America's Fiscal Constitution (73 page)

64
. Mellon,
Taxation
, 30.

65
. Ibid., 80–82.

66
. Walton and Rockoff,
History of the American Economy
, Table 22–1 at 472.

67
. Schlesinger,
The Age of Roosevelt
, vol. 1, 68.

68
. Hicks,
Republican Ascendancy
, 18.

69
. Coolidge, “Inaugural Address.”

70
. Dickson and Allen,
The Bonus Army
, 29.

C
HAPTER
10

1
. Schlesinger,
The Age of Roosevelt
, vol. 1, 159.

2
. Committee on Economic Security, “Estimates.”

3
. Hoover, “Address.”

4
. Firestone,
Federal Receipts
, Table A-4 at 151–152.

5
. Dewey,
Financial History
, 535–537.

6
. Bureau of the Census,
Historical Statistics to 1970
, Series P 89–98 at 295–296. In 1930 the federal government collected $1.146 billion in personal income taxes, $1.263 billion in corporate income taxes, $537 million in customs receipts, and $270 million in interest and principal owed to the United States by Europe for World War I debts. Revenues from those four sources almost equaled the $3.4 billion in spending before debt retirement. Just three fiscal years later, with much higher taxes, 1933 personal income tax receipts had fallen to $427 million, corporate income tax to $629 million, customs receipts to $327 million, and receipts from foreign debt to zero. Revenue from personal and corporate income taxes did not recover to pre-Depression levels until 1939.

7
. Herbert Hoover quoted in Savage,
Balanced Budgets
, 168.

8
. Board of Governors, “Industrial Production Index.”

9
. Committee on Economic Security, “Estimates.”

10
. Hoover,
Memoirs
, vol. 3, 135–137.

11
. Robert Doughton quoted in “Robert Doughton.”

12
. By 1933 bank reserves and the money supply had dropped by more than 30 percent. Half of US banks closed between 1929 and 1933. The percentages of banks failing each year were: 1930, 5.6 percent; 1931, 10.5 percent; 1932, 7.8 percent; and 1933, 12.9 percent.

13
. Hoover cited in footnote 83 in Meltzer,
A History of the Federal Reserve
, 347.

14
. Timmons,
Portrait of an American: Charles G. Dawes
, 313.

15
. Todd, “Reconstruction Finance Corporation.”

16
. Calvin Coolidge quoted in Leuchtenburg,
Franklin D. Roosevelt
, 28.

17
. Schlesinger,
The Age of Roosevelt
, vol. 1, 176, 204.

18
. Brown,
Public Relief
, 89–90.

19
. Ratchford,
American State Debts
, 369–370.

20
. Brown,
Public Relief
, 124.

21
. “Democratic Party Platform of 1932.”

22
. Roosevelt, “Campaign Address on the Eight Great Credit Groups.”

23
. Roosevelt, “Campaign Address on the Federal Budget.”

24
. Hoover,
Memoirs
, vol. 2, 274–275.

25
. “Smith Lays Charge.”

26
. Bureau of the Census,
Historical Statistics to 1970
.

27
. Board of Governors, “Industrial Production Index.”

28
. See Appendix B.

29
. Stein,
The Fiscal Revolution
, 45.

30
. Kimmel,
Federal Budget and Fiscal Policy
, 178.

31
. Rosentreter, “Roosevelt’s Tree Army.”

32
. Benjamin Franklin quoted in Beer,
To Make a Nation
, 154.

33
. Stein,
The Fiscal Revolution
, 59.

34
. Studenski and Krooss,
Financial History
, 407. For a breakdown of the various categories of spending classified as “ordinary” and “recovery and relief” during the first years of the Roosevelt administration, see Shultz and Caine,
Financial Development
, 715.

35
. The combined deficit for those two fiscal years was $7.7 billion. Relief—not including large public works but including public service jobs—was $4.7 billion. The cost of the veterans’ bonus and loss of the processing fee more than exceeded the difference.

36
. Studenski and Krooss,
Financial History
, Table 75 at 417.

37
. Henry Morgenthau quoted in Zelizer,
Governing America
, 142.

38
. Brown,
Public Relief
, 204 (relief), and Bureau of the Census,
Historical Statistics to 1970
, Series A 177–133 at 12 (national income).

39
. Roosevelt quoted in Leuchtenberg,
Franklin D. Roosevelt
, 122–123, 124.

40
. Amenta,
When Movements Matter
, 84.

41
. DeWitt, Béland, and Berkowitz,
Social Security
.

42
. Hoover,
Memoirs
, vol. 2, 313.

43
. Perkins,
The Roosevelt I Know
, 280.

44
. Thomas Jefferson quoted in Peterson,
Running on Empty
, 214.

45
. Studenski and Krooss,
Financial History
, Table 78 at 428.

46
. Livingston,
U.S. Social Security,
13.

47
. Vandenberg, “The $47,000,000,000 Blight.”

48
. Alf Landon quoted in Leuchtenberg,
Franklin D. Roosevelt
, 179.

49
. Kimmel,
Federal Budget
, 187.

50
. Roosevelt quoted in Stein,
The Fiscal Revolution
, 98.

51
. Kimmel,
Federal Budget
, 227.

52
. See Appendix B.

C
HAPTER
11

1
. Studenski and Krooss,
Financial History
, 437–438.

2
. Adolf Hitler quoted in Hormats,
The Price of Liberty
, 148.

3
. Evans,
The Third Reich at War
, 332–333.

