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To climb fully out of the Great Recession, we must go back to the future. President Franklin Roosevelt’s New Deal and its Works Progress Administration (WPA), and President Dwight Eisenhower’s Small Business Administration (SBA), provide ideas on which we can build a stronger and more productive California economy.

Recession Recovery Lessons From Past Presidents

While the WPA worked very well to put millions of Americans back to work with income they could spend to create demand in the economy, the SBA whose basic idea is sound, is not working today as well as it could. We need a modern version of both, in order to create good jobs.

Between 1935 and 1943, FDR’s Works Progress Administration spent nearly $11 billion to put 8,500,000 men and women to work building 651,087 miles of roads, highways and streets, rebuilding 124,031 bridges, building 125,110 public buildings, 8,192 parks, and 853 airports. WPA workers also cleaned slums, revived forests, and brought electrical power to rural areas. Fed One projects employed 40,000 artists and other cultural workers to produce music and theatre, sculptures, murals, and paintings, and put out regional tour guide books and surveys of national archives. The Federal Writers Project hired more than 6,000 writers, authors, playwrights and poets, including Orson Wells, the great actor and director. The WPA helped to stimulate economic growth through the demand provided by millions of American men and women who now worked and spent money.

California must use a portion of its unexpected $6 billion windfall in the 2014-15 state budget, to help establish a California State Bank (CSB) to fully fund a California Works Progress Administration (CWPA) and a California Small Business Administration (CSBA). The CSB can learn from the state owned Bank of North Dakota (BND). The BND, established by the North Dakota Legislature 94 years ago, enables the state’s community banks, businesses, students and consumers to get loans at low rates, compared to the giant corporate banks. According tosalon.com, in 2011 the BND provided more than $70 million to the state treasury from its profits. The CSB would generate an additional $3.8 billion in revenue for California’s Treasury.

The rest of the money needed to fully fund the CSB would come from closing unnecessary corporate tax loopholes, such as the off shoring tax loophole used by Apple Inc. and others, the stock option tax loophole used by Facebook. This would generate several billion dollars more annually to fund the CSBA, CWPA, and CSB.

With billions of dollars to spend, the CWPA could hire California’s engineers, scientists, tech workers, teachers, professors, nurses, firefighters, police officers, artists, machinists, and high skilled, manufacturing workers, helping California to produce the world’s best Twenty-First Century products and services.

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We also need a modern California Small Business Administration (CSBA). With billions of dollars to lend, the CSBA will make available low interest rate, direct loans to small and medium sized businesses, creating millions of jobs and increasing demand that will grow the economy, and make California the Golden State once again!

Peter Mathews

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