Coolidge’s Fiscal Triumph

January 30, 2015

By: Amity Shlaes and Rushad Thomas

Don’t be fooled by recent reports that deficits are narrowing. The federal debt is on course to skyrocket over the next decade. Recovery or recession, it seems, Americans and their government don’t care much about the federal debt. We certainly aren’t paying our debt down. Congressional Budget Office Director Douglas Elmendorf even noted recently that “payments by the government have been quite low.”

Could America ever find a leader who might cut our debt? There’s reason for hope. We at least have a model from history. There was once a president who stared down big government and won the battle for control of the debt. That president was Calvin Coolidge.

The thirtieth president was a rare treasure; a politician who didn’t just talk the talk, but actually walked the walk when it came to fiscal discipline. In 1923, the year Calvin Coolidge entered the White House, the Federal Government spent $3.14 billion. By 1928, his last full year in office, the Feds spent $2.96 billion. Calvin Coolidge, a president who left office more than eighty years ago, is the last chief executive to have cut the size of government.

In outlining his philosophy of governance in his 1925 inaugural address, Coolidge said “I favor the policy of economy, not because I wish to save money, but because I wish to save people.” Coolidge understood that tax revenues represent the hard work and toil of the American people. It was his sacred duty as their president to ensure that the money they sent to Washington was responsibly managed. He also understood that debt led to inflation, which he abhorred. Responsibility and money he deemed intertwined. “Inflation is repudiation. Deflation is assumption,” he told an audience in Chicago in 1922.

Coolidge was consumed by a desire to cut down on government spending. In a 1924 talk he remarked that “the budget idea, I may admit, is a sort of obsession with me. I believe in budgets. I want other people to believe in them…Do you wonder, then, that at times I dream of balance sheets and sinking funds, and deficits, and tax rates, and all the rest?” Coolidge wasn’t kidding when he said he obsessed over budgets. Not only did he meet just about every week with his budget bureau director, General Herbert Lord, to discuss the government’s budget, he also campaigned to lower spending in the White House. When the White House Cook Ms. Riley reduced her annual purchases to $9,116.39 in 1927 from $11,667.10 the year before, Coolidge wrote a terse but laudatory note: “very fine improvement.”

The budget wasn’t the only area where Silent Cal starred. “30” insisted that the government continue to pay down the massive debt that was accumulated during the First World War. By 1919, the year after the Great War ended, outstanding Federal debt had ballooned to $27.4 billion from $14.6 billion in 1918. When Warren Harding and Calvin Coolidge began their term as president and vice president in 1921 the debt level was down to $23.9 billion. Because of the policies of Presidents Harding and Coolidge, by the time Coolidge left office in 1929 the publicly-held debt of the United States lay at $17.3 billion.

Try to match President Coolidge’s credentials as a fiscal hawk – it’s difficult. You will find no other modern president who took a harder line on reining in spending, paying down the debt, and cutting taxes.

Today many argue that politicians cannot cut government spending because they would never get re-elected. Yet, Coolidge proves the opposite here as well. In 1924, running on the record of accomplishments of the Harding and Coolidge administrations, Mr. Austerity won a three-way race for a full term in the White House. He didn’t just claim a plurality – he took an absolute majority. Republicans also maintained healthy majorities in both chambers of Congress.

After years of war and high spending the American people wanted to return to the simpler days in which government played a smaller role in their day-to-day lives. Calvin Coolidge worked every day of his presidency to deliver a limited, fiscally responsible government to the nation he served. America was stronger for it. The same could be true today, if only we had another Coolidge.

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