Article contents
President Eisenhower, Economic Policy, and the 1960 Presidential Election
Published online by Cambridge University Press: 03 March 2009
Abstract
This article examines economic policy in the Eisenhower years and the president's role in the 1960 election. I measure the impact of changes in fiscal policy on real GNP and show that policy in 1959 was unusually contractionary and cannot be dismissed as merely evidence of Eisenhower's fiscal conservatism.
- Type
- Papers Presented at the Forty-Ninth Annual Meeting of the Economic History Association
- Information
- Copyright
- Copyright © The Economic History Association 1990
References
1 Stevenson, Adlai E., Major Campaign Speeches of Adlai E. Stevenson (New York, 1953), pp. 31–32.Google Scholar
2 For example, see Nordhaus, William D., “The Political Business Cycle,” Review of Economic Studies, 42 (04. 1975), pp. 169–90CrossRefGoogle Scholar; and Tufte, Edward R., Political Control of the Economy (Princeton, 1978).Google Scholar
3 Tufte, Political Control, p. 15.Google Scholar
4 Weatherford, Stephen, “The Interplay of Ideology and Advice in Economic Policy-Making: The Case of Political Business Cycles,” Journal of Politics, 49 (11 1987), p. 932.CrossRefGoogle Scholar
5 The average annual unemployment rate in 1956 was 4.0 percent compared to an average annual rate of 5.4 percent in 1960. See the Economic Report of the President, 1988 (Washington, DC, 1988), p. 292.Google Scholar
6 Gallup, George H., The Gallup Poll Public Opinion: 1935–1971 (New York, 1972), pp. 1622, 1642, 1682.Google Scholar
7 For example, see Stein, Herbert, The Fiscal Revolution in America (Chicago, 1969).Google Scholar
8 See Ambrose, Stephen E., Eisenhower: The President (New York, 1984)Google Scholar; and Ambrose, Stephen E., Nixon: The Education of a Politician 1913–1962 (New York, 1987).Google Scholar
9 Nixon, Richard M., Six Crises (New York, 1962), p. 294.Google Scholar
10 Brodie, Fawn M., Richard Nixon: The Shaping of His Character (Cambridge, MA, 1983), p. 427.Google Scholar
11 Nixon, Six Crises, p. 310.Google Scholar
12 Ibid., pp. 309–10.
13 Ibid., p. 310.
14 Quarterly data from Fairmodel macroeconometric model, July 1985.
15 Public Papers of the Presidents of the United States, Dwight D. Eisenhower, 1960–61 (Washington, DC, 1961), p. 935.Google Scholar
16 Stein, The Fiscal Revolution, pp. 281–84.Google Scholar
17 All quarterly figures on the actual federal budget and the full-employment budget are reported in Carlson, Keith, “Estimates of the High-Employment Budget: 1947–1967,” Federal Reserve Bank of St. Louis, Review, 49 (June 1967), pp. 10–11.CrossRefGoogle Scholar
18 The method used to estimate the impact measures is presented in Blinder, Alan S. and Goldfeld, Stephen M., “New Measures of Fiscal and Monetary Policy, 1958–1973,” American Economic Review, 66 (Dec. 1976), pp. 780–96.Google Scholar
19 The four-quarter time horizon is used here because it represents a realistic impact lag and because the dynamic properties of the macroeconometric model produce highly correlated two-, four-, and six-quarter impact measures.Google Scholar
20 See Fair, Ray C., Specification, Estimation, and Analysis of Macroeconometric Models (Cambridge, MA, 1984).Google Scholar
21 When Eisenhower took office in 1953, government agencies were instructed to review their budgets and make cuts where possible. See the Public Papers of the Presidents of the United States, Dwight D. Eisenhower, 1953 (Washington, DC, 1960), pp. 53–54.Google Scholar
22 Whereas other fiscal policy variables used here largely reflect discretionary changes in policy, transfer payments to households reflect both discretionary and nondiscretionary changes due to automatic stabilizers.Google Scholar
23 See the Economic Report of the President, 1955 (Washington, DC, 1955), p. 19.Google Scholar
24 Stein, The Fiscal Revolution, p. 305.Google Scholar
25 A proportion of the increase in transfer payments to households was due to the legislative extension of unemployment compensation payments.Google Scholar
26 See Lewis, Wilfred, Federal Fiscal Policy in the Postwar Recessions (Washington, DC, 1962), pp. 208–13.Google Scholar
27 Ibid., pp. 237–39.
28 Hughes, Jonathan, American Economic Growth (Glenview, 1987), p. 513.Google Scholar
29 Economic Report of the President, 1956 (Washington, DC, 1956), pp. 72–79.Google Scholar
30 Public Papers of the Presidents, 1960–1961, p. 40.Google Scholar
31 Stein, The Fiscal Revolution, p. 283.Google Scholar
32 See the Economic Report of the President, 1988, p. 253.Google Scholar
33 Carlson, “Estimates of the High-Employment Budget,” pp. 10–11.Google Scholar
34 Stein, The Fiscal Revolution, p. 364.Google Scholar
35 Lewis, Federal Fiscal Policy, p. 240.Google Scholar
36 See Friedman, Milton and Schwartz, Anna J., A Monetary History of the United States, 1867–1960 (Princeton, 1963), pp. 617–20.Google Scholar
37 Bach, George L., Making Monetary and Fiscal Policy (Washington, DC, 1971), p. 102.Google Scholar
38 Ambrose, Nixon, p. 509.Google Scholar
39 Public Papers of the Presidents, 1960–1961, pp. 657–58.Google Scholar
40 Ibid., p. 626.
41 For the official and unofficial story of this event, see Eisenhower, Dwight D., Waging Peace (Garden City, 1965), pp. 6–9Google Scholar; and Ambrose, Eisenhower, pp. 292–93.Google Scholar
42 Ambrose, Nixon, p. 511.Google Scholar
43 Ambrose, Eisenhower, p. 512. Also see Public Papers of the Presidents, 1960–1961, p. 144.Google Scholar
44 Nixon, Six Crises, p. 349.Google Scholar
45 Ambrose, Nixon, p. 558.Google Scholar
46 Weatherford, “The Interplay of Ideology,” p. 944.Google Scholar
47 Ambrose, Nixon, p. 513.Google Scholar
- 7
- Cited by