CHAPTER 5

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“A Posture of Advocacy for the Poor”: Fighting Poverty in an Era of Austerity

Even in the face of waning local and national support for the War on Poverty, activist employees in Baltimore’s antipoverty agencies and human-services departments attempted to sustain the passion for change that had exploded in the city in the 1960s. Employees of the Department of Public Welfare played leading roles. Some welfare workers, aware that their clients often saw them as representatives of an antagonistic state and that many elected officials both expected and wanted them to play that role, defiantly dubbed themselves “client advocates.”1 And they took the role very seriously. Client advocates complained publicly of welfare regulations that impeded them from effectively serving low-income residents and expressed outrage that the state provided inadequate resources to combat need. As a result, it sometimes became necessary to “bend the rules,” in the words of one advocate. Maryland lacked funding to help residents pay for utility bills, she offered as an example. But the state did have an emergency furniture allotment. “We’ll just say to the client: ‘Don’t you need a chest of drawers?’” she commented to explain how she and her coworkers got families the cash they needed to keep their lights on.2 And when rule-bending proved inadequate, DPW workers were known to propose more dramatic interventions. As one welfare recipient recalled, “Sometimes caseworkers will tell us about harsh or unfair state regulations they can’t do much about and suggest that we try to do something, like organize a protest to the state.”3 Client advocates participated in protests as well. “Often they join militant Welfare Rights Organization demonstrators on a picket line,” a local journalist reported about DPW workers.4 And their union, a local of AFSCME that included more than five hundred caseworkers, paraprofessionals, and clerical workers, also sometimes joined welfare rights protests. In 1972, for example, led by their African American union president Carolyn Murray, DPW workers rallied in solidarity with their clients on behalf of welfare reform.5 Although the tide of public opinion was turning on an aggressive war against poverty, activist municipal employees were not ready to give up.

Many conservative Maryland voters and elected officials did not appreciate client advocates’ rule-bending and activism. Instead, they considered DPW workers troublemakers—and conservatives were not the only critics. As the Baltimore Sun reported, welfare workers were frequently “criticized for irresponsibility with tax-payers money, for being overly-solicitous of their clients, for either helping clients to ‘cheat,’ in [Lieutenant Governor Blair] Lee’s words, or more mildly in [Governor Marvin] Mandel’s words, for being ‘uncooperative.’” They performed their jobs with “a missionary zeal—just adding people to the rolls,” the lieutenant governor complained.6 And he and the governor were Democrats. Activist city workers remained impassioned, but they were running short on allies. Meanwhile, Democrats were creating dangerous divisions within their party by selling out government workers and their clients.

DPW workers were not unique among municipal employees during the late 1960s and early 1970s in being determined to maintain the activist spirit that had motivated many public service providers during the height of the War on Poverty. Their efforts to promote democratic decision-making and accessible and accountable neighborhood-level service delivery reflected the conviction that the opinions of low-income city residents merited respect and that the hardships service recipients endured were legitimate and required significant government intervention. The sentiments were not as widely shared as they once were. Alternatively, growing numbers of Americans, particularly white Americans, both in Maryland and nationally increasingly regarded low-income urban residents, particularly African Americans, with mistrust. And candidate and then president Richard Nixon and his running mate Spiro Agnew stoked the hostility in an effort to win new Republican voters. Mounting racial resentment and Nixon’s legitimation of it on the campaign trail and again while in office contributed to imperiling federally funded antipoverty programs and the well-being of those who depended on them.

Meanwhile, significant policy changes that President Nixon made in the realm of global macroeconomics undermined activist workers’ efforts to win resources to combat poverty. In an effort to preserve American global hegemony, Nixon abandoned the multilateral agreements that had governed the global economy since the end of World War II and that had reflected mid-century liberal economic orthodoxy. He adopted instead policies that paved the way for the neoliberal global world order that characterized the late twentieth century. But the policies the president pursued did not bode well for rust-belt cities and their residents. The policies contributed to eroding the cities’ competitiveness in global contests for credit and investment, all but foreclosing the already unlikely possibility of industrial recoveries that would restore needed jobs and tax revenue. Moreover, the policies increased already intense pressure on locally elected officials to practice cost-cutting in order to make ends meet and to attract new investment. In Baltimore, such austerity pressures were among the factors that led elected officials to closely monitor and attempt to improve the city’s credit ratings and to offer tax incentives to lure new businesses to the city, regardless of the tolls the practices took on municipal jobs and services. By offering the tax relief, however, Baltimore made rivals of other struggling cities, whose elected officials would have to attempt to best the incentives offered elsewhere, setting off a race to the bottom that would come at the cost of needed tax revenue. The combination of fiscal strains facing elected officials had dire implications for the agendas of client advocates, other activist municipal employees, and their unions.

