2010 JFK Symposium

Tax Policy and Communications Were Vital to Calvin Coolidge’s Success. Are His Strategies Relevant Today?–
A Panel Discussion

Martha Joynt Kumar, Joseph J. Thorndike
Moderated by Sarwar A. Kashmeri

MJK:   Martha Joynt Kumar

JT:       Joseph J. Thorndike

SK:      Sarwar A. Kashmeri

 SK:      You know the panel that we are now going to start, first of all, has two panelists who are probably the most gifted and knowledgeable in the two areas that we’re going to talk about.

Coolidge was one of those people who bears constant study.  Not perhaps so much for policies that can be lifted to this age, but the times that he lived in have many resemblances to the times that we live in now and let me give you just one example.  When he became president, if you go back about a hundred and twenty years, the financial order in the world was just about reversed.  Some of you may know that right up to the Industrial Age eighty percent of the GDP of the world came from the East.  Beginning at the Industrial Revolution until today, the West has pretty much dominated the financial picture.  Things are again changing.  And if you look at Calvin Coolidge’s time, he was kind of at the midpoint of that.  So the Age of Prosperity was just beginning, and was about to sweep over the West.  And so he found himself there with tax and other priorities that he had to deal with.  And we find ourselves now in an age when things are starting once again to head back East.  You read about all the different powers in China, and India, and so on, and so that’s an interesting way to look at it.

The other part of, of course, is communications.  You know, when he was president, as so many people have noted today, electricity, the radio, all of these were starting to come to the fore and he had to adapt to that, and he did.  And so, of course, today we are Twitter, and internet and all of these things, and perhaps a big lesson that we can take away from him is what was in his psyche, what was in his background, that let him adapt to a whole new age?

So let me, without further ado, introduce our panelists.

To my left is Dr. Martha Joynt Kumar.  She is in the Department of Political Science at Towson University.  As a scholar with a research focus on the White House, she’s interested in presidential press relations, White House communications and presidential transitions.  Her award-winning book from 2008, Managing the President’s Message; the White House Communications Operation, was reprinted this year with a postscript comparing the communications operations of Presidents Obama, George W. Bush and Bill Clinton.  She’s a painstaking researcher with an encyclopedic knowledge of presidential communications, with a prodigious speaking and writing schedule.  To show you how detailed her work is, earlier, people were discussing whether Calvin Coolidge’s son’s death interfered with his campaign.  She picked up some of the notes that she’d brought and she was going through and said, ‘nope, the son died here, he had these press conferences for three days before, he had these press conferences for four days after, so he seems very much engaged.’  So that’s the level of research that she represents and brings here.

And then, to my right, is Mr. Joseph Thorndike.  He’s the director of the Tax History Project at Tax Analysts and a resident scholar at the University of Virginia.  He’s a contributing editor for Tax Notes magazine.  He’s also, with Amity Shlaes, a co-writer of the blog SilentCal.com.  He’s the author of numerous publications on tax policy, both past and present, and is currently writing a history of tax fairness and social justice in the twentieth century.  And, if I remember correctly, his upcoming book is called Their Fair Share; Why Americans Tax the Rich.  If you think that a tax historian talks about nothing but those horrible 1099 forms and 1040 forms, that’s not true with Joseph.  He was telling me last night that he’s really a political historian who could just as well have written about political diplomacy, but he chose this area of taxation to put it into perspective through the history of the republic. 

So those are our panelists, and here is the format we’ll follow.  We’ll have them talk to you for between five and ten minutes starting with Martha and then, after that, we’ll start the Q & A.  So let me first turn it over to Ms. Martha Joynt Kumar.

 

EDITORS NOTE   Page Break   Add the Martha Joynt Kumar Presentation, sent separately

SK:      Thank you, Martha.  During Martha’s introduction I forgot to mention that she worked with the transition teams of Mr. Obama, Mr. McCain and George W. Bush.  So, Joseph, the floor is all yours.

 A Tea Party for Calvin Coolidge?

Joseph J. Thorndike

 Every dog will have his day, and Calvin Coolidge is having his. Two years ago, Franklin Roosevelt took his star turn in the spotlight of contemporary politics. But today, thanks to the Tea Party — and political commentator Glenn Beck in particular — Coolidge is getting his moment in the limelight.

 Historical figures can make useful heroes, but movements should be careful about whom they idolize. Modern-day politicians don’t always fare well in comparison with their predecessors. When measured against FDR, for instance, Barack Obama has often come up short. (What, no Hundred Days? No New New Deal?)

