The era of easy finance, 1941–1980

World War II, like the great national emergencies before it, created opportunities for public finance reforms that had clear social intent and organizational coherence. As had been the case during World War I and the Great Depression, decisive presidential leadership contributed significantly to the creation of a new tax regime. The administration of President Franklin D. Roosevelt—motivated by a concern for social justice as well as by the threat to the nation's security—shaped the enactment of a wartime tax regime and then exercised initiative in using the media to persuade Americans to accept it. After the war, this new tax regime proved even more resilient than the World War I regime had been during the 1920s. At the core of the new regime was a broad-based income tax. Because of this broad base, economic growth and long-term inflation enabled the federal government to garner increasing revenues from the new regime. Until the late 1970s, the new regime funded the expansion of both domestic and foreign programs while enabling the federal government to reduce corporate and excise taxes and to avoid the politically damaging process of increasing tax rates. THE FORMATION OF THE TAX REGIME As Americans prepared to enter World War II, President Roosevelt and the congressional leadership assumed that mobilization would be on a much greater scale than during World War I and that the inflationary pressures would be even more severe.