The evolution of (Keynesian) economics in the United States

John F. Kennedy (1961) – An Unfinished Life, p. 480 (Robert Dallek)

Kennedy feared that legislation requiring tax cuts in response to economic slowing would be seen as restricting congressional control over the economy or trampling on Congress’s “fiscal prerogatives.” Moreover, in the fall of 1961, Kennedy continued to worry that tax cuts would increase deficits and mark him out as a liberal Keynesian at odds with balanced budgets and fiscal conservatives.

So Kennedy’s idea of a fiscal stimulus was through tax cuts, but with an eye to balanced budgets.

Fast forward to George W. Bush, who favoured massive tax cuts and massive spending increases, blowing out the budget.

Or Obama, further massive spending increases and further blowing out the budget.

Today’s Keynesian policies – whether GOP or Democratic – include increasing spending. Republicans also lean towards tax cuts, although often not going near the most inefficient of taxes. Both eschew balanced budgets.

Kennedy was more of an economic conservative / libertarian than many of his successors, whether from the GOP or Democratic Party.

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16 Responses to The evolution of (Keynesian) economics in the United States

  1. Poor Old Rafe

    He was more of an anti-communist than most as well, and he and his brother were alert to the problem of crime and corruption in the trade union movement.

  2. RodClarke

    Its also been a moral evolution.

    The richest generation in human history is now happy to drown its children in debt while spending up big on white elephants like Solyndra.

  3. WadeJ

    Sam J you if we’re just talking stimulus here you can’t compare Obama’s to Bush’s. Obama’s totaled about $800 Billion, a third of which were tax cuts. So spending of about $500Billion, that didn’t continue across the long term budget.

    We’re still talking about the Bush tax cuts, with a total loss of revenue of $2.8Billion.

    As scary as it is for this board to realize the only fiscally responsible party in Washington is the Democrats.

  4. Token

    Take the crap back to the The Dumb WadeJ.

  5. Sorry I have to put this somewhere, but have you seen, in gape-mouthed amazement, the claim on the front page of The Age this morning?

    Translation: “If you don’t count all the spending we agree with, Howard spent the most.”

  6. .

    We’re still talking about the Bush tax cuts, with a total loss of revenue of $2.8Billion.

    I am fairly sure you mean trillion, not billion.

    No. That is simply forgone revenue – not lost revenue.

    Do you think if a company reprices a product, that they lose an amount equal to new sales minus times the price differential?

    This is seriously defective “thinking”.

    The upshot of this is that you think taxpayers are less rational about tax minimisation than they are about discretionary spending.

    I think you live on Mars if you think this is so.

  7. I was once working at a company where someone did a presentation on some piece of equipment they had had installed, and they proudly explained that they had first obtained a quote for a contractor to do it for a million dollars, but then proudly explained that they did in house for $500,000, saving the company half a million dollars!
    I said “You idiots. I could have given you a quote for five million. You could have saved the company four and half!”

  8. Token

    No. That is simply forgone revenue – not lost revenue.

    Of course no-one measures the wealth taxpayers created with the extra money they got to keep, nor have they measured the extra tax paid on that extra wealth.

    Its all a “loss” to the statists.

  9. papachango

    the claim on the front page of The Age this morning?

    I’m sure Howard did have some wasteful spending, but when you consider that the authors of this study thought Whitlam’s spending wasn’t reckless and Howard’s was, it gives a teeny clue about their possible ideological bias.

  10. Skuter

    From the article itself:

    The Rudd government’s stimulus spending during the financial crisis doesn’t rate as profligate because the measure makes allowance for spending needed to stabilise the economy.

    Not that I have ever been a fan of the IMF, but when have they ever been this irresponsible? There are a whole a range of Asian and Latin and American countries that would be shaking their heads at how the IMF has suddenly changed their advice once it was advanced economies suffering from downturns and debt crises. That to me is the explanation for the turn around in the IMF from advocates of austerity to unabashed Keynesians…

  11. Skuter

    oops, should be Latin and American

  12. Well Skute, that was my point. “spending needed to stabilise the economy” is sort of a contestable issue, but thousands of Age reading numpties won’t realise this and will just slurp it up like instant moron.

  13. Jannie

    In my Samuelson textbook in Economics I in 1976 there was a quote from Richard Nixon “We are all Keynsians now”. Samuelson taught us to believe that was a good thing, and was supported by writers such as Galbraith.

    Teaching that it can be good policy to pay people to dig holes and fill them in again, never made sense to me. You may as well have a sociology graduate as Treasurer.

  14. MattR

    I said “You idiots. I could have given you a quote for five million. You could have saved the company four and half!”

    Haha, very good.

  15. Skuter

    OHH, don’t worry, as I work in Canberra, no doubt this ‘authoritative, independent study’ will be brought up and thrown in my face ad nauseum…Peter Martin is an intellectual pygmy…no wonder fairfax is nearly bust.

  16. Dot, that’s a very telling point that WadeJ makes, but only if you assume that all money belongs to the government.
    In which case the total loss of ?$2.8 Trillion is quite correct.
    But it would take a complete and utter lunatic to think like that…

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