“I See What They’re up Against”: Defending the War on Poverty

During the late 1960s and early 1970s, activist municipal employees in antipoverty and human-services agencies endeavored to keep city officials committed to fighting the War on Poverty. Efforts to revitalize the city via trickle-down commercial redevelopment strategies had certainly persisted through the 1960s, but the availability of federal antipoverty grants had enabled the workers, abetted and pushed by activist groups, to compel the city to also invest in bottom-up solutions to the city’s problem. Decreasing federal interest made the task more difficult. During the early 1970s, the number of Black city residents surpassed the number of whites. African Americans remained grossly underrepresented in elected office throughout the decade, however, so municipal jobs, particularly high-ranking positions, and positions on oversight boards and commissions remained a critical source of Black influence in local decision-making. To be sure, disillusionment with the federal government’s lackluster dedication to antipoverty and urban programs was widespread, bitter, and growing. And frustration mounted as the Vietnam War slogged on and continued to steal lives and sap resources that city workers believed they could put to much better use. “It’s like paying for the [war] out of the hide of a 16-year old neighborhood kid,” complained Marion Pines, who ran Baltimore’s Office of Manpower Resources.7 Meanwhile, Parren Mitchell’s departure from the Community Action Agency and Walter Carter’s decision to leave the Model Cities program a year later cost the city’s federally supported antipoverty efforts dynamic leadership. Nevertheless, many workers, such as the client advocates at DPW, and elected representatives on municipal oversight bodies did what they could from within the state to make sure low-income residents were included in policy-making and to safeguard and even improve the social safety net.

Following the 1968 decision by conservative members of the Baltimore City Council to prevent Carter from assuming the directorship of the CAA, many of that agency’s employees along with others committed to aggressively combating poverty sought positions in the Model Cities program, which became the new heart of the city’s War on Poverty.8 In 1969, William Sykes became the director of Model Cities. Born in Virginia in 1926, Sykes was an African American social worker with experience garnered in multiple public agencies, including the Baltimore Departments of Education and of Health. A principled yet pragmatic leader, he skillfully shepherded the staff, steering board members and city officials through the posturing and power-seeking phase of program planning into actual policy implementation. Model Cities adopted the neighborhood-based service-delivery model of the CAA and developed a network of community-run neighborhood councils that served as centers of both advocacy and policy innovation. Model Cities staff also helped low-income city residents win representation on the boards of government agencies and local institutions. Meanwhile, the Model Cities Policy Steering Board and the Community Action Commission remained the only two oversight bodies in the city that included a significant number of African Americans, women, and residents with low incomes.9

Many workers in municipal human-services departments also remained committed to an aggressive War on Poverty. During the mid-1960s, the Department of Health had not garnered a reputation for activism. In fact, as a mayoral adviser noted, the department’s leadership was often criticized in comparison to leadership in other city departments for “not being radically innovative.” Its administration and staff were good, however, at “aggressively pursuing the federal dollar,” the observer noted.10 Thus, despite the lack of fire at the top of the department, during the late 1960s and early 1970s, health officials oversaw considerable new programming. And the city’s interracial team of community health nurses and aides joined the staffs of antipoverty agencies as an additional army of largely female workers committed to improving and expanding the government’s provision of welfare services.

Health care providers introduced new services and programming, some of which were aimed at women and children. Health department staff helped create well-baby services and family-planning programming. In addition, they staffed tuberculosis and venereal disease clinics, made home visits to the elderly and disabled, advocated for lead-poisoning prevention remedies, and worked in the schools. Many public-health employees staunchly defended community-based service provision. As African American nurse Leola Washington noted about working in neighborhoods, “That’s why I like what I do. As a nurse, I deal with the complete person.… Besides their medical problems, I see what they’re up against as people too.”11

Meanwhile, activist leadership at Baltimore’s DPW reinforced the assertiveness of the staff. In 1969, Maurice Harmon replaced Esther Lazarus as the department’s director. A white social worker, Harmon was a staunch proponent of a generous welfare state. He also expressed frustration with conservatives’ critiques of welfare programs and concerns with cheating, which he believed distracted attention from the magnitude and gravity of need in the nation. “The issue,” he argued, “should be how to redistribute the wealth of this country.”12 From that perspective, Baltimore’s growing pool of Aid to Families with Dependent Children recipients served as evidence of his department’s success; DPW workers were getting the job done, and low-income residents were receiving at least some of the support they needed. At the same time, Harmon embraced the community-based service model, and he championed the decentralization of his agency, which was renamed the Department of Social Services. Instead of requiring welfare recipients to report to a large, impersonal, and inconveniently located government building, Harmon wanted to shift the power dynamics between service providers and recipients and base his workers in neighborhoods. Among other benefits, such a method of organization “place[d] staff people in a posture of advocacy for the poor,” Harmon explained.13 Once the plan was realized, at least some on his staff felt it worked. “When you consistently walk through the same neighborhoods, when you buy at the same stores they do and see the same children on the street, you begin to experience some of their frustrations,” explained social services employee Mary Stevenson.14

