Presidential Pleasure Principles

John Maynard Keynes once remarked that statesmen, for all their surface practicality, were generally slaves to some defunct economist. He became the greatest slavemaster of them all.

Before the end of World War II, American presidents and their Treasury secretaries generally delivered budget surpluses except in times of war or economic depression. The discipline of the international gold standard and an unfavorable balance of payments required nothing less. The public debt grew gradually but did so apace with the growth of a wealthy and expanding nation.

World War I reversed the balance of payments situation, making the U.S. a net creditor. During the prosperous Roaring Twenties Presidents Harding and Coolidge actually reduced the national debt by about one-third. The Great Depression of the 1930s, however, all but required sharply unbalanced budgets, whether from Herbert Hoover or Franklin Roosevelt.

The economic dominance of the United States at least permitted monetary tinkering (including a 60 percent devaluation of the dollar in terms of gold) that would have been severe in most other nations. World War II forced huge deficit spending, financed almost entirely by bond issues sold to American citizens and corporations. Its end brought victory and unparalleled prosperity. By then, Keynes was achieving a position of dominance among academic economists, increasing numbers of whom were liberal in their politics and culturally prone to reject the pleasure/pain principle that had dominated their profession.

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