President Obama is being advised to adopt as a model in his dealings with Congress during the budget crisis the tactics of Lyndon Baines Johnson. A former aide to LBJ, Joseph Califano Jr., has a dispatch in the New York Times this week suggesting that Mr. Obama base his strategy in dealing with Congress on Johnson’s maneuvering during the budget battles of 1967 and 1968, when LBJ “won” his contest with Congress by knowing the “pressure points” on the legislators and thus preserving the huge outlays on the Great Society program while keeping up the Vietnam War. The strategy was known as guns and butter. Mr. Califano suggests Mr. Obama hew to such a line even in the wake of rejection by a bipartisan majority in the House of a plan to raise the nation’s debt ceiling absent cuts in taxes and spending.

What Mr. Califano fails to mention is that it was during this period under President Johnson that America defaulted on its agreement in respect of the London Gold Pool. The gold pool was an accord among eight major nations to pool some their gold holdings so as to enable the Bretton Woods system to continue operating. Under Bretton Woods America was bound by treaty to redeem the dollar with foreign governments at a 35^th of an ounce of gold. The gold pool was a scheme to maintain that price via an agreement, struck in 1961, to buy and sell among eight major countries. America was supposed to provide half of the gold in the pool. But as LBJ’s domestic spending competed with outlays for the war against communism in Southeast Asia, the dollar began to lose value, and in March 1968, America asked that the London gold markets be shuttered. Bretton Woods unraveled three years later.

Mr. Califano’s narrative is typical of a Democratic Party that today proceeds as if none of this ever happened — or had any meaning. All this horror today at the prospect that the Republicans might force a default on the federal debt is voiced absent any mention of the default that was precipitated by the quest for the Great Society. It is also a cover for tax increases. “Like Mr. Obama now,” Mr. Califano writes, Johnson “knew that he had to raise taxes to reduce the deficit.” He goes on to characterize LBJ’s $28 billion shortfall as “chump change” compared to “today’s trillions.” That’s a rookie error. The fact is that adjusting that $28 billion deficit LBJ was facing for the price of gold discloses that it is comparable to a deficit today of $1.25 trillion, much closer to the budget deficit today and hardly “chump change,” even by the standard of modern profligacy.

Not that Mr. Califano is alone in his confusion. All kinds of people have difficulty keeping things straight in an era of fiat currency, when the dollar has no definition other than what a few Ph.D.s at the Federal Reserve say it has, a saying that can vary from day to day without any reference to United States statue or to the Constitution. Price signals can’t be trusted, and when the government makes commitments, it has no clear understanding of what will be the true cost of them when it comes time for redemption. This is something to remember in the battle that is coming to a head over the debt ceiling. The default that everyone is warning might happen if Congress doesn’t permit Mr. Obama to borrow more or raise taxes is no worse than the default that has already happened, as the value of the dollar has been permitted to collapse to less than a 1,500^th of an ounce of gold.