Larry Kudlow, here:
[S]peaking in Galesburg, Ill., this summer, Obama served up a convenient historical fairy tale: "In the period after world War II," he said, "a growing middle class was the engine of our prosperity." Presumably he was thinking of a time when high taxes on the rich and industrial-union rule had the middle class soaring. The trouble is, Obama's history is wrong.
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Arguably, government spending cuts were the engine of post-war prosperity.
While Truman's record is second only to JFK/LBJ for real GDP growth in the post-war period, it occurred under special circumstances of extraordinarily deep government spending CUTS, which is little appreciated today when politicians and Keynesian and monetarist economists stress the importance of government spending for GDP. The truly remarkable thing under Truman is how the economy soared as spending decreased by TWO THIRDS from 1945 to 1947, as Arnold Kling reminded us here last year. Funny how Kudlow doesn't mention this. I guess they don't teach that at Princeton.
Under Truman's successor Eisenhower, real GDP growth slowed dramatically because of onerous levels of taxation maintained primarily to retire the war debts, but Eisenhower spent almost as frugally as Truman at the same time, making them the two best presidents we've had when it comes to small increases in the US public debt. That said, only the two Bush presidents and Obama have turned in poorer GDP performances than IKE. Funny also how Kudlow mentions only the one Bush. He leaves out the other one. You know, the "read my lips . . . no new taxes" Bush who ended up raising taxes.
Interestingly enough for US public debt growth, JFK/LBJ come in right behind Truman and Eisenhower while introducing the tax cuts which might have made Eisenhower's GDP record better than it was. Despite the guns and butter era under LBJ, the presidents occupying The White House between 1945 and 1968 were the most fiscally responsible we've had in the post-war, and it was a dramatic resetting of the baseline for spending LOWER under Truman which was the foundation of that period's economic growth.
