Coolidge’s Legacy
by Robert Novak ©1998
Robert D. Novak has been a newspaper reporter, correspondent and columnist since the early 1950s. He is a commentator for Cable News Network, co-producer of CNN’s “Capital Gang” and regularly co-hosts “Crossfire.” He is the co-author of books on Lyndon Johnson, Richard Nixon and Ronald Reagan.
When making public speeches, I refer to Calvin Coolidge as my second favorite president of the 20th century (Ronald Reagan ranks first), and derisive laughter invariably results. That reflects the conventional wisdom of “Silent Cal” as a dull-witted mossback. In fact, his combined personal integrity, faith in the market system and concern for the ordinary citizen are what should be-but all too often are not-the model of American conservatism.
For the first half-century after Calvin Coolidge’s death, he did not fare well in an intellectual environment where historians regarded Woodrow Wilson’s presidency a success and ranked Franklin Roosevelt with Washington and Lincoln. Coolidge was relegated to the historical company of mediocrities like Millard Fillmore, Franklin Pierce and Chester Arthur.
If Coolidge stood out he was a figure of fun, satirized and derided by H.L. Mencken and Oswald Garrison Villard as the president, respectively, of the booboisie or the rapacious rich. By his own fastidious accounting, no president ever slept so long and so consistently each day in the White House. His historical reputation has not been enhanced by a collection of Coolidge anecdotes, unsubstantiated by written record but derived by first-hand eyewitnesses. When football stars Red Grange and George Halas were introduced to him at the White House as touring with the Chicago Bears, Silent Cal responded: “pleased to meet you, gentlemen, always been partial to animal acts.” When military aviation officers warned the president that the United States was failing behind European powers and Japan in the training of pilots because there weren’t enough warplanes for them to fly, Coolidge replied, “why can’t we buy one plane, and let the aviators take turns?” Addle-pated? Not at all. This was the very, very dry Vermont wit of Calvin Coolidge.
Nevertheless, it came as a shock to conventionally-thinking Americans when in 1981, the newly elected president, Ronald Reagan took down Harry Truman’s picture in the cabinet room and replaced it with Calvin Coolidge’s. The spate of Calvin Coolidge birthday parties among Reaganites reflected a desire to reject the liberal establishment’s standards. After a half-century of workaholic presidents who nearly wrecked the country, a napping president looked pretty good.
These celebrators, in effect, were accepting the historical establishment’s assessment of Coolidge as a mediocrity, and saying, so what? But, in fact, he was an exceptional man. A new biography, Coolidge: an American Enigma by Robert Sobel, demolishes many of the myths of Coolidge. No troglodyte reactionary, he was an early reform Republican who slowly moved toward the right. No party hack, he was always at war with the Republican regulars and was named to the national ticket in 1920 in spite of them. His views on blacks were far in advance of his time, particularly well beyond a Woodrow Wilson who was grounded in southern white superiority.
Far from a cultural ignoramus, Coolidge wrote poetry and once translated Dante’s Inferno. Silent Cal was the first president to use the radio effectively. He was the last president to write all of his own speeches, and he inaugurated the regular presidential press conference, which since has atrophied as an established institution. Succeeding the libertine Harding and Harding’s corrupt associates, Coolidge was one president never touched by scandal — personal or official.
Yet, even Sobel’s otherwise excellent biography regrettably makes a serious mistake. Sobel writes: “Coolidge was not a ‘supply-sider’ as Arthur Laffer and his disciples were to be in the 1980s. He meant for the tax cuts to be paid for mainly by reductions in government-spending.” But this suggests an acceptance of the liberal dogma that supply-siders believe, contrary to all reason, that lower and lower taxes will permit higher and higher spending. Actually, the supply-side wedge model, fully explained by Jude Wanniski in The Way the World Works in 1978, has government revenue minimized by too much or too little taxation-the Laffer Curve. This simple concept that has been so difficult for politicians and journalists to understand is rooted in antiquity. Augustus Caesar put it into practice, and Ibn Khaldun explained it. Certainly, it was the heart of Calvin Coolidge’s economic policy and the reason for his popularity among the Reaganites of the ’80s.
