War Deficits.

The economic recovery of World War II was the result of massive federal expenditures for defense. The government spent approximately $360 billion on the war, at times as much as $250 million a day. A little under half of these expenditures were raised by taxes; bond sales and deficit spending accounted for the rest. Throughout the war the government operated in the red; by 1945 the national debt was a staggering $260 billion.

Taxes.

Taxation was the government's best means of raising revenue, but tax policy was a complicated political construction, the product of numerous compromises between interest groups and their representatives on Capitol Hill. The Roosevelt administration hoped for a heavily progressive tax geared toward the wealthy. Such taxes would raise the greatest revenues and dampen inflationary pressures by reducing disposable income. From the experience of World War I, Roosevelt was...