America's contribution to mankind's 5000-year leap was achieved by rather strict adherence to certain fundamental principles which were part of the Founders' phenomenal success formula. As we have already seen, some of these most important fundamentals are being neglected if not repudiated in our day. A most important area of neglect is the advice of the Founders concerning national fiscal policies. As we examine the two charts included with this chapter we find a number of notable things.
First of all, as we have already observed, each generation of the past tried to pay off the national debt. In our own day the importance of this policy has been DE-emphasized. This development has occurred simultaneously with a policy of DE-emphasizing the restraints and literal construction of the Constitution.
Beginning with the era of the Great Depression, all three branches of the federal government used the climate of emergency to overstep their Constitutional authority and aggressively undertake to perform tasks not authorized by the Founders. Extensive studies by Nobel Prize-winning economist Milton Friedman have demonstrated that every one of these adventures in non-Constitutional activities proved counter-productive, some of them tragically so.
Secondly, the people were induced to believe that these serious aberrations of Constitutional principles would provide a shortcut to economic prosperity, thereby lifting the people our of the depression. Unfortunately, it was successful only politically. It gave the people the illusion that by spending vast quantities of borrowed money they would prosper, when, as a matter of fact, the outcome was exactly the opposite, just as the Founders had predicted.
Dr. Milton Friedman points out that after the federal government had spent many billions of dollars and had seriously meddled with the Constitutional structure of the nation, the unemployment rate was higher in 1938 than it had been in 1923. Had not the crisis of World War II suddenly emerged, which required the spending of many additional billions of borrowed dollars and also resulted in absorbing the unemployed work force, the fiscal failure of the New Deal experiments would be better remembered by the American people.
Splurge Spending is Habit-forming
It is highly significant that the political formula which Harry Hopkins recommended to keep a particular administration in power was "tax, tax --spend, spend--elect, elect." Once the people have been encouraged by their political leaders to indulge in splurge spending, the result is like a snowball rolling downhill--it increases in size and gains in speed. This is dramatically demonstrated in the charts, It will be noted that the national budget was less than a hundred billion dollars in 1960. Today we spend almost that much just for interest on the national debt. And that is more than the entire cost of World War I in real dollars! Since 1970 the national debt has tripled.
End of part Three
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