Governor DeSantis Offers a Reminder on Fiscal Conservatism
As part of the honoring the 250th anniversary of the Declaration of Independence, Florida Governor Ron DeSantis dedicated a new statue of President Calvin Coolidge. “Today, I unveiled a statue honoring President Calvin Coolidge, who dedicated Bok Tower Gardens on Lake Wales in one of his last public appearances as President. As America marks its 250th anniversary, I was proud to honor President Coolidge with this new statue,” stated Governor DeSantis.
“Coolidge governed as a constitutionalist, eliminated debt, balanced the budget, reduced taxes, and promoted a unified American civic tradition and culture,” noted Governor DeSantis. Amity Shlaes, Chair of the Calvin Coolidge Presidential Foundation and biographer of Coolidge, remarked that “the state of Florida’s decision to showcase Coolidge and his values is an example for the nation.”
“In these challenging times, the Coolidge values of thrift, respect for enterprise, and government restraint are more important than ever,” argues Shlaes. With a national debt of $39 trillion and rising and projected budget deficits that are approaching over $4 trillion, the federal government has a significant spending problem. The Wall Street Journal reported that the national debt “now exceeds 100% of gross domestic product.”
For decades, the federal government has been unable to limit spending even when Republicans who described themselves as fiscal conservatives have been in control. It is hard to believe, but at one time the federal government served as an example of fiscal restraint.
Even more surprising, it was not just slowing the growth of spending but actually reducing spending. This was the fiscal conservatism that was the foundation of Presidents Warren G. Harding and Calvin Coolidge’s administrations.
Congress passed the Budget and Accounting Act of 1921 to reform the budget process. The Act also established the Bureau of the Budget, which would help the president organize the federal budget proposal. President Harding considered the selection of the first Budget Director “the most important appointment” that he was called to make. “In view of the many duties imposed I do not suppose there will be so important an office in the administration,” wrote Harding.
Charles G. Dawes was selected by Harding to serve as the first Budget Director. Dawes shared Harding’s view of “economy in government.” In fulfilling Harding’s goal of reducing expenditures, Dawes understood the difficulty in cutting government spending as he described the task as similar to “having a toothpick with which to tunnel Pike’s Peak.”
To meet the objectives of spending relief, the Harding administration held a series of meetings under the Business Organization of the Government to make its objectives known. It was in these meetings that Harding would “hold his cabinet to a stern fiscal program.”
“There is such pressing necessity for reductions and such widespread resentment of the demand for reductions that it is going to require infinite tact and diplomacy to get along without a flare-up,” wrote Harding regarding the difficulty in reducing spending.
As an example of the difficulty, President Harding vetoed a popular bonus bill for veterans of the Great War. It was not that Harding objected to the veterans receiving a bonus, but rather he argued that measure was not fiscally sound. Harding reflected that in the aftermath of the veto he would be “very much complained against for many months to come by a very considerable number of ex-service men.” Nevertheless, Harding believed that he could “stand that without annoyance in view of the fact that I have the satisfaction of knowing I did the wise and best thing.”
Both Harding and Coolidge can serve as examples for policymakers … that fiscal conservatism is not only possible, but it creates the best economic outcomes.
“The present administration is committed to a period of economy in government.… There is not a menace in the world today like that of growing public indebtedness and mounting public expenditures.… We want to reverse things,” explained Harding.
Not only was Harding successful in this first endeavor to reduce government expenditures, but his efforts also resulted in “over $1.5 billion less than actual expenditures for the year 1921.” Dawes stated: “One cannot successfully preach economy without practicing it. Of the appropriation of $225,000, we spent only $120,313.54 in the year’s work. We took our own medicine.”
Overall Harding achieved a significant reduction in spending. “Federal spending was cut from $6.3 billion in 1920 to $5 billion in 1921 and $3.2 billion in 1922,” noted Jim Powell, a Senior Fellow at CATO Institute.
President Harding would not survive his first term in office because of a heart attack, but fiscal conservativism would continue under Coolidge. Coolidge emphasized the need to continue reducing spending and tax rates. He regarded “a good budget as among the most noblest monuments of virtue.”
The Business Organization of Government meetings would continue in the Coolidge administration, and the Bureau of the Budget would be under the leadership of Herbert M. Lord. Coolidge and Lord met regularly to ensure their goal of cutting spending was achieved.
When Coolidge assumed office in August 1923, the federal budget was $3.14 billion and by 1928 when he left, the budget was $2.96 billion. “The very fact that the federal government has been able to cut down expenditures, decrease its indebtedness and reduce its taxes indicates how great is the accomplishment which you have made on behalf of the people of the nation,” noted Coolidge in his remarks to one of the Business Organization of Government meetings.
Fiscal conservatism and prudent budgeting were not just about sound economic policy for Harding and Coolidge. As Governor DeSantis stated, both Harding and Coolidge governed as “constitutionalists.” Both believed in limited constitutional government.
“Government extravagance is not only contrary to the whole teaching of our Constitution but violates the fundamental conceptions and the very genius of American institutions,” stated Coolidge.
When Harding and Coolidge assumed office in 1921, the federal budget was $5.1 billion and by 1929 when Coolidge left office, the budget was $2.96 billion. The national debt was reduced from $24 billion down to $16.9 billion. In addition, Harding and Coolidge were able to lower the income tax from an over 70 percent top rate to 25 percent. As a result, the budget was in surplus, and the economy went into one of the largest expansions in American history.
Today many policymakers at all levels of government think it is impossible to address spending and that the only solution is to “grow” our way out of the problem. However, economic growth trends have not been able to keep pace with the level of government spending. Fiscal conservatism is never easy, it was a battle for Harding and Coolidge, but they made it a priority and understood that limiting spending and conservative budgeting are at the heart of fiscal conservatism.
Both Harding and Coolidge can serve as examples for policymakers at all levels of government in demonstrating that fiscal conservatism is not only possible, but it creates the best economic outcomes.
READ MORE from John Hendrickson:
Coolidge’s Heir in the Heartland
Iowa Does Not Need ‘Revolutionary’ Election Changes That Violate Voters’ Associational Rights
John Hendrickson serves as Policy Director for Iowans for Tax Relief Foundation