Bring Warren G. Harding Back from the Dead

Beginning in 1920, after the end of World War I, the U.S. Gross Domestic Product plunged 24 percent, consumer prices dropped 18 percent, and unemployment soared from 2 percent to 12 percent. It was ugly.

Did President Harding try to spend his way out of the downturn? Not on your life. Instead, he cut federal expenditures, reduced the top tax rates, and broadened the tax base, making the rates flatter and less progressive. He also induced the Federal Reserve Bank to cut the money supply.

Bingo, the depression came to a screeching halt. Unemployment plunged, and the extraordinary prosperity of the 1920s was launched.

Bigger government and higher tax rates don’t cure economic downturns. They lengthen and intensify them.