Take From The Government The Power Of Borrowing

Thomas Jefferson’s Wisdom

“I wish it were possible to obtain a single amendment to our constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its constitution; I mean an additional article, taking from the federal government the power of borrowing.”

Thomas Jefferson (1743–1826) in a letter to John Taylor dated November 26, 1798

History Is A Guide

Adam Smith wrote in his chapter “On Public Debt” that “The practice of funding [by government debt] has gradually enfeebled every state which has adopted it.”.

Few people can resist taking and spending other people’s money, if they have the power or opportunity to do so. Democratically elected representatives are no different or even worse.

There is a long history of government debt of most countries predominantly ratcheting up over time, seldom being paid down in any significant way only to rise again. During the last two hundred years alone there were more than two hundred defaults on government debt according to Carmen Reinhart and Kenneth Rogoff.

A Balanced Budget Amendment Will Not Suffice And Will Not Work

Balanced budget amendments seem to be very popular. However, elected representatives have proven to be clever enough to circumvent such measures by accounting tricks or taking spending items off budget etc.

Further, even under a periodic balanced budget requirement nothing would stop lawmakers from raising taxes to meet their profligate spending habits accordingly.

To cite the famous quote of Jean Baptiste Colbert (1619-1683):

“The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing”

Our elected representatives are experts in plucking our money.

Solution

We have now enough experience to tell whether the federal debt ceiling approach in the US did not work and is insufficient.

Grant Thomas Jefferson’s wish: Add a new amendment to the US constitution requiring a supermajority (e.g. 75%) every time Congress wants to borrow money to spend, in particular, if it increases government debt.

National catastrophe or national security is no excuse not to have such an amendment. It is hardly conceivable that responsible elected representatives would not expediently vote for borrowing if absolutely necessary.

Anyway, who needs Congress in an emergency situation when private citizens are willing to borrow money to government in times of war or a major catastrophe as happened before, e.g., in the early days of the USA.

What Else?

Term limits for members of Congress are overdue. How can it be that only the President of the USA (POTUS) is term limited for a reason.

Ceterum censeo Carthaginem esse delendam: Strictly voluntary taxation is the way to go! Nobody should be compelled to pay taxes.