Veronique de Rugy over at the American Enterprise Institute makes a very good case as to what Washington, D. C.’s motto, gleaned from even the briefest glance of its behavior, should be: “Spend During Good Times and Spend Even More During Bad Times.” When it comes to that motto, between Congress and the White House there is a distinction without a difference. We are about to witness, after the third coronavirus stimulus bill, a $3.8 trillion deficit in the budget for the coming fiscal year.
Author de Rugy observes,
The last time this country had a debt as a share of GDP higher than 100 percent was in 1945 and 1946. However, as soon as the war was over the debt fell quickly. I wouldn’t count on a dramatic reduction in debt as a share of GDP this time around.
Entitlement spending continues to climb higher than ever before and as she argues, it has carried a ratchet effect since that last time, three-quarters of a century ago. It never goes down. Like snow that withstands summer heat, the sun may shine but Washington never allows for long enough to get back to that first layer of indebtedness. How long before these levels of spending will enter the sacred chamber of nondiscretionary status? The crisis mentality of Congressional sessions alone testifies to the fact we have yet to come down from the emergency mindset of World War II, a 50+ week long duration that has become the norm since 1940, eighty years ago this past January.
While Coolidge is not mentioned in Ms. de Rugy’s piece, he certainly stands as proof that a time did once exist when spending actually went down following a violent and global conflagration (world war followed swiftly by pandemic and depression) in defiance of Robert Higgs’ otherwise correct and brilliantly argued thesis in Crisis and Leviathan. We are comfortable frogs in our gradually boiling pot that we console ourselves that those were simple and nostalgic days long gone. Putting up a strawman argument — that we can or should return to the Twenties – is intellectually lazy and downright stupid, expecting you to be stupid enough to buy the snake oil. No one is attempting, including Ms. de Rugy, to make the argument that we can or will somehow drop back into a 1920 world. But we are foolish in the extreme when we do not countenance a playbook that gives us principles (dare I say it, truths) that translate across time to reveal methods which, if tried and applied, reverse bad decisions and attempt to avert disastrous consequences. Are we to embrace forever the notion that the course on which we are heading cannot be corrected and really won’t be that bad if we hit the accelerator? Nor does it follow that what happened in 1929 is the inescapable conclusion of those principles when applied.
Before the closing years of the nineteenth century, most of America’s history did not live under the unspoken value system we have amassed these last eighty years. But, the Thirties and Forties were so unprecedented, so new (at least to America then), so unlike anything we had ever faced before that we chose a path that exchanged fewer guardrails on government for more guardrails than ever before upon ourselves. We have re-ratified that unwritten — yet constantly redrafting — constitution countless ways and many, many times since those years and any iteration that attempts to reintroduce the guardrails on Washington after our experimentation without them for so long will not come without a supreme determination of will. It likely will not come without a generation first being lost in the wilderness — do not our hearts pine for Egypt in our day? Then, and only then, will another come after it toughened by the experience to exercise the will and judgment that has been missing to restore what our colonial fathers and mothers knew was there for good reason. Put another way, we have so long accepted the same argument employed to prevent the enfranchisement of freed slaves that we would find the stiff breeze of freedom too cold and biting outside our security blanket…or boiling pot.
In April 1931, former President Coolidge wrote this:
The reported decision from Washington not to call an extra session of the Congress to relieve the farmer and redress unemployment will impress the country as sound. When the last Congress assembled, in the early spring of 1929, the farmer was in a fair condition and unemployment was not a pressing question. The longer the Congress was in session the worse the condition of the farmer became and the larger grew the list of the unemployed. While it is not possible to say that conditions were not improved by legislation, it is apparent they were not cured. A large prospective Treasury deficit has not prove a sovereign remedy.
Business will also gain some courage from the report that by curbing expenses a further increase of taxes may be avoided. But what is especially cheering is the suggestion that politics is not to agitate the country…No extra Congress, no extra taxes and no extra politics make the wisest proposals for relief that have yet been announced.
Art Laffer has actually called for a suspension of payroll taxes in our current situation. Is it too much to say that Coolidge would probably agree, based on his observations here. Coolidge actually believed that shorter sessions of Congress were a virtue not a liability for the country…because they furnished clarity, stability and peace: Americans could get back to work without wondering what else was set to change in the next hour, day or week of Congressional debate or Presidential pronouncement. Coolidge’s persistent pressure on legislative leaders to do more with less started early in his career. It also applied to more than money, it also applied to time. He exerted that subtle pressure in Massachusetts in the midst of the Progressive Era, satisfied to note that the daily sessions and the volume of legislation actually decreased on his watch as presiding officer of the state senate. “The Blue Book of Acts and Resolves” saw “a very wholesome reduction of more than thirty percent” between 1913 and 1915. It was not just final victory in a war over budgets, it was winning in the battles too. He took that same mentality to Washington and, while the personalities may have been bigger, it is interesting to note that Coolidge’s tenure marked the last time the longest Congressional sessions returned consistently below 30 weeks in duration. The last time we had a long session conclude that quickly was 1934. He, like FDR, knew how to expedite the legislative task when it needed more than merely an increase of laws, it needed to do the country a favor and adjourn. Of course, the latest crisis has postponed the next session too. Many will deeply resent it, no doubt, but perhaps we are being pulled back kicking and screaming to see what used to be the norm: a Congress that holds its longest session to less than 25 weeks.
Today, we like our 24/7 legislative formula too well to question its wisdom. If Washington isn’t meeting to spend somewhere (sometimes repeatedly on the same amount) how will the country still be standing in the morning? For Coolidge, this was patently absurd, the kind of stuff that con artists pawn on unsuspecting buyers, filling the former’s pockets while leaving the latter’s poorer but feeling good that the miracle cure works so well.
Coolidge revealed what restraining Washington can accomplish but it will not come without what Cal tapped into then: a determined public backing. With that, whole mountains can move and never in as much time as the policy wonks and “experts” cautiously advise. Dismissed as a cautious man, there was nothing cautious about Coolidge when it came to deftly wielding a tomahawk on Washington’s infatuation with spending in good times and spending more in the bad.