This is not a political blog to harangue politicians and their politics. At the same time, many of the figures found on our coinage portray politicians. As we study those figures on our coins, it’s interesting to review their philosophies. Their economic positions are certainly worth review considering the economic challenge our country faces today.
Take a look at the gentleman on this coin:
President Dwight D. Eisenhower became our 34th president in 1953. He served two terms and achieved a balanced budget for three of his eight years in office.
At the beginning of his first term in his 1953 State of the Union Address, President Eisenhower presented several points:
The grand labors of this leadership will involve:
Application of America’s influence in world affairs with such fortitude and such foresight that it will deter aggression and eventually secure peace;
Establishment of a national administration of such integrity and such efficiency that its honor at home will ensure respect abroad;
Encouragement of those incentives that inspire creative initiative in our economy, so that its productivity may fortify freedom everywhere; and
Dedication to the well-being of all our citizens and to the attainment of equality of opportunity for all, so that our Nation will ever act with the strength of unity in every task to which it is called.
The purpose of this message is to suggest certain lines along which our joint efforts may immediately be directed toward realization of these four ruling purposes.
Later in his speech, he goes into more economic detail:
I have referred to the inescapable need for economic health and strength if we are to maintain adequate military power and exert influential leadership for peace in the world.
Our immediate task is to chart a fiscal and economic policy that can:
(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.
It is important that all of us understand that this administration does not and cannot begin its task with a clean slate. Much already has been written on the record, beyond our power quickly to erase or to amend. This record includes our inherited burden of indebtedness and obligations and deficits.
The current year’s budget, as you know, carries a 5.9 billion dollar deficit; and the budget, which was presented to you before this administration took office, indicates a budgetary deficit of 9.9 billion for the fiscal year ending June 30, 1954. The national debt is now more than 265 billion dollars. In addition, the accumulated obligational authority of the Federal Government for future payment totals over 80 billion dollars. Even this amount is exclusive of large contingent liabilities, so numerous and extensive as to be almost beyond description.
The bills for the payment of nearly all of the 80 billion dollars of obligations will be presented during the next 4 years. These bills, added to the current costs of government we must meet, make a formidable burden.
The present authorized Government-debt limit is 275 billion dollars. The forecast presented by the outgoing administration with the fiscal year 1954 budget indicates that–before the end of the fiscal year and at the peak of demand for payments during the year–the total Government debt may approach and even exceed that limit. Unless budgeted deficits are checked, the momentum of past programs will force an increase of the statutory debt limit.
Permit me this one understatement: to meet and to correct this situation will not be easy.
Permit me this one assurance: every department head and I are determined to do everything we can to resolve it.
The first order of business is the elimination of the annual deficit. This cannot be achieved merely by exhortation. It demands the concerted action of all those in responsible positions in the Government and the earnest cooperation of the Congress.
Already, we have begun an examination of the appropriations and expenditures of all departments in an effort to find significant items that may be decreased or canceled without damage to our essential requirements.
Getting control of the budget requires also that State and local governments and interested groups of citizens restrain themselves in their demands upon the Congress that the Federal Treasury spend more and more money for all types of projects.
A balanced budget is an essential first measure in checking further depreciation in the buying power of the dollar. This is one of the critical steps to be taken to bring an end to planned inflation. Our purpose is to manage the Government’s finances so as to help and not hinder each family in balancing its own budget.
Reduction of taxes will be justified only as we show we can succeed in bringing the budget under control. As the budget is balanced and inflation checked, the tax burden that today stifles initiative can and must be eased.
Until we can determine the extent to which expenditures can be reduced, it would not be wise to reduce our revenues.
Meanwhile, the tax structure as a whole demands review. The Secretary of the Treasury is undertaking this study immediately. We must develop a system of taxation which will impose the least possible obstacle to the dynamic growth of the country. This includes particularly real opportunity for the growth of small businesses. Many readjustments in existing taxes will be necessary to serve these objectives and also to remove existing inequities. Clarification and simplification in the tax laws as well as the regulations will be undertaken.
In the entire area of fiscal policy–which must, in its various aspects, be treated in recommendations to the Congress in coming weeks–there can now be stated certain basic facts and principles.
