What the Founders Thought about Debt
October 10, 2013
“Neither a borrower nor a lender be,” wrote William Shakespeare in Hamlet. As the Founders were exceptionally well read men, they surely knew the reference. And it’s clear that, when it comes to governing a nation, the Founders were nervous about allowing it to run up too much debt.
As James Madison said in a 1790 speech to the House of Representatives:
There is not a more important and fundamental principle in legislation, than that the ways and means ought always to face the public engagements; that our appropriations should ever go hand in hand with our promises. To say that the United States should be answerable for twenty-five millions of dollars without knowing whether the ways and means can be provided, and without knowing whether those who are to succeed us will think with us on the subject, would be rash and unjustifiable.
It is worth noting Madison’s concern here for future generations. That’s us, and we have him and his fellow Founders to thank, because they bequeathed us a successful and prosperous nation. We should also ask whether we’re living up to our end of the bargain.
The simple answer is no. Consider the $25 million Madison mentioned borrowing. Well, on a given day in August, the federal government spent almost $6 billion more than it took in. We borrowed $250 million each hour of that day, more than $4 million each minute. And that’s not the total amount we spent—just what we borrowed. The bill, with interest, will be passed along to future generations.
Madison wasn’t alone in his concern about excessive borrowing.
As Thomas Jefferson wrote:
It is a wise rule and should be fundamental in a government disposed to cherish its credit, and at the same time to restrain the use of it within the limits of its faculties, never to borrow a dollar without laying a tax in the same instant for paying the interest annually, and the principal within a given term.
Of course, in his personal life, Jefferson wasn’t renowned for being a wise steward of money. But here he recognized that as a nation it’s important to protect our ability to borrow by making it clear to lenders that we have a plan to eventually pay them back. This year alone, our government has shelled out almost $400 billion just to repay interest on borrowed money. That’s more than the entire budget of the Canadian government. No nation has ever spent money on the scale that the United States does.
It’s important to change course. And quickly.
“No pecuniary consideration is more urgent, than the regular redemption and discharge of the public debt: on none can delay be more injurious, or an economy of time more valuable,” George Washington warned lawmakers in 1793.
As the country approaches—and smashes through—the debt ceiling once again, it would be wise to take the father of our country’s words to heart. Rather than borrowing trillions more, we need to begin paying down some debt before it crushes us.