Dwight Eisenhower on Budget & Economy

1961: Kennedy is transforming government into Santa Claus

Achieve pay-as-you-go budget instead of increases

I reviewed some of the work I had done to reduce costs and achieve a sound pay-as-you-go budgetary position. The administration had cut the roster of federal civil positions by a quarter of a million. We had carefully prepared every military budget so as to support only the essential, shifting the emphasis from traditional or conventional defense to the development of powerful deterrent forces; had tried (unsuccessfully) to make the interest rates for borrowings from the federal Treasury at least equal to the cost to the government out of business that properly pertained to private industry. In appropri

Inflation hurts people; even in times of full employment

Why worry, some asked? Why not let prices creep upward forever? Inflation can get out of hand; beginning with a creep, it can end with a gallop. Inflation hurts people. Price increases averaging merely 1% a year will in 25 years cheapen the dollar by more than 1/5.

Huge federal spending, even when covered completely by tax revenues, can in itself provoke inflation. When the economy was performing at capacity and the federal budget was in balance, the government should try to increase its surplus by cutting spending, by postponing projects which, however desirable, are not immediately necessary. For, at a time of full employment, an increase in either federal or private spending will tend to bring on an increase in prices.

Whether or not these things were widely understood, I believed in them.

Deficit spending is irresponsible and inflationary

Our overriding purpose was to promote economic growth while keeping prices reasonably stable.

$168M in spending for harbors & flood control is stupid

For example, early in the 1958 session, the Congress passed a stupid bill--I choose the adjective carefully--authorizing appropriations for rivers, harbors, and flood control projects. It authorized 14 projects with an estimated cost of $168 million. On Apr. 15 I vetoed the bill. I did so despite the specious argument that it would stimulate the economy.

In 1958, just as in 1954, the United Steel Workers once again sketched out a free-wheeling program of federal outlays to end the downturn with little regard for their likely long-term economic consequences.

In reply I reminisced a bit: "Whenever a crisis occurred, some interested but excitable people began screaming for action. I had only one answer, 'I guess I'm just too stubborn to act fast.'"

Danger of inflation if government is profligate

This danger requires a firm resolution that the Federal Government shall utilize only a prudent share of the Nation's resources, that it shall live within its means, carefully measuring against need alternative proposals for expenditures.

Eliminate the deficit and check the menace of inflation

1. Reduce the planned deficits and then balance the budget, which means, among other things, reducing Federal expenditures to the safe minimum;
2. Meet the huge costs of our defense;
3. Properly handle the burden of our inheritance of debt and obligations;
4. Check the menace of inflation;
5. Work toward the earliest possible reduction of the tax burden;
6. Make constructive plans to encourage the initiative of our citizens.