Saturday, January 12, 2013

The Contender: Richard Nixon, The Congress Years 5

My latest reading of Irwin Gellman's The Contender: Richard Nixon, The Congress Years, 1946-1952 focused on Congressman Richard Nixon's stance on the Marshall Plan, a post-World War II attempt by the U.S. to provide monetary assistance to help European nations in rebuilding their economies so that they wouldn't fall prey to Communism.  Nixon was a supporter of the Marshall Plan, especially after he visited Europe, saw the poverty there, and questioned Europeans about the popularity of Communism.  Nixon differed from a number of conservatives, who did not care for the Marshall Plan because they felt that the foreign aid would contribute to inflation, plus they were reluctant to support giving money to European governments that they deemed to be socialistic.

Nixon also supported "the Reciprocal Trade Agreements Act as another means to strengthen the democracies" (page 149), and his reason was that he thought that more imports would help the U.S. to pay off its debts.  In short, Nixon thought that the U.S. needed Europe, as Europe needed the U.S.!  Yet, Gellman notes, Nixon was protectionist when it came to his own constituents, for Nixon voted against reducing tariffs "for the citrus industry" after a "freeze...had severely damaged the crop" (page 149).

I mentioned that there were opponents of the Marshall Plan who believed that it was inflationary.  Inflation was a significant issue during the Truman years.  Remember that Ronald Reagan gave a speech when he campaigned for Truman and Hubert Humphrey in 1948 that criticized the "Republican inflation that ate up all [a man's] savings" (see here)!  According to Gellman, although Nixon as President was notorious for his wage and price controls, as congressman he was quite critical of President Harry Truman's call for price controls, for Nixon feared that such a policy would hinder productivity (which, I will note, was what many opponents of price controls said during Nixon's Presidency!).  To help Americans meet rising costs, Nixon as congressman supported tax breaks for the lower income, yet he preferred a more modest tax reduction than what he actually voted for because he wanted to avoid an "unbalanced budget" and the endangerment of "national security against any potential foreign attack" (Gellman's words on page 150).  President Truman vetoed the Republican bill because he thought that it would reduce revenue and contribute to inflation, but the Republican majority in Congress, along with a number of Democrats, "overrode his veto" (page 150).

This stood out to me for a couple of reasons.  First of all, it was interesting that Republicans such as Nixon supported exempting the lower-income from taxes, especially since in today's political discourse it is often Republicans (not all, but certain prominent ones) who lament that about half of Americans pay no federal income taxes, while President Barack Obama champions tax cuts for the middle class.  Second, I wondered if the tax cuts could have contributed to more inflation, for, if people have more money to spend as a result of the tax cuts, and there is more demand, would not companies raise prices?

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