Efforts to include poor people in decision-making and policy implementation and to move government offices and service delivery into low-income neighborhoods evinced a faith on the part of employees in antipoverty and human-services agencies that poor people’s opinions and time were important and that the state should be responsive and accommodating. Certainly, residents with low incomes continued to receive and to complain of poor and disrespectful treatment by city workers. Not all municipal employees shared the passion and commitment to social and economic justice of Harmon and his department’s client advocates. And certainly activists with low incomes, civil rights activists, and other progressive leaders continued to battle city hall independently and with the conviction that city workers were part of the problem.15 Nevertheless, within the municipal government, activist workers had become the city’s conscience. Administrators in antipoverty and humanservices agencies often proved willing to speak up for some of the concerns of African Americans and residents with low incomes when city officials deliberated over the municipal agenda and policy-making. The need for their voices only grew stronger after Nixon and Agnew won the White House and began rescinding the federal government’s commitment to the War on Poverty. The reliance of their agencies on federal funding made the services the workers delivered—and the jobs they depended on—vulnerable to the shifting mood of the national electorate.

“Why, Oh, Why Are the Loud and Violent Given All the Privileges?” American Political Realignment

During the late 1960s, the United States entered a period of significant political realignment. In the wake of the Great Depression, many Americans had accepted as necessary and beneficial a more expansive regulatory role for the federal government than had previously existed. Diverse groups of voters that included blue-collar workers, white southerners, African Americans, and members of other minority ethnic and religious groups served as the electoral power behind the changes. Historians dub the group the New Deal coalition. During the decades that followed, those seeking to expand the regulatory powers of the state wrangled repeatedly with those hoping to shrink them. Both sides scored noteworthy victories. Nevertheless, the size of the federal government and the scope of its involvement in American life continued to grow under both Democratic and Republican administrations.

Republican Richard Nixon’s elections in 1968 and 1972 signaled the beginning of the splintering of the New Deal coalition. Staunch advocates of laissez-faire capitalism had been working for decades to discredit New Deal liberalism and promote their own agenda. They were joined during the 1950s and 1960s by constituencies who shared their hatred of communism and concern with government growth, some of whom hailed from the small but growing religious right. Nixon, however, owed the bulk of his electoral support less to the stridently conservative groups than to those in what he called the “silent majority,” predominantly white Americans still largely content with the federal government’s regulatory role but increasingly hostile to liberal antipoverty efforts and civil rights and other protest movements.16 They were voters such as those in Maryland who cheered Governor Agnew’s decision to berate civil rights activists and deride the Baltimore sanitation workers’ strike in 1968. They were those who wondered along with one frustrated Baltimore resident, “Why, oh, why are the loud and violent given all of the privileges and the law-abiding citizens deprived of what is rightfully his?”17

On the campaign trail, Nixon and Agnew had assiduously courted Democratic voters who they correctly perceived to be alienated from their party and its leaders. The candidates targeted white working- and middle-class Americans, southerners and nonsoutherners alike. A broad range of issues angered these voters. They were frustrated by the Democrats’ inability to effectively execute the war in Vietnam and by antiwar protesters whom they viewed as unpatriotic—even as they harbored their own doubts about the war’s wisdom and viability. Rising inflation and a slowing in the growth of real wages during the mid-1960s also contributed to voters’ dissatisfaction with Democratic leadership as did resentment against taxes. Additionally, many who pulled the lever for Nixon in 1968 and 1972 were concerned with the state of race relations in the United States.18 In 1969, according to a national opinion poll, 81 percent of respondents agreed that the United States was suffering from a breakdown in law and order, and the majority of them blamed “Negroes who start riots.”19

Nixon and his surrogates conveyed sympathy with the concerns of disaffected white Democrats, including their racial resentment. They typically did so, however, not in the overtly racist style of segregationists nor by adopting the crass approach Agnew took with Baltimore’s Black leaders following the death of Martin Luther King. Instead they communicated between the lines. Nixon described himself as a supporter of civil rights. He also made clear that as president he would be the arbiter of the pace of race-related changes and that he intended to slow things down. As he stated in 1968 when accepting his party’s nomination for the presidency, at an event usually known for bold campaign pledges, “Tonight I do not promise the millennium. I don’t promise that we can eradicate poverty and end discrimination in the space of four or even eight years.” Instead, distinguishing himself from Democratic president Lyndon Johnson, the candidate vaguely promised “action.”20

