V
In truth, Eisenhower was not a small-government conservative, although he successfully sold himself as one to the public. He believed government should create the conditions in which Americans could pursue their own ambitions. This implied not a small or diminished government but an effective one. Good government should deliver meaningful enhancements to citizens within the limits of fiscal restraint. Ike believed in making government work “for the little fellow,” as he put it, and in particular that meant providing social security, health care and insurance, housing, and highways.23
This principle of effective yet restrained government led Eisenhower to champion a program for national health insurance, a policy area of infamous complexity and entrenched interests. As early as his State of the Union message in January 1954, he expressed his convictions on the subject: “I am flatly opposed to the socialization of medicine,” he began predictably. But he did believe that with the rising costs of medical care and health insurance, many Americans had no protection against sudden injury or illness. He floated the idea of a “limited government reinsurance program” to backstop private insurance companies and encourage them to offer “broader protection to more families.” In March 1954 the administration sent a proposal to Congress that would set up a $25 million fund, which the government would use to guarantee policies given to low-income or high-risk groups. HEW Secretary Oveta Hobby said the scheme would allow insurance companies to offer more insurance to a wider population, while avoiding a national or socialized program.24
But in a stunning defeat for the president, the reinsurance bill was killed in the House of Representatives in July. A coalition of 162 Democrats who wanted a national health insurance program and 75 conservative Republicans who wanted no federal role at all in the health insurance business sank the legislation, aided and abetted by the American Medical Association. Eisenhower’s frustration boiled over in a mid-July news conference. His goal was to “bring good and fine medical care within reach of the average household budget.” The House members who had defeated his bill “just don’t understand what are the facts of American life. . . . Our people are not getting the kind of medical care to which they are entitled.” The right-wing Chicago Tribune hailed the defeat, calling the scheme a political ploy to show the country that the Republicans now embraced the welfare state. But the Washington Post argued that the plan was “the most hopeful middle-of-the-way measure” yet devised to make health insurance affordable to 68 million uninsured people. The president reintroduced the proposal in 1955 and in 1956 but could never overcome its varied sources of opposition.25
Eisenhower had more success in steering public housing and urban development legislation through Congress. In the early 1950s both political parties could agree that America’s cities were facing a serious crisis of decay. As many white middle-class families moved to the suburbs, taking advantage of federal mortgage subsidies through the GI Bill, city centers began to lose residents, businesses, and taxes. In their place less affluent families, immigrants, and African Americans took up residence in city neighborhoods and apartment blocks that were already in decline. In the eyes of many whites who yearned for their slice of the American dream, urban city centers began to look broken and dangerous, whereas modern suburban developments like the Levittowns in New York and Pennsylvania glittered with the appeal of modernity (and remained white, thanks to racially restrictive covenants). The Truman administration developed a huge public housing program that aimed to build 800,000 new units of housing over six years to address the shortage of modern homes, while helping cities to retain residents. But Congress appropriated only a fraction of the money needed to carry out this building program, and most of the promised houses were never built.
Eisenhower believed the federal government should encourage “good housing in good neighborhoods” as a way to produce “good health and good citizenship,” as he phrased it in his 1954 proposal to Congress for a new housing law. But simply building homes would make people more “dependent” upon government, so Eisenhower took a different tack. He appointed Albert Cole, a conservative Kansan who was a well-established foe of public housing, as his administrator of the Housing and Home Finance Agency. He also convened the Advisory Committee on Government Housing Policies, staffed entirely by leaders from the business, banking, and construction worlds. Their conclusions pushed Eisenhower to de-emphasize a direct federal role for public housing. Instead he proposed to offer cities loans for slum clearance and land reclamation projects. For medium- and low-income families, the Federal Housing Administration would provide low-interest loans.
These forms of assistance were designed to rehabilitate urban areas and attract residents and new businesses, thus creating a self-sustaining cycle that would in theory repair urban blight while also enhancing economic growth. The Washington Post enthused about the plan, calling it a “blitzkrieg against slum living” and “the most ambitious anti-slum battle in the Nation’s history.” At the same time, though, the government significantly slowed its public housing projects to less than a quarter of what Truman had called for. Signed on August 2, 1954, the Housing Act of 1954 marked a sharp transition from a New Deal era that identified public housing as a responsibility of the federal government to an era of public-private partnership in which the government pursued pro-business policies favoring loans, easier mortgage terms, and urban redevelopment.26
Consequential as these achievements were, nothing demonstrates Ike’s belief in the constructive possibilities of good government as much as his pursuit of a nationwide interstate highway system, perhaps his most enduring domestic initiative and one that continues to shape the American landscape, environment, and economy. Biographers have long noted that Eisenhower first encountered the woeful American road network when he joined the army’s 1919 transcontinental road convoy. This lumbering three-mile-long caravan of surplus war vehicles left Washington, D.C., in early July on a publicity jaunt and arrived in San Francisco two months later. The conditions of the roads over which the convoy struggled showed Eisenhower that the nation could not flourish without significant internal infrastructure improvements. At a time when other nations, especially Germany, were investing in modern highways to boost economic growth, America remained stuck in second gear.
