In campaigning for the presidency in 1932, Franklin D. Roosevelt promised the American public that a balanced budget would be maintained. In fact, during all his years in the White House, prior to our buildup for World War II, a balanced budget was uppermost in his mind. Philosophically, he was against the government's going further into debt -- but, in order to support his many relief programs, his advisors felt that it was necessary to spend more. As program after program was passed -- programs that would cost taxpayers billions of dollars -- the choices were increased taxes or government borrowing. So, to give the American people a "New Deal," a budget deficit was needed.

When he first took over the presidency, Roosevelt had the backing of many segments of society -- not only the general public but bankers and businessmen. The depression affected everyone. Business was hurt badly; government borrowing was far more acceptable to the business community than higher taxes. Such was the attitude until 1936, when bankers and businessmen began to change their views. As recovery began to take effect, the deficit was not considered necessary. Even though he did not favor greater debt, Roosevelt had his priorities. Convinced that deficits were temporary and not a permanent fact of fiscal life, he was exultant about the pump-priming consequences of spending. In his budget message of 1936 he stated:

    Our policy is succeeding. The figures prove it Secure in the knowledge that steadily decreasing deficits will turn in time into steadily increasing surpluses, and that it is the deficit of today which is making possible the surplus of tomorrow, let us pursue the course we have mapped.

As unemployment decreased during those early years of pump-priming, there seemed to be some grounds for President Roosevelt's optimism. Then, one year after his second inauguration, unemployment began to rise. Why, in spite of this pump priming, was there a recession within a depression? The pump was not running; prosperity generated by deficits had not survived the withdrawal of the stimulus. Were deficits to become a permanent part of government policy?

Looking back upon those deficit days of the New Deal, it is well to note that the average yearly federal budget deficit was about three billion dollars, out of an entire federal budget of six to nine billion dollars. The federal government was borrowing a larger portion of its operating expenses in the 30s than it is today.

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