Coolidge and the Budget & Accounting Act of 1921

I took it all for granted
But how was I to know
That you'd be letting go
--Bryan Adams

The Budget and Accounting Act of 1921 was passed early in the Harding administration to give more control of the federal budget to the executive branch. A special budget bureau, the forerunner to today's Office of Management and Budget, spearheaded the movement for federal thrift.

When Calvin Coolidge became president after Harding's death in 1923, Coolidge operationalized the Budget and Accounting Act to new levels. He quickly named his own budget director (whom he met with weekly prior to cabinet meetings) and went on the offensive, announcing deep cuts in politically sensitive areas such as veterans benefits and public works projects. Coolidge publicly praised executive branch staffers that came in below budget and publicly scorned (and fired) those who spent lavishly.

Coolidge vetoed 50 bills during his tenure. He discouraged the spending of federal funds for disaster relief--even after the great Mississippi River flood of 1927 (the Hurricane Katrina of its day).

In concert with his Treasury Secretary, Andrew Mellon, Coolidge drove the passage of legislation that cut top marginal tax rates from 58% (it was 70% when Harding took office) to 25% in 1926. Other presidents (e.g., Reagan) cut tax rates with assurances to Big Government types that the cuts would increase federal government revenue--courtesy of the famous Laffer Curve argument.

Coolidge, however, did not play this game. His idea was to employ spending cuts in concert with tax decreases to shrink government so that more economic resources remained in the hands of the people.

As one might imagine, Coolidge was not very popular with Washington bureau-philes. His popularity with the public, however, was much higher. In the election of 1924, Coolidge won a landslide--achieving an absolute majority vote over Democratic and Progressive Party candidates combined.

During his presidency from 1923 to 1929, Coolidge sustained a budget surplus and left office with a smaller budget than the one that he inherited. No president has come close to matching his record since then.

The Budget and Accounting Act of 1921 offered a mechanism for the president to control the budget and national debt while establishing clear line of sight with the American people for accountability.

Unfortunately, no president following Coolidge chose to use the law to continue his tradition of economy. Underutilized as it became, the law remained on the books until the 1970s when it was replaced with legislation that tilted budget authority back toward Congress.

The subsequent decline in clear accountability has corresponded to gigantic increases in federal spending.