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America's founders' financial advice
Posted By Chuck Norris On 09/21/2008 @ 12:00 am In Commentary | Comments Disabled
America is broke. Wall Street is going out of business. The government is borrowing and bailing like there is no tomorrow. Americans anxiously await the full impact of a second Great Depression. And we all are longing and looking for solutions and saviors.
Well, have no fear. Our founders are here.
Yes, it’s official and public news for the whole world to see: Government is the worst run business on the face of the planet. We’ve known it for a long time – we’re just now facing the monetary music. We’re going under, fast. And the government’s remedy is to return to its cycle of treasury vomit – spending money it doesn’t have by borrowing money it can’t pay back. But the cat’s costs are out of the bailout bag, too. Fannie May, Freddie Mac, AIG insurance, etc., are all birth pains of greater taxpayer burdens to come. The Fed’s rescue plan will cost Americans another $1 trillion dollars – for those doing the math, that’s roughly $3,600 each in taxes.
But most Americans’ pocketbooks are barren wastelands – with maxed payments, mortgages and consumer credit. So where will the Fed get another trillion dollars when it already holds a $9 trillion dollar deficit? From the same black hole it got the preceding $9 trillion. We make more money and lessen the value of the dollar; we borrow more money and lose our grip on our nation. America is up for sale. And foreign entities and powers are buying up our debt to own a large piece of the pie called America. We are literally mortgaging our land and liberties – and our children’s future. And our government is not only doing nothing to stop it – it is the bureaucratic broker arranging the deal!
Who will save us from our certain financial despair and ruin? The president? The secretary of the Treasury? The Federal Reserve? Congress? An ad hoc committee of Harvard MBAs? Some of America’s best and biggest financial moguls? A new president?
America, it’s time to wake up and fight for our future! When Congress pays 1.26 cents per penny and 7.7 cents per nickel – and wastes $100 million a year in doing so – it’s time to make major changes in government. But the changes we need are not those that come with empty political promises to provide universal health – which is guaranteed to accrue billions more in debt every year. A presidential candidate pledges to lower taxes for 95 percent of the people and increase taxes for the other 5 percent, but that can’t be done when only 70 percent of Americans pay taxes and 30 percent pay no federal taxes at all.
It’s true that we can’t repeat the last eight years of government. But it’s even more clear that we can’t repeat the last 38 years of government financial mismanagement, especially when only four of those since 1970 have not been deficit-building years. The fact is, electing the same old Republican and Democrat money-management methods will do nothing more than bury us deeper in the quick sands of government spending and debt. What we need is to turn back the financial clock 200 years and return to the fiscal prudence of our Founding Fathers.
Call me altruistic – say the plan is oversimplified. But even mom always taught me when I was young, “If you get in a pinch, go back to the basics.” It works in martial arts. It works in the movies. It works in marriage. It works in financial markets. And it worked for our Founding Fathers.
With small variances, our founders agreed on five basic approaches to fiscal management, which I describe in far more detail in the third chapter (“Stop the nightmare of debt”) of my new New York Time’s best-seller (as of Sept. 28), “Black Belt Patriotism,” in which I address eight major problems facing America with our founders’ solutions. If we’re going to reawaken America from her economic slumber, then we must go back to those who discovered and established the American dream. Their financial principles were:
2. Don’t bail out debt with more debt. George Washington wrote in 1799 to James Welch, “To contract new debts is not the way to pay for old ones.” Thomas Jefferson similarly admonished Samuel Kercheval in 1816, “To preserve [the] independence [of the people], we must not let our rulers load us with perpetual debt.”
3. Return to a pay-as-you-go government. If we don’t have the money, we don’t spend it. Period. No more debt. No more bailouts. No more spending. As Thomas Jefferson once wrote to Fulwar Skipwith in 1787, “[T]he maxim of buying nothing but what we had money in our pockets to pay for …[is] a maxim, which, of all others, lays the broadest foundation for happiness.” (Some are quick to point out that Thomas Jefferson financed the Louisiana Purchase with government loans, but they overlook the fact that Jefferson’s administration lowered the federal deficit by nearly one-third in his eight years in office.)
4. Tax for imports, not exports or anything else. Our earliest government’s primary tool to raise revenue was from tariffs. Obviously, we can’t raise all the monies our government now needs by imports alone (because of its excessive taxation dependence through the decades), but we need to return to our founders’ simple taxation system. That is one reason why I say abolish the unconstitutional IRS and implement a Fair Tax. Early Americans did not pay income taxes, export taxes, capital gains taxes, estate and property taxes, corporate taxes, social security taxes, gas taxes or any of the rest of them we pay. However, our founders did build revenue by requiring import taxes from those who wanted to sell us their goods. The fact is, most of our taxes are unconstitutional and would therefore be illegal to our founders. We must appoint only elected officials who want to scrap the present tax code and return to a fair or flat (consumptive) tax system, which doesn’t penalize productivity and will bring American manufacturing back within our borders. As James Madison said in his “Address to the States” in 1783: “Taxes on consumption are always least burdensome, because they are least felt, and are borne too by those who are both willing and able to pay them; that of all taxes on consumption, those on foreign commerce are most compatible with the genius and policy of free States.”
5. Get over the greed. We’re in this financial mess because of greed. Why is government spending out of control? Greed. Why do we as individuals and as a nation keep falling deeper into a pit of debt? Greed. We need, we want and we have to have it. We can’t afford it, but we can’t say no. So we charge it, deferring the penalty. We can’t blame it all on the government, because we appoint our representatives and many of us struggle with greed just like them. If not, then what is it exactly we’re expecting our future presidential choice to do for us, and how is he going to pay for it? Alexander Hamilton, the first secretary of the Treasury, believed a government that could use greed to motivate its people would become powerful and wealthy. Unfortunately, he was correct. We’ve become a nation that confuses our needs and greeds – and we’ve got to get back to the basics if we’re ever to understand and overcome the heart of this financial crisis.
Many of the founders warned about America’s potential fiscal woes under the power of a central bank. Thomas Jefferson was one of Hamilton’s biggest opponents, almost prophesying as president in 1803 to Albert Gallatin, “This institution is one of the most deadly hostility existing, against the principles and form of our Constitution. … I deem no government safe which is under the vassalage of any self-constituted authorities, or any other authority than that of the nation, or its regular functionaries. What an obstruction could not this Bank of the United States, with all its branch banks, be in time of war? It might dictate to us the peace we should accept, or withdraw its aids. Ought we then to give further growth to an institution so powerful, so hostile? … Now, while we are strong, it is the greatest debt we owe to the safety of our Constitution, to bring its powerful enemy to a perfect subordination under its authorities.”
What we need today is far more men and women in government with our founders’ financial forethought and cautiousness. But that is not what we have. That is why I’ve joined the voter revolution across this land, to oust political and congressional corruption and stalemate. If you’re ready to join millions of other Americans in that commitment, then give me three steps: (1) Make a pledge to bring about political and congressional change in future elections; (2) Recall unconstitutional congressional incumbents; (3) Rise up and elect above-reproach, non-greedy selfless representatives who aren’t afraid to stand up to governmental status quo and corruption, will vote for constitutional restrictions of government, reduce big government (deficits, budgets, spending, and taxes), reform the tax code (by providing a Fair Tax or its equivalent) and fight for a constitutional amendment for a mandated balanced federal budget.
America is in the biggest financial fiasco since the Great Depression. And while we can put anesthetic on her financial injuries via temporary government bailouts, we’re heading for another economic earthquake that will ultimately widen and deepen her wounds. But it’s not too late, especially if we follow the sound fiscal advice of experts, including our founders.
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