The Roaring Twenties at the End of the Tunnel

The expression says, “History doesn’t repeat itself, but it frequently rhymes.” No other time in American history is just like today, but a close parallel in several ways would be the waning days of the Woodrow Wilson presidency. Our 28th president was an academic with little real-world experience who gave numerous speeches and produced numerous writings that stood in exact opposition with the Framers of our Constitution and the Founding Fathers.

Briefly, Wilson stood directly opposed to individual inalienable rights; believed that the bureaucracy (professional administrators) should rule the country; believed that founding principles only applied to the realities as understood in the late 18th Century; did not see Thomas Jefferson as a “thorough” (true) American because of his abstract beliefs- abstract beliefs being un-American; and believed that the state, among other things, should serve as a “spiritual godparent” to its citizens. The list goes on.

Much of Wilson’s thought was European in origin. A stellar book about this subject, and one from which this column draws heavily for descriptions of Wilson, is “Woodrow Wilson and the Roots of Modern Liberalism” by Ronald J. Pestrittto.

Following World War I, as a percentage of GDP, American debt was as high as it had ever been previously, approximately matching the levels following the American Revolution and the Civil War. While today’s debt as a percentage of GDP does not match the unfathomable 112% of GDP ratio following World War II, today’s debt is significantly higher than the Wilson/WWI era.

To say that Wilson was a big government advocate would be like saying that the Sun is a little warm at its surface.

In 1920, the country elected Warren G. Harding, a man not ready to be president; he simply trusted his friends to handle high level government posts -- trusted his crooked friends, that is.

Income tax rates, which took effect under Wilson’s tenure after the life-sucking 16th Amendment was added to the Constitution, boasted a top marginal rate of 7%. Stare at that for awhile. By 1920, the top rate had dropped- yes, dropped- to 73% from its high of 77%. Sworn into office in 1921, Harding oversaw the lowering of rates, with the top rate at 43.5% when he died in August of 1923.

Then came President Calvin Coolidge- “Silent Cal,” as he was known. Coolidge retained Treasury Secretary Andrew Mellon, who had developed what he called “scientific taxation.” You know it as an underlying component of supply-side economics. Together, the tight-fisted president and Treasury Secretary cut the debt in half, as a percentage of GDP, by the time Herbert Hoover was sworn in as the 31st president.

The Twenties roared. Cutting the size of the government grew the economy, bringing in more money to government coffers and allowing citizens to lead better, wealthier lives. Incomes- for everyone, not just the rich- soared. Low wage earners dropped in number. Coolidge and Mellon understood how to get the government out of people's pockets and to allow businesses to make more money so that they can pay higher wages, pay more in taxes, hire more employees, and purchase additional capital- all of which create more jobs.

Wilson left the White House with a one-year surplus, despite large deficits every prior year. The economy was in recession when Harding entered the Oval Office, but the economy turned around and surpluses remained every year until 1931. If not for the Progressive Congress and President Hoover, with the same policies adopted and amplified by Franklin Roosevelt, the Great Depression would have not been “Great,” but merely a blip.

The point of this 1920s dissertation is to point out the way forward. “The way” was repeated following the pathetic liberal Jimmy Carter, who was no match for Wilson’s hatred of the American Founding, but whose ineptitude stunned us all. Out went Carter, in came Ronald Wilson Reagan and the “Laffer Curve,” and the economy launched. If not for the budget system in place, a Congress too willing to spend, and a national media intent on advancing the scourge of modern liberalism, the deficits of the 1980s would have either not existed or would have been minimal.

There will be hope after the domestic and international devastation left behind by Barack Obama, a man who spent his formative years overseas and whose primary mentor - Frank Marshall Davis - was a communist notorious enough that he was on an FBI list to be arrested immediately should war with the Soviet Union break out. Obama is an odd reflection of Wilson.

There is hope. For hope to become reality, we must choose our president and our representatives wisely. They must, in turn, choose more wisely their leaders to key committees and their House and Senate leaders. We also must remember the words of one of the two great presidents of the 20th century. When discussing the importance of government, Calvin Coolidge once said, “It is much more important to kill bad bills than to pass good ones.”

It is clear that the year 2016 will rhyme with 1920 and 1980. We cannot afford, literally, to get it wrong.