US President J.F.Kennedy and Federal Budgetary Policy, Posted by Mat Forstater, NEP Nov 22nd 2013
JFK and Federal Budgetary Policy
By Mathew Forstater
On this, the 50th anniversary of the assassination of President John F. Kennedy, we would do well to remind ourselves that another loss resulting from that fateful day was that of a progressive trend in leadership regarding federal budgetary policy. The points are expressed so clearly they require no interpretation or commentary.
President John Fitzgerald Kennedy
Commencement Address, Yale University, June 11, 1962
“If our Federal Budget is to serve not the debate but the country, we must find ways of clarifying this area of discourse. Still in the area of fiscal policy, let me say a word about deficits. The myth persists that Federal deficits create inflation, and budget surpluses prevent it. Yet sizable budget surpluses after the war did not prevent inflation, and persistent deficits for the last several years have not upset our basic price stability. Obviously, deficits are sometimes dangerous—and so are surpluses. But honest assessment plainly requires a more sophisticated view than the old and automatic cliché that deficits automatically bring inflation.
There are myths also about our public debt…debts public and private are neither good nor bad in and of themselves. Borrowing can lead to over-extension and collapse—but it can also lead to expansion and strength. There is no simple slogan in this field that we can trust.
The stereotypes I have been discussing distract our attention and divide our efforts. These stereotypes do our nation a disservice not just because they are exhausted and irrelevant, but above all because they are misleading—because they stand in the way of the solution of hard and complicated facts.
It is not new that past debates should obscure present realities. But the damage of safety of all the world—the very future of freedom—depends as never before on the sensible and clear-headed management of the domestic affairs of the United States.
We cannot understand and attack our contemporary problems…if we are bound by traditional labels and worn-out slogans of an earlier era.
But the unfortunate fact of the matter is that our rhetoric has not kept pace with the speed of social and economic change. Our political debate, our public discourse on current domestic and economic issues, too often bears little or no relation to the actual problems the United States faces.
What is at stake in our economic decisions today is not some grand warfare of rival ideologies which will sweep the country with passion, but the practical management of a modern economy. What we need are not labels and clichés but more basic discussion of the sophisticated and technical questions involved in keeping a great economic machinery moving ahead.
The national interest lies in high employment and steady expansion of output and stable prices…The declaration of such an objective is easy. The attainment in an intricate and interdependent economy and world is a little more difficult. To attain them we require not some automatic response but hard thought.
I am suggesting that the problems of fiscal and monetary policy [today] as opposed to the kinds of problems we had in the Thirties demand subtle changes for which technical answers—not political answers—must be provided.
These are matters…which government and business should be discussing in the most sober, dispassionate and careful way if we are to maintain the kind of vigorous economy upon which our country depends.
How can we generate the buying power which can consume what we produce on our farms and in our factories?
How can we take advantage of the miracles of automation with the great demand that it will put upon high-skilled labor and yet offer employment to the half a million of unskilled high school dropouts every year who enter the labor market?
How do we eradicate the barriers which separate substantial minorities of our citizens from access to education and employment on equal terms with the rest?
How, in sum, can we make our free economy work at full capacity, that is, provide adequate wages for labor and adequate utilization of plant and opportunity for all?
These are problems that we should be talking about, that the political parties and the various groups in our country should be discussing. They cannot be solved by incantations from the forgotten past.
Let us not engage in the wrong argument at the wrong time, between the wrong people in the wrong country, while the real problems of our time grow and multiply, fertilized by our neglect.”