The blessing of our national debt has made us great
U.S. House Speaker Kevin McCarthy, left, and Senate Minority Leader Mitch McConnell outside the White House following a meeting on the debt limit with President Joe Biden and Democratic congressional leaders on May 9, 2023. (Ashley Murray/States Newsroom)
Alexander Hamilton, America’s first Secretary of the Treasury said, “A national debt, if it is not excessive, to us will be a national blessing.” The whole “if it is not excessive” part has always been important, but never more important than it is today.
The musical, “Hamilton,” doesn’t really do much on this other than a brief line from the song, “My Shot.” Lin-Manuel Miranda wrote and portrayed young Alexander rapping: “But Jesus, between all the bleedin’ and fightin’ I’ve been readin’ and writin’…we need to handle our financial situation…”
Assuming debt and handling it has always been part of our fabric. We began accumulating it before our constitution was ratified. Debts incurred during the Revolutionary War period totaled a little over $75 million. President Andrew Jackson paid off the original national debt in 1835 because he didn’t trust the paper money we issued. It was the only time it happened. Then we went to war with Mexico in 1846, and the current debt began.
The Department of the Treasury is a great resource of the debt’s history. That is if one is inclined to understand what our obligations actually are. Reading through it feels like a highlight reel of what makes America what it is today.
Our nation was founded on many things. Some of them are great sources of pride: independence, representative government, religious freedom, etc. Others are not, primarily, slavery and misogyny. Deficit spending, operating on debt, and all of the things that come with it has pros and cons, but carrying debt at all was a choice we made at the beginning.
Honoring our debts is as much about who we are as allowing the debt to exist is in the first place.
The national debt today
According to the Brookings Institution: “The first debt limit was established in 1917 to make it easier to finance mobilization efforts in World War I. Before that, Congress generally had to authorize each bond issue.” This is important, because as dealing with the national debt limit has had some dramatic recent history, it was originally created to make things easier in dealing with debt, not more politically difficult.
Today, the limit itself is viewed as some self-imposed discipline for purposes of moderation. That’s not why it was created, and it won’t be its ongoing function after the drama of the moment passes, assuming it does pass.
For much of this year, leading to a climax over the course of the next several days, Republicans in the U.S. House have decided to bargain with our soul. They don’t want to keep paying our accumulated, and still accumulating bill without political concessions to them. I don’t believe they really want these things, since they never seemed to want them before, but that’s their strained message, delivered by their strained leader, Speaker Kevin McCarthy.
If no action is taken in the next several days, America will exhaust its ability to incur additional debt. The consequences for this dereliction are not really governmental, they are market-based, financial ones. There is no “seniority” system for individual debts, meaning we can’t choose to pay our debt on social security, but default on what we never paid off for our purchase of the U.S. Virgin Islands. Any default is total default in the market, it will establish our decision, our choice to no longer be a good bet to pay up.
Recent AP-NORC Center for Public Affairs Research polling showed some things that are as American as the debt, as reported by PBS Newshour. First, there were opinions about who was to blame for the situation. Yea, yea, it’s always the other guy’s fault. But what struck me more was that only 2 in 10 reported they understood the situation “very well,” while 4 in 10 reported understanding it “somewhat well.”
As low as the level of understanding might seem, I contend that most of those reporting any understanding don’t actually understand it at all. Why else would such an entertaining and dynamic writer like me labor through something so, well, not that?
To “handle our financial situation” the way Secretary Hamilton envisioned, certainty is required. Oh sure, he also had that caveat of the debt not being “excessive,” but he wrote that before America did things like sending humans to the moon.
Look, we have to pay the bill. We have to pay for the things of which we are proud, like say, Alaska, and of the things we are ashamed, like say, the southern border wall. I proudly pay my student loan debt, but wince at the excessive amount of credit card debt attributable to concert tickets.
But I’m an American. My credit is good, and you can take that to the bank.
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