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Economics Of Eisenhower Essay, Research Paper

In November of 1952 General Dwight D. Eisenhower was elected to the office of

President of the United States. It was the first time a Republican was elected since

Herbert Hoover in 1928. The Eisenhower administration started at a rather awkward

time, both politically and economically. First of all there was a war on. The Korean War

had begun in June of 1950 and was still waging. As was usual for wartime the country

was economically prosperous. However, the war had caused President Truman to

abandon his former restraints on government spending. The amount of money being

spent on defense skyrocketed to supply the troops in Korea with the supplies they needed.

This caused the federal deficit to increase dramatically (Pach and Richardson, 53).

Another legacy leftover from the Truman days was that of the Fair Deal domestic

program. Although Truman found much opposition to his programs in Congress he

managed to get several things done. Such as a public housing bill, an expansion of social

security coverage, and increased minimum wages. The Republican party was not in favor

of the majority of this legislation. Thus when Eisenhower was elected they immediately

made plans for cutbacks in the spending on these programs. Unfortunately for them the

newly elected president was not opposed to the programs Truman had began and

improved upon. Over the course of his administration Eisenhower often did not hold the

same opinions as some of the members of his party.

As the Chief Economic advisor to the President of the United States there are

many different issues which I must consider. These issues are both large and small,

foreign and domestic, and affect the upper, middle, and lower classes. At this point in

time there are several important concerns which I have. The Korean War is ending and

this is going to have a profound affect on the economy of the United States. During the

war the country was prosperous but afterward there is always a high risk of increased

inflation and an increase in unemployment. These conditions have the ability to cause a

recession. Now that an armistice has been reached in Korea, a recession is beginning to

occur (Pach and Richardson, 54).

I believe that the President s chief concern should not be to make an immediate

and fast acting restoration of the general economy. The problems of the federal deficit

and the recession must wait until the more important problems are dealt with. The

problem at hand is the rising rate of unemployment. This problem must be dealt with

immediately with strong actions. I suggest implementing federal public works projects

as a way of creating jobs without burdening the government with additional expenses.

Ideas for these public works projects are: the construction of a Saint Lawrence Seaway,

and an Interstate Highway System. This system would be a massive undertaking and

would be one of the largest construction projects of all time but it would create many jobs

for Americans who are no longer employed by the war effort (Branyan and Larsen, 251).

The Republican party has not been happy with the nations economic policies for

quite some time. These are the policies of the Democrats, and more specifically those of

the New Deal and the Fair Deal. These social programs, such as social security and

welfare have been a drain on the federal budget for quite some time. Republicans feel

that the time has come to start cutting back the amount of money being spent on such

programs or at least curtail the yearly increases. However, there are times when a

political leader must make their own decisions and not base the way they run their

administration on the influences from their party. It would be better for the economic

health of the nation to maintain all of the social programs started under the Roosevelt and

Truman administrations. While this would normally pose a problem to the federal budget

it will not due to current conditions. The amount of money formerly spent on national

security, meaning military and defense spending has been severely reduced (Albertson,

139). This frees up a large amount of money to be used for other goals. These goals

should be those of improving the standard of living for each and every American and not

the immediate reduction of taxes, a goal which many members of the Republican party

would like to see pursued. The programs initiated in the policies of the New Deal and

Fair Deal should not simply be maintained, instead they should be expanded upon. I

suggest that the Social Security system be amended to include benefits for self-employed

farmers and disabled workers.

While there is much work to be done on economic policy domestically, the

foreign policy must be dealt with as well. One of the most important aspects of foreign

economic policy is that of trade. There are different ways for a government to legislate

trade. It can be done from a protectionist position or from a more free trade position. In a

protectionist position the government is aiming to ensure American businesses and at the

same time decrease the amount of sales of foreign business. The fastest method for

accomplishing this task is to increase tariffs, as in taxes on foreign goods coming in to the

country. When these taxes are high it costs the foreign companies much more to ship

goods into the United States. In order to compensate these costs the companies must

increase the price of their goods. When people in American see foreign goods for

outrageous prices and then they see American goods for normal prices than they are going

to buy American products. Unfortunately, this is not the only effect of a protectionist

policy. Foreign nations often get upset at the increase in American tariffs and respond by

increasing their own tariffs on American goods. This weakens the sales of American

goods in foreign nations. In order for the United States to have a favorable balance of

trade then they must have strong exports. This is where a free trade policy comes in. In a

free trade policy, tariffs are lowered, allowing more goods to be imported to the United

States. Foreign nations will see the lowered tariffs in the United States and respond by

lowering their tariffs on American goods. This will increase the overall trade between the

United States and nations abroad.

