Is national debt a problem? Some say no, others say yes. This is not a new discussion. Since the Revolution, our country’s debt problems and solutions have been argued. The Founders desired to establish a country that would endure for generations. These educated men, with personal experience of oppression, set forth principles that we ignore at our peril. Any enterprise, a simple partnership or even a country that veers from original principles is doomed to fail. The Founders understood massive debt could endanger the country’s very existence. They understood that it would be necessary, at times, to run a deficit. The Revolutionary War was successful in large part because of heavy borrowing. Still the Founders disapproved of unlimited debt.
In 1789, the new federated republic was formed as was the U.S Treasury. Alexander Hamilton, the first treasury secretary, convinced Congress to assume the war debt from individual states. Hamilton said, "A national debt, if it is not excessive, will be to us a national blessing." If interest was paid regularly, the country would build a positive reputation.
Thomas Jefferson, secretary of state, opposed Hamilton’s plan. He wanted strict limits on the amount of debt and duration allowed. Hamilton’s plan proved effective. Federal bonds were issued to cover the debt. This helped consolidate debt and timely interest payments along with crucial immediate spending cuts built credit and reputation. By 1793, the government showed its first surplus.
Of course, America has repeatedly been in debt. The Louisiana Purchase and The War of 1812 raised the debt to $119.2 million in 1815. Andrew Jackson, born the generation after the founding, hated debt and vowed to pay off national debt entirely. By selling federal lands and slashing spending, Jackson succeeded. The Depression and a series of wars forced more debt.
In 1917, during WWI, Congress set a statutory debt limit only to raise the limit again during WWII When fighting stopped, the government took steps to pay down debt. Large deficits in peacetime were frowned upon until recent times.
Listen to our Founders’ principles:
George Washington cautioned, "Š avoid likewise the accumulation of debt not only by shunning occasions of expense but by vigorous exertions to discharge the debts, not throwing upon posterity the burden which we ourselves ought to bear."
Thomas Jefferson: "We must not let our rulers load us with perpetual debt."
Benjamin Franklin: "When you run in debt; you give another the power over your liberty."
James Madison, "I go on the principle that a national debt is a public curse... a curse greater than any other."
Arguments over debt continued. Woodrow Wilson and FDR promoted extensive debt, Calvin Coolidge and JFK opposed. Jimmy Carter increased debt, Bill Clinton was convinced to reform.
Is our country at risk? Spending far exceeds tax revenues. As of May 19, 2013 our national debt was $16.7 trillion. We now borrow 19 cents of every dollar spent.
To illustrate the problem, rather than the incomprehensible size of the federal budget, let us use a family budget as reported by the Congressional Budget Office (CBO) as an example. This average American family’s income is $52,000/year. They spend $62,000 a year, to make ends meet they add $12,000 to their credit card every year, not to mention the $320,000 debt this and every other family carries as their share of the national debt. When does this family lose credibility and reputation? How long before the family is bankrupt? How can our government be any different from the family?
Solutions? Increase credit limits? Seek ways to reduce spending immediately and find efficient ways to balance the budget? Some lawmakers want to simply increase the debt limit, taxes, fees and fines and continue out of control spending.
I contend we must get our finances under control now. To do so, five years of level budget funding, no earmarks, new taxes, regulations or fees. Will Congress capitulate to spending or for once make the prudent decision?
Kathryn Mickle lives in Dalton and is a local business owner.