Friday, February 8, 2013

Ambrose's Nixon: The Education of a Politician 16

A few years ago, economist Bruce Bartlett wrote an article that commented on the Republican Party's historical stance on tax cuts.  Bartlett states the following:

"Once upon a time Republicans thought that budget deficits were bad, that it was immoral to live for the present and pass the debt onto our children. Until the 1970s they were consistent in opposing both expansions of spending and tax cuts that were not financed with tax increases or spending cuts. Republicans also thought that deficits had a cost over and above the spending that they financed and that it was possible for this cost to be so high that tax increases were justified if spending could not be cut.  Dwight Eisenhower kept in place the high Korean War tax rates throughout his presidency, which is partly why the national debt fell from 74.3% of gross domestic product to 56% on his watch. Most Republicans in the House of Representatives voted against the Kennedy tax cut in 1963."

What I have been reading in Stephen Ambrose's Nixon: The Education of a Politician is that the conservative Republican Old Guard was critical of "high income and corporate taxes" and "deficit financing" (page 142).  That may coincide with what Bartlett is saying: that Republicans were all for tax cuts, but they also sought to avoid deficits, and so they wanted for tax cuts to be paid for with reductions in government spending.  But Bartlett also says that Republicans back then were open to tax increases and opposed tax cuts when they felt that they would exasperate the deficit.

Regarding Dwight Eisenhower and his Vice-President, Richard Nixon, there was some difference of opinion between the two on tax cuts.  Dwight Eisenhower was accused of giving the defense budget short shrift so that taxes could be cut and the budget could be balanced.  But Nixon, as Ambrose narrates, believed that the defense budget could be increased even as taxes were cut.  Eisenhower did push successfully for a tax cut, but later he tended to prioritize a balanced budget over reducing taxes.  And yet, there was a recession during part of Eisenhower's time as President, and Nixon thought that tax cuts were important when the economy was slow, for they could free up money for investment.  According to Ambrose, Nixon also held that taxes that were too high could negatively impact revenue.  Nixon was preaching supply-side, before supply-side became known as supply-side!  And Eisenhower was concerned that Nixon, after succeeding him as President, would pursue a policy of cutting taxes while increasing defense spending.

According to Irwin Gellman in The Contender: Richard Nixon, The Congress Years, 1946-1952, however, the earlier Nixon was a penny-pincher (or tried to be).  (Gellman does not call Nixon a penny-pincher, but I'm drawing that conclusion based on facts that Gellman presents.)  While Nixon voted for a generous Republican tax cut when he was a congressman, he actually wanted for the tax cut to be smaller so that the defense budget could be adequate (page 150).  And, as Senator, Nixon thought that, once the Korean War were to end, the U.S. should maintain a powerful military to keep the peace, and thus the government should cut its domestic budget (page 321).  Perhaps Nixon as Vice-President likewise favored government spending cuts to pay for the tax reductions and increased defense spending----I don't know.  But Eisenhower was concerned that the math would not add up were Nixon to succeed him as President.

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