Less than a month later, Martin, caricatured by the political cartoonist Herblock as a tightwad<br />with a stiff, high collar, said the prospect of a tax cut was causing “excessive optimism.”<br />“If the present euphoria should be translated by a tax cut in a real surge in the economy,” he warned Fed policy makers on Dec. 17, “the system<br />might be faced with the need for a change in the discount rate or some other drastic action to be taken at the first opportunity.”<br />By March 1964, Congress had passed the tax cut and the economy was cruising.<br />Joseph Califano, an aide (later a cabinet secretary under President Jimmy Carter), recalled Johnson’s “burning up the wires to Washington, asking one member of Congress after another, ‘How can I run the country<br />and the government if I have to read on a news-service ticker that Bill Martin is going to run his own economy?’”<br />Martin was summoned to explain why he had defied the president.<br />A President at War With His Fed Chief, 5 Decades Before Trump -<br />A new president takes office with big plans, and needs a booming economy to help underwrite his promises.<br />Speaking to Fowler by phone, he made a historical reference going back nearly 150 years: the so-called Bank War when President Andrew Jackson whipped up a populist frenzy against Nicholas Biddle<br />and his Bank of the United States, a predecessor of the Federal Reserve.<br />“The function of the Federal Reserve,” he said, “is to take away the punch bowl just as the party is getting good.”<br />Johnson, the shrewd Texas lawmaker who had seemed out of sorts as Kennedy’s vice president, had no interest in slowing growth.
