The founders of our nation would surely be perplexed if they were dropped into today's world – and not just from the technological advances, what passes as modern entertainment and the fame achieved by the Kardashians. But given their written and spoken words, the founders would fit right in with today's economic arguments, particularly with respect to debt and taxation.
The founders had a range of views on the value of debt, from Thomas Paine and Alexander Hamilton backing debt as a useful financial tool, to Thomas Jefferson casting a suspicious eye on its use. Consider the following notable quotations from our founders:
"A National Debt, if it is not excessive, will be to us a National Blessing." – Alexander Hamilton
"No nation ought to be without a debt. A national debt is a national bond; and when it bears no interest, is in no case a grievance." – Thomas Paine
"The burden of the national debt consists not in its being so many millions, or so many hundred millions, but in the quantity of taxes collected every year to pay the interest. If this quantity continue the same, the burden of the national debt is the same to all intents and purposes, be the capital more or less." – Thomas Paine
"I place economy among the first and most important virtues, and public debt as the greatest of dangers to be feared. To preserve our independence, we must not let our rulers load us with perpetual debt. If we run into such debts, we must be taxed in our meat and drink, in our necessities and in our comforts, in our labor and in our amusements." – Thomas Jefferson
There are many other fascinating quotes to survey, but the gist is that the Founding Fathers understood the need for debt but were wary of its management – and they would surely be dismayed at running continuous deficits.
How would they handle today's situation? Would they tend to raise or lower taxes, and cut or increase spending? Their quotes can give some insight.
James Madison would likely be disturbed at the complexity and favoritism of our tax code, given his statement that, "A just security to property is not afforded by that government, under which unequal taxes oppress one species of property and reward another species."
His approach might be one of tax reform and limiting the size of government, given the quote “If Congress can do whatever in their discretion can be done by money, and will promote the general welfare, the government is no longer a limited one possessing enumerated powers, but an indefinite one subject to particular exceptions.”
Two examples of Jefferson’s writing suggest he would be for an austerity program – "A rigid economy of the public contributions and absolute interdiction of all useless expenses will go far towards keeping the government honest and unoppressive," and "The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale."
John Adams would likely address the banking system, given his observation, "Banks have done more injury to the religion, morality, tranquility, prosperity, and even wealth of the nation than they have ever done or ever will do good."
The quote that best captures the collective position of our founders may well be from Alexander Hamilton’s "Report on Public Credit, issued in 1790. In it, he wrote:
“…[It is] of the greatest consequence that the debt should, with the consent of the creditors, be remoulded into such a shape as will bring the expenditure of the nation to a level with its income. Till this shall be accomplished the finances of the United States shall never wear a proper countenance. Arrears of interest, continually accruing, will be as continual as a monument, either of inability or of ill faith, and will not cease to have an evil influence on public credit."
In short, the founders would have done everything in their power to avoid getting into such a debt position in the first place, and they would probably address tax inequities and restrain spending to the extent possible. They may have trouble grasping the speed and interactivity of today's economy – and once they did, their views might change.
One thing they would universally disdain is the lack of action from government. The founders set up a wonderful system of checks and balances expecting that the balances of power would foster the compromises necessary to run an effective government, instead of gridlock.
Perhaps they would wistfully conclude that Benjamin Franklin was correct in predicting, "When the people find that they can vote themselves money, that will herald the end of the republic."