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.