Burt Folsom: Can We Get Out of this Economic Mess?
[Burt Folsom is professor of history at Hillsdale College.]
The U. S. annual deficits of almost $1,000,000,000,000 per year are hard to comprehend. Think of it this way: One trillion dollars equals about $30,000 per second every second of every day for one full year. That adds up to about $1,800,000 per minute every minute of the year. Last week was tax week–how much of that time did you pay off? Most Americans paid only a fraction of one second’s worth of debt, and almost half of Americans paid no taxes whatsoever. What is wrong with this picture?
Many are discouraged, but half the battle is getting the attention of the American people; this last year has awakened many Americans. Have we had a situation in the past where debt increased rapidly and Americans awakened to the problem in time? Yes, we have. Before World War I, our entire national debt was a little over one billion dollars. And that included many wars and recessions from 1776 to 1916. We were a fiscally responsible people. During World War I, however, our national debt multiplied many times over to $24 billion. In the 1920 election, the Harding-Coolidge presidential ticket vowed to tackle the debt, and did so. During the 1920s, the U. S. ran budget surpluses every year and we chopped more than one-fourth of that debt off.
What was our secret? Stimulus packages? High taxes to pay down the debt? No, and no again. We cut tax rates from a top rate of 73 percent to 25 percent during the 1920s. Then we slashed federal spending. Coolidge vetoed a popular farm subsidy bill and a popular veteran subsidy bill. We diminished the role of the federal government and relied on free people to be creative–they started new industries making radios and air conditioners; they cut the costs of making household products, like refrigerators and telephones. Put cars in most garages, our entrepreneurs said. If we increased freedom, we showed we could increase prosperity as well. Sure, some people were still hurting, but charitable giving helped with that.
We should be encouraged today by the tea parties, the tax protests, and increasing skepticism of federal bailouts and spending. We are more alert to the danger of our astonishing debt. We turned our economy around in the 1920s and we can do the same ninety years later.
Read entire article at BurtFolsom.com
The U. S. annual deficits of almost $1,000,000,000,000 per year are hard to comprehend. Think of it this way: One trillion dollars equals about $30,000 per second every second of every day for one full year. That adds up to about $1,800,000 per minute every minute of the year. Last week was tax week–how much of that time did you pay off? Most Americans paid only a fraction of one second’s worth of debt, and almost half of Americans paid no taxes whatsoever. What is wrong with this picture?
Many are discouraged, but half the battle is getting the attention of the American people; this last year has awakened many Americans. Have we had a situation in the past where debt increased rapidly and Americans awakened to the problem in time? Yes, we have. Before World War I, our entire national debt was a little over one billion dollars. And that included many wars and recessions from 1776 to 1916. We were a fiscally responsible people. During World War I, however, our national debt multiplied many times over to $24 billion. In the 1920 election, the Harding-Coolidge presidential ticket vowed to tackle the debt, and did so. During the 1920s, the U. S. ran budget surpluses every year and we chopped more than one-fourth of that debt off.
What was our secret? Stimulus packages? High taxes to pay down the debt? No, and no again. We cut tax rates from a top rate of 73 percent to 25 percent during the 1920s. Then we slashed federal spending. Coolidge vetoed a popular farm subsidy bill and a popular veteran subsidy bill. We diminished the role of the federal government and relied on free people to be creative–they started new industries making radios and air conditioners; they cut the costs of making household products, like refrigerators and telephones. Put cars in most garages, our entrepreneurs said. If we increased freedom, we showed we could increase prosperity as well. Sure, some people were still hurting, but charitable giving helped with that.
We should be encouraged today by the tea parties, the tax protests, and increasing skepticism of federal bailouts and spending. We are more alert to the danger of our astonishing debt. We turned our economy around in the 1920s and we can do the same ninety years later.