaid by the combined impact of “conservative coalition” Republican and southern Democratic opposition and the escalating costs of the Vietnam War. Later, the Nixon Administration transferred a number of OEO programs to the departments of Health, Education, and Welfare and the Department of Labor. The Office of Economic Opportunity was itself dismantled in 1974, and its successor, the Community Services Administration (CSA), was abolished in 1981. Local community action agencies, many of which had come under the auspices of county governments in the intervening years, then became eligible for still-existing federal Community Services Block Grants (CSBG): $642 million was available in 2004; $626 million in 2005. For FY2006, President George Bush proposed eliminating all CSBG monies.

Coincident with the 1974 elimination of the Office of Economic Opportunity, Congress and President Richard Nixon created the Community Development Block Grant (CDBG) program (the bill was actually signed by Gerald Ford who assumed the presidency upon Nixon’s Watergate-scandal resignation). Included as part of the Housing and Community Development Act (HCDA) of that year, CDBGs brought together several categorical grant programs, including urban renewal. Granting local governments more autonomy as well as greater flexibility, block grants offered downtown pro-growth business coalitions increased opportunity to channel federal funds into redevelopment projects. Not until Jimmy Carter entered the White House was there any scrutiny of how local governments were using these resources. A 1977 Housing and Urban Development (HUD) report concluded that about 70% of CDBG money went to low- and moderate-income areas (districts with median incomes below 80% of local average). A similar accounting one year later, however, revealed that the percentage had fallen to below 50%. Only with a 1978 Carter directive requiring that local governments had to spend a minimum of 75% of funds in “needy” communities did the amount of money going to such areas grow.

Southern officials have generally been the worst offenders in terms of both ignoring citizen participation (CDBG language “emphasizes” but does not require inclusion of low-income persons) and diverting funds to ineligible neighborhoods. So-called “priority districts” have routinely included affluent addresses, enabling money to be used for parks and recreational centers in well-off residential areas. In declaring its entire municipal jurisdiction to be a “development zone,” Gulfport, Mississippi attempted to completely eliminate area distinctions. Throughout the country, however, “misappropriation” of CDBG funds for re-development projects such as commercial parks and shopping malls — aka urban renewal — has been the norm. Meanwhile, public involvement has often been reduced to community advisory boards that, by definition, have no formal authority to make policy decisions. The consequences of limiting citizen participation are evident in Sunbelt cities such as Houston that deploy but 10% of their development block grant funds for housing, though older urban locales such as Boston that have some history of community activism spend 75% on affordable residential construction and improvement.

HCDA permitted city mayors — many of whom had been critics of community action program circumvention of their offices — to take control of re/development activities. Using federal grants as seed money to attract private developers, a “new generation” of entrepreneurial hizzoners directed funds into rehabbing “historic” business districts and neighborhoods. Considered potential “engines of growth,” community development block grants provided an economic “anchor” that produced still-flourishing downtown office building and retail shopping district construction. Thus, CDBG was the only federal urban policy to survive Ronald Reagan’s presidency, doing so, in large measure, because of support from Republicans touting its importance to the business “community.” Still, program appropriations declined more than 25% over the course of the Reagan era (from about $4 billion in 1981 to under $3 billion in 1990). While development block grant appropriations increased during Bill Clinton’s time in the White House, George H. W. Bush oversaw cuts throughout his first term, after which he proposed to eliminate the program completely. The following year, an effort led by Republican Senator and former St. Paul, Minnesota mayor Norm Coleman and the U.S. Conference of Mayors forced the Administration to back away from a plan to “reform” the program by incorporating it into the Commerce Department. Meanwhile, Bush’s 2007 budget proposal calls for cutting CDBG funding from $3.9 billion to $3 billion, a reduction of approximately 20%.

One element of Great Society-era policy innovation that has grown in the decades since is the community development corporation (CDC), the origins of which are generally traced to a 1966 Bobby Kennedy (U.S. Senator from New York at the time) tour of Brooklyn’s beleaguered Bedford-Stuyvesant district. Believing that “if you build it, they’ll come” and that public funds were the key to leveraging private investment, Kennedy secured federal appropriations for CDC creation in 1967 amendments to the Employment Opportunity Act. Today, there are several thousand such organizations around the country; they receive assistance from local private banks prohibited from “redlining” (the name is derived from the red lines drawn on maps indicating neighborhoods deemed “too risky” for residents to qualify for loans) by the 1977 Community Reinvestment Act (CRA). Used primarily to discriminate against African-Americans and other minorities, the practice of redlining exemplifies public consequences of so-called private decisions. Denial of both home mortgage and small business loans contributes to community deterioration, results of which include increased public safety services and social welfare assistance. At some point, “sufficiently” deteriorated housing stock and infrastructure may well lead to using public funds for “community renewal” efforts (read: displacement and gentrification).

Congressional passage of the CRA came at the tail end of a decade of community activism directed at gaining and guaranteeing equal and fair treatment for minorities and low-income persons. In one of the more successful examples of “grassroots” lobbying, community-based organizations and neighborhood groups from throughout the country sent people to Washington, D. C. to pressure law-makers to enact a bill stating that “regulated financial institutions have continuing and affirmative obligations to help meet the credit needs of the local communities in which they are chartered.” While the legislation provides no criteria by which to evaluate bank performance, estimates of more than $1 trillion dollars in negotiated commitments (the vast majority of which have occurred in the last fifteen years) indicates that CDCs and other advocates do have some leverage with lenders. The increasing willingness of banks since 1990 to make investments in previously excluded areas is largely a product of frequent protest and constant legal action. As for racial discrimination in lending, a now decade-and-a-half-old Federal Reserve Bank of Boston study concluding that African-American and Hispanic applicants were about 60% more likely than whites to have their loan applications rejected remains the benchmark to which later research — both confirming and critical — has referred. More recent concerns, however, run toward what is called “predatory” lending in minority communities.

Today, community action agencies, community development grants, and community development corporations are institutionalized legacies of what Lyndon Johnson called “creative” federalism, envisioned as a partnership of national, state, and local governments as well as the private sector. Clearly, this approach was not always welcome. But neither was it — as some would claim — always a failure. Action agencies, for example, fashioned the strategy of using courts to compel changes in local housing policies; action programs trained a generation of black activists in organizing techniques and pressure tactics. In fact, when “community action” politics was shorn of its “controversial” features, national associations, councils, and foundations emerged. These networks of professionalized “advocates for the poor” have themselves received support from the likes of the Ford and Enterprise foundations: elite philanthropic organizations whose “tax-privileged” dollars simultaneously fund social change and social stasis.

National-local policy in the U.S. is confronted with two ongoing constraints. First, the disaggregating effect of federalism allows local diversity to pull government programs in various directions; the very existence of thousands of local governments lessens effective coordination and oversight. Secondly, the reliance upon private interests makes politics more responsive to the affluent; privatism (the label that historian Sam Bass Warner attached to circumstances in which private decision-makers decide matters of public importance) weighs against the advancement of an effective popular democracy. Together, federalism and privatism channel public funds and resources toward business concerns while directing them away from low-income people’s needs. The problem is endemic to the political system; its causes are fundamental to the system’s operation; its results yield diminished communities.

City on Fire Michael Hoover is a professor of political science at Seminole Community College. Hoover co-authored City on Fire: Hong Kong Cinema. with Lisa Odham Stokes. Hoover serves on the editorial board of New Political Science, journal of the caucus for a new political science.