The Contextual Backdrop for Deficit Spending in American Political Thought

Abstract

This paper analyzes political theories about national debt, public credit, and deficit spending as expressed by thinkers from our nation’s founding fathers to our most recent leaders. I found that instrumental, early American thinkers such as Alexander Hamilton, Thomas Jefferson, and James Madison held theories and values that undoubtedly carried on into modern politics. Alexander Hamilton believed national debt to be a “blessing” for the United States and that it would help to ensure the nation’s economic stability. Thomas Jefferson and James Madison disputed Hamilton’s ideas about debt and deficit spending, arguing that it would cause unnecessary government intervention. However, they acknowledged that having the ability to borrow was a necessity, but, by having poor credit, the nation would lose that ability altogether. I found that these thinkers’ logics were expanded upon by several American presidents over the twentieth and twenty-first centuries. While the main rationale for public debt was national defense, more recent government officials have expanded upon this to include the “necessity” of deficit spending in regards to maintaining a strong national defense, but also to sustain a large portion of the population by governmental aid. In conclusion, the behavior of the government and transformation of public opinion in regards to the national debt and deficit spending have not changed, but earlier theories have been expanded upon and loosely interpreted to be applied to situations that they were not intended for, including social-welfare programs, military spending during peace-time, and not repaying debt in times of economic prosperity.