ELIMINATION OF DEBT LEADS TO SHRINKING OF TAXES.
THE unfamiliar economic territory of expected federal government surpluses as far as the eye can see has broadened the usual tax cut-spending limitation debate to include the hardly mentioned but conservative fiscal notion of paying off the $3.6 trillion dollar national debt.
House speaker Dennis Hastert, R-Ill., announced a goal of eliminating the federal debt altogether by the year 2015.
Then President Clinton announced his plan to eliminate the debt by 2013. That goal seems as astonishing for this generation as putting a man on the moon was for the last. If accomplished, it would be the first time the federal debt was erased since 1835 under President AndrewJackson.
You can hear the echoes of Jackson's arguments for eliminating the debt in the words of today's politicians. In his first annual message to Congress as president in 1829, Jackson said that extinguishing the public debt would create additional revenue to fuel private enterprise, while at the same time leaving ample means for the government to promote the general welfare. He specifically mentioned increased education spending (by the states) would be the beneficiary of a zero public debt.
Tax cuts are the most popular government fiscal controls, not surprising when you consider a tax cut will immediately put more money in the taxpayers' pockets. Tax cutting is in our blood - this country began with a tax revolt. But, many early Americans who participated in the Revolution knew the value of dealing with debt.
Thomas Jefferson yearned for a country with low taxes and little public debt. Jefferson considered debt should be redeemed within the lives of a majority of the generation contracting it. He believed every generation should be born unencumbered by their predecessors' debts.
That is not the case now.
Each child born in the country today is handed a birth certificate and a you-owe-U.S. bill of $13,300. Perhaps more staggering is the fact that the federal budget devotes $230 billion a year just to pay interest on the debt. Compare that to the entire national defense portion of the budget at a relatively close $288 billion. And with that the taxpayers own a tank or two. Paying interest on the debt buys the taxpayers nothing.
Imagine if the debt were eliminated. Just wiping out the yearly interest on the debt could mean a tax cut every year in the hundreds of billions of dollars. That would dwarf all current tax cut proposals.
The opportunity for both tax cuts and debt reduction does not come along often. President Jackson was able to pull it off. He understood that the elimination of debt led to the shrinking of taxes. With the debt eliminated, Jackson cut internal tax collection to the bone. His followers on the state level devised constitutional controls on government spending and put checks, including voting requirements, on the creation of local debt-creating bonds.
The star of fiscal reform is tax cuts. Spending restrictions and debt reduction are less glamorous but important partners. In a time of plenty all three can work together to create an awesome American economy.
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|Publication:||Daily News (Los Angeles, CA)|
|Date:||Feb 18, 2000|
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