Nixon also knew how to intimate to more reactionary potential voters that he might share their bigotry. During an interview on the national news program Face the Nation shortly before the election, Nixon sanitized the exchange that had occurred between Agnew and Baltimore’s Black leaders. The Maryland governor had “stood up at the time that his city, Baltimore, was being burned and said, ‘Look, we’re going to rebuild our cities but we don’t have to burn them down in order to rebuild them,’” Nixon disingenuously reported about an infamous diatribe that had actually involved yelling and name-calling. Agnew’s supposedly measured response had been “criticized by some of the all-out civil rights people,” Nixon continued, suggesting that it was Black leaders rather than the governor who were intemperate. But, the candidate continued, “I agree with him on that statement. I think we need that kind of strength and that kind of firmness.”21 Although he did not literally wink and nod, Nixon, who surely knew what had really happened in Baltimore, endorsed Agnew’s aggressive, get-tough stance with civil rights leaders.

On the campaign trail, Nixon and Agnew also used language that invoked but did not specifically mention race and that was intended to reinforce white racial resentment and foment division within the Democratic Party. To woo working-class whites in particular, Nixon described them in language borrowed from Franklin Roosevelt. As they had been during the early years of the Great Depression, they were once again the “forgotten Americans.” This time, however, Nixon suggested, it was the Democratic Party that had left them behind—because they were “the non-shouters, the non-demonstrators.”22 Concerned more with special interest groups such as African Americans, the Democrats had abandoned their base, Nixon suggested.

But Nixon and Agnew did not identify members of the silent majority only as nonprotesters; they also described them economically. The voters who they courted were “taxpayers,” “hard-working,” and “homeowners,” an assertion that perniciously implied that protesters, including African Americans with jobs such as government workers, were not. In their effort to chip away at the New Deal coalition, Nixon and Agnew erased from the political conversation Black working people, some of whom were protesting simply to secure the protections the New Deal had extended to many white forgotten Americans a few decades earlier. Meanwhile, Nixon and Agnew’s frequent calls for “law and order” were references to anti–Vietnam War demonstrators and often intended to invoke the specter of urban crime and African American protest. The use of coded appeals to racial prejudices became known as “dog-whistle politics,” and Nixon employed such rhetoric to great effect.23 To be sure, many backlash voters, as the media and political scientists dubbed those who cast ballots motivated at least in part by white identity politics, had harbored racial hostilities well before the 1960s.24 But Nixon perfected a formula for stealthily invoking and stoking prejudices recently made impolitic by the successes of the civil rights movement. And Agnew certainly pulled his own weight, at times less delicately. Both helped to convince many white American voters that despite the tremendous political and economic power they commanded both domestically and internationally, they were the victims of the reforms enacted during the 1960s to redress centuries of exploitation and oppression. At the same time, they communicated that Black protest, be it in the service of civil, welfare, or unions rights, was illegitimate.

Ultimately, Nixon’s electoral success in 1968 and 1972 reflected his ability—and the failure of successive Democratic candidates—to demonstrate convincing concern for the multiple problems facing many working- and middle-class white American voters. It also, however, represented his effectiveness at conveying his agreement with reactionary hostilities. And through his use of dog-whistle politics, Nixon legitimized and popularized views about low-income urban African Americans that differed entirely from those that activist city workers in Baltimore communicated through their advocacy of community participation, neighborhood-based service delivery, and wealth redistribution. With Nixon’s views in ascendance, the sustainability of Baltimore’s largely federally funded antipoverty efforts grew increasingly uncertain. The context made the stakes in Baltimore’s 1971 mayoral election very high. To the next mayor would fall the delicate job of determining how to allocate limited local resources to three important yet competing tasks: fighting poverty, combating depopulation, and attracting new businesses, corporate taxpayers, and jobs to the city. The workers needed someone who shared their goals and appreciated the urgency of their efforts.

