Hostname: page-component-78c5997874-fbnjt Total loading time: 0 Render date: 2024-11-17T06:43:49.623Z Has data issue: false hasContentIssue false

President Eisenhower, Economic Policy, and the 1960 Presidential Election

Published online by Cambridge University Press:  03 March 2009

Ann Mari May
Affiliation:
The author is Assistant Professor of Economics, University of Nebraska, Lincoln, NE 68588. She would like to thank Martha Olney for helpful comments on an earlier draft.

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
Copyright
Copyright © The Economic History Association 1990

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 Stevenson, Adlai E., Major Campaign Speeches of Adlai E. Stevenson (New York, 1953), pp. 3132.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. 1011.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. 5354.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. 7279.Google Scholar

30 Public Papers of the Presidents, 19601961, 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, 19601961, 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. 69Google 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, 19601961, 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