L. Neil Smith's
Number 311, March 20, 2005

"This is your government, people."

What National Debt?
by Abe Clark

Exclusive to TLE

Politicians love budget deficits. They can spend as much as they want, avoid unpopular spending cuts, reward their supporters, and claim credit for holding the line on taxes. The number of voters who might hold them accountable for deficit spending is insignificant, and the politician in the other major party has similar plans anyway. The downside to deficit spending is, of course, the large and growing national debt.

Just how bad is the national debt? For Fiscal Year 2005, it will top eight trillion dollars for the first time. By the end of the Reign of Fiscal Terror (the second term of the second Bush Administration), the national debt will exceed ten trillion dollars. That's $10,000,000,000,000.00, if you prefer the numerical representation, and believe the President's own optimistic projections. Or around $100,000 for every American family. Or almost double what it was when George W. Bush was first elected.

Net interest payments on that debt will exceed two hundred billion dollars for FY2006. The typical American family is already being taxed to the tune of two thousand dollars per year, just to pay the interest on past deficits, and the problem is going to get worse, a lot worse, if interest rates rise.

If a Libertarian candidate with plans to eliminate the income tax and replace it with nothing somehow wins, he would still have to find a way to pay off trillions of dollars in past debts. No President since Andrew Jackson has paid off the entire national debt, and it's a much tougher task now. Which is why a much bolder plan is needed.

The national debt should be repudiated.

As a question of basic fairness and justice, why should innocent and productive Americans today be looted under threat of imprisonment to pay for the schemes of politicians five, ten, or twenty years ago?

As a question of law, how is a contract to rob large numbers of people for ten, twenty, or thirty years valid in any way? A contract for any illegal activity is not valid. And who made the contract? The holders of the government bonds are easy to identify, but who claims responsibility for making the promise to pay? The politicians who spent the money were elected by secret ballot—they have no way to prove exactly who they were working for, and no one will stand up to take responsibility for their actions.

If I were to sell you a promissory note to be repaid with interest by stealing from my neighbors for the next ten years, a fact you knew in advance, no court based on justice could determine the note to be valid. It wouldn't matter if I formed my own neighborhood watch to drive out competing burglars, or occasionally helped old Mrs. Whipple paint her house to show what a great guy I am. If some of my neighbors liked me, and I let them vote on whether to continue being robbed by me or by my close friend and next door neighbor instead, it wouldn't make the operation any more just. Doing something evil on a much larger scale doesn't make it more moral.

But wouldn't defaulting on the national debt destroy the "full faith and credit" of the United States government? Wouldn't writing off the whole eight trillion at a single stroke of the pen make it exceedingly difficult to borrow more in the future? Of course it would, and that would be an added benefit. Not only would taxes go down right away, but it would be more difficult for politicians to tack additional spending on to future budgets. With any luck, there would never be another bill or bond issued by the U.S. Treasury.

Alexander Hamilton may have dreamt of a government with huge debt payments to large banking concerns, giving the bankers a vested interest in the stability of the government, but stability and liberty would appear to be incompatible goals when the government loots the people it was meant to protect, and institutionalizes the looting process through perpetual debt.

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