“Father-Knows-Best” Governance: The Election of William Donald Schaefer

The 1971 mayoral election in Baltimore generated considerable excitement. Activist city workers were not the only constituency with a lot at stake. Many Black city residents were determined to follow in the footsteps of residents of Newark, New Jersey; Cleveland, Ohio; and Gary, Indiana, and elect an African American mayor. The goal became plausible when the city’s sitting mayor, Thomas D’Alesandro III, announced he would not seek reelection or endorse a successor. His decision raised hopes among African Americans, who made up almost half of the city’s population, although less than 40 percent of registered voters. As had typically been the case in Baltimore, the Democratic primary would determine the outcome of the race. George L. Russell, a former judge appointed city solicitor by D’Alesandro, was the first to announce his candidacy. As city solicitor, Russell held the highest post in the city government ever occupied by an African American. He entered the race with considerable support from both influential African Americans and whites and made unity the theme of his campaign.25

Eventually William Donald Schaefer, the white sitting president of the city council, and Clarence Mitchell III also became serious contenders. Schaefer had sixteen years of political experience in city office and enjoyed strong ties with behind-the-scenes politicos. Mitchell was serving his second term in the State Senate. His considerable name recognition was the product of his family’s prominent history—his mother, Juanita Mitchell, and grandmother Lillie May Jackson, had run the city and state chapters of the NAACP for thirty-five years; his father, Clarence Mitchell, was the national NAACP’s chief lobbyist in Washington, DC; and his uncle Parren Mitchell, had served as the director of the CAA before becoming the state’s first Black representative in the U.S. Congress. Candidate Mitchell had also established his own reputation as a leader in the city as the result of his participation in sit-ins during the 1960s.26

Despite his imprimatur, many in the city’s Black establishment considered Mitchell the spoiler. They may have been right. Mitchell lacked Russell’s experience, credentials, and connections, and his entry into the campaign eroded the chances of the more seasoned Black contender. On the campaign trail, Russell and Mitchell spent considerable time attacking each other, which undermined Russell’s unity theme. Meanwhile, Schaefer largely stayed out of the fray and rallied white and some African American supporters. Prior to the election, the Afro-American endorsed Russell and pled with readers to make a strong showing at the polls. The effort was to little avail. Black turnout was lower than it could have been, and Schaefer soundly defeated his opponents; even Russell’s and Mitchell’s combined vote totals failed to equal the support Schaefer amassed. Russell was the undisputed winner of the Black vote, but that was not enough. Importantly, five Black candidates did win city council seats. They were significantly outnumbered by the thirteen whites who won the remaining positions.27 Schaefer’s victory and the persistent underrepresentation of African Americans on the council meant that Black workers’ influence within, and especially at the helm of, city agencies remained a critical source of Black political power in the city.

Although the white vote won Schaefer the election, he was certainly no race-baiter along the lines of Nixon and Agnew. During his political career, Schaefer was publicly critical of Black nationalists, and he had stayed on the fringes during the city’s many civil rights battles, which doubtlessly appealed to many white city voters. But Schaefer also attracted African American supporters. In fact, he won more Black votes than did Mitchell.28 Schaefer was a staunch advocate of neighborhood associations, which attracted African Americans and whites alike. Moreover, like the two Black candidates, Schaefer was a Baltimore native. When he was seven years old, his parents had moved to a row house in a west-side neighborhood called the Hill. With the exception of the years he spent in the military during World War II, he had continued to reside in his childhood home. As an adult, he shared quarters with his mother Tululu, living with her until her death in 1983. The demography of the Hill changed during the years the Schaefers lived there. By the 1970s, what had once been an exclusively white neighborhood had become home to large numbers of African Americans. Schaefer’s decision to remain in the Hill as most of its white residents left no doubt won him a measure of credibility among some African Americans.29

As a council member, Schaefer had also compiled a decent voting record on issues of concern to Black communities. His record had won him the endorsement of both Juanita and Clarence Mitchell in 1967 when Schaefer had run for city council president, a position filled by a citywide election. Thus the modest support he received from African Americans during the 1971 election was not entirely surprising. And the new mayor’s popularity among Black voters increased with time. He garnered between 70 percent and 80 percent of African Americans’ votes during the three subsequent mayoral elections—winning even when challenged by a Black contender. He certainly had numerous run-ins with the city’s African American leaders. Yet Black support would also help Schaefer win Maryland’s gubernatorial race in 1987, a victory that finally forced him to vacate his home in the Hill and move to Annapolis.30

As mayor, Schaefer became the greatest booster the city had ever known. He was also an assiduous micromanager. He was known to prowl Baltimore’s neighborhoods in his Pontiac, seeking out broken streetlights and abandoned cars. The next work day, department heads could expect a to-do list on their desks and a follow-up call a few days later to make sure the problems had been solved. Although unequalled in his devotion to the city, he was also a relentless and sometimes patronizing patrician who observers critically described as adopting a “father-knows-best” approach to governance.31 “I believe I know my City better than anyone else and that includes the federal government, the state government and neighborhood groups which know their problems well, but cannot be expected to fully comprehend the totality of the issues and problems with which a city is faced,” Schaefer declared.32 On the whole, he expected no more from his staff and municipal employees than he was willing to give himself.

