Warren G. Harding We need to realize the accomplishments of Charlie Dawes and President Warren Harding. Bureau of the Budget Charlie Dawes was the first Director of the Budget for a U.S. President. He was an able administrator who reduced federal spending. President Harding requested and obtained from the Congress authorization for the country's first formal budgeting process budget via the Budget and Accounting Act of 1921 establishing the Bureau of the Budget, considered to be one of his greatest domestic achievements.[106] The law created the presidential budget director who was directly responsible to the President, rather than the Secretary of Treasury. The law also stipulated that the President must submit a budget annually to the U.S. Congress. The General Accounting Office was created to assure oversight in the federal budget expenditures. Harding appointed Charlie Dawes, known for being an effective financier, as the first director of the Bureau of the Budget. Dawes reduced government spending by $1.5 billion his first year as director, a 25% reduction, along with another 25% reduction the following year. In effect, the Government budget was cut in half in just 2 years.[107] Postwar depression and recovery Main article: Depression of 1920-21 On March 4, 1921 President Harding assumed office while the nation was in the midst of a postwar economic decline, known as the Depression of 1920-21. By summer of his first year in office, after a series of actions by the Federal Reserve to lower interest rates, an economic recovery began. President Harding convened the Conference of Unemployment in 1921, headed by Secretary of Commerce Herbert Hoover, that proactively advocated stimulating the economy with local public work projects and encouraged businesses to apply shared work programs.[108] Harding's Treasury Secretary, Andrew Mellon, ordered a study which demonstrated historically that, as income tax rates were increased, money was driven underground or abroad. Mellon concluded that lower rates would increase tax revenues. Based on this advice, Harding cut taxes, starting in 1922. The top marginal rate was reduced annually in four stages from 73% in 1921 to 25% in 1925. Taxes were cut for lower incomes starting in 1923. The lower rates substantially increased the money flowing to the treasury.[109] By late 1922 the economy began to turn around. Unemployment was pared from its 1921 high of 12% to an average of 3.3% for the remainder of the decade. The misery index which is a combination of unemployment and inflation had its sharpest decline in U.S. history under President Harding. Wages, profits, and productivity all made substantial gains during the 1920s. Libertarian historian Thomas Woods contends that the tax cuts implemented by President Harding ended the Depression of 1920-21 and were responsible for creating a decade-long expansion. Historians Schweikart and Allen also argue that Harding's tax and economic policies in part "...produced the most vibrant eight year burst of manufacturing and innovation in the nation's history."[110]

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