1959 budget cuts held back an economic recovery - what's that say about cuts and economic growth?

[alp227]

I read a book about President Dwight Eisenhower and came across a passage about how the 1959 budget cuts and tight-money economic policy restrained the 1958 economic recovery. It seems that the current administration and the Republicans could take a lesson from history - cuts don't help the economy! More at my blog. You can read Dwight D. Eisenhower by Tom Wicker at Google Books (Google mistitled the book though); the relevant passage is on pages 113 and 114:

Neither for the first nor last time, Eisenhower had misjudged the Democrats. In 1959, rather than being profligate spenders, they decided to outdo the president in reducing federal expenditures. By the time the two congressional parties were done leap-frogging over each other in ever bigger spending cuts, the fiscal 1960 budget they adopted featured a $269 million surplus. That may have please the White House but the inescapable economic fact was that such a dramatic one-year swing in federal spending—from a $13 billion deficit to a nearly—virtually strangled the economic recovery that had begun in April 1958.

In 1959, moreover, the Federal Reserve, which had been ritually keeping money tight since 1956, actually raised the crucial discount rate from 2.5 to 4 percent. Restrictive fiscal and monetary policy combined resulted in the shortest economic expansion of the post-war year, and in April 1960 the economy began sliding into a new recession, which was to last into 1961.

The top tax rate from 1950 to 1963 was 91%, and that could have contributed to the surplus. It's interesting how the right wing glamorizes the 1950s as the "good old days" yet never discuss how it could have been under such a BURDENSOME 91% rate that must have forced millionaires and billionaires back then to go hungry every night! (fell sharply after 1954. The administration invested in public works including the Saint Lawrence Seaway and Interstate Highway System. By the fourth quarter of 1956, the gross national product was $420 billion (Wicker, p. 94).[br />
So again...when has austerity EVER helped an economy? Look at the growth policy by Eisenhower that led to a prosperous nation. And after Bill Clinton boosted the top tax rate from 31% to 39.6% in 1993, the budget deficit shrunk every year under his administration and even reached a surplus by 1998.

And what happened to the Republican Party of Dwight Eisenhower? From people who knew how to manage an economy to greedy, individualistic billionaire butt-kissers.

[midnight]

1. Austerity never helps the economy.... They need to step out of the way, and

let some adults clean up.. And get the money flowing into the hands of the people that create the jobs.... The middle class and the poor..