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1932 › Franklin D. Roosevelt (Democratic) › Balancing the federal budget
Balance the federal budget annually within revenues
pledge_forwardspecific_pledgecandidate_directevidence A Federal Budget & SpendingEconomy & Fiscal Policy⚡ The Great Depression similar solutions · similar reasoning
Solution
Maintain the national credit by a federal budget balanced every year on accurate executive estimates, with revenues raised on the ability-to-pay principle; stop borrowing to cover deficits. Relief and protection of savings to be paid for by "saving in one place what we would spend in others, or by acquiring the necessary revenue through taxation."
Rationale
Republican deficits ($5 billion by end of FY1932) and "the type of inflation" used to fund them have weakened confidence in government credit at home and abroad; "a continuation of that habit means the poorhouse."
The candidate's own framing on July 30 already contains the escape hatch later used in Pittsburgh: a government "like any family, can for a year spend a little more than it earns."
Position chain: Balance the budget within a year or two out of rising national income, without new taxes
Statements (8)
We favor maintenance of the national credit by a federal budget annually balanced on the basis of accurate executive estimates within revenues, raised by a system of taxation levied on the principle of ability to pay.
That admirable document, the platform which you have adopted, is clear. I accept it 100 percent.
Blanket endorsement of every plank.
Revenues must cover expenditures by one means or another. Any Government, like any family, can for a year spend a little more than it earns. But you and I know that a continuation of that habit means the poorhouse.
Would it not be infinitely better to clear this whole subject of obscurity, to present the facts squarely to the Congress and the people of the United States, and to secure the one sound foundation of permanent economic recovery -- a complete and honest balancing of the Federal budget?
Second, I hope that it will not be necessary to increase the present scale of taxes
If starvation and dire need on the part of any of our citizens make necessary the appropriation of additional funds which would keep the budget out of balance, I shall not hesitate to tell the American people the full truth and ask them to authorize the expenditure of that additional amount.
The explicit escape clause.
It is my pledge and promise that this dangerous kind of financing shall be stopped and that rigid governmental economy shall be enforced by a stern and unremitting Administration policy of living within our income.
I propose that the Treasury, in issuing statements as to the condition of our finances, shall substitute efficiency for inefficiency, and candor for deception.
Follow-through
brokencontested among sources
The budget was never balanced in Roosevelt's presidency; deficits ran $2.6–4.4 billion a year through 1936. Roosevelt invoked the Pittsburgh escape clause ('if starvation and dire need ... make necessary the appropriation of additional funds') and the two-budget device, and Morgenthau's 1937 attempt to balance produced the 'Roosevelt recession,' after which deficit spending was adopted deliberately. Sam Rosenman's later account has Roosevelt asking him in 1936 to find a way to explain Pittsburgh, and being told to deny having been there.
Mechanisms
| Date | Type | Name | Effect | Consistent? | Source |
|---|---|---|---|---|---|
| 1933-03-10 | message | Economy message: pledge to cover expenditures 'within a year' | I give you assurance that if this is done there is reasonable prospect that within a year the income of the Government will be sufficient to cover the expenditures of the Government. | yes | Message to Congress on Economies in Government. |
| 1934-01-03 | budget | FY1935 budget message with continuing deficit | Projected deficits; distinguished 'regular' balanced budget from emergency outlays. | no | The Annual Budget Message. |
| 1937-06-01 | budget | Spending cuts of 1937 and the recession | Attempted balance cut federal stimulus from $4.1 billion to under $1 billion; production fell a third. | yes | Franklin D. Roosevelt: Domestic Affairs | Miller Center |
Obstruction
economydeliberate_abandonment Relief and recovery spending under the explicit starvation exception, then acceptance of deficit spending as policy after 1938.
Assessments
Sustained deficits, then a failed 1937 balancing attempt, then deliberate 'pump-priming.'
In 1936, the government contributed $4.1 billion to consumer purchasing power, versus less than $1 billion in 1937.
The 'ordinary' budget was brought near balance in 1933–34 by the Economy Act and new taxes, which is what the platform's 'annually balanced' language was reinterpreted to mean.
Reception (1)
The Pittsburgh speech was aimed at Eastern business: the balanced budget, the 25 percent cut and the bonus stand were read as removing business fears of a Roosevelt presidency.
His pledge of a balanced budget coincides with the unanimous views of financial leaders.
Other positions on this issue
- A balanced budget as 'the foundation of all public and private financial stability' — Herbert Hoover, 1932 specific_pledge
- Balance the budget by cutting expenditures, not by raising taxes — Alf Landon, 1936 specific_pledge
- A budget balanced immediately and a currency based on and convertible into gold — Frank Knox, 1936 specific_pledge
- Balance the budget within a year or two out of rising national income, without new taxes — Franklin D. Roosevelt, 1936 specific_pledge
1932-fdr-balanced-budget · created by claude-fable-5-1 · review: unreviewed