Tax rhetoric brings to mind some of the intemperate talk we hear from modern-day Tea Partiers. Legalized larceny? Similarly, many of today’s resurgent Republicans may come to regret a comparison to Coolidge. While Silent Cal shares some ideals with Tea Party politicians — especially a commitment to limited government — he was more consistent and less self-indulgent in his pursuit of that ideal.

 Hero in the Making

Coolidge’s appeal to modern Republicans is understandable. “At a time when government expansion is viewed as the answer for social and economic problems, a president who believed the opposite looks interesting,” notes Coolidge biographer Amity Shlaes. “The Tea Party people care about taxes, they understand that tax rates have something to do with recovery, and they’re concerned taxes will go up. Likewise, Coolidge understood that low taxes tend to produce more productive growth than growth produced by spending.”

Shlaes (with whom I coauthor a Coolidge-focused blog at http://www.silentcal.com) is on to something. The Tea Party adores Coolidge because he shares the movement’s suspicion of government and its antipathy to taxes. Indeed, I think it’s fair to say that Coolidge’s presidency was defined by his views on taxation. Over the course of his administration, Coolidge turned his cool, phlegmatic New England eye on any number of issues. What president doesn’t? But his political ideology was most evident in debates over spending and taxation — the twin elements of fiscal policy that were inextricably linked in Coolidge’s day, even if the politics of 2010 treats them separately.

Hot Talk and Cold Policy

In his 1925 inaugural address, not-so-silent Cal made some of the most famous (or perhaps notorious) comments on taxation:

The collection of any taxes which are not absolutely required, which do not beyond reasonable doubt contribute to the public welfare, is only a species of legalized larceny. Under this republic the rewards of industry belong to those who earn them. The only constitutional tax is the tax which ministers to public necessity. The property of the country belongs to the people of the country. Their title is absolute.1

Strong words, especially from a reserved man. The vehemence of Coolidge’sSounds a lot like tyranny to me. And to Coolidge, too. “A government which lays taxes on the people not required by urgent public necessity and sound public policy is not a protector of liberty, but an instrument of tyranny,” he declared in June 1924. “It condemns the citizen to servitude.”2

Coolidge insisted that excess taxation posed a real and present danger to political freedom — perhaps as much as any foreign aggressor. “One of the first signs of the breaking down of free government is a disregard by the taxing power of the right of the people to their own property,” he said. “It makes little difference whether such a condition is brought about through the will of a dictator, through the power of a military force, or through the pressure of an organized minority. The result is the same. Unless the people can enjoy that reasonable security in the possession of their property, which is guaranteed by the Constitution, against unreasonable taxation, freedom is at an end.”

Taxes in the 1920s

For all his strong talk, however, Coolidge was hardly a radical when it came to tax policy. To be sure, sweeping tax cuts were the order of the day during his tenure in the White House. The president considered such reductions an economic and moral imperative. But the effect of those cuts was paradoxical, at least for anyone eager to roll back progressive taxation (of whom there were more than a few in the 1920s). As I’ve noted before, if Woodrow Wilson made the world safe for democracy, then Calvin Coolidge made it safe for income taxation.3

Taken together, the Revenue Acts of 1921, 1924, 1926, and 1928 lightened the tax burden on almost everyone. Corporations successfully championed repeal of the excess profits tax — the most progressive, productive, and burdensome revenue innovation to emerge from World War I. Major cuts in the estate tax further eased the burden for wealthy taxpayers, as did rate reductions for the individual income tax (the top marginal rate dropped from 77 percent during the war to just 24 percent in 1925). Overall, the effective income tax rate for the top 1 percent of households fell from 15.8 percent in 1920 to just 8.1 percent in 1929.4

Meanwhile, millions of well-to-do-but-not-quite-rich taxpayers got a special reward: complete exemption from the income tax. These people continued to pony up a large share of federal revenue, paying a host of consumption taxes on items of mass consumption. But lawmakers dramatically narrowed the scope of the income tax, raising exemptions even as they reduced rates. As a result, the nation’s premier revenue tool ended the decade much flatter and narrower than it had begun it.

The architect of these tax changes was Andrew Mellon, Treasury secretary from 1921 to 1932. It’s been said that “three presidents served under Mellon.”5 Coolidge was certainly one of them. Indeed, of the three Republican presidents elected during the 1920s, Coolidge was the most ideologically and personally compatible with the Treasury titan. (It was said that the famously taciturn pair “conversed in pauses.”) And when it came to taxation, Coolidge and Mellon were of the same mind.

