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Hamilton's Blessing: The Extraordinary Life and Times of Our National Debt.

Charles Dickens in David Copperfield wrote, "Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." Alexander Hamilton, our first Treasury Secretary, would have disagreed. He said, "A national debt, if it is not excessive, will be a national blessing" (hence the title of this book). Hamilton paid all the cost of the Revolutionary War by creating a Federal bank that assumed individual state debts and thereby created the first national deficit.

Andrew Jackson (our seventh President) used surpluses created by a high tariff to pay off the debt and thus contributed to our country's first great depression. The Civil War caused the national debt to skyrocket and led to the nation's first income tax. The two World Wars and the Great Depression added to the debt. After World War II, economists adopted Keynesian deficit-spending theory to guide monetary and fiscal policy. This propelled the debt to very high levels and deficit reduction has become a popular political issue.

What can be done to reduce our national debt? The author believes that on this issue Congress, in recent years, "has come to resemble more and more a drunk wrestling with alcoholism." He suggests giving the President the power to set the limit on overall spending, subject to Congressional override, and the power to enforce that limit with cuts in spending. He wants the PAC system of campaign financing eliminated to curb lobbyist influence on government spending and a modern system of accounting imposed on the Congress. And he endorses abolishing the present tax code with its high marginal tax rates for a fiat tax that is progressive when a personal exemption is added.

The book combines a neat summary of American economic history with insights into the personalities of those who shaped it (e.g., Stephen Girard personally arranged the financing to sustain the War of 1812, Jay Cooke's invention of the war bond kept the Union going during the Civil War). And Gordon does it all in two hundred pages of lively, informative writing (including an appendix of easy to read federal debt statistics from 1792 to 1995).
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Author:Levinson, Martin H.
Publication:ETC.: A Review of General Semantics
Article Type:Book Review
Date:Sep 22, 1997
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