jasonbwatson

November 4, 2016

The Prophetic George Washington (Part 3)

Washington continued his address by transitioning to the matter of public debt. Debt was a big deal during the Washington administration and the assumption of state debts was a crucial element of the plan out forward by Alexander Hamilton to unify the nation and strengthen its economy. (Interestingly, this plan also ended up resulting in Hamilton’s support of relocating the national capital to the banks of the Potomac River, as he needed Thomas Jefferson’s support for his financial plan). Washington was intimately familiar with the financial cost of war and with what happens when soldiers and officers are not paid as promised, so he knew whereof he spoke when he addressed the matter of public debt. Still, while recognizing that it may at times be necessary, he left no question as to his opinion on the subject. Note what he had to say:

As a very important source of strength and security, cherish public credit. One method of preserving it is to use it as sparingly as possible, avoiding occasions of expense by cultivating peace, but remembering also that timely disbursements to prepare for danger frequently prevent much greater disbursements to repel it; avoiding likewise the accumulation of debt, not only by shunning occasions of expense, but by vigorous exertions in time of peace to discharge the debts which unavoidable wars may have occasioned, not ungenerously throwing upon posterity the burden which we ourselves ought to bear. The execution of these maxims belongs to your representatives, but it is necessary that public opinion should cooperate. To facilitate to them the performance of their duty, it is essential that you should practically bear in mind that towards the payment of debts there must be revenue; that to have revenue there must be taxes; that no taxes can be devised which are not more or less inconvenient and unpleasant; that the intrinsic embarrassment inseparable from the selection of the proper objects (which is always a choice of difficulties) ought to be a decisive motive for a candid construction of the conduct of the government in making it, and for a spirit of acquiescence in the measures for obtaining revenue which the public exigencies may at any time dictate.

That’s a long paragraph and it is, at times, wordy, but Washington makes three key points: avoid debt whenever possible, pay off debt that was unavoidable as quickly as possible, and remember that public debt can only be paid from public revenue–so it is necessary to pay taxes.

The United States has done exactly what Washington advised so strongly against. We have accumulated, and continued to add to, a massive public debt–one now hovering around $20 trillion. We have, for several generations now, been “ungenerously throwing upon posterity the burden which we ourselves ought to bear.” Back in 1995 and again in 1997 I devoted considerable time and attention to the federal budget–why it was in the shape it was in and what needed to be done about it. I did that as a lowly undergraduate student in college. My research and findings generated mild interest from professors at my university as well as others after I presented at an honors symposium, but it was essentially an academic exercise. Nothing came of it and no one really paid much attention. Several years before that Harry Figgie and Gerald Swanson had written a book–which did receive a fair amount of attention–entitled Bankruptcy 1995. Believe it or not, the predictions of that book could not have been much closer to spot on, as the federal government did shut down over budgetary issues in 1995. In his two presidential runs, but especially in 1992, Ross Perot devoted the bulk of his attention and energy to the matter of the U.S. debt. What, by the way, was the national debt in 1992? It was just over $4 trillion. We’re not doing anything to solve the problem. We are burdened with a debt that our ancestors ungenerously burdened us with, and we are doing nothing but piling on to it and–ungenerously–passing it on to our posterity. Eventually someone is going to have to pay the piper.

That piper, by the way, is mostly U.S. citizens and entities, but about one-third of U.S. debt is owned by foreign nations. About $1.3 trillion is held by China and $1.1 trillion by Japan, with other nations holding $3.8 trillion (according to a May 2016 report from CNN). And that raises another point that Washington made. He cautioned strongly against being attached too strongly to other nations, be that through treaties or just closer-than-healthy fondness. He did not mention debt specifically, but he would have understood it as an issue, since the United States had debts owed to France following the Revolutionary War. Such “avenues to foreign influence,” Washington said, “are particularly alarming to the truly enlightened and independent patriot.” Why would that be? Simply this:

Against the insidious wiles of foreign influence (I conjure you to believe me, fellow citizens) the jealousy of a free people ought to be constantly awake, since history and experience prove that foreign influence is one of the most baneful foes of republican government. … Excessive partiality for one foreign nation and excessive dislike of another cause those whom they actuate to see danger only on one side, and to serve to veil and even second the arts of influence on the other.

Washington cautioned the U.S. to honor its existing treaties at the time he left office and to resist making more. The risks involved with getting too entwined with another country were simply not worth it, Washington believed. The risks far outweighed the reward. That is because, as Washington and so many of the founders understood, human nature is fickle and corrupt. It is hard enough to govern your own people fairly and effectively; why introduce a dependence upon the people and/or governments of other nations over which the U.S. had (and has) no control? “There can be no greater error than to expect or calculate upon real favors from nation to nation,” Washington said.

We have failed, as a nation, to heed Washington’s warnings about party and faction. We have failed to heed his warnings about religion and morality. We have failed to heed his warnings about public debt and dependence upon foreign nations. Regardless of who wins the election next Tuesday, We the People have a long way to go and a lot of work to do to even begin to rectify the mess we have gotten ourselves in by ignoring, and continuing to ignore, the wisdom of the Father of our Country. George Washington was not perfect because no one is. Imagine, however, how different things would be today if our parties disagreed respectfully and actually worked together to accomplish what is best for the country. Imagine how different things would be today if religion and morality were not relegated to the categories of irrelevant and unnecessary. Imagine how different things would be if we paid off unavoidable debts quickly or even, having missed the chance to do that, determined to stop adding to it. That would be a very different country than the one we find ourselves in today.

1 Comment »

  1. Thank you for such a well-crafted segment. Clearly, George Washington was indispensable to this country’s founding. On the topic of debt, it seems important to add historical context. Notably, Washington was writing at the same time as Adam Smith. Both men had prophetic insights. However, Washington, like Smith, was limited by his view of global capitalism at its nascent phase. Though not ideal, today’s world economy is driven by debt. It is an unavoidable reality of doing business in the 21st-century, whether at the local level or at a global scale. Debt promotes risk-taking, which in turn promotes innovation. This is certainly something upon which the past and future strength of this country relies.

    Comment by ijdorfman — November 4, 2016 @ 10:29 pm | Reply


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