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Read and Remember!

Fifty years ago — on July 2, 1964 — President Johnson signed into law the Civil Rights Act, described by one author as “the most important legislation passed in 20th century America.” Many Americans take justifiable pride in the last 50 years of progress in support of the principle of racial equality.

Not so much progress has been made in vindicating another principle that played a critical role in the 1964 congressional session — the ideal of a balanced budget. The goal of balancing the budget that year led to hard choices on a compromise that cleared the way for congressional debate on the Civil Rights Act.

Federal officials in early 1964, like those today, worried about reducing a 6% unemployment rate that persisted long after recovery from a severe recession years earlier. A tax cut was one alternative, but congressional leaders in both parties believed it would be short-sighted to substitute debt for tax revenues to finance routine spending.

Wilbur Mills, chairman of the House Ways and Means Committee, had told President Kennedy that his constituents would welcome lower taxes but knew that “if you’re gonna cut taxes, you gotta cut spending.”

In the fall of 1963 Mills arranged House passage of a bill phasing in lower income-tax rates, as requested by the White House. Though the House was satisfied with Kennedy’s written pledge to uphold greater spending discipline, the Senate Finance Committee required a more concrete commitment.

Then an assassin’s bullet put Lyndon Johnson in the White House.

The new president told his staff that a debt-financed tax cut would fare no better than a “joint resolution endorsing sin.” After Johnson and his Cabinet worked for weeks to identify spending cuts, they produced a budget that proposed spending less in the next fiscal year than Congress had approved in the current year.

If the cuts were adopted, it would be the first time federal spending had dropped since 1947, the first full fiscal year of World War II demobilization. Johnson proudly noted in the State of the Union that federal spending would fall to the lowest percentage of national income in 14 years.

That budget prompted Senate Finance Committee Chairman Harry Byrd to send the tax bill to the floor, where it passed on Feb. 26. Immediately after, the Senate majority leader moved to place the Civil Rights Act on the calendar.

The principle of a balanced budget forced federal leaders to consider the tradeoffs between their tax and spending policies. Later in 1964 the House witnessed a debate over those tradeoffs that would hardly seem conceivable today.


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admin • July 18, 2014

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