We have heard much about a balanced budget, and it is interesting to note that many of those who have pleaded for a balanced budget as the sole need now come to me to plead for additional government expenditures at the expense of unbalancing the budget. As the Congress is fully aware, the annual deficit, large for several years, has been declining the last fiscal year and this. The proposed budget for 1939, which I shall shortly send to the Congress, will exhibit a further decrease in the deficit, though not a balance between income and outgo.
To many who have pleaded with me for an immediate balancing of the budget, by a sharp curtailment or even elimination of government functions, I have asked the question: "What present expenditures would you reduce or eliminate?" And the invariable answer has been "that is not my business -- I know nothing of the details, but I am sure that it could be done." That is not what you or I would call helpful citizenship.
The acceptance by the Roosevelt Administration of what became known as Keynesianism established the precedent of using deficit spending as a vehicle for promoting economic recovery in times of national fiscal crisis. Deficit spending continued throughout the war, when the economy expanded rapidly and employment reached full capacity, with the goal being the successful prosecution of the war. The obvious connection between deficit spending and economic expansion was not lost on many Americans, including business leaders who much preferred large deficits to Keynes's alternative of massive redistribution of wealth through taxation as a way to sustain America's prosperity in peacetime.
FDR's support for deficit spending was yet another shift in the relationship between the government and the people that took place during his Administration. President Roosevelt expressed his vision for a country where each citizen was guaranteed a basic level of economic security most eloquently in his Economic Bill of Rights speech on January 11, 1944:
We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence. "Necessitous men are not free men." People who are hungry and out of a job are the stuff of which dictatorships are made.
For more on the Economic Bill of Rights Speech, see the Library's online feature: 1944 State of the Union Address.
Photograph from Courtesy of the Franklin D. Roosevelt Library archives of FDR with son Elliott at Campobello, 1912.
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