When I became politically aware in the late 1950s, there were two jokes making the rounds among fans of presidential aspirant John F. Kennedy, both of them possible answers to the question “What is an Eisenhower doll?” One answer: Wind it up and it does nothing for eight years. The second: Put a battery in it and it plays golf for eight years.
Since leaving office, Dwight David Eisenhower (“Ike”) has risen in the rankings of presidents. If doing “nothing” means settling the Korean War, keeping the United States out of Vietnam, not getting into a war with China over Taiwan, not joining Britain and France’s support of Israel’s invasion of the Suez Canal, not going to war with the Soviet Union over Hungary, and giving a farewell speech warning about the dangers of the growing military-industrial establishment, then we need more “do-nothing, golf-playing dolls” in the White House.
Ike is even more overlooked on the domestic front. As the first Republican after 20 years of Democrats in the White House, he did not dismantle the New Deal, much to the disappointment of the Robert Taft wing of the party. He built up the Interstate Highway System and the St. Lawrence Seaway. He not only continued to fund the G.I. Bill of Rights but also provided massive federal subsidies for science education across all levels of schooling with the National Defense Education Act in 1958, following the Soviet Union’s launch of the Sputnik satellite. During six of his eight years in office, the Democratic Party controlled the House and the Senate, so he accomplished these initiatives working closely with House Speaker Sam Rayburn and Majority Leader Lyndon B. Johnson.
Ike was not shy about taking bold initiatives, and he was not shy about asking Americans to pay the costs through high tax rates.
As will almost certainly be the case with our next president, Ike inherited a large public debt, in his case due to World War II and the Korean War. Interest rates were very low, as they are now, but taxes were high. The highest marginal tax rate on income was above 90 percent. Ike worked toward balancing the federal budget, and under his administration the federal debt gradually shrank from above 70 percent of gross domestic product to slightly above 40 percent. Labor income as a share of total non-farm national income hovered around 65 percent, while today it is slightly above 58 percent. Those were good days for U.S. workers, even if Ike was not a popular president with labor leaders like George Meany of the A.F.L.-C.I.O. and Walter Reuther of the United Auto Workers.
Ike was not shy about taking bold initiatives, and he was not shy about asking Americans to pay the costs through high tax rates. Today, of course, the highest tax rates are less than half of what Ike took for granted. And the federal debt as a share of G.D.P. is expected, by 2020, to be the highest since just after World War II, something Ike would never have imagined for a peacetime economy. Approximately $22 trillion is held by U.S. citizens, while $4 trillion is held by foreigners, with China holding 27 percent of all foreign-held debt.
Would Ike worry over this situation, with China holding so much of our debt? Yes. Would he engage in trade wars to try to reduce our debt? Not likely; Ike was not one to provoke needless conflict with foreign leaders. Ike would simply keep the budget balanced and let the growth of the economy, coupled with low interest rates, bring down the debt over time. But that means getting budget deficits under control through higher tax rates.
Would Ike worry over this situation, with China holding so much of our debt? Yes. Would he engage in trade wars to try to reduce our debt? Not likely.
During Ike’s time, of course, we did not have Medicare or Medicaid. As a traditional Republican, he would have opposed these programs as forms of socialized medicine. But he would have been open to new federal initiatives in green energy. And he would want to see education, particularly STEM education, excel at all levels.
Ike would have applauded the recent statement by the Business Roundtable, led by Jamie Dimon, that companies exist to benefit customers, employees, suppliers and communities, not just stockholders. However, he would wonder about Mr. Dimon’s latest reported annual salary of $31 million as chief executive of J.P. Morgan Chase. While Ike would not propose a wealth tax, he would expect executives to be patriotic and pay their fair share of much higher tax rates, both on individual income as well as on their corporate profits.
Much to his discredit, Ike was not at the forefront of the Civil Rights Movement. He considered the appointment of Earl Warren as chief justice of the United States one of his greatest mistakes, and only with great reluctance did he send federal troops to enforce the school desegregation ruling of Brown vs. the Board of Education. While he did sign the Civil Rights Act of 1957, it was a watered-down bill engineered by Lyndon Johnson to get support from the Southern bloc in the Senate. Only later would there be true progress, after Johnson became president.
On current immigration issues, Ike would favor compromise, likely including a path to citizenship for undocumented migrants through a stint in the armed services.
He had no use for the kind of rhetoric used by Joe McCarthy, or name-calling in public discourse. While he never publicly rebuked McCarthy (Ike being Ike), the historian David A. Nichols writes that he launched a “clandestine operation” to bring down the U.S. senator, who was eventually censured by his colleagues.
Ike was a leader who was able to get things done and avoid conflicts, both international and domestic, with broad bipartisan support. He would also expect Americans to pay their fair share of taxes. I would welcome a new chief executive in this mold.
Of course, the United States in Ike’s time was much more closed in both trade and finance. Raising taxes to 70 percent on labor and capital income would trigger massive capital flight in the interconnected world of finance today. Indeed, both George H. W. Bush and Bill Clinton took heavy political losses when they increased taxes, the former by losing re-election in 1992 and the latter by losing control of Congress in 1994. But Ike’s example shows that balanced-budget policies involving targeted new government spending initiatives and higher taxes can transform the economy for the better.
President Trump wants to build a border wall and new infrastructure without raising taxes, while many Democratic candidates call for new initiatives as well as high redistributive tax policies. Given that Mr. Trump has abandoned the Eisenhower economic legacy, I recommend that the Democratic candidates moderate their initiatives in favor of a few initiatives (education and energy) financed by the necessary tax increases, without the redistributive rhetoric. Let the debt come down in this way, and let the new spending generate the benefits of better education and cleaner energy, with a redistributive effect in favor of U.S. workers.