Thomas Jefferson on national debt

Liberals and progressives love to quote Thomas Jefferson, but you will never find them quoting him on government finance.

“[With the decline of society] begins, indeed, the bellum omnium in omnia [war of all against all], which some philosophers observing to be so general in this world, have mistaken it for the natural, instead of the abusive state of man. And the fore horse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression.” –Thomas Jefferson to Samuel Kercheval, 1816. ME 15:40

“Then I say, the earth belongs to each of these generations during its course, fully and in its own right. The second generation receives it clear of the debts and incumbrances of the first, the third of the second, and so on. For if the first could charge it with a debt, then the earth would belong to the dead and not to the living generation. Then, no generation can contract debts greater than may be paid during the course of its own existence.” –Thomas Jefferson to James Madison, 1789. ME 7:455, Papers 15:393

Jefferson believed no generation should pass its debts on to the next. To do so would be immoral. There are of course exceptions.

One is a debt used for a program that has a return on investment. The debt, may well be incurred for multiple generations. A good example would be construction of the interstate highway system which greatly expanded interstate commerce. Not only was this a good investment, the fuel tax was a perfect tax to cover the maintenance cost because the heaviest vehicles, which cause the most wear, and those who use the roads most, pay the greatest tax. Jefferson would have approved.

Another would be a true safety net. But this should be born by all members of each generation. It is in essence an insurance plan. Unfortunately, Social Security was not structured in this manner. Instead, it is a Ponzi Scheme, with each generation paying for the previous generation. No insurance company could ever sell such a plan because it would be illegal. Jefferson would never approve of Social Security as implemented.

Social programs should have a return on investment but it is difficult to measure. However, you can measure if the program has achieved its objects. Thus it was very clear early on LBJ’s Great Society was a failure. Yet it, with modifications, endured for three decades.

More Jefferson on national debt and credit.

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