Economist and historian Thomas DiLorenzo explains why Hamilton and his followers championed public debt:
Hamilton championed the creation of a large national debt for the sake of having a large national debt. The reason he gave for this was that the owners of the debt would be the more affluent people of the country, who would then be tied to the government and always be supportive of it, just as welfare recipients are today. They would be sure to support future tax increases, he reasoned, to ensure that they would not be shortchanged on their principal and interest.
Once government refuses to live within its' means and pay off its' current debts, it is encouraged to take on more debt. Tom DiLorenzo, in his book Hamilton's Curse: How Jefferson's Arch Rival Betrayed the American Revolution and What it Means for Americans Today further elaborates:
Government debt is every politician's dream: it gives him the ability to buy votes by spending on government programs (with funds raised through borrowing) that will make him popular now, while putting the lion's share of the costs on future taxpayers, who must pay off the debt through taxes. It is the ultimate political something-for-nothing scheme. Furthermore, the costs of servicing the debt are so widely dispersed among the taxpayers that hardly anyone realizes that his taxes are higher because of the debt service.
Because Hamilton's views on public debt, along with his views on the role of government, have prevailed, the United States has become the greatest debtor nation in all of human history. In all of American history, the national debt has only been paid off once by the administration of President Andrew Jackson. The national debt has grown substantially more since then. But it did not happen over night.
And as the above quotes illustrate, the debt crisis is more than just an accounting problem. It is a philosophical problem as well, if not more so. Over the course of the history of the Republic, the American people's attitudes about the proper role of government in a free society has slowly move away from the vision of the Founding Fathers. Instead of embracing a limited, minimal constitutional republic, Americans have come to except an intrusive, destructive and liberty-smashing role for government, more specifically, the federal government.
As Laurence M. Vance notes: "Funding for things like the Corporation for Public Broadcasting, farm subsidies, and foreign aid is certainly unconstitutional and needs to be eliminated. But ending these things in their entirety would have a miniscule effect on the federal budget. The problem is the welfare/warfare state."
A majority of Americans have fully embraced the welfare/warfare state. And because Americans have excepted a role for government which goes against the limitations on power set forth in the Constitution, the size, scope and power of government has increase, causing politicians to borrow money from future generations to pay for today's anti-liberty extravagance.
Laurence Vance writes the following:
According to the Heritage Foundation, figures from the Office of Management and Budget show that the greatest expenditures of the federal government in 2010, aside from interest paid on the national debt, are Social Security ($721 billion), national defense ($719 billion), Medicare ($457 billion), income security programs ($363 billion), Medicaid and SCHIP ($284 billion), and unemployment benefits ($194 billion).
Spending in these six categories comes to $2.738 trillion.
The Defense Department, Social Security, and Medicare, are considered to be "non-discretionary" items, meaning that spending on these items must not cease or be cut in large amounts, regardless of their wasteful nature, or their violation of the Constitution.
Social Security and Medicare, both of which are cornerstones of the welfare state, are unconstitutional programs which, in the future, need to be abolished, sooner rather than later. Social Security and Medicare are essentially bankrupt and will soon consume all government spending and the entire economy. What gives the government the right take money for citizen A and give it to citizen B? This is not charity; it is theft. If someone came to your door pointing a gun and demanded that you give him money so he can give it to charity, we would call it theft. Yet, amazingly, we allow the federal government to do just that.
Laurence Vance also notes that all these welfare state programs are "clearly unconstitutional and illegitimate functions of the federal government. It doesn’t matter how popular they are, how many people they have kept out of poverty, how much people have grown to depend on them, or what the alternatives are. They still are not authorized by the Constitution. They still reek of socialism. They still foster dependency. They still aggress against those Americans that object to paying for them. And they still are not part of the proper functions of government. "
Then there is the warfare state.