Upon the death of Harding, Andrew Mellon visited the new president to resign as Secretary of the Treasury. “Forget it,” said Coolidge. Mellon, arguably the greatest of American finance ministers, became the cabinet member closest to Coolidge. He refined Coolidge’s own economic philosophy which he had developed as governor of Massachusetts. The result was a strategy and philosophy that made Coolidge the hero of the Reaganites nearly 60 years later. The Coolidge-Mellon team took dead aim at a steeply graduated federal income tax. The tax had been implemented in 1913 by the Woodrow Wilson reformers, imposed only on the rich and intended solely to redistribute income. But with U.S. entrance into World War I and its unprecedented demand for revenue, the income tax became a revenue-producer with a steeply graduated tax structure rising to a near-confiscatory top marginal rate of 77%. In the first two Harding budgets shaped by Mellon, that top rate went down to 56% and then 46%.
But the massive economic growth of the ’20s was still to come in the Coolidge presidency. Six months after assuming the presidency, Coolidge laid out his plans in an address to the National Republican Club in New York City that Wanniski has called “The most lucid articulation of the [supply-side] wedge model by a politician in modem times.” In that speech, Coolidge noted that the super-high marginal tax rates had reduced millionaire-incomes from 206 in 1916 gradually to 21 in 1921. These high rates, said Coolidge, mean “we are rapidly approaching the point of getting nothing at all. It is necessary to look for a more practical method, which can be done only by a reduction of the high surtaxes … to about 25%.” In the same speech, Coolidge went on to say: “an expanding prosperity requires that the largest possible amount of surplus income should be invested in productive enterprise” If the government is taking half of what Coolidge called surplus income, investors “will refuse to take the risk incidental to embarking in business.”
That began an annual effort by Coolidge as president to lower taxes. The Republican-controlled congress was hardly submissive. Republican regulars did not care much for Coolidge, and the Republican Progressives joined Democrats in advocating higher marginal tax rates. In his December, 1924 address to Congress, Coolidge said, “I am convinced that the larger incomes of the country would actually yield more revenue to the government if the basis of taxation were scientifically revised downward.” In his inaugural address the next March, he said “I want the people of America to be able to work less for the government and more for themselves.” The resulting tax cuts so increased income for the rich that 70% of income taxes in 1927 came from incomes over $50,000– a very high salary then. Americans with incomes below $3,000, the great majority of the country, paid only 1% of all taxes.
Coolidge has been misrepresented as a radical budget-cutter. In fact, the level of government spending when he left office was above the pre-war level under Wilson. What he vigorously opposed was governmental intrusion into the private sector as promised by the McNary-Haugen farm bill which he was able to block while he was in office. His opposition to spending, indeed, had a supply-side flavor. On March 5,1926, Coolidge told a press conference, “If Congress goes ahead and appropriates more money than there is in the treasury, and makes it necessary to put in a bill increasing taxes, it won’t encourage the business of the country.” The point made by Coolidge: the danger of higher spending is that it may encourage higher taxes, which in turn discourages business.
The Coolidge boom was built, not on stock speculation, but on his tax cuts. The criticism that Coolidge somehow failed to alert the country to the menace of an overheated stock market rejects the theory, first offered by Jude Wanniski, that the 1929 stock market crash and subsequent depression were triggered by the Smoot-Hawley tariff and subsequent tax increases. That theory is accepted today among mainstream conservative Republicans.
This leaves the question: what would Coolidge have done about the destructive Smoot-Hawley rates had he, not Herbert Hoover, been president and Andrew Mellon, not Ogden Mills, Secretary of the Treasury. After Hoover’s election, lame-duck President Coolidge tipped what he thought about Smoot-Hawley. He said that he didn’t think that the farmers would be helped. Certainly, it is a stretch to believe that Coolidge would have reacted to the stock market crash by increasing taxes. A final note on the economics of Calvin Coolidge – a note admirably described in Robert Sobel’s biography. Coolidge’s reputed statement for which he has long has been derided is “the business of America is business.” In truth, what he said in passing in a 1925 speech to the American Society of Newspaper Editors, was “After all, the chief business of the American people is business.” It didn’t get much attention at the time, and shouldn’t have. What Coolidge said in the same speech that fully reflected his views was this: “It is only those who do not understand our people, who believe our national life is entirely absorbed by material motives. We make no concealment of the fact that we want wealth, but there are many other things we want much more. We want peace and honor, and that charity which is so strong an element of all civilization. The chief ideal of the American people is idealism.”
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