Many American leaders had arrived at the same conclusion, but in the interwar years road construction was considered a municipal and state matter. Traditionally states planned their own road networks, raised the necessary money through bonds, taxes, and license fees, and then built roads with the purpose of serving local communities. The result was a skein of byways clogged with cars, motels, cafés, gas stations, and stoplights, impeding swift movement across the country. In a report drawn up during the war, federal road planners proposed a major change: the construction of a single integrated interstate highway system, with common design standards and limited access, bypassing congested small-town America and allowing cars and trucks to move faster and farther. These plans led to the 1944 Federal-Aid Highway Act, a blueprint for a 40,000-mile system of interstate highways. Congress, however, did not appropriate enough funds for the scheme, and so it was stillborn. Financing highway projects would be the great stumbling block Eisenhower had to address: Who would pay for such a massive public works project that would soon become “the biggest peacetime construction project of any description ever undertaken by the United States or any other country”?27
Eisenhower was preoccupied with the issue from the outset of his presidency, but in the fragile economic climate of 1953–54 he was wary of proposing such a massive project. Instead, with unemployment inching upward, he pushed highway building as a crash jobs program. The administration steered a stop-gap highway bill through Congress in May 1954 that dedicated $2 billion to road maintenance and construction. But this fell short of a full-scale highway system, and Eisenhower kept up the pressure. In July 1954 he declared the nation’s highways “obsolete.” Traffic accidents were taking too many lives,
the president stated; traffic jams wasted productive hours every day; and the economy was strangled by lack of adequate transport. He asked the Conference of Governors for help in designing a full-scale national interstate system, to be built over 10 years for $50 billion. The cost would be borne by tolls and gas taxes, he suggested, and it would require close federal-state cooperation. The governors remained skeptical, however, and Eisenhower realized he was going to have to generate pressure to get a plan drafted. In August 1954 he turned to one of his closest and most politically experienced friends, Gen. Lucius Clay, to take control of the bureaucratic machinery and get a detailed proposal before Congress.28
Clay, an engineer by training who had supervised the American occupation of postwar Germany, also served on the board of General Motors and was an outspoken advocate for the auto industry. Getting roads built, he felt, was a vital economic necessity for the country and for business. Clay took command of the President’s Advisory Committee on a National Highway Program and handpicked its members, among them Stephen Bechtel, a titan of the engineering industry. The committee toiled for three months, holding public hearings and consulting widely with engineers, planners, financial experts, trucking companies, auto companies, concrete manufacturers, and labor unions. In January 1955 Clay presented Eisenhower with a plan whose numbers and scale were staggering: 41,000 miles of highway at a total cost of $101 billion, to be built in 10 years. To solve the knotty problem of financing, the Federal Highway Corporation would be chartered by Congress to sell 30-year bonds. These bonds would be paid back over time by the use of the gas tax, a revenue stream that would only increase as car travel, and gas consumption, rose. The corporation could fund the project; no tolls would be imposed on drivers; and the proposal envisioned no increase in federal taxes or debt.29
It sounded simple, but Clay’s plan, which Eisenhower submitted to Congress in February 1955, met a buzz-saw of resistance from various quarters. The powerful chairman of the Senate Finance Committee, Harry F. Byrd of Virginia, argued that the proposed Federal Highway Corporation represented an infringement of states’ rights. (Significantly, Byrd was at that time asserting states’ rights to try to block implementation of the Supreme Court’s 1954 desegregation decision.) Trucking companies protested the reliance on gas taxes, which cut into their profit margins. Farmers opposed the emphasis on a limited-access road network that would cut off their local routes from the highway system. City and state officials wanted to protect their right to plan local routes based on local needs rather than accept federal directives; they wanted to take gas tax revenues and design their own roads. Many critics thought the bond issuance, which would require the government to pay back $11 billion in interest to bond purchasers, wasted valuable funds that ought to be spent on roads.
