Coolidge, U.S. President 1923-29, is a useful benchmark of how far the Bush administration has strayed from traditional Republicanism. He believed in small government first, balanced budgets second and cutting taxes third -- more or less an exact reversal of Bush's priorities. In international affairs, he was far less interventionist than Woodrow Wilson, who intervened aggressively in Mexico and Haiti, but not wholly isolationist -- he would probably have been close to neutral on Iraq, although in favor of the Afghanistan intervention.
The spending priorities for the Bush administration would also have struck Coolidge as strange. The "No child left behind" education act, that has added more than 50 percent to education spending at the Federal level, would have seemed to him a recipe for imposing expensive faddish programs on school systems that are much better run as locally as possible, with the maximum possible parental involvement. Coolidge would also have thought it bizarre beyond belief for the Federal government to subsidize the arts, particularly the type of art that the National Endowment for the Arts has tended to favor.
On Medicare, Coolidge would have disapproved in principle of federal aid to healthcare. While he would have seen the argument for adding prescription drugs to the treatments covered by Medicare, he would have preferred a system that covered only catastrophic events, rather than adding layers of government-imposed cost and inefficiency to the medical needs of every senior citizen in the United States. For Coolidge, the call for prescription drug coverage would have been seen as an opportunity for root and branch Medicare reform, one that the Bush administration completely missed. The subsequent increase in the projected 10-year cost of the new program, from $395 billion to $524 billion, would have outraged his Vermont instincts for thrift and confirmed his suspicions that political irresponsibility had been at work.
On the Budget as a whole, Coolidge would not only have been horrified by the $520 billion deficit projected for 2004, he would also have been deeply perturbed that a Republican president and a Republican controlled Congress had proved so woefully incapable of controlling domestic spending. While the Budget admits the necessity of reducing the deficit in the long term, its plan to halve it in the next five fiscal years is both insufficient and rests on assumptions about administration policies and Congressional profligacy that are wholly unrealistic.
At an Urban Institute seminar on the budget Thursday, no opportunity was missed to accuse the administration of both profligacy in spending and irresponsibility in taxation. Of most interest, was a chart derived from the "out-year" projections ion the budget, which demonstrated that administration spending and taxation patterns would have to reverse 180 degrees in every area except health care in order even for the modest deficit reduction projections to be met. Not only would domestic discretionary spending, which has increased sharply, have to be reduced equally sharply beginning in the 2006 Budget, presented after the 2004 Presidential election, but the buildup in defense and homeland security spending of the last three years would also have to be reversed, albeit only by a modest percentage. For an administration with continuing needs in defense and homeland security, and a high sensitivity to the political implications of even minor spending cuts, this scenario is completely unrealistic.
As horrified as he would be by the Budget, Coolidge would be equally appalled by other elements in the current U.S. economic position. To run a $500 billion payments deficit, while being in charge of the strongest economy in the world and attempting to run an activist foreign policy would outrage his sense of financial rectitude. Equally outrageous to him would be the appallingly low U.S. savings rate, and the financing of economic recovery in 2003 through "home mortgage takeout," an unsustainable source of finance if ever he saw one. Monetary policy, too, he would regard as completely misguided; when in 1927-28 the Federal Reserve Board faced a speculative boom similar to that of 1998-2000, he favored an early tightening of money to prevent excessive stock market speculation, although in the event the Fed did not follow his advice until March 1929, when it was too late. Three years of negative real interest rates, and the artificial housing boom that they have created, would to Coolidge (advised by his admirable Treasury Secretary Andrew Mellon) have been sure signs that a major recession was on the way, during which the liquidation of speculative positions in stocks and housing would place a heavy burden on economic activity.
Internationally, Coolidge would deeply disapprove of the policies of the International Monetary Fund, which mandates deflation on client countries in difficulties, until the difficulties become really severe, at which point it allows countries such as Russia and Argentina to default on their private sector obligations while remaining in good standing with the IMF, and even receiving small amounts of additional money. To a banker of Coolidge's generation, when banks lacked deposit insurance, the concept of "moral hazard" was an ever-present threat to depositors' money.
A final Bush policy with which Coolidge would disagree would be that on immigration. Coolidge, faced with a resumption after World War I of the very heavy immigration that had caused deep poverty to appear in the major cities of the world's richest country, signed the 1924 Immigration Act, that brought immigration almost to a halt for 40 years (net immigration was even negative during the 1930s.) Re-enactment of similar legislation would be Coolidge's response to an economy that has shown considerable slack and almost non-existent job creation for 4 years. Bush's response, of a liberalization of low-skill immigration, would appear to Coolidge a willfully perverse and unjust imposition on America's working class of additional low-wage competition for scarce jobs.
On the Democrat side, Coolidge would find little he agreed with, but not much that was significantly less attractive than the Administration's policies. Since Bush and the current GOP congressional leadership are unable or unwilling to control spending, raising taxes (both by the automatic repeal of the 2001-03 cuts and otherwise) would seem to Coolidge inevitable in 2005-08 -- hence the Democrat candidates' promises to do so would not appear particularly threatening. Howard Dean's up-front personality would probably grate on Coolidge, who liked his Governors of Vermont quiet and taciturn, while John Edwards' southern charm and trial-lawyer background would probably arouse his Yankee suspicions.
Coolidge's favorite Democrat candidate would probably be John Kerry, whose aloof manner and rugged integrity would be appealing, and who to Coolidge would look like Abraham Lincoln since Coolidge never saw the 1933 Boris Karloff movie "Frankenstein," released after his death. While Kerry's policies would seem to Coolidge even more unattractive than Bush's, fiscal constraints are likely to prevent him from putting most of them into effect.
Either way, as Coolidge would see it, the next four years present a grim prospect of severe economic difficulties accompanied by and exacerbated by tax increases. Knowing the U.S. electorate, Coolidge would realize that in the 2008 election, the blame for such unpleasantness would be placed firmly on the incumbent President, and not on any equally responsible predecessors.
It would appear that Coolidge would probably break the habits of a lifetime and vote Democrat -- with a view to running himself and clearing up the mess in 2008!
(The Bear's Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that, in the long '90s boom, the proportion of "sell" recommendations put out by Wall Street houses declined from 9 percent of all research reports to 1 percent and has only modestly rebounded since. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)
Martin Hutchinson is the author of "Great Conservatives" (Academica Press, April 2004) -- details can be found on the Web site greatconservatives.com.
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