By Jerry McDonough
Enter the Coolidge era of common sense and efficiency. Coolidge’s budget meetings were very demanding. He instituted a “Two Percent Club” for executive branch heads who managed to save two percent of their budgets, and then a “One Percent Club” for those who managed to save more than two percent. The “Woodpecker Club” was for those who continued to chip away at their remaining budget.
He told the press in 1926, “I am for economy, and after that I’m for more economy.” Years before his father had told him, “It is more important to kill bad bills than to pass good ones” and so he vetoed fifty including farm subsidies even though he came from a farming community. As his presidential forerunners Grover Cleveland and T. Roosevelt did, he favored the “pocket veto.” If he thought congress might override his veto he simply never signed it or rejected it forcing congress to submit another bill. The New York Times referred to this as “disapproval by inaction.”
His first national emergency was the great Mississippi River flood that wiped out many areas of the South. He sent no federal money for disaster relief, rather he caused the local people and their government to deal with the disaster themselves and they did. Soon after floods tore across Vermont where he had grown up and being a New Englander he treated this flood as he had the Southern flood, or as one New Englander said, “He can’t do for his own more than he did for others.” As president he met every Friday morning with his budget director to identify budget cuts and how to say no to spending measures. His rationale was, “I believe in budgets. I want other people to believe in them.” Coolidge was a firm believer in tax cuts increasing revenues. This was known as “scientific taxation” and was the original “Laffer Curve” with which we are familiar with today. As Coolidge stated, “Experience does not show that higher (tax) rate produces the larger revenues. Experience is all the other way.”
By 1926 the top marginal rate was 25%. He would never put tax cuts before budget reductions, but believing both to be necessary for an efficient, prosperous economy. In 1924 when Coolidge ran for president on his own the progressive party put up a candidate for the sole purpose of dividing the Republican vote as it had in 1912 which would then allow the more progressive democrat to win. The ruse didn’t work this time. The American voters weary of the progressive double speak re-elected Coolidge with more than 50% of the total vote. The popularity and success of their policies afforded Harding and Coolidge a long economic ascendancy and should be a lesson for today’s Americans. The progressives would like Americans to believe that “The Roaring Twenties” was all about illegal booze, flappers and speakeasies, but that is not true, as is so much of what progressives state. America’s economy was doing the roaring and the inventiveness of the time, freed from onerous taxes and government control, was at its peak. Most of the inventions that we all enjoy today were created during the twenties and only made better with age.