In his 1924 book on tax policy, Taxation: The People’s Business, Mellon wrote that steep tax rates stifled incentive and fostered tax evasion. “Any man of energy and initiative in this country can get what he wants out of life,” Mellon optimistically declared. “But when initiative is crippled by legislation or by a tax system which denies him the right to receive a reasonable share of his earnings, then he will no longer exert himself and the country will be deprived of the energy on which its continued greatness depends.”6

Worse yet, high rates didn’t even raise money, Mellon argued. By encouraging both legal tax avoidance and illegal tax evasion, they eroded the tax base and reduced overall revenue. Coolidge agreed. “I am convinced,” the president said in 1924, “that the larger incomes of the country would actually yield more revenue to the Government if the basis of taxation were scientifically revised downward.”7

Tax Favoritism

Mellon’s case for tax reduction was consistent, passionate, and politically compelling. Even skeptics were impressed. “There was a mystical righteousness about tax reduction,” recalled Randolph Paul, a leading Treasury official in the Roosevelt administration.8 That sense of righteousness extended, however, beyond general tax reduction to a series of specialized tax breaks and loopholes. The revenue laws passed during the 1920s included a variety of narrow provisions designed to benefit specific industries or corporations. In 1921, for instance, lawmakers enacted oil and gas percentage depletion allowances, much to the delight of those extractive industries. It was a generous gift from lawmakers, although hardly a selfless one. Such tax breaks conferred power on policymakers, who could use them to reward friends and political allies.9

Lawmakers weren’t the only ones trying to win friends (and pave the way for private-sector employment) during the 1920s. Officials at Treasury and its Bureau of Internal Revenue cut sweetheart deals with well-connected corporate taxpayers, too. “There has been a great deal of evidence tending to show that it is the policy of the bureau to fix taxes by bargain rather than by principle,” complained a Senate investigating committee. “The best and most persistent trader gets the lowest tax and gross discrimination is the inevitable result of such a policy.”10

The Moral Imperative of Tax Reduction

Tax favoritism gave the Mellon Treasury something of an image problem, at least on Capitol Hill, where critics (including some Republicans) were quick to point the finger of suspicion. But tax favors also flouted a key element of Coolidge’s personal tax philosophy. One of the signal virtues of a tax cut was the breadth of its good effect, Coolidge maintained. Tax reductions — as opposed to many kinds of spending increases — worked to the benefit of the common good, not just a particular class or interest. “High taxes reach everywhere and burden everybody,” Coolidge explained in his first State of the Union message. “They bear most heavily upon the poor. They diminish industry and commerce. They make agriculture unprofitable. They increase the rates on transportation. They are a charge on every necessary of life.”11 In reducing such charges, lawmakers could confer a blessing on the nation as a whole.

For all his tax cutting zeal, however, Coolidge was never single-minded in his pursuit of lower taxes. He and Mellon were all about rate reduction, but they were both cautious when it came to structural reform. “It would not seem either wise or necessary to change from our present system of taxation to new and untried plans,” Mellon told Congress. “The income tax is firmly embedded in our system of taxation and the objections made are not to the principle of the tax but only to the excessively high rates.”12 Mellon understood the economic and political realities of his day. His version of fiscal conservatism, like Coolidge’s, was methodical and cautious. These were not men to support abrupt breaks with the past, especially when reform might threaten the stability and adequacy of federal revenue. They accepted the old saw that an old tax is almost always a good tax. Proven revenue tools were never to be abandoned lightly.

Coolidge and Mellon also shared at least one distinctly progressive tax idea. They argued that “earned” income from wages and salaries should be taxed more lightly than “unearned” income from investments. “The fairness of taxing more lightly income from wages, salaries, or from investments is beyond question,” Mellon wrote. “In the first case, the income is uncertain and limited in duration; sickness or death destroys it and old age diminishes it; in the other, the source of income continues; the income may be disposed of during a man’s life and it descends to his heirs.”13 Coolidge endorsed this sentiment in his first State of the Union message.

The earned income preference was a striking proposal, especially coming from one of the richest people in America and from a presidential champion of business, industry, and investment. But it was not out of character for either man. Both believed that some degree of progressivity was necessary to forestall more radical attacks on capital. Such an argument — known to historians as “corporate liberalism” — did not sit well with many Republicans of the 1920s, who longed to eliminate income taxes entirely (possibly replacing them with a general sales tax). But Mellon and his presidential champion remained committed to taming, not destroying, the income tax, saving progressive taxation from the excesses of its more ardent supporters, as well as its most bitter critics.

