Coolidge, on spending and taxation, was however very Rothbardian well before Rothbard. Per Shlaes, “Coolidge didn’t favor tax cuts as a means to increase revenue or to buy off Democrats. He favored them because they took government, the people’s servant, out of the way of the people.” Not only did Coolidge’s government austerity program contribute to the prosperity and economic growth of the mid 1920s, the program, while unpopular in Washington, proved extremely popular with the people. Coolidge easily won re-election with a strong majority of the popular vote despite running against both a democratic challenger and a relatively popular Progressive Party candidate Robert LaFollette.
The political lesson of the 1920s is a lesson for today that should be more broadly embraced. Government austerity is not private–sector austerity. Government austerity is a path to private sector prosperity. The correct policy is one which combines true budget cuts—actual reductions in federal government spending—with reductions in tax rates, not some elaborate political plan that only slows down spending increases, thus continuing to add to the government burden on the economy and only allegedly balances the budget after 10 years. The ultimate path for a return to prosperity is described by Rothbard (xxiii and xxiv) in September 1982: “the Austrian program of hard money, the gold standard, abolition of the Fed, and laissez-faire.”
This post piggybacks on Georg's previous post on Coolidge.
I recently purchased the Shlaes book on Coolidge, and as soon as I get grades turned in on Tuesday night, plan on getting started on it (well, I might start before that, if time allows).