The two presidents appointed commissioners to reach a deal, and the U.S. recognized the Obregón government on August 31, 1923, just under a month after Harding's death, substantially on the terms proffered by Mexico.[135]

Domestic policy
Postwar recession and recovery
Main article: Depression of 1920–1921
Charles Dawes—the first budget director and later, vice president under Coolidge
When Harding took office on March 4, 1921, the nation was in the midst of a postwar economic decline.[136] At the suggestion of legislative leaders, Harding called a special session of Congress, to convene April 11. When Harding addressed the joint session the following day, he urged the reduction of income taxes (raised during the war), an increase in tariffs on agricultural goods to protect the American farmer, as well as more wide-ranging reforms, such as support for highways, aviation, and radio.[137][138] It was not until May 27 that Congress passed an emergency tariff increase on agricultural products. An act authorizing a Bureau of the Budget followed on June 10, and Harding appointed Charles Dawes as bureau director with a mandate to cut expenditures.