Abstract:Between the 1930s and early 1960s, U.S. economic policy underwent an important transformation, described by economist Herbert Stein as “The Fiscal Revolution in America.” During those years, policymakers utilized Keynesian ideas to promote prosperity, and the fiscal revolution reached its peak after John F. Kennedy proposed a growth-boosting tax cut despite the unprecedented peacetime consequence of running a deficit in nonrecession conditions. This article explores how that revolution developed during the postwar period. It challenges the argument that the business community shaped and consolidated the fiscal revolution in the late 1950s and early 1960s. Instead, this article shows that liberal economists played a crucial role in fashioning Keynesianism’s postwar consolidation, so much so that the brand of that doctrine implemented in the early 1960s owed much to their efforts and was significantly different to the one championed by the business community.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.