Despite his obvious dedication to the city and its residents, Schaefer was not a leader who shared the ambitions of activist antipoverty and human services workers. Although he did not oppose redistributive remedies to poverty, he prioritized efforts to stem white flight and to attract new businesses to the city—even when the efforts came at the expense of services for the poor. The exodus of human and corporate taxpayers from Baltimore was of tremendous concern to Schaefer. Unlike most cities in the United States, Baltimore was not located within a county but was instead its own jurisdiction. As a result, the city did not benefit from tax revenue paid by those who lived in its suburbs. Baltimore also suffered higher rates of unemployment than the surrounding counties and was home to large numbers of poor and elderly residents. The demographics of the city were reflected in low yields from income taxes. The year Schaefer took office, Baltimore’s income tax revenue generated $33.38 per capita while neighboring Baltimore County, using the same tax rate, generated $62.50 per capita. Depopulation and deindustrialization cost the city not just income-tax but also property-tax revenue. To compensate for its low tax yields, the city asked for more from its remaining property owners than suburbanites had to pay. In 1970, the tax rate in Baltimore per $100 of property value was $2.01 higher than in the city’s wealthier fringes. The relatively high property-tax burden fueled white flight, which worsened the city’s revenue problems.33

To combat the situation, Schaefer began creating programs to respond to the frustration of outer-city residents who had felt neglected during the 1960s, when federal and city resources seemed aimed only at the inner city. Schaefer’s attention to the outer city strengthened his political base, but the mayor also agreed with many of its residents that a myopic focus on antipoverty efforts could not effectively solve the city’s problems. Schaefer believed scarce municipal resources were best used salvaging neighborhoods in danger of decline and maintaining those in good health. He disagreed with those who would concentrate resources on the monumental task of resuscitating areas of Baltimore already ravaged by poverty. He also prioritized attracting new businesses to the city. His was a triage strategy not unlike those under way in other cities that were hemorrhaging working- and middle-class white residents, corporate taxpayers, and jobs.34 It did not endear him to those either inside or outside of the government who were angered by the racial and economic status quo of the city. The policies of the Nixon administration, however, reinforced Schaefer’s agenda—and in some ways even compelled it.

“Removing the Foundation Stone of the International Monetary System”: Nixon and the Global Economy

Schaefer became the mayor of Baltimore as momentous changes were under way regarding the organization of the global economy. And although not necessarily issues that sparked a lot of interest in the city, the macroeconomic policy decisions that Nixon made during the early 1970s had grave implications for Baltimore. In an effort to preserve the dominance of the United States in the global economy during a moment when that hegemony seemed imperiled, Nixon pursued policies detrimental to both the economic health of deindustrializing cities such as Baltimore and the job prospects of the often predominantly African American residents of those cities. The president replaced multilateral economic agreements premised on the Keynesian consensus of the mid-twentieth century with unilateral decisions that helped to forge the neoliberal economic order of the late twentieth and early twenty-first centuries. To be sure, Nixon took only the first steps in a process that his successors in the White House continued. Nevertheless, his role in dismantling the Bretton Woods system that had governed the global economy since the end of World War II and reorienting the global economy in accordance with free-market principles dramatically changed the course of history. It also gravely diminished the prospects that Baltimore or any other city would win the War on Poverty.

When Nixon took office, the Bretton Woods system was poised on the brink of collapse. That system, which political scientist John Ruggie describes as imbued with “embedded liberalism,” had helped to resuscitate global trade after World War II and had also accommodated the welfare states and commitments to full employment that many participating nations had promised their citizens.35 The source of stability of the Bretton Woods system was the American dollar, which was pegged to a fixed value of gold. The very serious problem that Nixon faced was that the U.S. Treasury did not have anywhere near enough gold to cover all of the dollars in global circulation. Americans had spent far more—on military alliances, foreign investments, hot and cold Cold War ventures, imports, international aid, and even tourism—than they could possibly back up with gold, and the fear of a run on the dollar had been tormenting U.S. Treasury secretaries for years. Johnson had addressed the problem by imposing capital controls and limits on the flow of currency across borders and implementing other stop-gap measures. But he left to his successor the monumental task of salvaging the system of international cooperation on which so many around the world depended.36

