By David Kurlander
Treasury Secretary Janet Yellen on Tuesday warned the Senate Banking Committee that Congress must raise the debt ceiling by October 18th to avoid defaulting. Yellen’s deadline comes as Republican leader Mitch McConnell, in a quest for broader political leverage over congressional spending, refuses to join Senate Democrats in voting to increase the ceiling. On this week’s episode of Now & Then, “Government Debt Roulette,” Heather Cox Richardson argued that the sometimes-dry debt debates are actually “the way that Americans discuss what kind of a nation they want to have and who should pay for that nation.” This was never truer than in 1967, when Republican legislators used a debt ceiling debate to question the Johnson administration’s commitment to domestic spending amid the rising costs of the Vietnam War.
“I am here today to talk about financing a war,” said Treasury Secretary Henry Fowler. “It is a costly war, and it must be financed in a manner consistent with preserving sound, balanced, and fruitful economic growth at home while we are fighting to preserve freedom in a far-off corner of the world.”
Fowler was testifying before the House Ways and Means Committee on May 15th, 1967. He was asking for a $29 billion increase in the debt ceiling, from $336 billion to $365 billion. At the end of the federal government fiscal year, June 30th, 1967, the ceiling was slated to revert down to its permanent level of $285 billion, risking default. Fowler told the Committee that he believed the permanent increase would give the Treasury enough money to pay the federal debt until mid-1969, even if the fighting in Vietnam further expanded.
Over the previous two years, Fowler had orchestrated a series of temporary increases in the ceiling as the cost of the Vietnam War spiraled. He was a Democratic Party loyalist; he had served as a legal staffer at the Tennessee Valley Authority under Roosevelt, as an economic advisor to Truman during the Korean War, and as Kennedy’s Under Secretary of the Treasury. Fowler was also a crucial Johnson fundraiser in 1964, and his wife Trudye was Chairman of the Speaker’s Bureau for Lady Bird Johnson’s vaunted Beautification Program.
In other words, Fowler was not going to question LBJ’s program. “I never felt that it was my role or that I had either qualifications or resources to second-guess the President, the Joint Chiefs of Staff, the Secretary of Defense and the Secretary of State on the duration or magnitude of the war,” Fowler reflected in a 1969 oral history. In the same interview, Fowler also expressed his belief that Johnson was being unfairly dragged for the War. “To me he was just exactly like I’ve always thought Abraham Lincoln was. He was carrying on a war which he regretted more than anybody else in the world.”
Republican legislators found themselves in an odd position with Fowler’s request. Although ostensible supporters of the War, they mostly opposed Johnson’s domestic social programs and Civil Rights legislation, from Medicare to his Head Start federal education program. The yearly cost of Johnson’s domestic vision had spiked $20 billion since 1965. After a strong showing in the November 1966 midterms, the GOP saw an opportunity to squeeze the administration over President Johnson’s continued belief that he could have both “guns and butter.”
During the Ways and Means Committee vote on the ceiling increase on June 4th, 1967, the Republicans unleashed their attack. In a minority report, the GOP members argued that Johnson was being purposely vague about the costs of the War to avoid limiting his Great Society: “Instead of acknowledging that the increased cost of the war in Vietnam requires a change in its domestic programs, the Administration has consistently underestimated the cost of the war to avert any cutback in domestic spending.” While the bill advanced to the House floor, the 10 Republicans on the Committee voted against the increase. Their united opposition was a signal of things to come.
On June 7th, the House voted against raising the ceiling 217-196. Their surprising decision marked the first time in American history that the House ever rejected a debt limit increase. The Republicans were united in their opposition and were joined by 34 Democrats—primarily segregationists who were drifting from the party, but also several dovish opponents to the Vietnam War.
The obstruction was short-lived. Two weeks after the defeat, the House narrowly passed a slight compromise: an agreement to raise the debt ceiling to $358 billion immediately, with the outstanding $7 billion coming the following year.
The floor debate before the vote was contentious. Missouri Republican Thomas Curtis re-upped criticism over the opacity of Vietnam budgets, arguing that the projections for weapons expenditures were deliberately underreported and made forward-looking congressional economic decisions impossible. Curtis asked: “Are we going to have a dictatorship or are we going to fulfill our obligations as the representative of the people?”
Moments later, Dixiecrat Georgian Phil Landrum countered by reading aloud letters urging the increase from the heads of the American Legion, Veterans of Foreign Wars, and Disabled American Veterans. The letters suggested that the organizations might not be able to send pension checks and benefits to veterans.
Michigan Republican Gerald Ford, then the House Minority Leader, broke in to insinuate that the administration was using broader “arm-twisting” tactics to generate sympathy for the increase. “Some Government defense contractors have been calling Members on our side of the aisle, and literally with tears in their eyes have said that they have been told by the Bureau of the Budget and by the Pentagon that unless we pass this $365 billion limitation they will not get paid,” Ford alleged. “Well, that is a lot of baloney.”
Landrum took the floor again, throwing Ford’s language back in the GOP’s face: “The charge today that we are living under a dictatorship in the fiscal area is simply pure nonsense—pure political baloney—if you want to use the words used by the gentleman from Michigan.”
The increase also barely scraped through the Senate, despite the efforts of Virginia Dixiecrat Harry Byrd, Jr., who broke with the Democrats to push for eliminating the $7 billion second-year increase. “The lid’s off, boys,” Byrd warned. “We’re gonna raise the ceiling again next year and do it a year in advance.” The powerful Byrd family was no stranger to debt increase battles. Back in 1953, Byrd’s father, Harry Sr., led anti-Eisenhower Senate Democrats in a revolt against a $15 billion ceiling boost.
Even with the added criticism from conservative Democrats, Johnson and Fowler had achieved their objective just in time. Johnson signed the new debt limit into law from his ranch outside of San Antonio shortly before the midnight deadline of July 1st, 1967. In a poignant synchronicity, he simultaneously signed a four-year extension of the draft law.
The increase indeed held over until mid-1969. Furthermore, a tax increase allowed for a rare budget surplus for fiscal year 1969, the last until the Clinton administration and a symbolic victory for the Johnson White House, even as the pain of Vietnam sapped Johnson of his will to run for a second term.
The 1967 debt ceiling increase was not just a battle over honoring past spending, but rather an escalating debate over the role of government, the conduct of an increasingly unpopular conflict, and the nature of party loyalty in a shifting social climate. The Republican strategy today also has much more to do with fundamental national priorities than it does with actual Treasury funds. With default looming yet again, the risks of this decades-long game of partisan chicken rise by the day.
For more on the economic wrangling surrounding Vietnam, read Anthony Campagna’s 1991 The Economic Impact of the Vietnam War. And for more on Fowler’s position with debates over war spending, check out his 1981 WGBH interview for the epic Vietnam: A Television History.
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