What A Conservative Republican Looks Like

There is a very public debate within the Republican Party as to what it means to be an economic conservative. The answer is simple. It’s not the bailout-government intervention responses of Hoover and Bush that prevent an economy from recovering during a financial crisis. It’s not the cheap money demands of Coolidge, Reagan, and Bush that create mirages of economic booms that result in destruction. The real example comes from a President who is far less notable than all the above leaders. In 1920, the economy was in crisis after the Federal Revere (“Fed”) pulled back on the monetary expansion and low interest rates used to fund World War I. The unemployment rate spiked to over 12%. In comparison, after the 1929 crash, the unemployment rate spiked to 8% and, after the 2008 crash, the unemployment rate peaked at 10%. In response, Harding, though not perfect in many ways, did something incredible in the world of politics. He did nothing! Well, he cut the budget by over 50% and cut some taxes.

In his 1920 speech accepting the Republican presidential nomination, Harding declared:

We will attempt intelligent and courageous deflation, and strike at government borrowing which enlarges the evil, and we will attack high cost of government with every energy and facility which attend Republican capacity. We promise that relief which will attend the halting of waste and extravagance, and the renewal of the practice of public economy, not alone because it will relieve tax burdens but because it will be an example to stimulate thrift and economy in private life. Let us call to all the people for thrift and economy, for denial and sacrifice if need be, for a nationwide drive against extravagance and luxury, to a recommittal to simplicity of living, to that prudent and normal plan of life which is the health of the republic. There hasn’t been a recovery from the waste and abnormalities of war since the story of mankind was first written, except through work and saving, through industry and denial, while needless spending and heedless extravagance have marked every decay in the history of nations.

What happened? Less than two years later, the unemployment rate was below 2%. Unlike any of the other Presidents or most current Republicans, Harding understood that the economic down turn was actually the economy’s attempt to fix the destruction caused by the interference of the Fed and the government in the economy. The economic crash was the cure, not the problem! If you want to know if a Republican is a conservative, much less understands our economic problems, just ask yourself if he/she acts like Harding.