As federal policymakers gear up to battle over federal spending and the budget sequester this Fall, it is interesting to consider past efforts at restraint. President Calvin Coolidge, for example, held the federal budget down to about $3 billion seven years in a row, while cutting taxes and bringing the federal debt down from $22 billion to $17 billion.
President Thomas Jefferson pursued his own rough sequester, and substantially reduced the federal debt that had accumulated under the Federalists. In a 1799 letter to Elbridge Gerry, Jefferson said “I am for a government rigorously frugal and simple, applying all the possible savings of the public revenue to the discharge of the national debt.” Jefferson more or less followed through over his two terms. He kept total federal spending at about $9 to $10 billion, although his downsizing efforts were thrown off by various contingencies.
Figure 1 shows the basic story. Federal spending rose substantially under Presidents George Washington and John Adams, but then flattened under Jefferson between 1801 and 1809. Federal debt fell from $83 million in 1801 to $57 million in 1809. The drop in debt was impressive, especially considering that the government swallowed $13 million of added debt during that period from the Louisiana purchase. The success of Jefferson—and his Treasury Secretary Albert Gallatin—in reducing debt stemmed not from cuts to overall spending, but from simply ensuring that revenue increases from a growing economy went toward paying down the debt rather than expanding the government.
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