We Can’t Resuscitate Thomas Jefferson (but We Can Borrow His Ideas)

by Burt on February 15, 2011

On Obama’s huge budget proposed for 2012, the Wall Street Journal headline says it best: “Deficit Would Stay High for Years to Come.” In fact, we are–at this rate of spending–only a decade a way from having all income tax revenue collected in any given year going entirely for interest payment on the debt. That means we all pay high income taxes, and at the end of our payments we will have purchased no federal program of any kind. We would be a nation in severe decline.

Let’s put aside the gory details of the spending hikes for politically favored programs, and simply ask how can a free people do this to themselves? It wasn’t always this way. The Founding generation paid off all national debt by the 1830s. After that, from 1866 to 1893 for example, the U. S. had budget surpluses every year. We always took in more than we spent–and we had much spending that we had to fund for the Civil War debt and for pensions to veterans. But politicians year after year, whichever party was in power, turned in budget surpluses year after year.

The big change came in the 1930s, when FDR expanded the powers of government beyond the constitutional limits set by the Founders. What this produced was the idea that politicians could propose large spending programs, then win votes from constituents for giving them federal subsidies, and then transfer the payment of the debt to the next generation. During FDR’s first two terms in office the national debt more than doubled–and unemployment remained high. The Great Depression persisted in the midst of massive federal spending, but FDR won votes in the areas targeted for federal subsidies. A vicious cycle, which could usually be prevented under a system of limited government, was now possible after the 1930s. The next step was to get more federal revenue by large tax increases on rich people–whose money would then be transferred to middle-class voters, who would receive their cotton subsidies, their dams, their roads, their protective tariffs, or their subsidized hospitals.

When Tea Party activists cry for limited government, and dress up like the Founders, they are harkening back to a system of balanced budgets, steady economic growth, and equal opportunity for all. (Eventually blacks received their freedom during the 1860s, under the system of government set up by the Founders.) The study of history suggests that limited government produces a more prosperous society than is created by targeted subsidies to politically connected groups. Thus, a study of history and a return to first principles are starting points for getting a grip on our spending before it grips us and takes us down the road to financial ruin.

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