Except for one year, the United States has always been in debt. Wars cost money, and the Revolutionary War was no exception. Nor was it the first war in history to leave a country or a ruler owing money.
According to an NPR story about America’s one debt-free year, the founders decided it would be better to pay the states’ war debts than to default. The latter would ruin the country’s credit, and it would have been bad for the economy. Sound familiar?
That debt-free year, 1835, occurred during a land bubble and was followed by a depression, which caused the government to borrow money again.
One lesson: Cuts to spending and increases in revenue (yes, that means taxes) must be done carefully. At more than $14 trillion, the current debt is unsustainable, but we still need national security and a social safety net.
No one is arguing for limitless spending. The argument is over how to close the gap between what our government spends and what it takes in.
These past two weeks, Washington DC has been like a dog chasing its tail. Except the dog is more productive and more amusing to watch.