For the history-minded, news that president Obama appears to be mulling a possible privatization of the TVA is at least a little bit ironic – and definitively ironic is the opposition that Tennessee’s two Republican Senators are already voicing against any such proposal.
Sen. George W. Norris (photo courtesy Digital Archives. Library of Congress)
During the 1920s, the virtues of public vs. private ownership of dams and plants to harness the Tennessee River’s giant hydroelectric potential were hotly debated. Originally, the U.S. government had begun construction on two dams and two nitrate plants near Muscle Shoals in northern Alabama during WW I. When the war ended before the project was completed, the Harding administration at first sought to transfer the installation into private ownership.
Still mostly hidden behind the paywall, here’s Amity Shlaes at NRO on how Republicans have strayed from the concept of the small Presidency of Harding’s and Coolidge’s day, and why it might be time for a comeback. Being a thrifty person, I haven’t scaled that paywall to read the whole thing, but my immediate reaction to this would have to be, no way is the small Presidency coming back anytime soon – people have been so indoctrinated to invest their hopes and expectations in a savior-like, all-powerful Chief Executive. But maybe there’s hope, as that model has so demonstrably failed.
This blog -when it descends from the lofty heights of Coolidge scholarship into the dense fog of contemporary politics- is often critical of the current incumbent, but as the world looks towards Washington, D.C. today Jan. 21, 2013, for Barack Obama’s second inauguration, we wish him good luck and Godspeed in conducting the administration of the government these coming four years to the benefit of all.
By way of contrast to today’s pomp and circumstances, here’s a link to a segment filmed by CBS News right in Plymouth Notch, VT, to remind viewers of the memorable and unique midnight swearing-in of Calvin Coolidge. It features the spectre of Calvin Coolidge himself (impeccably impersonated by Jim Cooke, Coolidge scholar, as well as frequent and valued commenter on this blog):
Just a short note today – this post by Tim Cavanaugh at reason.com caught my eye. Why? Because in the very first sentence, he mentions Calvin Coolidge, if only by way of contrast to Barack Obama: “The way President Barack Obama’s acolytes are calling for bold action in his second term, you’d think he had been some kind of prudent Calvin Coolidge in his first.”
And, of course, because I’m wary of the laundry list of progressive pet schemes that Obama and his minions are pushing, on the back of what they construe as his “mandate” from the electorate. Post-Coolidge, presidents have often entertained grand ideas, some of them because they genuinely thought they were doing something good for the country, some very likely because they were working on their own legacy and you don’t usually get a big write-up in history books, let alone a monument on the Mall, if you’re content to merely “do the day’s work,” as was Coolidge’s wont. If Calvin Coolidge was, in the words of Amity Shlaes, “the great refrainer,” Barack Obama surely aims for the title of “the great 21st century progressive,” and the great destroyer of Ronald Reagan’s legacy. Given the perilous state the nation’s finances are in already, this could not have come at a worse time.
Calvin Coolidge hated the national debt he inherited from his pre-predecessor Woodrow Wilson, it is safe to say. Like Warren Harding before him, he made it the top priority of his administration to sharply reduce the debt, scrimping and saving a couple of million here and there to produce budget surpluses year after year in the process. It also is safe to say that he would be aghast at the fiscal mess the country is in today, a mess caused by Democratic and Republican administrations and Congressional majorities.
While reporting on the Fiscal Cliff negotiations, commentators have chosen to focus on the supposedly catastrophic mix of tax increases and “draconian” spending cuts going over the cliff will entail. Well, I hope I’m not taking too great liberties with his legacy when I say I firmly believe that Calvin Coolidge would be the first to go over the cliff with flags flying, because it is precisely the dose of bitter medicine the U.S. needs to wean itself off profligate spending. Coolidge was no fundamentalist when it came to taxes, and I think he would also be the first to agree that in the present situation selective tax increases will need to be part of the package to reduce the staggering deficit.
So, in closing this blog post and this year, and while we still don’t know if the wheelers and dealers in Washington D.C. will wheel and deal themselves out of going over the cliff (still the likeliest outcome, I’m afraid), I would like to call out to them what I think would be Calvin Coolidge’s and Andrew Mellon’s view – do your job, swallow the pill, go over the cliff, get your fiscal house in order. It may be the best thing to happen to the country in a long time.
2013 is shaping up to be a good year for the reputation of the man some have called America’s most underrated, if not actually forgotten, president. Just like Amity Shlaes’ long awaited new biography, writer Charles C. Johnson’s new book on why Coolidge is still significant comes out a little too late for Christmas… but you can pre-order and gift-wrap the voucher!
Reader David W alerts me to the upcoming (presumably also in 2013) new book by Coolidge scholar David Pietrusza. Looks like I really need to add a new Coolidge shelf to my bookcase!
