Look to Coolidge for inspiration today
Republicans often ask what Reagan would do, but it is hard to answer that question about our current budgetary situation. When Reagan won the presidency in 1980, the federal debt was a third of gross domestic product. Now it is approximately 100 percent. Even Reagan might not try a strategy of tax cuts before budget cutting today.
There is another Republican president whose example might be better suited to our times: Calvin Coolidge. Coolidge came to Washington in 1921, as vice president to Warren Harding, and became president upon Harding’s sudden death in August of 1923. Coolidge then won four years on his own in 1924, staying until March of 1929.
Reagan admired Coolidge enough to take Coolidge’s portrait out of storage and hang it in the cabinet room, but in areas that are highly relevant today — fiscal policy and leadership style — the two differed dramatically. Where Reagan sought growth through tax cuts, Coolidge put budget cuts first. And where Reagan took charismatic action, Coolidge fostered prosperity through determined inaction.
While researching a biography of Coolidge, I kept imagining the steps he might take if he were moving into the Oval Office in 2013. His world is not ours, but his moves were successful, and they so differ from today’s received wisdom that we may profit from a review of them.
Pass a new budget law. One of the troubles today is that Congress wields a disproportionate share of power when it comes to crafting the budget. It enjoyed similar power in Harding and Coolidge’s day. As a remedy, in 1921 Republicans passed the Budget and Accounting Act, which Harding signed into law shortly after taking office. The law gave the chief executive greater authority, including the power to hold back already-appropriated cash from departments in the executive branch when he decided they did not need their full appropriation.
Coolidge put the law to good use. When Harding died in 1923, Coolidge made it clear that the budget was his first priority. Together with his budget director, Brigadier General Herbert Mayhew Lord, he reviewed budgets each week and made cuts. Using a metaphor from his rural upbringing, he called this “cheese paring.” The White House either halted or managed to delay spending on some large items — including ships, to the fury of the military. But the Coolidge administration also made the tiniest of cuts; the Budget Bureau even withheld pencils from departments, and workers who did not use their pencils to the end were expected to return the stubs. “Our item of expense for pencils is materially less,” a Budget Office report boasted. The president hasn’t had this kind of authority since 1974, when Congress took back power in the Congressional Budget and Impoundment Control Act. It’s time to go back.
Shame Washington bureaucrats into spending less. Twice a year, Coolidge and Lord summoned all the department heads and their staff to a session in Memorial Continental Hall — just to show Washington that Coolidge meant what he said. Acting more like a drill sergeant than a general, Lord harangued and exhorted his captive audience. The lectures had a chilling effect; no department wanted to be singled out as profligate.
Block new entitlements when you can. One of the large new entitlements sought in Coolidge’s day was a national pension plan for veterans known as the Bonus. Coolidge vetoed the legislation, because, as he put it, “the desire to do justice to pensioners . . . must be attended by some solicitude to do justice to taxpayers.” It was a bold move, since many men had served in World War I and a third had come back disabled in some way. The veto was all the more unpopular because Harding had let veterans down: A Veterans Bureau plan to construct hospitals for the vets had proven wildly corrupt, with members of the department accepting kickbacks from contractors. Congress overrode Coolidge’s veto, but popular support for the veto outside Washington had a good effect: Congress was afraid to override other Coolidge vetoes, on such matters as farm subsidies.
Thousands of farms, and thousands of farmers’ banks, failed in the 1920s. Coolidge himself owned a farm, but he nonetheless twice vetoed legislation that would have driven crop prices or farm profits up. “Well, farmers never have made much money,” he told Robert Cooper of the Farm Loan Board at one of the many meetings on agriculture that took place in the White House over those years. “I don’t believe we can do much about it.”
Stand up to unions. While governor of Massachusetts, Coolidge faced a tough challenge. The Boston police had affiliated with a moderate union, the American Federation of Labor. The policemen were genuinely underpaid, but when they went on strike, riots ensued. The police commissioner fired the strikers, and Coolidge backed him up. Coolidge also called out the state guard, calmed the streets, and, most important, drew a line in the sand for public-sector unions with his statement that “there is no right to strike against the public safety by anybody, anytime, anywhere.” Coolidge’s tough handling of the situation calmed not only Boston but the country.
Veto all the time. In his term and a half as president, Coolidge issued 20 standard vetoes. He also “pocket vetoed” 30 bills, meaning he failed to sign them after Congress adjourned. His total of 50 vetoes compares with six for Harding.
Cut budgets before cutting taxes. Coolidge believed high taxes were wrong, but he believed that cutting taxes before cutting budgets trained citizens to believe that deficits did not matter. If the American voter was no longer concerned about deficits, lawmakers would not be concerned either, and they would expand programs that generated yet larger deficits. The Coolidge insistence on pairing tax cuts with budget cuts extended even to pet names: When a South African mayor sent the White House twin lion cubs, Coolidge named them “Tax Reduction” and “Budget Bureau.”
