Few presidents have accomplished so much in such a short time—Harding served from March 1921 to August 1923, when he died of a heart attack. As we’ve argued before, the fiscal policies Harding instituted brought the country out of the economic depression occurring as a result of the Great War, a period in which the national debt climbed from $1 billion in 1914 to $24 billion in 1920. It was a dire time: The country was already experiencing rising unemployment just as soldiers were returning home from the war looking for work. Deflation led to bankruptcies and business closures. In urban areas where African-Americans lived in close proximity to whites, race riots broke out.
Harding’s pledge to restore America to a condition of “normalcy” led to his landslide victory in November 1920. In office, he cut government spending to the bone and reduced federal income tax rates across the board. As he said to Congress, the government acted during the war as if “it counted the Treasury inexhaustible”; if that pattern continued, it would result in “inevitable disaster.” To get government spending under control, Harding established the nation’s first Budget Bureau (the forerunner of today’s Office of Management and Budget) in the Treasury Department. As a result, federal spending dropped from $6.3 billion in 1920 to $5 billion in 1921 and then $3.3 billion in 1922. He supported the Revenue Act of 1921, which eliminated the wartime excess-profits tax, lowered the top marginal income tax rate from 73 to 58 percent, decreased surtaxes on incomes above $5,000, and increased exemptions for families.
By the time Harding died, the signs of economic growth were evident.
See also Coolidge.