Ultimately Nixon opted to replace rather than repair the Bretton Woods system, a unilateral move that astounded U.S. allies and trading partners. “At the stroke of a pen, or more factually, in one brief TV broadcast, Mr. Nixon removed the foundation stone of the international monetary system. The result is monetary chaos and uncertainty,” observed one economist with alarm.37 Although he initially closed the gold window only temporarily, ultimately the president opted not to restore the earlier system. Instead he allowed the value of the dollar to float, the policy preference of renowned monetarist economist Milton Friedman, who had many acolytes in the Nixon White House, including George Shultz, Donald Rumsfeld, and Dick Cheney. In the service of trade liberalization, Friedman and like-minded advisers also endorsed the elimination of capital controls—the policy option Johnson had recently taken and that nations around the world used to limit potentially destabilizing foreign investment or disinvestment. Nixon adopted that proposal as well, and as the administration negotiated the terms of the new floating currency system with its trading partners, it pressed them to also abandon capital controls. Within a few years, Nixon had laid a foundation for the neoliberal macroeconomic regime that would replace Bretton Woods.38

The changes Nixon introduced had profound consequences, most of which emerged over time and were reinforced by subsequent presidents. In the increasingly unrestrained free-market global economy that Nixon and his advisers began building, the steps that governments could be called upon to take to conform to neoliberal prescriptions would come at the cost of measures intended to ease poverty and redistribute wealth. Moreover, in already deindustrializing cities like Baltimore, the elimination of capital controls worsened vulnerability to capital flight and thus job losses. The changes also increased pressure on urban executives such as Schaefer to adopt austere local budgets and pursue other policies intended to make their locales attractive to investors. In addition, the elimination of capital controls contributed to making credit markets increasingly competitive, and poor cities often found it difficult to secure funding for local projects.39 In Baltimore, the changes had dire implications for the agendas of activist municipal workers, whose bold ambitions for fighting poverty relied on generous public spending.

“The Most Exciting, Fiscally Sound Port City on the Atlantic”: Austerity in Baltimore

As an elected official in a city that for decades had relied in large measure on both the tax revenue and jobs generated by manufacturers, Schaefer faced the daunting challenge of managing Baltimore’s economic health within a global economy increasingly characterized by capital mobility. An oil embargo and the recession and inflation of the early 1970s worsened the city’s problems. Fiscal strain created pressure on elected officials to practice austerity. So too did the need to demonstrate fiscal health to woo potential investors to the city. Schaefer willingly accommodated the economic imperatives. He kept a tight lid on spending, cutting municipal jobs and services to keep the city budget in the Black. He also adopted two practices that locally elected officials nationally would soon find increasingly hard to avoid and that indicate the corporate sector’s growing influence over urban affairs. He closely monitored Baltimore’s credit rating and pursued austerity to improve it, and he worked with state officials to create tax incentives intended to keep businesses in or lure them to the city.40

Mayors in other U.S. cities responded differently to the fiscal challenges. Many executives in deindustrializing or cash-strapped cities with stronger liberal-labor coalitions than existed in Baltimore defied the new fiscal pressures in an effort to defend public services and jobs. In the process, they racked up considerable debt burdens. Even as capital flight cost cities revenue that had earlier helped cover the cost of local services, the elected officials nevertheless opted not to compel residents with low incomes or city workers, whose incomes generally trailed those of their counterparts in the private sector, to take the hit for the economic changes. American cities, such as New York, Detroit, Philadelphia, and Washington, DC, soon found it difficult to meet their debt obligations. In response, financial institutions and credit-rating agencies denied the cities credit or downgraded their credit-rating status, making it difficult for elected officials to secure additional loans or sell bonds. The situation led observers on the political left to argue that the conservative financial industry was using its influence over lending practices to discipline cities with liberal leaderships by punishing those who did not practice austerity.41

The charge had a particularly large number of adherents in New York City. Its financial crisis came to a head during the mid-1970s, when the municipal government teetered on the brink of default but could not secure additional credit. In October 1975, Standard and Poor’s, one of the nation’s top two credit-rating agencies, dropped New York City’s credit rating twice, and municipal officials could not find new sources of credit. The federal government offered no relief. Nixon’s successor, President Gerald Ford; Ford’s chief of staff, Donald Rumsfeld; and other policy advisers were determined to teach New York and cities in general a lesson on the imperative of fiscal “responsibility,” and they refused to provide federal relief. Only intense domestic and international pressure from those concerned about the dire ramifications for the health of the global economy of a New York City bankruptcy led the president to relent. Nevertheless, ultimately, the proponents of austerity got their way in New York when an unelected Emergency Financial Control Board was created to oversee fiscal affairs, and residents lost the ability to direct the way their taxes were spent.42