The Republican party would like to see a return to more protectionist policies.

However, I feel it should be the job of the President to guide the Grand Old Party away

from such a viewpoint (Bonker, 58). Instead of trying to increase tariffs, President

Eisenhower should attempt to renew the Reciprocal Trade Act so that he will have the

power to lower tariffs by as much as fifteen percent. With the tariffs lowered foreign

countries will respond favorably. This will produce more commerce and be beneficial to

the United States balance of trade. Another measure that should be taken in order to

bolster American trading and overseas investments is to decrease the corporate taxes to a

percent much lower than the domestic rate on income earned through foreign subsidiaries

of U.S. businesses. Trade is essential to overcome the dollar gap that prevented foreign

marketing of United States goods (Melanson and Mayers, 159).

There are many economic issues which face the nation at this time. A recovery

from World War II and the Korean War, a recession, a change in the political party of the

president, and several other issues. Thus this must be a time of strong economic

leadership. The policies made and legislature passed must steer the United States through

this apparent storm and give the nation a chance to rest from the hecticness of the first

half of the century. For in that half a century the country faced World War I, World War

II, and the Great Depression. Now is a time when the nation must rest up and regain its

strength for the most assuredly hard times to come. During President Eisenhower s term

in office one word must describe the economic policy, stability. The country does not

need risky ventures and bold new ideas, the country needs to hold on to its previous

economic standpoints. The only new policies implemented should be those to combat

new issues that arise during the Eisenhower presidency. Thus all of the economic advice

I have given the President Eisenhower serves one main purpose. That is to ensure the

economic stability and prosperity of the United States of America.

In 1953 I took office and began to serve as President Eisenhower s chief

economic advisor. I quickly assessed the economic stature of the nation and began to

plan my policies for the future. I was aware of what I wanted to accomplish and how I

planned to achieve my goals. I advised the President on many key and important

economic issues of our time. When I think back I must decipher whether or not the

policies I implemented were successful. At the time I thought what I was doing was right

but as the saying goes hindsight is twenty-twenty and I can only truly tell if I was

successful by looking back upon my work and taking an overview of it.

As I look back upon my time in office I come to a very distinct conclusion. I

believe that I was successful in achieving the economic goals which I set out for.

Through my suggested policies regarding social security I made Americans more secure

in their jobs and their government. Through my suggested policies regarding works

programs I created countless jobs for Americans who desperately needed them, especially

in a time directly after a major war. In regards to foreign economic policy I was also very

successful. The trading of the United States was booming. U.S. products were being

produced and sold around the world. By the 1956 fiscal year the Treasury showed an

impressive surplus (Pach and Richardson, 55). The success of the nation s economy

would prove to be imperative for the time. As the country entered the Cold War the focus

needed to be placed on the Soviet Union, national security, and defense. The economy

had to be stable because we could not afford to worry about its well being in a time of

such political strife. The United States had very specific needs during the fifties. The

country needed a strong military to compete with the Soviet Union, a strong government

to legislate, and a strong economy to back it all up. The policies I helped to implement

were the ones that met the needs of the times. After a war a nation needs stability and my

policies and programs provided this stability which allowed the United States to

adequately recover from World War II and the Korean War so that the country would be

able to fight future battles.

Works Cited List

Albertson, Dean. Eisenhower As President. New York: Hill and Wang, 1963

Ambrose, Stephen E. Eisenhower. New York: Simon and Schuster, 1970

Bonker, Don. America s Trade Crisis. Boston: Houghton Mifflin Company, 1988

Branyan, Robert L., Larsen, Lawrence H. The Eisenhower Administration 1953-1961.

New York: Random House, 1971

Melanson, Richard A., Mayers, David. Reevaluating Eisenhower American Foreign

Policy in the 1950s. Urbana and Chicago: University of Illinois Press, 1987

Pach, Chester J. Jr., Richardson, Elmo. The Presidency of Dwight D. Eisenhower.

Kansas: University Press of Kansas, 1991