Economics of the Kennedy years, and a look ahead

What this book actually teaches

Seymour Edwin Harris was one of the leading Keynesian economists in the United States, and this book — written during or shortly after the Kennedy administration — is both a defense of the economic policies pursued under Kennedy and an argument for a particular vision of fiscal activism that Harris and his colleagues at Harvard had been developing since the New Deal era. The core argument is that the Kennedy economic team represented the first systematic application of professional macroeconomic thinking to American fiscal policy, and that the results — a growing economy, reduced unemployment, and the successful 1964 tax cut (proposed by Kennedy, passed under Johnson) — validated the Keynesian framework against both conservative critics and structuralist alternatives.

Harris was a close adviser to Kennedy and writes from the inside. The book provides useful documentary evidence of how the Council of Economic Advisers under Walter Heller operated, how the internal arguments about fiscal stimulus versus monetary policy were structured, and why the Kennedy team chose a large permanent tax cut rather than spending increases as the primary instrument for closing the output gap in 1961-1963. The political economy behind this choice — a tax cut being more acceptable to a Congress resistant to domestic spending expansion — is discussed with more candor than most official policy documents.

The analytical framework throughout is demand-side Keynesianism: output gaps can be closed by fiscal expansion; the multiplier effects of tax cuts or spending increases outweigh the crowding-out effects on private investment; and the full-employment budget balance is the appropriate fiscal target rather than the actual deficit. Harris is confident in this framework in ways that look dated from the vantage point of debates about supply-side effects, rational expectations, and the long-run neutrality of fiscal policy that emerged in the 1970s and 1980s.

The "look ahead" chapters attempt to project Kennedy-era policy directions forward, making them less useful as analysis and more useful as a window into what the American economic mainstream believed about growth, inflation, and the limits of policy in the early 1960s — before Vietnam spending, the Great Society programs, and the 1970s stagflation crisis had forced revisions to those beliefs.

For economic historians, policy scholars, and readers interested in how Keynesian ideas were actually translated into American fiscal policy during the early 1960s — a primary source document as much as an analysis.

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About Seymour Edwin Harris

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