No such dramatic showdowns occurred in Baltimore. As a result of what the Baltimore Sun described as Schaefer’s “Spartan” fiscal policies, during the early 1970s the city had just over a third of New York’s per capita debt, making it one of the least indebted of the nation’s largest cities.43 During the mid-1970s, Moody’s Investor Service rewarded Schaefer’s austerity by raising the city’s credit rating from A to A-1. Aware that Baltimore was competing for investors with similarly downtrodden cities as well as with Sunbelt upstarts, the city’s boosters hoped the improved rating would give Baltimore an edge. They celebrated the A-1 status in a twelve-page advertisement in Forbes. In the hopes of attracting investors, they enthusiastically if unpoetically dubbed Baltimore “the most exciting, fiscally sound port city on the Atlantic.” In a not-so-subtle reference to the financial straits of northern and midwestern rivals, the ad noted that Baltimore’s fiscal health allowed it to “offer a host of advantages that our sister cities may not be in a position to offer.” Among those advantages were “industrial revenue bonds; State loans for building construction and equipment; State loan guarantees for construction and equipment; Tax exemption on equipment and machinery; Foreign trade zone (proposed); Tax exemption on manufacturers’ inventories; sales tax exemption on new equipment; Tax exemption on manufacturing materials; Accelerated depreciation of industrial equipment; [and] Free employee training.”44 Preying on the weakness of competitor cities rather than finding common cause with urban mayors facing similar fiscal pressures, Schafer had boldly entered what some feared would become a race to the bottom in terms of incentives that elected officials of already cash-strapped cities felt compelled to offer to potential investors.

Schaefer’s attention to Baltimore’s credit rating and effort to lure investors with tax abatements were practices that municipal officials across the nation found increasingly hard to resist in their quest to keep their cities financially viable. Both, however, created pressure on elected officials to prioritize business over local concerns. As antipoverty workers in Baltimore could easily attest, particularly vulnerable to neglect were the costly humanservices needs of residents with low incomes. The situation was not entirely new. Private credit-rating agencies had existed in the United States since the early twentieth century. Their judgments concerning the creditworthiness of localities grew in importance, however, during an era of increasing capital mobility. Critics certainly protested the influence unelected agents from elite private firms were able to wield over local policy-making. But once mayors such as Schaefer entered the tax-abatement game, elected officials debating policy options in similarly downtrodden cities had to remain ever mindful of market imperatives.45

Meanwhile, tax abatements eliminated one of corporations’ historic fiduciary obligations: a degree of responsibility both for the infrastructure needed by their businesses, such as roads and firefighting forces, and for the human services that nurtured their current and future workforces, such as hospitals and schools. Nevertheless, despite pressing need for tax revenue and faced with rising and debilitating unemployment rates, elected officials such as Schaefer responded to intense competition for global capital by attempting to entice potential employers with tax breaks. As a result, as urban-planning scholar Peter S. Fisher argues, absent leadership and planning in Washington, DC, to protect manufacturing jobs, federal, state, and local tax incentives became the “American version of industrial policy.”46 The incentives also, however, shifted the burden for paying for infrastructure and services increasingly onto the shoulders of taxpaying city residents. Meanwhile, though conservatives leveled many criticisms against cities and their liberal and supposedly profligate elected officials during the 1970s, tax abatements, a significant source of revenue loss that worsened cities’ fiscal problems, never received the opprobrium aimed at welfare spending and wage increases won through union negotiations for city employees.47

Since Schaefer was the mayor of a rust-belt city, his attention to keeping businesses and taxpaying residents in the city and his efforts to attract new ones certainly made sense. At the same time, however, activist city workers and community leaders worried about the unmet and pressing needs of low-income residents. It hardly took an MBA to connect fiscal “health” with unmet need in cities with high poverty rates. But Schaefer was undeterred. Confronted with the toll that white flight and deindustrialization were taking on Baltimore’s tax base, he responded with belt-tightening. Rewarded for his efforts with a strong city credit rating from the financial community, Schaefer pressed his advantage over competitor cities suffering fiscal crises. In the meantime, he saddled the city with two new sources of austerity pressures. Fiscal “responsibility” was necessary to maintain Baltimore’s credit rating, and new businesses were excused from some taxes, which failed to relieve city residents of already comparatively high property tax rates during an era of rising prices. Residents of Baltimore entrusted Schaefer with the task of effectively balancing competing demands for city resources. From the vantage point of workers in the city’s antipoverty and human-services agencies, he was neglecting important constituents. Their agencies and the low-income residents they served paid a steep price for the mayor’s commitment to austerity. But their ability to effectively combat the new municipal priorities was diminishing. Nixon’s domestic policies were eroding their influence within the city government and strengthening the authority of the mayor’s.

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