George Washington would roll over in his grave — bumping into his fellow Founding Fathers — if he knew the scope of America’s public debt. Among the values shared by America’s first leaders was an absolute fear of debt, given the pain and misery that followed it. As America celebrates another birthday, their convictions should be studied again.
John Adams, our nation’s second president, once observed: “There are two ways to enslave a nation. One is by the sword. The other is by debt.”
That conviction does not hold true today. Though the national debt is now $16.7 trillion — and growing — and though the United States borrows 46 cents of every dollar spent, our current leadership assures us that there is nothing to worry about.
“We don’t have an immediate crisis in terms of debt,” President Obama told ABC News recently. He went further: “In fact, for the next 10 years, it’s gonna be in a sustainable place.”
Notice the word, “immediate” in the president’s assessment of the current debt problem. He also revealed his view of debt by declaring himself to be comfortable with “sustainable” debt.
“Sustainable” debt is not justification for more borrowing. It’s a slippery slope as policy cycles from printing money to creative borrowing fueled by the assumption that a market will continue to exist for U.S. debt.
George Washington would not approve. “To contract new debts is not the way to pay old ones,” he cautioned.
Thomas Jefferson wrote, “To preserve our independence, we must not let our leaders load us with perpetual debt. If we can prevent the government from wasting the labors of the people under the pretense of caring for them, we will be wise.”
The Jeffersonian principle for acquiring debt held that no generation should borrow more than it could pay back within about 20 years. “We shall all consider ourselves unauthorized to saddle posterity with our debts, and morally bound to pay them ourselves,” Jefferson said, and many agreed at that time.
To take on a public debt that would burden your children was considered taxation without representation. It was an immoral act for elders to consume more than they could pay for, and infringe on the choices and liberty of their children, who had no vote or choice in the matter.
“Before the Great Depression, balancing the budget and paying down the debt were considered second only to the defense of the country as an obligation of the federal government,” noted writer and historian John Steele Gordon.
Our 19th president, Rutherford B. Hayes, reflected that view, advising: “Let every man, every corporation, and especially let every village, town and city, every county and state, get out of debt and keep out of debt. It is the debtor that is ruined by hard times.” Still, only our seventh president, Andrew Jackson, achieved a debt-free America, although other presidents paid down some of the nation’s obligations.
“How gratifying,” Jackson wrote in 1829 as he began his presidency, “the effect of presenting to the world the sublime spectacle of a republic of more than 12 million happy people, in the 54th year of her existence free from debt and with all [her] immense resources unfettered!” By January 1835, he achieved his dream.
A controversial figure, Jackson made many enemies with his cut-the-budget programs and with his attack on a powerful central bank he considered too big to fail and too big to allow control of much of the nation’s wealth. Jackson distributed his budget surplus in banks across the growing country, a move that led many to speculate in land. National debt returned in the collapse of what may have been America’s first housing bubble.
Many of our nation’s Founders watched with horror as families were destroyed by debt, including Jefferson himself. While he reduced the national debt, he struggled with his own finances.
Nevertheless, he held firm to his ideals. “I place economy among the first and most important of virtues, and public debt as the greatest of dangers to be feared,” he wrote.
But for witty teaching instructions in economics, it’s hard to usurp Benjamin Franklin, whose timeless truths (such as “a penny saved is a penny earned”) found in Poor Richard’s Almanac and an essay, “The Way To Wealth,” continue to instruct our society.
Franklin warned: “Think what you do when you run in debt; you give to another power over your liberty.”
Freedom from debt is true liberty, as “the borrower is servant to the lender,” just as we learned in the Bible from Proverbs 22:7.
Today what Americans owe — and the interest we must pay — is accumulating at a record pace. In 2010, the United States accumulated more than $3.5 billion in new debt each and every day. That’s more than $2 million per minute. It’s a shopping spree almost impossible to imagine.
It’s time to fight for financial freedom of the next generation. Our children and grandchildren are being saddled with “unsustainable” debt that will surely lead to a crisis if we continue on this course.
We are fast becoming the generation that enslaved our children because of our own reckless addiction to spending and borrowing. As the 31st president, Herbert Hoover, observed, “Blessed are the young, for they shall inherit the national debt.” I say, rather than pass along our debts, let us bless our children by beginning to pay down the debt with a definite goal to achieve the vision of Andrew Jackson to “unfetter” our national resources.
America and her leaders should commit to reining in its spending and borrowing that would tyrannize the next generation. American families must show the way by doing in our personal lives that which we expect of our federal, state and local leaders.
Chuck Bentley is CEO of Crown, a nonprofit business and personal-finance organization, and author of “The S.A.L.T. Plan: How to Prepare for an Economic Crisis of Biblical Proportions” (Crown, 2012).