Presidential Vetoes: Chester A. Arthur and the Budget Surplus
Chester Alan Arthur had one problem in his presidency that many modern presidents wish they had: a large budget surplus. Wartime taxes had left the nation with high revenues as governments had surplus budgets since 1866. By 1882 the surplus reached $145 million. Everyone was of the opinion that there was no need for this large surplus and that it was time to balance the budget from the other direction. But opinions differed on how to do it.
Democrats said that the way to go was to lower tariffs, in order to reduce revenues and also to reduce the cost of imported goods. On the other side of the aisle, Republicans believed that high tariffs ensured high wages in manufacturing and mining. They wanted the government to spend the surplus on internal improvements. The also wanted to see a reduction in excise taxes. President Arthur agreed with his party, and in 1882 he called for the abolition of excise taxes on everything except liquor. He also wanted to see a simplification of the complex tariff structure.
In May of 1882, Republican Representative William D. Kelley of Pennsylvania introduced a bill to establish a tariff commission. The bill passed and Arthur signed it into law. He appointed people who were predominantly protectionists to the committee. Republicans were satisfied with Arthur's appointments. But they were shocked when the committee report was released in December 1882. The committee report recommended that Congress impose tariff cuts averaging between 20 and 25%.
Republicans in the house decided to ignore the commission's recommendations. The House Ways and Means Committee was controlled by protectionists who recommended only a 10% average tariff reduction. After conferring with the Senate, the bill that emerged only reduced tariffs by an average of 1.47%. The bill passed both houses narrowly on March 3, 1883, the last full day of the 47th Congress. The bill accorded with Arthur's protectionist beliefs and he signed the measure into law. This still left the problem of the surplus.
Congress attempted to balance the budget from the other side of the ledger, with increased spending. They passed the 1882 Rivers and Harbors Act, a bill which called for $19 million to be spent. The River and Harbor Act of 1882 sought to improve waterways to benefit nation by promoting competition among other transportation modes, especially railroads. Congress sought to combine appropriations for development of nation's waterways with a reaffirmation of the policy of freedom from tolls and other user charges.
Unlike some of his predecessors who vetoed similar bills, Arthur was not opposed to internal improvements. It was the size of the bill disturbed him. He was also unhappy about the bill's focus on specific regions rather than projects that on those which would benefit a larger segment of the nation. On August 1, 1882, Arthur vetoed the bill.
In his veto message, Arthur said that his principal objection was that it appropriated funds for purposes "not for the common defense or general welfare, and which do not promote commerce among the States." Arthur's veto was publicly popular, everywhere except in Congress that is.
Congress overrode Arthur's veto the next day on August 2, 1882. The new law reduced the surplus by $19 million. Republicans in Congress thought that the law a success at the time. But several months later when Republicans lost seats in the mid-term elections, many of them attributed this as one of the factors that contributed to their loss.
Democrats said that the way to go was to lower tariffs, in order to reduce revenues and also to reduce the cost of imported goods. On the other side of the aisle, Republicans believed that high tariffs ensured high wages in manufacturing and mining. They wanted the government to spend the surplus on internal improvements. The also wanted to see a reduction in excise taxes. President Arthur agreed with his party, and in 1882 he called for the abolition of excise taxes on everything except liquor. He also wanted to see a simplification of the complex tariff structure.
In May of 1882, Republican Representative William D. Kelley of Pennsylvania introduced a bill to establish a tariff commission. The bill passed and Arthur signed it into law. He appointed people who were predominantly protectionists to the committee. Republicans were satisfied with Arthur's appointments. But they were shocked when the committee report was released in December 1882. The committee report recommended that Congress impose tariff cuts averaging between 20 and 25%.
Republicans in the house decided to ignore the commission's recommendations. The House Ways and Means Committee was controlled by protectionists who recommended only a 10% average tariff reduction. After conferring with the Senate, the bill that emerged only reduced tariffs by an average of 1.47%. The bill passed both houses narrowly on March 3, 1883, the last full day of the 47th Congress. The bill accorded with Arthur's protectionist beliefs and he signed the measure into law. This still left the problem of the surplus.
Congress attempted to balance the budget from the other side of the ledger, with increased spending. They passed the 1882 Rivers and Harbors Act, a bill which called for $19 million to be spent. The River and Harbor Act of 1882 sought to improve waterways to benefit nation by promoting competition among other transportation modes, especially railroads. Congress sought to combine appropriations for development of nation's waterways with a reaffirmation of the policy of freedom from tolls and other user charges.
Unlike some of his predecessors who vetoed similar bills, Arthur was not opposed to internal improvements. It was the size of the bill disturbed him. He was also unhappy about the bill's focus on specific regions rather than projects that on those which would benefit a larger segment of the nation. On August 1, 1882, Arthur vetoed the bill.
In his veto message, Arthur said that his principal objection was that it appropriated funds for purposes "not for the common defense or general welfare, and which do not promote commerce among the States." Arthur's veto was publicly popular, everywhere except in Congress that is.
Congress overrode Arthur's veto the next day on August 2, 1882. The new law reduced the surplus by $19 million. Republicans in Congress thought that the law a success at the time. But several months later when Republicans lost seats in the mid-term elections, many of them attributed this as one of the factors that contributed to their loss.