None of the emperors of Rome having been stabbed on this date, the 15th of April has never become the stuff of legend: instead of one very powerful man being taken down on a permanent basis, as happened on the 15th of March, we have instead millions of workaday folk being taken to the cleaners year-round, and a day set aside for them to be forced to acknowledge it. Unless you're a Roman emperor yourself, and chances are you aren't, there is no reason for you to think of this as an improvement.

The few of us permitted to be curious might wonder how it is that the Republic got by for well over a hundred (albeit nonconsecutive) years without an income tax of any sort. The answer, it appears, is "Very well, thank you." We've always had some measure of public debt: after the Revolution, the United States of America was in the hole to the tune of $75 million, revolutions in general being none too cheap. The new government buckled down, though, and got most of the debt paid off, only to find it jump up again during the War of 1812. (Life lesson number one: wars cost money.) By 1833, the federal debt was nominal at best, and it remained fairly insignificant until the Civil War Between the States for Southern Independence, or whatever you want to call it; halfway through the war, the government was in a billion-dollar hole, which more than doubled in size, or depth, before Appomattox. A 3-percent temporary income tax had been passed by Congress shortly after the war began; the next year a 5-percent bracket was created. However, they really did mean "temporary"; the tax would expire in 1866, and would not be extended. Again the government went to work on reducing the debt; the next major uptick in the debt was, you guessed it, during World War I.

By then, of course, the 16th Amendment had been passed, but the new revenues did little to offset the high price of war: the debt reached $25 billion by the Armistice. Still, debt was still seen as a Bad Thing, and over the next eleven years the government paid off more than a third of it. And then in 1929, a bubble burst, a bubble largely created by Woodrow Wilson's plaything, the Federal Reserve. Wilson himself took no political heat for it, having died five years before, and it was left to Herbert Hoover to fix the mess. Unfortunately, his fix included stuff like Smoot-Hawley, which killed approximately half of the nation's export earnings in mere moments.

It remained, therefore, for Franklin Delano Roosevelt to point out that, hey, we can run up massive deficits without going to war. And indeed, in FDR's first term, the deficit as a percentage of Gross Domestic Product doubled, from 20 to 40 percent. (The GDP having declined in those years, the actual dollar amount went up by only two thirds: $20 billion to $33.7 billion.) There was more doubling to come, though, with World War II on the horizon; at one point, the debt actually hit 100 percent of GDP.

Economic expansion after the war brought the possibility of getting rid of the debt once again, but government saw no reason to downsize itself, and while the GDP increased, successive administrations came to the conclusion that increasing spending was no problem and actually might do some good. We know now, after forty years of the War on Poverty, that (1) war is too expensive and (2) nobody since FDR had ever had a good idea on how to stop one although surprisngly, there has been little support for nuclear strikes against Congress. The debt as a percentage of GDP bottomed out at about a third during those wonderful years of malaise under Jimmy Carter; the deficit went up in the Reagan years, the President insistent on tax cuts and the Congress insistent on spending at least as much as before, and apart from a brief drop in the Clinton years, it's been booming ever since, surpassing 100 percent during the Obama administration. For taxpayers, this has been a century of unremitting bad news while remitting ever-larger sums.

Then again, if official Washington would confine itself to activities specifically authorized by the Constitution, as it (mostly) did for those first hundred years, the tax brackets of 3 and 5 percent, as set in the Revenue Acts of 1861 and 1862, might well be perfectly adequate a hundred fifty years later. The chances of that, however, are essentially nil, inasmuch as actual familiarity with the Constitution among members of Congress is virtually unknown.

Which means, very likely, that we're heading toward American Revolution Version 2. It is highly unlikely that we would emerge from that clash with a measly $75 million in debt. Then again, what other choice is there?

The Vent

  15 April 2012

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 Copyright © 2012 by Charles G. Hill