Washington’s Birthday and Public Debt

Washington’s real birthday was just last Friday, and perhaps in preparation for it, on Wednesday the anti-tax, anti-government-debt activist Grover Norquist posted this: “Today, in 1792, George Washington signed the law creating the US Postal Service. Oh, well. No one is perfect.”

The purport of Norquist’s tweet — even great Washington nodded — is actually kind of funny. Yet it relies, not surprisingly, on a false presumption: that the first president’s other efforts and decisions were dedicated to bringing about the kind of American government that Norquist and fellow anti-tax, anti-debt types do want: little-to-zero debt and very low taxes, a government small enough to drown in a bathtub.

In fact the Norquist crowd would get little support from the real George Washington. The first president did not, putting it mildly, hope to diminish the size and scope of central government. He loved federal taxes. And he was a big fan of national debt.

At least as early as the early 1780’s, with the War of Independence still on, the commander of the Continental Army joined Robert Morris, Alexander Hamilton, James Madison, James Wilson, and others, in committing himself to a consolidated American nation. In those early nationalists’ view, such a federal government would no longer be merely central — organizing and acting on a union of sovereign states — but fully national, acting directly on all citizens throughout all the states.

After the war, the turmoil of the 1780’s increased Washington’s commitment to forming a top-down American government, literally bigger, and in every way more pervasively powerful than any that had preceded it. “If government shrinks,” he wrote Henry Knox after the Shays Rebellion in Massachusetts (well, okay, here he really meant “if government recoils in fear”) “… anarchy and confusion must prevail.” He went on: “My opinion of the energetic wants of the federal government are well known. Publicly and privately, I have declared it.” He mocked the states-rights position as “the darling sovereignties of the states individually.”

As we know, in the late 1780’s, Washington and his fellow nationalists got their way. We became a nation. And anti-tax ideologues like Norquist to the contrary, nothing about forming the United States was more important to Washington himself than establishing federal taxation, what the framers debated as the “direct taxing power,” granted in Article I, Section 8, Clause 1.

In August of 1788, Washington took an overwhelmingly clear position on federal taxation’s central importance to American nationhood. Antifederalists wanted to amend the Constitution particularly with regard to the direct taxing power. “I can say,” Washington wrote to Thomas Jefferson, “there are scarcely any of the amendments which have been suggested to which I have much objection except that which goes to the prevention of direct taxation.” (Perhaps thinking ahead to 2013, he added darkly, “And that, I presume, will be more strenuously advocated and insisted upon hereafter than any other.”) To Washington, as to other nationalists, amending away the federal taxing power would amend away the very purpose of forming a nation. More than once in 1788, he expressed a deep concern that if the kinds of amendments eroding the direct taxing power were adopted, they would undo everything that both the War of Independence and the framing of the Constitution had achieved.

But what really undermines Norquist’s and other debt-and-tax hawks’ faux-historical claims on George Washington’s legacy: the chief reason for insisting on the primacy of the federal taxing power. Washington and other nationalists wanted federal taxes for the express purpose of servicing a national debt. “Justice to the public creditors” is what Washington called that debt service.

Washington’s position on public debt service has some disturbing historical resonances for modern fiscal liberalism as well as modern fiscal conservatism, and for American ideas of liberty. By “public creditors” Washington meant not America’s foreign lenders, the nations of France and Holland, but a small group of fabulously wealthy American investors in Revolutionary War bonds. With independence achieved, those investors were desperate to be paid regular, 6% tax-free interest on the face value of those bonds.

And the investors were terrified that with wartime unity dissolving, their investments might be marked steeply down or lost entirely. The Shays Rebellion that so upset Washington represented a direct populist action to devalue the creditors’ investments and equalize American economic life. Similar efforts were afoot all over the country. In the absence of a far-reaching, vigorous national government committed to enforcing tax collection, throughout all the states, earmarked for servicing the public debt, the richest American speculators might be ruined. If, on the other hand, such a government could indeed be instituted, and its direct taxing power preserved, the wealth of the American investing class would remain connected to that government, and big national projects could be readily financed.

The purpose of forming a nation was to consolidate wealth via federal taxation for national debt. The purpose of federal taxation and national debt service was to strengthen the nation.

At least that’s how George Washington looked at it. In the 1790’s, he showed himself willing to ignore due process of law and protections for civil liberties beloved (supposedly, anyway) by today’s liberals and conservatives alike, in order to carry out that fiscal-military vision.

Oh well. No one is perfect. (Happy birthday anyway, big dog.)

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One thought on “Washington’s Birthday and Public Debt

  1. Well said. I might add that to that end, GW (and his Machiavellian sidekick, HaHa Hamilton), used the farmers who fought his war for him–and who bartered whiskey because they had no cash–to justify the whiskey tax, which was used to pay interest on that debt. That he double-crossed his own soldiers to pay the money churners is a national secret that needs to be exposed.

    Also, the Constitution itself is an economic document that presumes all taxpayers are federal government property. It gives the federal government control over all the “economic narrows” in the nation’s economy, including the money supply. No one challenges Congress’ giving that power to the Federal Reserve in 1913, or the income tax that was enacted the same year to service national debt.

    The Constitution turned the Declaration of Independence on its ear. Am I the only person who has noticed both Thomas Jefferson and John Adams were conveniently out of the country when the perpetrators called that special assembly to meet in secret and to bypass state legislatures for ratification?

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