Eisenhower tried to cajole congressional leaders into seeing his plan as a sensible, prudent response to a national emergency. He even used the specter of a nuclear attack to justify highway building, pointing out that evacuation of cities in wartime required better roads. Without a crash program of highway building, the economy would suffocate, national defense would be harmed, and “we will have a terrible condition in this country. . . . We must build new roads.” Few could disagree with the goal, but many disagreed with the plan to pay for it. Bonds? Tolls? Gas taxes? Some combination of all three? Eisenhower’s road plan got tangled up in congressional committees in the summer of 1955, and by the time of the August recess no law had been passed. The president went off to Denver for vacation—a prolonged one, as it turned out—without having a highway bill to sign.30
Yet Eisenhower had one ace in the hole: all the major parties to the debate wanted a highway bill, and eventually a compromise was found. It was sketched out by Congressman George Fallon, Democrat of Maryland, who served on the House Public Works Committee. Fallon replaced the bond issue with a proposal to create a Highway Trust Fund supplied by slightly increased taxes on gasoline, diesel oil, tires, trucks, buses, and trailers. The proposal promised to bring in a constant, indeed constantly increasing stream of revenue into the Trust Fund, and it stipulated that money so raised could be used only for highway building and no other public works. The highways would be built without any federal budget appropriations. Only a small user fee in the form of gas and excise taxes was needed to create a self-perpetuating machine: gas taxes would be spent on new roads that would allow greater traffic, which in turn would consume more gasoline, providing more revenue to spend on more roads, leading to more gas consumption and so more tax revenue. In May and June 1956 both houses of Congress passed the legislation, and on June 29 the president signed into law the Interstate Highway Act of 1956. The law reflected Eisenhower’s political philosophy: it married government initiative with technocratic expertise in the service of market-enhancing public projects. In return for effective government, the public could be fairly asked to pay a small additional tax to support it.31
VI
By the end of his second year in office, Eisenhower had accumulated a number of significant legislative achievements, and more seemed well on the way. In areas such as infrastructure, housing, health care, and social security, his administration had made progress and cut federal spending at the same time. As the midterm elections of November 1954 loomed, Ike hoped this strong record would translate into victories at the congressional level for Republicans. Both chambers were in GOP hands, but the margin of control was razor-thin and Eisenhower wanted to expand it. He and Nixon threw themselves into campaigning. Ike gave 40 political speeches in the fall of 1954 and traveled 10,000 miles on behalf of candidates. Nixon worked tirelessly and in typical fashion slammed the Democrats as the party of communism, cowardice, and corruption. But these efforts could not forestall a significant defeat at the polls. The GOP lost control of both the House (where the Democrats took 17 seats) and the Senate (where the Democrats gained 2). It was a slap in the face for the president. He now had to preside over a divided government.32
In a postmortem on the elections, Eisenhower and some of his close advisers drew the conclusion that the Republican Party was in a dangerous position. It could win national elections only when a genuine political phenomenon like Eisenhower stood at the top of the ticket. Without such a known vote-getter pulling everyone else along, GOP candidates struggled. The party remained divided between far-right conservatives and moderates and had no clear vision or platform to offer voters that could contest the Democratic legacy of the New Deal. Ike had been mulling over this problem since coming to Washington and tangling with the Taft wing of his party. From time to time he would vent his feelings in his diary or in letters to friends. As early as April 1953 he speculated about forming a new party under the banner “the Middle Way.” It would gather those who were internationalists in foreign policy, fiscal conservatives who wanted a balanced budget, and social liberals who understood the need for a basic safety net to catch those who, “through no fault of their own, suddenly find themselves poverty-stricken.” Between those who wanted “socialism” and those who sought “to eliminate everything the Federal government has ever done,” there had to be some common ground. Mere hostility to government was not a winning formula.33
In the wake of the disastrous midterms Eisenhower decided that the answer to his party’s problems was to embrace the middle of the road as a political strategy. It would not be easy. He told a gathering of his close advisers that “the time had come to start the fight against the Old Guard within our party.” If the GOP was to have a chance of winning majorities in the future, it first had to reform itself by bringing forward the “progressive moderates” in the party. In his diary he spelled it out clearly: “The Republican Party must be known as a progressive organization or it is sunk.”34
As 1955 opened, Eisenhower began consciously to shape a political message that would appeal to the nation’s moderates and independents. His January 2, 1955, State of the Union address carefully outlined proposals that balanced fiscal restraint against expanded social we
lfare projects and a robust defense policy. From time to time Eisenhower floated the term “moderate progressive” to describe this platform, but in February 1955, in a speech to the Republican National Committee, he coined a phrase that captured his ambitions: the Republicans must champion “dynamic conservatism.” Here was a winning formula that suggested generous and humane solutions to social problems within a framework of fiscal restraint, moral rectitude, and a scrupulous observance of states’ rights. The right wing bucked at this: the Chicago Tribune whined, “We cannot see what purpose was served by Republicans fighting the New Deal for 20 years if they were going to wind up by embracing the New Deal.”35
But that sort of carping could not contend with the rousing chorus of approval from Republican activists who understood what a godsend Eisenhower was for their party. At its national meeting, the Republican National Committee (RNC), now under the direction of former New York congressman Leonard Hall, passed a glowing, worshipful resolution praising Eisenhower in language that bordered on a cult of personality: “In Dwight Eisenhower we have a political leader whose vigor, judgment and wisdom have breathed fresh life, energy and determination into our party organization.” There was something godly about the man: Ike had become, the party leaders stated, “not only the political leader but the spiritual leader of our times. We thank him and salute him.”36
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