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Why States go into Debt

February 14, 2011

I watched the classic movie Don Juan with Errol Flynn on Turner Classic Movies a while back.

It is a great swashbuckling movie–lots of fun in what seems like an old-fashioned way. One of the major plot themesĀ  revolved around Spain preparing to go to war. The king asked Don Juan if he knew why states go into debt; Don Juan didn’t. You have to remember that this was a time when money was most often hard metal and governments had not yet discovered the wonders of massive deficit spending.

The answer was war: states went into debt preparing for and engaging in war, and the king was actually worried about it. In our history, we incurred debt during the Revolutionary War (Alexander Hamilton did a masterful job of paying it off), the Civil War and the two World Wars. We eventually paid off Civil War debt, too. Thomas Jefferson wrote that it was immoral for one generation to pass on its debts to another generation.

Yet with the rise of socialism in the latter 19th century states gained a whole new reason to go into debt. Today there are two reasons why we are in debt:

  • Defense spending
  • Social welfare spending

Democrats want to cut defense and Republicans want to cut “wasteful” welfare spending. They can’t simply advocate cutting welfare spending because the Democrats call this “entitlement” spending and Republicans are afraid of alienating voters; Democrats heighten this sensitivity by frequently playing the “Republicans are going to take away your Social Security!” card. In Colorado this month, Democrats successfully played the card on a minor $150,000 “cut” in subsidized breakfasts.

The real answer is that we have to cut both. Any cuts that do not at least return to 2008 spending levels are not serious. From there, look at all existing federal programs that are outside the Constitutional scope of the federal government. High on the list should be direct block transfers to states.

And no new programs. We need a bullet train like we need a bullet to our collective brain. What we do need is to pull up our big boy and big girl pants and start acting like responsible adults instead of spoiled Baby Boomers. We need to start solving our own problems in our own communities without seeking a bailout from Big Brother in Washington.

There’s a huge movement of fiscal conservatives called the Tea Party that has the potential to drive change in a way we haven’t seen in over a century. Here’s a few websites to help you get educated on fiscal policy–and note that they all pre-date the Tea Party movement:

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