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).
Reacting to the momentous event of his being sworn in as president following the sudden death of Warren G. Harding, Calvin Coolidge deadpanned “I believe I can swing it.” In the minds of his contemporaries, he did indeed swing it, but in the intervening decades, most historians have frowned on the Republican. Several times over the last half-century, the father-son duo of Arthur M. Schlesinger Sr. and Jr. have asked their fellow professors to rank America’s chief executives. These academics always deem Coolidge “below average”–in other words, they think he’s about as accomplished as the dithering Millard Fillmore. Cool Cal didn’t do much better in a 1982 Chicago Tribune poll of 49 “distinguished historians”; they placed him immediately behind Jimmy Carter. In the 1997 Ridings-McIver survey of historians and former politicians, Coolidge came in at number 33, right below Richard Nixon. It may be said that he was unfairly treated by historians almost from the day he left office.
In his daily column of Feb. 18, 1931, a scant 80 years ago today, Calvin Coolidge reiterated his belief that the repayment of debt must take precedence over other other considerations, such as further reducing taxes. It is a message that Republicans might do well to heed today.
We still have a small body of thought that considers the national debt has been reduced too fast. It is claimed that the surplus should have been applied to a reduction of taxes. By the same reasoning it would be proven that taxes should be kept down and money borrowed to meet running expenses. It was a great saving to the taxpayers to reduce the debt when the value of the dollar was low. It takes about twice as much cotton, corn, wheat, copper and other materials now to make the same payments as it did two or three years ago.
If it is argued that liquidation of the debt disturbed financial conditions one answer to that is that for every dollar the national debt was reduced state and local governments increased their debts over a dollar.
Besides these reasons any one who knows the enormous pressure on the Congress by organized minorities knows that if the revenues had not been used to reduce the debt they would have gone into additional expenditures rather than tax reduction. Great interest charges have been eliminated. Sound finance calls for payment of debt and makes the revenues of each year meet the expenditures.
On a contemporary note, Nick Gillespie and Veronique de Rugy detail in their very worthwhile article, The 19 Percent Solution, that the main driver of a veritable spending explosion projected by the CBO over the next decades is interest spending, which will grow from 1.4 percent of GDP (or $204 billion in 2010 dollars) to an astonishing 41.4 percent of GDP (or $27.2 trillion in 2010 dollars) over the next 70 years. Even in the short run, it will balloon to 7 percent of GDP by 2030. As every businessperson knows, deficit spending today triggers an avalanche of interest down the road. Coolidge was right that debt reduction is the best strategy to save taxpayers money in the long run.