Budget battle: Four points of advice from Ike

We can only begin to imagine the depth of the political fissures once Congress seriously addresses our budget challenges as opposed to punting tough compromises down the road with last-minute, stop-gap spending bills. Just consider the intensity of the heat generated today over the Republicans’ continued resolve to cut “only” $100 billion from President Obama’s proposed budget for this year, which still would leave a massive deficit in excess of $1.4 trillion.

Ultimately, Americans must consider a painful, indelicate balance of much larger spending cuts along with tax increases, coupled with the need for crucial investments in our nation’s future. In confronting these agonizing political choices, both parties, and the electorate, would benefit from advice from “Ike.”

Such advice can be found in President Dwight D. Eisenhower’s memorable (though little remembered) radio and television address on taxes in 1954. The address was delivered on March 15, which was Tax Day back then. Its value lies not in its details but in what he said about the government’s role domestically, about sound budgeting, and about being a “good American.”

These words, from a Republican, challenged listeners then regardless of party, as they will challenge listeners today. Mount Holyoke College tax-policy scholar John O. Fox gives us Ike's four critical pieces of advice.

1.On the role of government

34th president of the United States Dwight D. Eisenhower is pictured here boarding an aircraft in December 1955. (akg-images/Newscom )

Ike believed, like Lincoln, that the federal government must provide “those things which the individual cannot do at all or so well do for himself;” so he called upon Congress “to approve a great program to build a stronger America for all our people.” This would include an expanded “social-security program, a broader and stronger system of unemployment insurance, more and better homes for our people.”

He continues, “We want to do away with slums in our cities. We want a much-improved health program, a better and a lasting farm program, an improved Taft-Hartley Act to protect workers and employers, wider markets overseas for our products.”

On tax rates and tax thresholds

But “without adequate revenue, most of [these programs] would be abandoned or curtailed,” Ike said. And he insisted they be paid out of current taxes. For this reason, and because of the massive debt lingering from World War II, the top individual rate was to remain at 91 percent (vs. 35 percent today). Also, to the profound disappointment of most Republicans, he called for the top corporate rate to remain at 52 percent (vs. 35 percent today).

“The extension of this extra tax on corporations will provide enough money to pay the costs of the benefits this tax revision program will bring to individuals and businesses,” Ike explained. Both rates remained unchanged through the end of his presidency in 1960.

But before Democrats become too pleased with these policies: Ike also refused to lower the bottom individual rate below 20 percent (vs. 10 percent today), or to increase the personal exemption to protect one-third of all taxpayers from tax (vs. over 40 percent today). “The share of that one-third would have to be paid by the other two-thirds. I think this is wrong,” he declared.

On good Americans and paying taxes

Ike’s message was clear: “The good American doesn’t ask for favored position or treatment…Every real American is proud to carry his share of the burden…I simply don’t believe for one second that anyone privileged to live in this country wants someone else to pay his own fair share of the cost of his Government.”

In this election year, he said, “Some think it is good politics to promise more and more Government spending, and at the same time, more and more tax cuts for all.” But that would “pass on still larger debts to our children.”

On the national debt

Ike believed that the US government debt held by the public in 1954 was “gigantic” and could lead to a dangerous level of inflation. (Sound familiar?) Such debt also would be unfair to future generations. “My friends,” Ike began the final words of his speech, “a century and a half ago, George Washington gave us some good advice.

He said we should keep a good national defense. He also said we should not ungenerously impose upon our children the burden which we ourselves ought to bear. I know you and I agree with him.”

In his vision of a responsible government, and good citizenship, Ike summoned our better angels. Let’s hope we can summon them today.

John O. Fox is a visiting professor and tax-policy scholar at Mount Holyoke College. He is a former tax lawyer and the author of “If Americans Really Understood the Income Tax.”