Simply put, the mess is far greater than you think.
Suppose you were offered the job of Treasury secretary a few months from now. Would you accept? You would confront problems that are so daunting even Alexander Hamilton would have trouble preserving the full faith and credit of the United States. Our first Treasury secretary famously argued that one of a nation’s greatest assets is its ability to issue debt, especially in a crisis. We needed to honor our Revolutionary War debt, he said, because the debt “foreign and domestic, was the price of liberty.”
History has reconfirmed Hamilton’s wisdom. As historian John Steele Gordon has written, our nation’s ability to issue debt helped preserve the Union in the 1860s and defeat totalitarian governments in the 1940s. Today, government officials are issuing debt to finance pet projects and payoffs to interest groups, not some vital, let alone existential, national purpose.
Read the entire (longish) piece by George P. Shultz, Michael J. Boskin, John F. Cogan, Allan H. Meltzer and John B. Taylor at the Wall Street Journal online here.
- Our View: New fears over debt-downgrade (appeal-democrat.com)
- U.S. Treasury resists GM plan on government stake sale: WSJ (news.yahoo.com)
- The Magnitude of the Mess We’re In (realclearpolitics.com)
- According to a report in The WSJ, debt collectors in states are using legal loophole justify jailing poor citizens (investmentwatchblog.com)