How Does the Downturn Affect Urban Renewal?
Editor’s Note: As Barack Obama’s presidency reaches the 100-day mark, the NewsHour is examining how the president’s policies and the economic crisis are affecting one city – St. Louis, where Obama will mark the milestone April 29. Paul’s segment on St. Louis and the legacy of New Deal-era investments there will air Monday, April 27. For the next few days, he’s taking questions from St. Louis area residents.
Question: Given the condition of the economy, will the rebirth taking place in cities like St. Louis suffer long-term?
Paul Solman: The hope would be that the stimulus package will CONTRIBUTE to the rebirth. You’ll see in our economics story from St. Louis next week that the New Deal made a major contribution in the 1930s, everywhere from the zoo to the Ville.
What surprised me so was how paltry today’s stimulus projects are by comparison. True, St. Louis is less than half the city it was back then (in population). But the numbers are almost unbelievable. According to one of the key economic historians of the New Deal, Price Fishback, St. Louis (city and county) got $132 million in the ’30s, plus federal loans in the many tens of millions as well. By contrast, the city of St. Louis is getting only $53 million today. But $53 million today is a vanishingly small amount for rebuilding a city in 1930s dollars.
The U.S. economy (GDP) averaged about $80 billion a year in the New Deal era. Today’s GDP is about $14 trillion, 175 times greater. Divide today’s $53 million by 175 to keep the numbers equal, as a proportion of the total economy, and you’ve got something like $300,000 in equivalent spending today. Or go the other way and multiply the St. Louis total of $132 million by 175 (not even counting loans, mind you). In today’s dollars, that’s an astounding $23 billion. Just think what $23 billion dollars worth of investment in St. Louis city and county might do today.
Look, an economic plunge like this one hurts everyone, everything, every city. But if a city’s rebirth is its building for the future, then government spending can be a real opportunity.
Thanks to KETC/Channel 9 in St. Louis for collecting viewer questions.