Last week, I summarized how President Barack Obama has not lived up to his campaign promises to lower the national deficit and debt and get our nation's fiscal house in order. So now I'm calling on him to heed the economic advice of our nation's first eight presidents.
Before I highlight some of the Founding Fathers' wisdom on federal debt and spending, let me remind readers how Crossroads GPS recently summarized Obama's relation to national debt:
"January 20, 2009: The National Debt Was $10,626,877,048,913.08 (Obama Takes Office). (Treasury Department, accessed 5/23/12)
"May 22, 2012: The National Debt Was $15,721,218,607,447.09 (Most Recent). (Treasury Department, accessed 5/23/12)
"Obama Has Been In Office For 1,219 Days (1/20/09-5/22/12). (Convert Units, accessed 5/17/12)
"$5,094,341,558,534.01 (divided by) 1,219 Days (equals) $4,179,115,306/Day."
Outside of brief periods in our nation's history, U.S. presidents have not been very frugal and disciplined with debt management. But our founders and first eight presidents did a much better job with money management than present leaders, who could learn a few fiscal lessons by turning back the clock to our early republic.
True, on Jan. 1, 1791, during George Washington's second year as president, the national debt was $75 million, but that financial liability was incurred during the entire massive Revolutionary War as the cash-strapped Continental Congress, which lacked authority to levy taxes, accepted loans from France's government, the Spanish government, Dutch bankers and investors, etc.
It was also true that Washington accrued $7 million more in debt during his entire eight years as president, but with the genius help of Secretary of the Treasury Alexander Hamilton, he firmly established our new and flailing country on solid financial ground and as a global power. And by 1795, Washington and Hamilton also had absolved the U.S. from financial obligations to foreign governments (though we did owe to some private investors in Europe) because American bankers privately assumed the foreign debts at a slightly higher interest rate and then resold them for a profit on domestic U.S. markets.
The second U.S. president, John Adams, essentially broke even with the national debt during his four years in office by starting his term $82 million in the red, dropping the debt by $4 million in two years and then accruing back the same amount by the end of his term in 1801, largely in order to fund a larger, more mobile Army. Nevertheless, Adams highly cautioned against national loans, saying they led to the collapse of many historical empires.
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