Once you have a surplus, cut taxes with a vengeance. Harding, like Woodrow Wilson before him, cut tax rates. But once they were relatively certain they could sustain a budget surplus, Coolidge and Treasury Secretary Andrew W. Mellon launched an all-out anti-tax campaign. Over years, and with great effort, Coolidge and Mellon pushed the top marginal income-tax rate down from 58 percent to 25 percent — lower than the 28 percent of Ronald Reagan’s landmark 1986 law.
Delegate. Coolidge’s idea of practicing better government was to delegate religiously. When Labor Secretary James Davis once sought to run an idea by Coolidge, Coolidge said to a Secret Service man, “You tell ol’ man Davis I hired him as secretary of labor and if he can’t do the job I’ll get a new secretary of labor.” He delegated with greater consequence to Treasury Secretary Mellon and Secretary of State Frank Kellogg. Both men enjoyed the satisfaction of seeing major legislative efforts come to fruition: for Mellon, the tax laws, and for Kellogg, the Kellogg-Briand Pact.
Hide your light under a bushel. Coolidge believed that no news about himself was good news. He also preferred little or no news about his family, a desire for which his family paid in fun and freedom. When Grace Coolidge decided to take up riding — she looked good in riding clothes — Coolidge killed the idea, telling the first lady that “I think you will find you will get along in this job fully as well if you do not try anything new.”
Coolidge’s extreme modesty struck everyone he met. Senator Selden Spencer of Missouri was once seeking to cheer up the often gloomy Coolidge as they walked around the White House grounds. Spencer raised his hand and pointed to the White House and asked: “Who lives there?”
“Nobody does,” replied Coolidge. “They just come and go.”
But Coolidge’s aversion to the limelight came not from ill humor but from conviction and experience. In the helplessness of the vice presidency, he had had to watch as Harding squandered political capital with behavior that kept the chief executive in the headlines — in particular, scandals such as the Veterans Bureau graft. There is no strong evidence that Harding benefited from the scandalous and illegal behavior of such graft. But Harding’s personnel choices for key posts were so sloppy they bordered on criminal neglect. The best example was his pick to head the Veterans Bureau, Charles Forbes. Forbes was later discovered to have doctored his résumé, and he and friends embezzled $250 million from Harding’s showcase bureau in a matter of years. Harding appointed too many cronies from his Ohio days, and undermined his own campaign for law and order by permitting heavy drinking and partying at the White House in the early years of Prohibition. This in turn made both him and the presidency appear unserious. As Alice Roosevelt put it, “Harding was a slob.”
Coolidge wanted to restore the status of the presidency by putting the office above the individual. He succeeded. He then decided not to run for reelection in 1928 because “the chances of having wise and faithful public service are increased by a change in the presidential office after a moderate length of time.”
Eschew change. Coolidge achieved by not achieving. “The White House is extremely sensitive to the first symptoms of any desire on the part of Congress or of the executive departments to do something,” wrote the journalist Walter Lippmann. “The skill with which Mr. Coolidge can apply a wet blanket to an enthusiast is technically marvelous.” My favorite line of Coolidge’s is one he wrote to his father in 1910: “It is better to block a bad law than to pass a good one.”
Don’t pretend you can run the economy. At this point in the discussion, many wll argue that it can’t be wise for Republicans to lionize a president whose administration was followed by a market crash and the Great Depression. The crash was a violent stock-market correction that Coolidge anticipated, as his personal investments of the period show. But Coolidge also believed that presidential intervention in the market does more damage than good over the long term. Herbert Hoover, the president who succeeded him, had a far more activist temperament and took steps Coolidge would not have taken, such as insisting employers sustain high wages and blaming those who shorted stocks on Wall Street for the downturn. The general uncertainty that resulted from Hoover’s activist posture, and the even more activist measures of Franklin Roosevelt, did much in turn to render the Depression long and Great.
An example of the kind of policy Coolidge deemed appropriate was the government’s response to the crash of the early 1920s. This was also a dramatic crash: The Dow Jones Industrial Average dropped by about half, from 119 in November 1919 to 64 in August 1921. Double-digit unemployment ensued. But the federal government made it clear it would not intervene except to raise interest rates, cut taxes, and reduce government. The economy recovered so quickly that the crash of the early 1920s is largely forgotten.
All of these principles were factors in Coolidge’s success. But as I wrote my biography of him, it was the importance of presidential temperament that most struck me. Hoover knew he should believe in markets, but his vanity and past record of success encouraged him to manage them. Harding planned a government that said no, but he was temperamentally disposed to say yes, and did. Coolidge not only said no but had the temperamentally disposed to say yes, and did. Coolidge not only said no but had the temperament to make “no” a reality. It is this temperament that we need more of today.
– Amity Shlaes is the author of the forthcoming book Coolidge (HarperCollins) and director of the Four Percent Growth Project at the Bush Center.