John F. Kennedy on Budget & Economy
Heavy deficit spending to recover from 1961 recession
The need was to get money into the economy fast. Kennedy directed all Federal agencies to accelerate their procurement and construction. He released over a billion dollars in state highway aid funds ahead of schedule, raised farm price supports and
advanced their payment, speeded up the distribution of tax refunds and GI life insurance dividends. He created a "pilot" Food Stamp program for the needy and expanded US Employment Offices. Finally, he encouraged the Federal Reserve Board to help keep
long-term interest rates low through the purchase of long-term bonds.
While most of Kennedy's administrative moves added to the deficit--some by billions of dollars--none of them had to wait for legislation or appropriations. The money was paid out
when the economy needed it most. He made clear--and this may have had the most important effect of all--that he would not cut back Federal spending when the recession reduced Federal revenues, or permit a tightening of credit when recovery began.
Source: "Kennedy" by Ted Sorensen, p. 397-398
, Jan 1, 1965
1961 recession plan: prompt recovery toward long-term growth
[In his first State of the Union address, Kennedy stated], "The present state of our economy is disturbing. We take office in the wake of seven months of recession. Insured unemployment is at the highest peak in our history. In short, the American
economy is in trouble. The most resourceful industrialized country on earth ranks among the last in economic growth. I will propose within the next 14 days measures aimed at insuring a prompt recovery and paving the way for increased long-range growth."
Source: "Kennedy" by Ted Sorensen, p. 396
, Jan 1, 1965
Presided over strongest economic expansion in modern history
During the four years following John Kennedy's inauguration, the US experienced the longest and strongest economic expansion in this nation's modern history--GDP increased more in 4 years than it had in the previous 8. By 1964, a record $100 billion, 16%
growth in the nation's total output had provided more than 2.75 million more jobs and a record rise in labor income. The amount of idle manufacturing capacity had been reduced by half, and for the first time, the 70-million-job barrier had been shattered
Source: "Kennedy" by Ted Sorensen, p. 393
, Jan 1, 1965
All presidents outspend their predecessors
Kennedy's favorite comparison was with the fiscal record of his Republican predecessor. On occasion, he would ask: considering Truman's expenditures in Korea and at the end of the Second World War, how do you think Eisenhower's eight budgets compared wit
Truman's eight budgets? Eisenhower outspent Truman by $182 billion. "You could win a bet on that in any bar in the country," the President told me when I first gave him the figure. He would also cite
Eisenhower's record of five deficits in eight years, including a peacetime high of $12 billion, the $23 billion Eisenhower added to the national debt and the 200,000 civilian employees he added to the Federal payroll.
All Presidents, he continued, outspend their predecessors in a growing, progressive nation. The Kennedy administration's "domestic" increases didn't sound so outrageous when shown to be less than in the last three years of his predecessor.
Source: "Kennedy" by Ted Sorensen, p. 419
, Jan 1, 1965
More interested in federal programs than in cutting deficit
KENNEDY: I did not advocate reducing the federal debt because I don't believe that you're going to be able to reduce the federal debt very much in 1961, 1962, or 1963.
Q: You call for expanding some of the welfare programs for schools, for teacher salaries, medical care, and so forth; but you also call for reducing the federal debt. And I'm wondering how you would go about paying the bill for all this.
I think you have heavy obligations which affect our security, which we're going to have to meet.
NIXON: I think that it should be pointed out that of course it is not possible, particularly under the proposals that
Senator Kennedy has advocated, either to cut the national debt or to reduce taxes. As a matter of fact it will be necessary to raise taxes.
Source: The First Kennedy-Nixon Presidential Debate
, Sep 26, 1960
Page last updated: Apr 28, 2013