4
. Roosevelt, “State of the Union Address.”

5
. Henry Morgenthau quoted in Hormats,
The Price of Liberty
, 160.

6
. Patterson,
Mr. Republican
, 256.

7
. Witte,
Federal Income Tax
, 117–118; “Marginal Rates of Federal Corporate Income Taxation, 1942–2010,” Tax Policy Center,
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=64
; “U.S. Individual Income Tax: Personal Exemptions and Lowest and Highest Tax Rates and Tax Base for Regular Tax, Tax Years 1913–2013,” Tax Policy Center,
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=543
.

8
. Brownlee,
Federal Taxation
, 112.

9
. “Ninety Years of Individual and Income Tax Statistics,” SOI Tax Stats–Individual Time Series Statistical Tables, 2012, Tables 1 and 1A,
http://www.irs.gov/uac/SOI-Tax-Stats-Individual-Time-Series-Statistical-Tables
.

10
. Derived from “Ninety Years of Individual and Income Tax Statistics.”

11
. Ibid.

12
. Steuerle,
The Tax Decade
, Figure 2.2 at 20.

13
. During the war, enrollment in group hospital plans grew from seven million to twenty-six million, with about three-quarters enrolled in nonprofit Blue Cross programs. In the five years after the war, enrollment in employer plans continued to explode, and by the end of 1954, more than 60 percent of American workers had some form of employer-based hospital insurance. That year Congress made clear that employers’ payments for medical insurance were properly excluded from the taxable income of beneficiaries.

14
. Ledbetter, “Comparison of BEA Estimates.” For current relative amounts of various exclusions and deduction, see also OMB Budget, Fiscal Year 2012:
Analytical Perspectives,
http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/spec.pdf
. That $900 billion accounted for about a third of all exclusions representing the difference between $7.4 trillion in reported gross income and $10.3 trillion in personal income as estimated by economists for that year. Postwar debates on personal income taxes focused more on tax rates than on expanding the tax base.

15
. Bureau of the Census,
Historical Statistics, 1789–1945
, Series P 141–155 at 307.

16
. Studenski and Krooss,
Financial History
, 446n2.

17
. Roosevelt, “Veto of a Revenue Bill.”

18
. Henry Morgenthau quoted in Blum,
Years of War
, 21.

19
. Studenski and Krooss,
Financial History
, Table 86 at 452.

20
. Stabile and Cantor,
Public Debt
, 95.

21
. Meltzer,
A History of the Federal Reserve
, vol. 1, Table 7.2 at 298.

22
. This interest rate is calculated by dividing the gross interest on debt paid each fiscal year by the beginning and ending balance of outstanding interest-bearing debt. For gross interest, see Department of the Treasury,
Statistical Appendix
, 8–15. For interest-bearing debt, see Appendix A and note 3.

23
. Derived from Appendix C. According to one comprehensive analysis of wartime debt, in the five fiscal years from July 1, 1941, through June 30, 1946, out of $383 billion spent by the federal government, taxes provided $169 billion and debt, $214 billion. See also the Committee on Public Debt Policy,
Our National Debt
, at 54.

24
. See Appendix B.

25
. See Appendix B.

26
. Wallace,
Sixty Million Jobs
, 3, 10–11, 184, 190.

27
. Harry S. Truman quoted in Patterson,
Mr. Republican
, 440.

28
. Donovan,
Conflict and Crisis
, 62.

29
. Harry S. Truman quoted in Stein,
The Fiscal Revolution
, 207.

30
. James Forrestal quoted in Donovan,
Tumultuous Years
, 59.

31
. Truman, “Statement by the President Announcing Revised Budget Estimates.”

32
. Gaddis,
The United States and the Origins of the Cold War
, 312.

33
. Bostdorff,
Proclaiming the Truman Doctrine
, 101.

34
. Truman, “Address in Chicago on Army Day.”

35
. Gaddis,
The United States and the Origins of the Cold War
, 344.

36
. Committee on Public Debt Policy,
Our National Debt
, 31.

37
. Truman, “Special Message to the Congress on Greece and Turkey.”

38
. See Appendix C.

39
. Witte,
Federal Income Tax
, 134–135.

40
. Hoopes and Brinkley,
Driven Patriot
, 365.

41
. Lucius Clay quoted in “Learning to Estimate, 1948.”

42
. Donovan,
Tumultuous Years
, 58.

43
. Millis,
The Forrestal Diaries
, 498–99.

44
. Truman,
Off the Record
, 134.

45
. Millis,
The Forrestal Diaries
, 498–99.

46
. Ibid., 526.

47
. Smith,
Thomas E. Dewey
, 547.

48
. Kirk and McClellan,
Robert A. Taft
, 132–133.

49
. Arthur Vandenberg quoted in Brands,
The Strange Death of American Liberalism
, 60.

50
. Harry S. Truman quoted in Donovan,
Tumultuous Years
, 58.

51
. Brownlee,
Federal Taxation
, 121.

52
. See Appendix C.

53
. Studenski and Krooss,
Financial History
, Table 90 at 463.

54
. Taft-Radcliffe amendment quoted in “The Growing Debt.”

55
. The act declared it the “policy and responsibility of the Federal Government to use all practical means . . . to coordinate and utilize its plans, functions, and resources for the purpose of creating and maintaining . . . conditions under which there will be afforded useful employment, for those able, willing and seeking to work.”

56
. Friedman, “A Monetary and Fiscal Framework,” 249.

57
. Committee for Economic Development,
Taxes and the Budget
.