Can Obama Pull a Jackson?

It was the eight of January, 1835 when officials from across the country gathered in Washington DC for a meeting presided by President Andrew Jackson when it was officially announced the United States had paid all debts to other nations for the first time in history. Not only was the country out of the hole but for the time being, we were running a national surplus.

Right from the start debt was a choice for the United States. Following the Revolutionary War, as we were founded we had the simple option to default and forget about wartime loans. All the bonds and grants to the government would be forgotten but at the cost our credit, economic stability and credibility as a state.

So the US decided to take on its debt which for the same reasons as today, wasn’t very easy to finance. The debt wasn’t expanding at quite the rate it does today but neither was it shrinking. Then along came Andrew Jackson who as a land speculator in the West had gone in the red after a deal gone bad. His experience led to a campaign oriented around economic stability and would go on to enter office despising banks and considering debt a moral failure of sorts.

And so he went to work almost immediately, and shut down the National Bank. He then began selling US assets primarily in through federally held land in the West. Further, he ruthlessly blocked spending bills, vetoing expenditure of nearly any form. Though some questioned the integrity of his practices, there no doubt that it worked. Money poured into our coffers as spending simultaneously shrunk and the miraculous result was the erasure of our remaining $58 million debt within 6 years.

 And so it was on the eight of January, 1835 when Jackson realized he had the wonderful new dilemma of what to do with his extra reserves now. There was no National Bank anymore so he decided to divide the money and grant it to states by population. And sure enough that’s when the good times ended. The states weren’t quite as cautious as Mister Jackson and began a land purchasing bubble not hugely unlike our housing bubble, which soon grew out of control. Jackson noticed this and stepped in but immediately realized he was too late. By requiring land to be purchased in gold or silver, we saw a crash causing a recession that would drag on for six years. And just like that, with the pop of a bubble we said goodbye to a year long debt-free US.

Even when accounting for inflation, the debt Jackson tackled pales in comparison to the burden we carry today. Last Wednesday, President Obama proposed a combination of long-term spending cuts particularly in national defense, tax hikes and changes to welfare programs. Personally, with my limited economic knowledge, I believe each of these is exactly what we may need. Spending as our dear old President Jackson demonstrated is the obvious and possibly most important point. Tax increases (audacious considering elections are approaching) may very well be a fact that we are just going to have to learn to live with if we ever plan on lowering our deficit. Lastly, welfare programs at the moment have already been identified as facing huge sustainability issues particularly in the case of Social Security so reform is necessary in any case.

                 If these measures were to take effect and be as successful as planned, the national debt would be reduced by $4 trillion in the next 12 years. This goal is ambitious to say the least especially considering years past, but offers the kind of hope and worthy cause America needs at the moment to handle a task as daunting as this. So though for now the debt clock continues ticking, the beginning of our journey to the end just may be in sight.

Libya Updates!!!

Over the days since I last discussed the state of Libya, much has happened and at last, necessary measures have been put in place. As you have probably seen on the news, the situation in Libya leading up to the coalition strike only deteriorated as Qaddafi declared total war on rebel groups and effectively declared the genocide of his own people. Since then the United States has taken the lead alongside other UN members under General Carter Ham in a tactical assault primarily involving bombers and cruise missiles on Libya’s air infrastructure. However, these strikes have allowed us to also destroy army ground units and tanks threatening rebel strongholds.

Now, some are saying that the United States’ plan has been a cop-out of sorts. To put this in context, America currently holds a policy of no boots on the ground. Furthermore, we intend to withdraw from fighting for the most part after the initial offensive, only interfering when our “unique (military) capabilities” are called upon. This will leave the remainder of the conflict to other countries and limited US resources. Though I will agree that it is a bit disappointing to see this sort of haphazard effort, this intercession was absolutely imperative considering the circumstances. Little as these attacks may seem they completely turned the tables in a conflict where both sides held what can at best be described as primitive military capabilities in our modern age. Without our help it’s hard to say how many citizens may have been killed. Think of it this way; even as Qaddafi’s forces retreat unable to counter the powerful UN air strikes, they continue to snipe indiscriminatingly at citizens in towns along the way to the point that people don’t dare set foot outside. Furthermore, considering how thinly spread the US army is and the costs, any help is better than none. We have already incurred bills totaling hundreds of millions and any further support is likely to greatly add to that expense. Though you might say that there is no price on human lives, from a pragmatic perspective this is reasonable support.

As for now, the rebels hold out slowly gaining strength and confidence. At this point, I believe one of their top priorities must be to organize some form of government. If utter chaos and disorder are to be avoided a governing body must exist before the current state collapses. As in the interim board in Egypt or even the colonies of a freed America, some form of organization amidst a lack of rule will be extremely important.

The other heated question at the moment seems to be the decision of whether or not to target Qaddafi himself. I personally believe that this is up to the UN. Though killing Qaddafi may seem justified and may very well be the key to quickly ending this conflict, such a decision remains in the hands of those international magistrates responsible for evaluating war crimes and crimes against humanity. If we or any other country were to privately make that decision, it would go against what we deem as unalienable rights and would have great political implications.

In the mean time we must continue to take steps towards freedom and democracy in Libya and hope for the well being of the country’s citizens.