A Debt-Free Country?

There “does not exist an engine so corruptive,” Thomas Jefferson wrote in 1821, “of the government and so demoralizing of the nation as a public debt.  It will bring on us more ruin at home than all the enemies from abroad . . . ”  Jefferson left Paris in 1790 three years before the French guillotined Louis XVI.  Before the Revolution, the king’s debts were so large that interest payments ate up 70 percent of his tax receipts.  We are not quite there yet, but the American public is deeply worried about the country’s future in view of our huge national debt.  Our severe debt problem has arisen very quickly, in about a decade.  Just a short time ago we were worrying about the “problems” of a debt-free country.

On January 25, 2000, President Bill Clinton called a press conference to announce that his 2001 budget put America on the path to pay off the national debt by 2013.  The country was last debt-free in 1835 under Andrew Jackson.  In 1998 and 1999 the country ran historic surpluses and paid down outstanding debt.  In 2000, the debt owed to the public was $3.8 trillion.  The Congressional Budget Office (CBO) supported the President’s projections, estimating that the debt would be down to $941 billion in 2010.  At the press conference, the President was asked whether a tax cut was possible.  A “modest cut,”...

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