Wed Nov 28, 2012, 09:36 PM
n2doc (42,483 posts)
How the US last paid off its debt: Stealing land from Native Americans
The ongoing political scramble over how to avoid the fiscal cliff has put everybody in a somewhat wondrous mood about the level of US government debt, currently hovering around $16 trillion. How did it get that big? Did the US always have it? Has the US ever paid off its debt before?
On that last point, it’s worth noting that yes, the US did indeed hammer its debt-load down to nearly nothing. As you might have spotted if you looked at our recent complete history of US debt in one chart, President Andrew Jackson’s single-minded focus on debt reduction knocked the US debt load from more than $58 million in the year of his election, 1828—mostly a hangover from the obligations incurred to fight the War of 1812—down to essentially nothing. It was just $38,000 on Dec. 31, 1834 (pdf—see table 19). As a share of GDP, the debt load went from about 5% in 1828 to effectively, well, bupkus in 1834-36.
In the context of the current US economy, that would be more than $800 billion of debt reduction. That’s impressive, but that was still a smaller amount than the $1 trillion that the Congressional Budget Office says the US needs to trim its debt load by over the next 10 years just to stabilize its borrowing. Also in the context of the current fiscal cliff debate, Goldman Sachs says allowing tax rates to rise and other policies to expire for people with incomes over $250,000 would boost revenues by a bit more than $800 billion over a decade beginning in 2013.
So how did Jackson do it? Well, for one thing, he collected more cash—sorry, raised revenue—by jacking up import tariffs. But something else also happened. Uncle Sam balanced his budget on the back of an unsustainable, wildly-speculative land-buying frenzy that occurred during Jackson’s stint at the White House. Federal receipts from the sale of lands surged from $1.5 million in 1829, the first year of the Jackson administration, to $14.8 million in 1835. Expenditures stayed roughly flat over the same period. That’s a recipe for instant, sizable surpluses.
1 replies, 1159 views
Always highlight: 10 newest replies | Replies posted after I mark a forum
Replies to this discussion thread
How the US last paid off its debt: Stealing land from Native Americans (Original post)
Response to n2doc (Original post)
Thu Nov 29, 2012, 01:36 PM
malexand (59 posts)
1. Fairness to the Natives...
Thanks once again, n2doc.
We have been unjust to Native Americans and Alaskans. Our laws and treatment of Natives are unconstitutional and contrary to principles of fairness by which the US defines itself.