The always recommended Burt Folsom poses the question “Who was the last president to have a great second term?” and you’ll never guess who – none other than Calvin Coolidge (some might claim his second term wasn’t really that, as his “first term” consisted of serving out his predecessor’s term). As Folsom goes down the list of two-termers since Coolidge, it becomes clear that second terms have a way of being a letdown. While circumstances and events were different in each of those cases, there is little doubt that re-elected presidents usually have an eye on their legacy, which unfortunately often means the creation of projects and programs that saddle future generations with snowballing costs. It is a safe bet that Barack Obama will try to leave a progressive legacy, and not follow the restrained course of Coolidge, but a gridlocked Congress and the lack of a true mandate may mean that his leeway in shaping his legacy turns out to be somewhat constrained. If a costly legacy is what he has in mind, there is hope that his second term will join the list of failed second terms that are a letdown for presidents but a respite for the nation.
In an interesting episode of The DMZ on bloggingheads.tv, the astute Kristen Soltis argues that Democrats won the presidential election in part because of their ability to communicate the benefits of voting their ticket. Republicans offered their standard program of lower taxes, less government, and less regulation, and voters were left to translate that into what it might mean for their own personal well-being and prosperity, while Democrats were able to offer specifics as to how their policies benefitted individuals. In a sense (although Kristen takes pains to disavow Romney’s “gifts” statement) and in a nod to public choice theory this does mean that Democrats offered more immediately tangible benefits (free contraception, anyone?) and access to the public trough, while Republicans stood for the longer-term benefits of growing the economy.
In this context the experience of the 1920s does take on some relevance. Distant to and different from our time as they may seem, the 1920s are a prime example of an administration standing by a program of lowered taxes, debt reduction and governmental austerity, which led to an unprecedented burst of productivity and prosperity. Progressives counter this by claiming that these policies and this prosperity somehow was responsible for or at least resulted in the Crash of ’29 – a causal link that has, to my knowledge, not been scientifically proven and even Jill Lepore, in her paean to the income tax in this week’s New Yorker, is careful to state this claim as a fact. Going forward, Republicans might do well to remind people of the “chicken in every pot” prosperity that ensued when Republican administrations and congressional majorities enacted tax rate reductions. In the tug of war for the GOP’s soul that is unfolding now, some are saying that the bold tax-cutting message of yore has had its day. But maybe the way forward is to educate a new generation about the historical facts.
Uncle Moneybags character copyright Hasbro, Inc.
Stephen Moore, a member of the Wall Street Journal’s editorial board, lays out the case for lower tax rates, yes, even for millionaires, and argues that the only sensible way to make millionaires pay more in taxes is… to create more millionaires. He evaluates the various 20th century presidents who cut taxes (surprise – not counting those blissful years before the income tax was instituted, we never had it so good as during the Coolidge 20s).
With the 2012 election out of the way, Democrats in the White House and the Senate, and Republicans in the House of Representatives will need to come to terms with the dire fiscal situation facing the U.S. Predictably, the posturing about areas that play at best a peripheral role, such as higher taxes for “the rich” has already begun. But the fact is, that for the past four fiscal years, from 2009 forward, federal spending has hovered at around $3.5 trillion, some $800 billion higher than in the last pre-recession fiscal year of 2007. What was intended as a one-shot fiscal stimulus back in 2008 appears to have become a permanent part of the federal budget. Despite the anemic economy, Washington is squeezing ever higher tax revenues from citizens and corporations, with tax receipts at near-record heights of $2.45 trillion. Again predictably, the president’s only recipe to counter the resulting $1 trillion+ deficits is to insist on “a little more in taxes,” but even if he got his way and all the tax-rate increases he dreams of become reality, that will mean no more than an $160 billion drop in the deficit bucket – leaving an annual shortfall of some $850 billion.
At the outset of the 1920s, the U.S. also was saddled by gigantic deficits. Legendary Treasury Secretary Andrew Mellon and two of the presidents who “served under him” in the 1920s, Warren Harding and Calvin Coolidge, realized full well that the fastest way to raise revenue is by way of faster economic growth. He also realized that higher taxes generally reduce economic activity, thereby slowing exonomic grwoth and actually reducing fedral revenue. This prompted the tax reforms of the early 1920s which resulted in unprecedented economic growth – accompanied by a very restrictive budgetary policy. Those long-ago lessons of the 1920s should be on everyone’s mind as they ponder the glib talk from Washington insiders proposing a “balanced” approach. The question remains if those favoring a such an approach really want to bring down the deficit, or if their hidden agenda is to ratchet taxes up to finance permanently high new spending levels.
Mellon and Coolidge would get out of the way of economic growth, selectively reduce tax rates, severely cut federal spending, and reduce regime uncertainty in the system. Little if any of this may be expected from the messy process that will now ensue in Washington.