First. It is axiomatic that our economy is a highly complex and sensitive mechanism. Hasty and ill-considered action of any kind could seriously upset the subtle equation that encompasses debts, obligations, expenditures, defense demands, deficits, taxes, and the general economic health of the Nation. Our goals can be clear, our start toward them can be immediate–but action must be gradual.
Second. It is clear that too great a part of the national debt comes due in too short a time. The Department of the Treasury will undertake at suitable times a program of extending part of the debt over longer periods and gradually placing greater amounts in the hands of longer-term investors.
Third. Past differences in policy between the Treasury and the Federal Reserve Board have helped to encourage inflation. Henceforth, I expect that their single purpose shall be to serve the whole Nation by policies designed to stabilize the economy and encourage the free play of our people’s genius for individual initiative.
In encouraging this initiative, no single item in our current problems has received more thoughtful consideration by my associates, and by the many individuals called into our counsels, than the matter of price and wage control by law.
The great economic strength of our democracy has developed in an atmosphere of freedom. The character of our people resists artificial and arbitrary controls of any kind. Direct controls, except those on credit, deal not with the real causes of inflation but only with its symptoms. In times of national emergency, this kind of control has a role to play. Our whole system, however, is based upon the assumption that, normally, we should combat wide fluctuations in our price structure by relying largely on the effective use of sound fiscal and monetary policy, and upon the natural workings of economic law.
Moreover, American labor and American business can best resolve their wage problems across the bargaining table. Government should refrain from sitting in with them unless, in extreme cases, the public welfare requires protection.
We are, of course, living in an international situation that is neither an emergency demanding full mobilization, nor is it peace. No one can know how long this condition will persist. Consequently, we are forced to learn many new things as we go along-clinging to what works, discarding what does not.
In all our current discussions on these and related facts, the weight of evidence is clearly against the use of controls in their present forms. They have proved largely unsatisfactory or unworkable. They have not prevented inflation; they have not kept down the cost of living. Dissatisfaction with them is wholly justified. I am convinced that now–as well as in the long run–free and competitive prices will best serve the interests of all the people, and best meet the changing, growing needs of our economy.
Accordingly, I do not intend to ask for a renewal of the present wage and price controls on April 30, 1953, when present legislation expires. In the meantime, steps will be taken to eliminate controls in an orderly manner, and to terminate special agencies no longer needed for this purpose. It is obviously to be expected that the removal of these controls will result in individual price changes–some up, some down. But a maximum of freedom in market prices as well as in collective bargaining is characteristic of a truly free people.
I believe also that material and product controls should be ended, except with respect to defense priorities and scarce and critical items essential for our defense. I shall recommend to the Congress that legislation be enacted to continue authority for such remaining controls of this type as will be necessary after the expiration of the existing statute on June 30, 1953.
I recommend the continuance of the authority for Federal control over rents in those communities in which serious housing shortages exist. These are chiefly the so-called defense areas. In these and all areas the Federal Government should withdraw from the control of rents as soon as practicable. But before they are removed entirely, each legislature should have full opportunity to take over, within its own State, responsibility for this function.
It would be idle to pretend that all our problems in this whole field of prices will solve themselves by mere Federal withdrawal from direct controls. We shall have to watch trends closely. If the freer functioning of our economic system, as well as the indirect controls which can be appropriately employed, prove insufficient during this period of strain and tension, I shall promptly ask the Congress to enact such legislation as may be required.
In facing all these problems–wages, prices, production, tax rates, fiscal policy, deficits–everywhere we remain constantly mindful that the time for sacrifice has not ended. But we are concerned with the encouragement of competitive enterprise and individual initiative precisely because we know them to be our Nation’s abiding sources of strength.
Looking at his description of the Nation’s problems, they don’t appear to be that much different than we face today – except in scale. In particular, he talked of problems in the billions compared to today’s issues in the trillions of dollars.
Rather than learning from history and from the gentleman honored on this coin, we appear doomed to repeat the same problems over and over again.
Click on this link to find President Eisenhower’s 1953 State of the Union Address in its entirety.