There will come a day of reckoning.
No matter how often that is said about the reckless abandon with which Washington keeps adding to the national debt, officials keep printing and borrowing so they can keep spending money they do not have. And they will keep doing it until Stein’s Law kicks in: “If something cannot go on forever, it will stop.”
And it’s likely to be an abrupt stop, a horrendous crash with uncountable casualties.
The national debt, which grew obscenely under both President Obama and President Trump, is fast approaching $28 trillion. The $1.9 trillion “recovery act” proposed by President Biden would help push it beyond $30 trillion. Throw in the increasing entitlement payments to now-aged baby boomers and ... well, there goes the whole thing.
What’s left to say except that we are racing toward bankruptcy and no one seems to care?
All we modest Midwesterners in Indiana can do is make one small deposit to our “We told you so” bank by recalling a page from the state’s history. Pay attention, Washington:
Hoosier pioneers were for the most part just as we would expect our ancestors to have been: passionate believers in individual responsibility with a resulting desire for small government and low taxes, accompanied by a profound distaste for dictates from far away, including the state capital.
But they also yearned to move beyond the meagerness of subsistence farming, and that required above all else a reliable transportation network. To reach the next level of civilization, they needed a way to get their agricultural products to larger markets and goods and services to local merchants.
So was born the Mammoth Internal Improvements Act of 1836, the most ambitious legislation in Indiana history and, some say, the state’s biggest debacle ever. The act called for borrowing $10 million on top of the $2 million in debt already accrued, at a time when annual revenue from taxes was about $65,000, to fund three major canals, a railroad line, a macadam road and several lesser projects.
Even in good times, it would have been a reckless plan, and times did not stay good. The next year, the Panic of 1837 triggered a major depression that lasted into the mid-1840s. Work stopped on all the Improvement Act projects, and none were ever completed. Indiana could not even pay the interest on the debt, and it wasn’t until 1847 that a compromise was reached in which the state agreed to pay half of its debt.
Indiana University historian James H. Madison quotes a London newspaper at the time denouncing Indiana as “the land of promises for all the knavery and thievery of the known world.”
As a result of that embarrassing day of reckoning, when Indiana updated its 1816 Constitution in 1851, a provision was added forbidding the state to go into debt. That is why Indiana has always had a balanced budget and why Hoosiers remain a cautious people who much prefer incremental evolution over bold revolution.
Madison thinks it is “a curious irony of history” that a pioneer generation’s one failed risk “contributed to the reluctance of succeeding generations to use active state government, as they had, in service of the general welfare.”
But it could also be said that our conservative approach to change is a natural, rational result of trying to learn from our mistakes.
Few at the national level have ever shown a hint of prudence, perhaps because there has not been a day of reckoning. But with the concept of “the general welfare” so expanded it defies definition and the national debt on the verge of surpassing the Gross National Product, that day is coming.
The bigger the debt gets, the worse the reckoning will be, and it is worth wondering how much of the nation will be left to gain from the lessons learned. This is a great country, but that greatness is not set in stone.