The Affluent Society

by John Kenneth Galbraith

The conventional wisdom continued to emphasize the balanced budget. Audiences continued to respond to the warnings of the disaster which would befall were this rule not respected. The shattering circumstance was the great depression. This led in the United States to a severe reduction in the revenues of the federal government; it also brought pressure for a variety of relief and welfare expenditures. A balanced budget meant increasing tax rates and reducing public expenditure. Viewed in retrospect, it would be hard to imagine a better design for reducing both the private and the public demand for goods, aggravating deflation, increasing unemployment, and adding to the general suffering. In the conventional wisdom, nonetheless, the balanced budget remained of paramount importance.