Everything about Fiscal Conservative totally explained
Fiscal conservatism is a political phrase term used in
North America to describe advocacy of lower governmental spending practices and a lower
federal debt; it may also include higher taxes in order to lower the debt. It doesn't necessarily denote advocacy of
free market economics as a whole, and is a distinct concept from that of
neo-liberalism.
Early United States
The
Democratic-Republican Party of
Thomas Jefferson supported a weak central government and a more
laissez-faire approach than that of
Hamilton's rival party, the
Federalists. They opposed Hamilton's plan to pay off the debts owed by the states for the expense of the American Revolution, because some of the debt was held by financiers and speculators (rather than the original holders) and because most of the debt was held by northern states. Hamilton passed his legislation and set up taxes to pay the debts (in exchange, he agreed to let Jefferson move the nation's capital to Washington, DC). Jefferson in particular strongly opposed having any national debt, although he relented when the opportunity came in 1803 of purchasing Louisiana.
James Madison,
James Monroe,
John Quincy Adams were elected by the Democratic-Republican Party, but after the fiscal disasters of the
War of 1812, they came to support most of the Federalist position, deciding the nation needed a central bank and a steady income flow from tariffs.
Mid-to-late 1800s
In the mid-1800s, a new fiscal conservative political party emerged, the
Republican Party. Unlike the modern fiscal conservatives, these fiscal conservatives were
paleoconservative supporters of
protectionism and
tariffs, similar in some ways to today's
Reform Party.
They were also generally supporters of big business and (internally) laissez-faire economics, although by 1890 they'd been convinced into supporting
Sherman Anti-Trust Act and the
Interstate Commerce Commission following massive complaints.
Early 20th century
In the early 1900s fiscal conservatives were often at odds with
progressive President
Theodore Roosevelt, particularly for his support of
antitrust laws.
During the 1920s President
Calvin Coolidge's pro-business economic policy were credited for the successful period of economic growth known as the "Roaring Twenties." After the great crash of 1929, however, Coolidge's policies and Hoover's took the blame. Coolidge not only lowered taxes but also reduced the national debt from World War I. His actions, however, may have been due more to a sense of federalism than fiscal conservatism:
Robert Sobel notes that "[a]s Governor of Massachusetts, Coolidge supported wages and hours legislation, opposed child labor, imposed economic controls during World War I, favored safety measures in factories, and even worker representation on corporate boards. Did he support these measures while president? No, because in the 1920s, such matters were considered the responsibilities of state and local governments."
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New Deal
During the 1930s
Franklin Roosevelt's
New Deal was opposed by many conservatives because it expanded the scope of the federal government, and regulated the economy. In general Roosevelt didn't raise taxes above the high levels Hoover had set.
Roosevelt's Treasury Secretary,
Henry Morgenthau, Jr. believed in balanced budgets, stable currency, reduction of the national debt, and the need for more private investment. Morgenthau accepted Roosevelt’s double budget as legitimate–that is a balanced regular budget, and an “emergency” budget for agencies, like the
WPA,
PWA and
CCC, that would be temporary until full recovery was at hand. He fought against the veterans’ bonus until Congress finally overrode Roosevelt’s veto and gave out $2.2 billion in 1936. Morgenthau's most notable achievement was the new
Social Security program; he managed to reverse the proposals to fund it from general revenue and insisted it be funded by new taxes on employees. Morgenthau insisted on excluding farm workers and domestic servants from Social Security because workers outside industry wouldn't be paying their way.
In World War Two there was broad agreement for heavy taxes, with conservatives insisting that the income tax base be broadened to include the great majority, rather than the 10% who before 1942 paid all income taxes.
After 1945 fiscal conservatism was most prevalent among some Democratic Senators from the South, especially
Harry F. Byrd, his son
Harry F. Byrd, Jr., and
Walter F. George.
The Reagan Era
Fiscal Conservatism was rhetorically promoted during the presidency of
Ronald Reagan (1981-1989). During his tenure, Reagan touted economic policies that became known as
Reaganomics. Based on the hypothesis of
supply-side economics, Reagan cut income taxes on the rich, raised social security taxes on low and middle income people, deregulated the economy, and instituted a tight monetary policy to contain inflation.
However, due to military spending, by the end of Reagan's second term the
national debt held by the public ballooned from 26 percent of the GDP in 1980 to 41 percent in 1989, the highest level since 1963. The national debt increased due to the tax cuts and the spending increases. By 1988, the debt totaled $2.6 trillion, due in part to both increased military spending at the end of the
Cold War and the tax cuts. The country owed more to foreigners than it was owed, and the United States moved from being the world's largest international creditor to the world's largest debtor nation.
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