Since the advent of the Spanish-American War, World War 1, and World War 2, the United States has abandoned the original American foreign policy of noninterventionism and has embraced a foreign policy of empire, interventionism and war. As a result, the budget and the military's role has grown exponentially from merely defending United States territory from invasion by a foreign government, to expanding, patrolling and policing a U.S. global empire.
This American Empire (i.e, warfare state) has made America less safe, less prosperous and less free. Doug Bandow has correctly noted that "many foreigners enjoy being protected at U. S. expense. Alas, Washington's desire to garrison most of the earth's surface helps explain why Uncle Sam is effectively bankrupt. In fact, it's hard to keep track of America's many overseas military installations. By one Pentagon count there are 865 foreign facilities. But that doesn't count bases in Afghanistan and Iraq, which probably pushes the total past 1000."
Why does the United States need to maintain an overseas military empire comprised of over 1000 military installations in order to protect the United States? Why can't the military be brought back to it's proper and constitutional role of defending the United States from invasion by a foreign government? Many Americans will contend that if we dismantle our U.S. global empire, then America will be constantly attacked, invaded, or bullied by other countries or terrorists. This is the typical refrain of "Fight them over there so we don't have to fight them here!" But by maintaining such a military presence around the entire globe, the United States is weaker because military and economic resources are wasted in money and blood losing wars that do not enhance America's defenses.
Jacob Hornberger points out that
Every competent military analyst would tell us that the threat of a foreign invasion and conquest of America is nonexistent. No nation has the military capability of invading and conquering the United States. Not China, not Russia, not Iran, not North Korea, not Syria. Not anyone. To invade the United States with sufficient forces to conquer and “pacify” the entire nation would take millions of foreign troops and tens of thousands of ships and planes to transport them across the Atlantic or Pacific ocean. No foreign nation has such resources or military capabilities and no nation will have them for the foreseeable future.
Therefore, the United States does not need to have a vast military empire or a bloated military budget to defend the United States. We do not need a $1 trillion defense budget to defend America. As Ivan Eland has pointed out numerous times, the United States has a nuclear arsenal that is more than enough for deterring other countries from attacking the United States.
Conclusion
In order for America to solve this debt crisis, Americans must once again embrace the liberties that made this country great and the proper role of government in a free society, which is to protect and promote our God-given natural rights. As Thomas Jefferson observed, "That government is best which governs least."
Here are some quick solutions to America's debt crisis:
1. The federal government must not be allowed to raise the debt ceiling. If this were to occur, this will only encourage more government borrowing, and consequently, more government spending. In fact, as Mark Thornton noted, the debt ceiling needs to be lowered.
2. The federal government must not be allowed to raise taxes. Raising taxes will only slow down economic growth by taking away capital from entrepreneurs who can put these resources to better use than the government. If taxes are to be lowered, these tax cuts must be accompanied by tremendous spending cuts, otherwise, the federal government will be encouraged to borrow more money, which crowds out private borrowing. In fact, the income tax needs to be abolish, along with most other federal taxes. The 16th Amendment needs to be repealed.
3. The federal government must cut spending. This does not mean slowing the rate of growth. Such "spending cuts" are fake. All the nondiscretionary items need to be substantially cut. This includes defense, Social Security and Medicare. Most discretionary spending can be eliminated because most programs in this category are unconstitutional anyway (this is not to say that Social Security and Medicare are constitutional; both Social Security and Medicare are unconstitutional). A repeal of the federal welfare/warfare state needs to be a reality sooner rather than later.
4. The Federal Reserve must be prohibited from monetizing the debt. This is a process by which the central bank (i.e., the Federal Reserve) prints more money, then buys Treasury bonds and adds them to the Fed's balance sheet. As a result of this process. the dollar is further devalued, while the federal government is given money to spend on their extravagance. The Fed needs to eventually be audited then abolished.
5. The federal government must protect and respect our natural rights. This means that the federal government must cease all programs that violate our natural rights, especially those protected by the Bill of Rights.
These simple solutions are necessary if America is to avoid fiscal armageddon and reclaim our liberties and our lives from leviathan.
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