RANDOLPH, RUSTIN, AND KING, standard-bearers of this Freedom Movement, were all avowed democratic socialists. Chief among the academic and union economists who worked with them on developing the budget was Leon Keyserling. As an attorney and economist on the staff of New York Sen. Robert Wagner in the 1930s, Keyserling had actually written most of the text of both the Social Security Act and the National Labor Relations Act. In the following years, he’d held multiple posts in both the Roosevelt and Truman administrations, arguing for planned full employment and higher minimum wages. (His advocacy led Truman and the Congress to enact what is still the greatest percentage increase in the federal minimum wage.)
When the Freedom Budget was released in late 1966, it called for planned full employment, income provision for those who couldn’t be employed, universal medical care, higher minimum wages, new housing to replace the nation’s 9.3 million “seriously deficient housing units,” the eradication of air and water pollution, and preservation of the nation’s natural resources, among other social necessities. It was Keyserling’s achievement that it did so without running a deficit or raising tax rates. By mandating a high level of production and planned full employment, the budget penciled out so that revenues coming in to the government would grow to provide an additional $185 billion over the next ten years that could fund its proposals, without diminishing the billions needed to fund other government activities. Full employment was the key, boosting the number of taxpayers, the level of their wages, and the government’s revenues.
We need to recall that in 1966, the highest marginal federal income tax rate was 70 percent (today, it’s 37 percent); the federal corporate tax rate was 53 percent (it’s 21 percent today); and the rate of private-sector unionization was 30 percent (it’s 6 percent today). Keyserling’s numbers were based on the more egalitarian income and tax rates in place when he wrote.
To say that the odds against the Freedom Budget’s adoption were steep is an understatement. It presupposed that the burst of liberal legislation that came out of the overwhelmingly Democratic Congress of 1965 would continue, yet the Democratic majorities were quickly diminished in the 1966 midterms. The budget also failed to account for the growing spending on the Vietnam War—and by ignoring the moral as well as financial costs of the war, it failed to reach out to and interest its most natural constituency—liberal and left-liberal anti-war activists.