Tax Cuts and Spending Cuts

Perhaps the most striking element of Coolidge’s tax cut philosophy — at least in comparison with current politics — is his linkage between tax cuts and spending cuts. Unlike many of today’s most ardent champions of tax reduction, Coolidge never suggested that tax cuts would “pay for themselves.” To be sure, lower rates might eventually raise additional revenue by encouraging economic growth. But generally speaking, Coolidge always assumed that tax cuts had to be paid for with spending cuts.

This might seem obvious, and in rhetorical terms, it remains an article of faith even among today’s fiscal hawks. But for Coolidge, the need to pair tax cuts with spending reduction was indisputable. “Everyone desires a reduction of taxes, and there is a great preponderance of sentiment in favor of taxation reform,” he pointed out in 1924. “Anybody can reduce taxes, but it is not so easy to stand in the gap and resist the passage of increasing appropriation bills which would make tax reduction impossible. It will be very easy to measure the strength of the attachment to reduced taxation by the power with which increased appropriations are resisted.”14

Clearly, Coolidge understood the dynamics of congressional lawmaking, where the pull to spend is intensely powerful. And whatever one may think of Coolidge’s insistence that government should not rush to correct every failing of the free market, you cannot accuse him of hypocrisy. By and large, he walked the walk of limited government.

Coolidge’s veto of the veteran’s bonus — proposed to reward those who had fought in World War I — was a case in point. Like FDR a decade later, Coolidge considered the bonus excessive and unaffordable (not to mention factional, since it benefited only a certain class, not the nation as a whole). To some degree, the bonus can be viewed as a sort of pre-modern entitlement. Indeed, historians have taken to viewing veterans benefits as just this sort of precursor to the modern welfare state. In that respect, Coolidge’s veto stands as a profile in courage when compared with the reticence of contemporary politicians to wrestle with the soaring cost of modern entitlements, especially Medicare.

Taxation for Depression

As Coolidge left office in early 1929, he must have been pleased with his tax record. Rates on personal income had fallen dramatically, and while the estate tax never disappeared, its rates were relatively modest. All in all, the 1920s were happy years for fiscal policymakers, who had the enviable task of choosing among various tax cuts. As FDR later pointed out, “It was all very merry while it lasted.”15

The Great Depression brought an end to this era of fiscal largesse. By 1930, a dour Mellon was warning Congress that declining revenues would produce a soaring deficit. Ultimately, the administration of Herbert Hoover dealt with this sad reality by engineering a major tax hike in 1932. Ever since, Hoover has been vilified for his shortsighted fidelity to fiscal austerity.

The 1932 tax increase may have been unwise, but it was not Hoover’s folly. Rather, it was a thoroughly bipartisan mistake endorsed by a comfortable majority of both parties. Expert opinion was not quite unanimous, but many economists believed large deficits would deepen the Depression and weaken the dollar.16 While a few proto-Keynesians demurred, Hoover had ample support from experts, business leaders, and even most Democrats.

What would Coolidge have done if still in office in 1932? Almost certainly, he would have cut spending. Throughout the early 1930s, Coolidge continued to insist that retrenchment was the only permanent solution to the government’s fiscal woes.17 “Almost all our governmental units have been taxing, borrowing and spending beyond the means of the people to pay,” the ex-president said.18 Unless lawmakers closed the spigot of public spending, high taxes would ruin the nation.

But Coolidge also acknowledged that new taxes might be necessary. In the short run, he wrote, heavy taxes on the rich might be a reasonable stopgap. Ultimately, however, lawmakers soaked the rich only at the nation’s peril. Foisting the tax burden disproportionately on the fortunate few would stifle growth and might even encourage the development of a political overclass, willing to pay heavy taxes only if granted overweening political power.19

If new taxes were unavoidable, then they should be paid by every American, not just the rich, Coolidge reasoned. During debate over the 1932 revenue act, Coolidge championed a broad-based tax on consumption. Such a levy would raise money while avoiding the dangers of a tax system too dependent on payments by the rich, he contended. “The levies on tobacco and gasoline produce a very large revenue which is not burdensome to the consumer,” he wrote. “The extension of such a system to many other commodities would seem to be in complete harmony with the spirit of a self-governing people.”20

Calvin’s Tea Party?

So what are we to make of Calvin Coolidge? Is he an apt poster boy for today’s Tea Partiers? Not really. To be sure, his devotion to limited government jibes with most Tea Party manifestos. But his commitment to fiscal austerity doesn’t quite fit. It seems likely that Coolidge would never have championed tax cuts in the face of soaring deficits.

