How long will the world keep buying U.S. bonds, notes, and bills, or use the dollar as a reserve currency, if Washington is bent on fiscal self-destruction?
“We must not let our rulers load us with perpetual debt,” warned Thomas Jefferson in 1816. To him, burdening ourselves and future generations with debt should be rare in frequency and minor in magnitude. It may be defensible for long-term capital projects like roads, but for little else.
Massive, uncontrollable debt to finance current consumption spending was unthinkable to Jefferson. He would undoubtedly see it as a reflection of a nation’s moral and economic decline that could ultimately destroy our liberties.
One state Jefferson would be proud of is Montana. Though the universities and the housing board carry a small amount of debt, that state’s general obligation bonds, which totaled $215 million in 2016, have all been paid off or otherwise removed as liabilities. Citizens in “progressive” states like New York and California, on the other hand, are on the hook for thousands of dollars of debt per capita.
If he could pay us a visit today, Jefferson would likely rake those high-debt states over the coals for their fiscal recklessness. But I think no words in the English language would adequately describe his reaction to the federal government’s debt, though apoplectic might come close.
Earlier this year, what we call the “national debt” broke through the $34 trillion level for the first time. That’s about a hundred thousand bucks for every man, woman, and child in the country. And it doesn’t even account for Washington’s “unfunded liabilities”—the expected spending in future years for which there is no identified funding stream. Interest on the national debt this year will cost us some $800 billion, twice the figure of less than a decade ago.
We are hurtling into an abyss of unimaginable consequences, and time is running out. These dangerous trends are not sustainable. How long will the world keep buying U.S. bonds, notes, and bills, or use the dollar as a reserve currency, if Washington is bent on fiscal self-destruction?
What’s even worse than this unconscionable track record is Washington’s devil-may-care attitude about it. Few in Congress (and nobody in the White House) seem to mind. The typical politician cuts nothing and proposes nothing except trillions more in spending and debt.
Fortunately, America’s Founders gave us a last-ditch tool if we have the courage to use it—Article V of the Constitution. Alexander Hamilton regarded it as necessary to “erect barriers against the encroachments of the national authority” when that authority refuses to act responsibly.
Article V stipulates two methods by which the Constitution can be amended—one at the initiative of Congress and the other at the initiative of the states. In the latter case, if the legislatures of two-thirds of the states (34 out of 50) apply for a convention to propose amendments, Congress has no choice but to authorize it. Any amendments resulting from the convention must then be ratified by three-fourths (38) of the states before they become part of the Constitution.
“The article V convention provision is the ultimate check on the national government,” says Montana State Senator Tom McGillivray (R-Billings). “It is the constitutional cornerstone of federalism, and federalism is the firewall between liberty and tyranny.”
Fears about a “runaway” convention veering down rabbit holes and making matters worse are largely unfounded. Independence Institute scholar Rob Natelson explained why in this recent monograph.
What we should really fear is more of the same business-as-usual inaction that guarantees fiscal suicide. That’s why millions of Americans, and 28 state legislatures, endorse an Article V effort for some form of fiscal restraint on Washington. You can read a lot about this here.
Only six more states are needed to reach the threshold Article V requires to hold a convention, at which spending and debt would be the highest priorities.
Not even the most profligate of “progressive” states can print money to accommodate deficit spending, but Washington does it every day, utterly oblivious to the future. Unless you have reason to believe the culprits in Washington are going to fix this on their own, consider the Article V option seriously.
It may be what Benjamin Franklin had in mind when he said the Founders gave the American people a republic, but only so long as we can muster the courage, integrity, and fiscal rectitude to keep it.
Written by Lawrence W. Reed for the Foundation for Economic Freedom ~ May 2o, 2024
