Warren G. Harding, 1920 campaign portrait. By Everett Collection @ Shutterstock.com
In the last thirty years, America’s spending has exploded beyond what anyone thirty years ago would have thought possible. At FEE, Dan Mitchell explains how one president was able to cut America’s spending in half. He writes:
I’ve repeatedly heaped praise on Ronald Reagan.
I’ve also lauded Calvin Coolidge on several occasions.
And I even once extolled the virtues of Grover Cleveland.
Today, we’re going to celebrate the fiscal achievements of Warren Harding.
Most notably, as illustrated by this chart based on OMB data, he presided over a period of remarkable spending discipline.
Harding also launched very big—and very effective—reductions in tax rates.
And his agenda of less government and lower tax rates helped bring about a quick end to a massive economic downturn (unlike the big-government policies of Hoover and Roosevelt, which deepened and lengthened the Great Depression).
In an article for National Review last year, Kyle Smith praised President Harding’s economic stewardship.
In a moment of national crisis, Warren G. Harding restored the economic health of the United States. …America in 1921 was in a state of crisis, reeling from the worst recession in half a century, the most severe deflationary spiral on record… Unemployment, it is now estimated, stood somewhere between 8.7 and 11.7 percent as returning soldiers inflated the size of the working-age population.
Between 1919 and August of 1921 the Dow Jones average plummeted 47 percent. Harding’s response to this emergency was largely to let the cycle play out. …The recession ended in mid-year, and boom times followed. Harding and Congress cut federal spending nearly in half, from 6.5 percent of GDP to 3.5 percent. The top tax rate came down from 73 percent to 25, and the tax base broadened. Unemployment came down to an estimated 2 to 4 percent. …Harding was a smashing success in a historically important role as the anti-Wilson: He restored a classically liberal, rights-focused, limited government, and deserves immense credit for the economic boom that kicked off in his first year and continued throughout the rest of the 1920s.
Smith’s article also praises Harding for reversing some of Woodrow Wilson’s most odious policies, such as racial discrimination and imprisoning political opponents (Wilson also had a terrible record on economic issues).
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