Indeed, when the nation faced exactly that situation in mid-1931, Coolidge was quick to point out that too many tax cuts would have imperiled federal debt repayment in the 1920s — one of his proudest achievements. “By retiring and refunding its debt the National Government is saving nearly half a billion dollars annually in interest,” he pointed out. “The only other courses would have been more extravagant spending or reduction of taxes. Either one of these would have aggravated the present serious situation of the Treasury.”21

Coolidge, then, was no fanatic when it came to cutting taxes. He was a man of hard truths, many of them fiscal. Solid, responsible government required taxes — low ones, when possible, but adequate ones at every juncture. And like the good Vermont farm boy that he was raised to be, he never put the cart before the horse. If tax cuts were the goal, then spending cuts were the means: They had to come first.

Are the Tea Partiers ready to make extension of the Bush tax cuts contingent on compensatory spending cuts? I suspect not. Coolidge would be unimpressed.

 FOOTNOTES

1 John T. Woolley and Gerhard Peters, the American Presidency Project [online], Santa Barbara, Calif. Available at http://www.presidency.ucsb.edu/ws/?pid=25834.

2 John T. Woolley and Gerhard Peters, the American Presidency Project [online], Santa Barbara, Calif. Available at http://www.presidency.ucsb.edu/ws/?pid=24174.

3 Tax Notes, Sept. 1, 2003, p. 1201, Doc 2003-19534, 2003 TNT 170-30.

4 W. Elliot Brownlee, “Historical Perspective on U.S. Tax Policy Toward the Rich,” in Does Atlas Shrug?, ed. Joel B. Slemrod (New York and Cambridge: Russell Sage Foundation and Harvard University Press, 2000), p. 45.

5 The Mellon witticism is widely attributed to Sen. George Norris. See, for example, Randolph E. Paul, Taxation in the United States (Boston: Little Brown, 1954), p. 125.

6 Andrew W. Mellon, Taxation: The People’s Business (New York: Macmillan Co., 1924), p. 12.

7 John T. Woolley and Gerhard Peters, the American Presidency Project [online], Santa Barbara, Calif. Available at http://www.presidency.ucsb.edu/ws/?pid=29565.

8 Paul, supra note 5, at p. 125.

9 On the political utility of granting such tax breaks, see W. Elliot Brownlee, Federal Taxation in America, pp. 73-75. See also Ronald King, “From Redistributive to Hegemonic Logic: The Transformation of American Tax Politics, 1894-1963,” Politics and Society (1983): pp. 1-52.

10 Senate Select Committee on Investigation of the Bureau of Internal Revenue, 69th Congress, 1st Session, Report No. 27, “Investigation of the Bureau of Internal Revenue: Partial Report,” pp. 7-8.

11 John T. Woolley and Gerhard Peters, the American Presidency Project [online]. Santa Barbara, Calif. Available at http://www.presidency.ucsb.edu/ws/?pid=29564.

12 Treasury Department, Annual Report of the Secretary of the Treasury on the State of the Finances for the Fiscal Year Ended June 30, 1921 (Washington: Government Printing Office, 1922), p. 25.

13 Mellon, supra note 6, at pp. 56-57.

14 Woolley and Peters, supra note 7.

15 “The Text of Governor Roosevelt’s Speech to 30,000 in Pittsburgh Baseball Park,” The New York Times, Oct. 20, 1932.

16 On the arguments for budget balance — at least over a period of years, if not annually — see Herbert Stein, “Pre-Revolutionary Fiscal Policy: The Regime of Herbert Hoover,” J. of Law and Econ. 9 (1966).

17 Calvin Coolidge, “Calvin Coolidge Says,” The Washington Post, May 12, 1931, p. 6.

18 “Coolidge Urges More Economy,” Los Angeles Times, Mar. 23, 1932, p. 7.

19 Calvin Coolidge, “Right to Own Property,” The Washington Post, July 16, 1932, p. 6.

20 “Coolidge Urges Sales Tax Plan,” Los Angeles Times, July 15, 1932, p. 7.

21 Calvin Coolidge, “Calvin Coolidge Says,” The Washington Post, June 20, 1931, p. 6.

* * * * * * * * *

 SK:      While you’re thinking of questions to send over our way, I have a couple to get us going and…

 (Q) SK:          …In all of the accolades that we’ve been showering on Coolidge throughout the day, which I think are true, but I’m just trying to understand how all this fits in.  Can you help?

