COOLIDGE FOR PRESIDENT: A review of Amity Shlaes’ new book, Coolidge. Excerpt:
At the end of World War I, the national debt stood at $27 billion, nine times its level before the war. But Coolidge, and Harding as well, slashed the country’s credit obligation to just $17.65 billion. They did it by cutting taxes, generating economic growth and, in the process, flooding federal coffers with surplus dollars. This accomplishment merits attention today, with the national debt exceeding $16 trillion—more than 70% of gross domestic product. If that number hits 90%, some economists warn, it will squeeze the national economy inexorably.
And if that crisis hits, the country will face a binary choice. It can return to a free-market system of lower taxes, smaller government and the curtailment of the Federal Reserve’s promiscuous fiat monetary policies—in short, abandoning Keynesian sensibilities and the trend toward European-style social democratic governance. Or it can opt for what energy-industry executive Jay Zawatsky has called “increasing financial repression”—further federal spending and intrusion into the economy, rising tax rates on the wealthy, ever greater federal debt financed by Fed money creation and, eventually, rising inflation.
To understand the first option, it is necessary to understand the 1920s. And we can’t understand the 1920s without peering into the life and politics of Calvin Coolidge—”principally a man of work,” as Ms. Shlaes describes him, “a minimalist president, an economic general of budgeting and tax cuts.” Her biography is thus both timely and important.
Indeed.