World War II and the Expansion of Government in America
Gerber, Larry G., National Forum
Although the rise of big government in the United States may have had its genesis in the New Deal of the 1930s, World War II had an even greater impact than the New Deal on the growth of the federal government. The expansion of government spending and bureaucracy during the war years surpassed anything ever imagined by even the most enthusiastic New Dealers during the depths of the Depression.
Through such means as selective service, price controls, rationing, subsidies for the construction of war factories, the mobilization of science and institutions of higher education, and countless other forms of government intervention in American society to further the war effort, the federal government assumed powers that went far beyond those exercised under the New Deal of the 1930s. Moreover, by war's end the president had at his command military and diplomatic powers that were hardly conceivable before 1939. With the development of the atomic bomb and a new role for the United States as a global superpower, the nation's chief executive soon took on the mantle of what Arthur Schlesinger has described as "the imperial presidency."
Between 1933 and 1939, the New Deal had resulted in nearly a doubling in federal spending and a 60 percent increase in the number of civilians working for the federal government. Even so, the entire federal budget for 1939 remained less than nine billion dollars, and fewer than one million civilians were employed in the federal bureaucracy. The demands of mobilizing for total war caused federal expenditures to skyrocket to nearly 100 billion dollars by 1945, while the number of civilians employed by the federal government reached nearly four million. Moreover, the size and scope of the federal government never returned to the status quo ante bellum. Although government spending and the size of the government's payroll decreased significantly after the end of the war, the federal government remained dramatically larger and more powerful than it had been in 1939.
Taxing and Spending Policy
Beginning with the Great Depression, Americans had begun to look to the federal government to take responsibility for managing the performance of the nation's economy and for evening out the extremes of the business cycle. During the war, price controls and rationing represented a significant centralization of authority over the economy in Washington, but such measures did not establish lasting precedents for government regulation of what would remain largely a market economy. Government management of the economy through the use of fiscal policy (spending and taxing), however, proved to be a permanent legacy of the war years.
The war brought a revolution in the nation's system of taxation. Even at the peak of the New Deal, relatively few Americans were subject to the federal income tax. The tax base for the federal government remained so small that Washington had only a limited capacity to influence the overall performance of the economy. In 1939, fewer than four million Americans paid federal income tax. Before the war ended, that number had increased to over forty-two million, and the dollar value of taxes paid by individuals had increased nearly twentyfold. Many Americans today define their relationship to the federal government largely in terms of the taxes regularly taken out of their paychecks. Payroll withholding for income tax liabilities, as well as the tremendous expansion in the number of Americans who would have to pay federal income tax, were wartime innovations that clearly outlived the war.
Before the war, a small but important group of New Dealers influenced by the ideas of John Maynard Keynes had advocated the conscious use of budget deficits to bring the nation out of the Depression. Yet, the limited size of the federal budget and the persistence of the conventional wisdom about the dangers of deficit spending severely restricted actual experimentation with Keynesian measures for stimulating the economy. …