(A) JT:             I think that both Coolidge and Mellon would have heard those numbers and said ‘well, absolutely.  And that’s why we’re crafting our tax cuts the way we’re crafting them.  The rich people are doing most of the earning and most of the saving, and if what we are hoping for is investment and economic growth, then they’re the ones who need to be getting the tax cuts.’  So I think there is potential for concern about distribution of wealth that some might bring to that, but I do not believe that either of them would have been concerned about that.  And I don’t know how much people, even Democrats at the time, were all that exercised about that yet.

(Q) SK:           Thank you.  So, Martha, my question has to do with Charles Evans Hughes, President Coolidge’s secretary of state.  He had gathered together a band of his closest friends to listen to a radio commentary by a rather, how shall I say, acerbic commentator from New York and when the commentary came over it was so awful to what the secretary of state was proposing to do that he was furious and he called the Washington station and had them throw that commentator out.  He couldn’t broadcast on that station any more.  And so I wanted to ask you, this seems tough, pretty heavy-handed and how does that all fit in with this talk of ‘Straight Talk.’

(A) MJK:         Well, I don’t know anything about that but I know from the press conference transcripts that he was concerned about how we’re portrayed abroad, and he talked about it in several different places.  I think he thought that the press had a different obligation abroad than it did in reporting domestic cases.  I’ll give you two examples. 

There is another matter of general concern, and that is that when our relations with a foreign country are in the condition that our relations with some of the Chinese are at the present time, it is in danger of being quite harmful if the press reports on speculation about the attitude of this government.  What opposition there is would be comforted if they were told that the officials of this government were in violent disagreement about what ought to be done, so that, while I know that the press oft times has to speculate some and draw deductions of positions when our foreign relations are concerned, over a matter that is somewhat delicate there is great danger than anything of that kind may do considerable harm and ought to be resorted to only on occasions when the press is pretty certain that it’s going to be right.  In this occasion [which dealt with the Chinese and what had happened in a Cabinet meeting, he said] there is no foundation whatsoever.

And beyond that, he went to great lengths to try to get his message abroad in printed form even before he spoke.  He spoke to a group of visiting journalists from the U.K. about his press conferences and  said:

It’s very seldom that I make any suggestions to the press other than to comment on inquiries that are filed with me in written form before the conference is held, and always with the understanding the president is not to be quoted directly.  That may account, possibly, for some misunderstanding that might arise in the foreign press.  I think it has given rise to very few misunderstandings in our domestic press.  I do sometimes have difficulty in getting correct reports abroad of what I do and say, so that when I am making an address that deals in foreign questions, I have adopted the custom of sending it abroad beforehand and having it distributed over there, just as it is given out here, in order that the foreign press may have a correct copy.

That’s the kind of thing that his publicity operation did that many previous presidents did not.  He did that domestically, as well, on big addresses.

(Q) SK:           The two conferences he used to have a week, were they off the record?  Were they on the record?

(A) MJK:         The rules were that the president was not to be quoted directly.  During the Harding administration they had created the device of White House spokesman and Coolidge was upset because he thought it was far too close to saying ‘White House spokesman (wink, wink), this is really the president.’  He felt, and he spoke about it in his press conferences, that if he were not quoted directly, he felt that he could explain things in much greater detail.  But, sometimes when he was explaining things, he would go “off the record” and that meant reporters were not to tell anybody outside this room.  Not only do you not report it, but you spoke about it to nobody outside the room.  Background is, you could say a senior administration official or you could say something that indicated that it came from the White House, after they got rid of the spokesman.

(Q) SK:           So here’s a question from the floor for you, Martha.  It says ‘how do press communications today compare with those in the Coolidge days?’

(A) MJK:         Okay.  Well let me give you an idea of the volume that presidents deal with today, but also with the flexibility.  In Coolidge’s day, let’s say it’s at least on background.  And that holds true, that held true from Woodrow Wilson in March of 1913 with the first press conference, through to December 1953 when President Eisenhower put them on the record, and then in January of 1955 they went on television.  After that, the press conferences were less frequent and presidents started developing other devices which you can see, I’ve developed a data set where I’m following President Obama and all of the different types of interactions he has with the press where he is answering questions.  In Coolidge’s case, it was simply the press conference. 

