“We’re in for a Coolidge revival”

No sooner did Coolidge become president than he went on a budget and tax cutting spree to terminate what he called the “despotic exactions” of the past years. The immediate aim was to enact Harding’s hope to roll back the higher progressive income tax that Wilson had imposed during World War I. Coolidge, for his part, idolized the Treasury secretary Andrew Mellon, whose frosty credo was that “the people generally must become more interested in saving the government’s money than in spending it.” Tax cuts, Shlaes asserts, were “not merely to favor the rich, as many said. The tax rate cuts at the top were designed to favor enterprise. If people got to keep more of their money, they would hire others, Mellon said.” As Mellon saw it, this was “scientific taxation,” a program he detailed in 1924 in his classic statement of supply-side economics, “Taxation: The People’s Business.” But progressive Republicans initially impeded Coolidge and Mellon’s sweeping plans. Coolidge was undaunted. “Cutting rates brought more revenue,” says Shlaes. “So cutting rates even more might bring yet more cash.” All Coolidge could think about was economizing. He was a cheap tipper. He berated the White House housekeeper, Mrs. Jaffray, for favoring specialty shops rather than the new supermarkets. Talking to a group of Jewish philanthropists, he admitted that the budget was “a sort of obsession with me. . . . I regard a good budget as among the noblest monuments of virtue.” When the mayor of Johannesburg, South Africa, sent the Coolidges two lion cubs, the White House named them Tax Reduction and Budget Bureau. In 1926, Coolidge finally got the tax cuts he had always dreamed about, what ­Shlaes deems nothing less than “a beauty to behold, with its surtax rate topping out at 20 percent.” By the end of his term, only the very wealthiest Americans paid any income tax at all. Frenzied speculation took off. The bubble would soon pop. But Shlaes suavely dismisses the notion that Coolidge bears responsibility for the Great Depression and suggests his work was “complete, ready as a kind of blessing for another era.”