Today there are two types of press conferences, solo and joint press conferences.  The joint, with a foreign leader, and then solo sessions where he answers questions himself.  You can see in looking at both Bushs, Clinton and Obama.  All of them answer questions from reporters, but they do it in ways that are comfortable for them.  While Obama has had thirty-seven press conferences,  as of September 10th, sixteen were solo and twenty-one joint.  George W. Bush had thirty-six but thirty were joint and six solo, as opposed to the sixteen that Obama had.  Clinton had sixty-six.  He had sixty-two solo.  Then George H. W. Bush had a hundred and forty-three.  He had eighty-four solo and fifty-nine joint.  Obama is kind of in the middle there of recent presidents.

In short question and answer sessions, and these sessions are ones where a pool of reporters goes in, say, if there’s a visiting foreign leader and they’re sitting by the fireside in the Oval Office and maybe a wire reporter, a couple of wire reporters, ask questions.  Those are short question and answer sessions.  Those are not ones that Obama does well on because he likes to talk at length.  One of his answers, I think the question was ten to eleven words and his answer was seven hundred and eighteen.  It dealt with creating a terrorism commission.  Obama’s had sixty-seven, George W. Bush had two hundred and seventeen, Clinton had three hundred and sixty-seven, and George H. W. Bush had a hundred and seven. 

So he’s not done a lot of press conferences, definitely not the short Q and A.  So what does he do?  He does interviews with groups of reporters.  Like, say they’re a group of reporters from the Midwest, the Rust Belt, and he’s talking about the economy there, or with television networks.  I have them broken down in a lot of ways which, if you want to know, you can come and to talk to me about it.  But in his interviews, he’s had two hundred and sixteen, George W. Bush, seventy-six, Clinton, eighty-two, and George H. W. Bush is eighty-seven.  So that is where he has put his time, and that’s for a reason because he can explain at length in an interview.  For example, he did a forty-nine minute interview with David Leonhardt  of the New York Times for a New York Times Magazine piece that was on the economy.

But if you think about the addresses that Coolidge had, today the volume of the speeches of a president is simply enormous.  If you add in their addresses to the nation, weekly radio addresses and all of the small remarks, whether it’s in the Rose Garden, the East Room, wherever the president is speaking publicly, Obama, through September 10th, had eight hundred and twenty, George W. Bush had nine hundred and eight, Clinton had eight hundred and thirty-seven and George H. W. Bush had six hundred and twenty-five.  He didn’t do radio addresses.  But it’s a similarity among them and that’s because of the institution of the presidency.  We expect presidents today to give major addresses, and we expect them to explain, and to do it in person, not just through written statements.  So the pressures are enormous on a president today.

SK:      An announcement, Amity Shlaes and her new Coolidge book are funding the digitizing of the press conferences in the Coolidge Museum and Forbes Library.  They’ll be accessible and searchable on-line for free in 2011.

MJK:   That’s excellent.

(Q) SK:           Joseph, here’s a question for you from the floor.  Please discuss tax loopholes and whether they are positive or negative.

(A) JT:             Well, one man’s loophole is another man’s preference.  You know, economists don’t like most of them, right?  They think they’re inefficient ways to spend money, and through a backdoor.  And that if you really want to be encouraging people to go to college you should give them money to go to college instead of giving them a tax credit to go to college.  It’s generally just more direct and more efficient.  We don’t like to do that because that’s just spending.  It’s still spending.  But, in general, there’s a complexity element that people don’t like.  But, I think that the real problem is that what you end up with is what the tax economists call horizontal inequities, where people with similar incomes are paying different average rates of tax because some of them are able to take advantage of a tax preference, of a loophole, and others are not.  In general, that’s a bad idea. 

Now, we might want to encourage certain sorts of behaviors, and that’s the rationale for almost every loophole, every tax preference.  But I think that the problem is, that justification can be stretched to cover a multitude of sins, and routinely is.  So, I tend to lean toward the notion, toward the idea, that the tax system is better when it is simpler, when it contains less of these things. 

I think one of the biggest problems with loopholes is that they undermine faith in the fairness of the tax system, of any tax system.  You know, a lot of people, I’m sure some of you out there, will think ‘well, what do you think about flat tax?,’ which ostensibly would have no loopholes, although almost every flat tax proposal that actually makes it out the door of a congressman’s office has a few loopholes left in it.  But it doesn’t matter because even if Congress goes crazy tomorrow, and the stars align in some strange way and, in a fit of madness, they pass a tax with absolutely no preferences, with a single rate – although in fact they always have two rates, also; a zero rate, for people up to a certain level, usually a high level, like forty thousand dollars for a family of four, and then some single rate after that.  But, just, if they go crazy, there’s nothing that keeps the flat tax flat.  There’s nothing that keeps the rates simple.  There’s nothing that keeps it free of loopholes.  Because Congress makes the revenue laws and they are under a lot of pressure to hand out favors. 

This isn’t new.  Congress has been handing out revenue favors for two hundred years and it was probably worse under the tariff than it is under the income tax.  So, I have absolutely no hope of tax simplicity, if truth be told.  Because I just think that democracy tends toward tax complexity and tax favoritism and that there’s almost no way around that.  We don’t want to hand it over to the technocrats.  I mean, if we gave it to a panel in the Treasury Department they might come up with a cleaner tax system, but it wouldn’t be our tax system.  I think it’s the old Winston Churchill argument, democratic tax policy-making is probably the worst form of tax policy-making imaginable, except for all the others.

Did I answer the question, I don’t even know.

(Q) SK:           Joseph, a question that I wanted to ask you.  You know, there’s a lot of people talk about tax bills today, they’re two thousand pages, or ten thousand pages, and nobody reads them.  Was it the same in Coolidge’s days?

(A) JT:             Well, the early tax bills were short.  But they quickly discovered they had a lot of problems they had to iron out because it’s actually remarkably complicated to figure out how to do this stuff.  What constitutes income?  You know, that was an open question.  Still is an open question.  We’re debating that about, say, carried interest for compensation on Wall Street.  But they realized very quickly after they wrote the first tax bill in 1913, which was like twelve pages long or something, that it was going to take a lot of pages to actually sort this out.  They had an income tax in the Civil War, very short to begin with, and then they were immediately issuing entire books of Treasury regulations to try to explain it all.  So, I think that just comes with the territory. 

Obviously, they are extremely complicated now.  People couldn’t, lawmakers, in their defense, could not possibly read them.  And, you know, there are all those proposals out there to insist that congressmen read these bills before they get passed.  If you want a total breakdown of government, require congressmen to read every bill they pass.  I mean, it’s simply not possible.  It’s like asking the CEO of a corporation to read every memo that gets passed around his corporation.  It just can’t be done.  It should be, on some level, obviously, but it can’t be done.  I think that the world is complicated.  And for the same reason that every time we sign a mortgage we sign eighty-five papers and a sheaf this thick and none of us actually read them, even the lawyers don’t actually read them, I think some of that is just our modern world and it’s inherent in the income tax.

(Q) SK:           So, I’m going to ask a quick question to both of our panelists before we wind up this session.  I’m fully aware of the fact, as a good friend of mine who was a law school professor used to say, that ‘we are all that stands between you and the bar.’  So my question for both of you is, if you were asked to give us a takeaway from the Coolidge presidency that we should either follow, or applies, today, what would you say from the communications side and from the tax side?  A bumper sticker message?

(A) MJK:         We learned that the presidency, as an institution, was important by Coolidge’s time and by Harding’s as well, as evidenced by his funeral.  Presidents had become closer to people through radio, through photography, through Movietone news, and people followed them no matter what it was that they were doing.  And so those conferences were important for the reporters and for their news organizations simply because they were covering the President of the United States, no matter what it was he was doing.  That’s an important transition point, I think, for the future.

(A) JT:             I’d say if there’s one thing that we could take away from this it’s the utility of candor, so I’ll just bring us back to the ‘Straight Talk’ notion.  I think that Coolidge would not, did not, shrink from the hard things as well as the easy things.  In many ways, fiscal policy in the twenties was a happy policy for lawmakers and for presidents because you got to hand out a lot of good things, like tax cuts.  But I do really believe that Coolidge was a straight talker when it came to fiscal responsibility and I think we could use more of that – lawmakers, leaders, presidents who are willing to confront the bad news as well as the good.  We revile Herbert Hoover for raising taxes in 1932, which was clearly a big mistake and everybody agrees that that was a big mistake now.  It was also what everybody believed to be the right thing to do in 1932.  I’m quite certain that Calvin Coolidge would have raised taxes in 1932, as well.  Setting aside what we know now, I think what’s admirable about that is that he was willing to do what had to be done, and he showed that on the spending side.  I think we’re going to need that in the years ahead.

(A) MJK:         I’d like to add one thing from Coolidge’s last press conference, it goes along with what Joe has to say here, and that is his self-deprecating sense of humor.  He never saw himself in big, grandiose terms.  He said, “Perhaps one of my most important accomplishments of my administration has been minding my own business.”

SK:      Ladies and gentlemen, please join me in thanking these two great panelists, Martha Joynt Kumar, Joseph Thorndike.