Zero U.S. debt wasn’t so great the first time around
The opinions expressed are his own.
At this rate, we’re going to have more debt-reduction proposals than we have trillions in debt. There was Simpson-Bowles, the Gang of Six (Pt. 1), Obama’s $4 trillion gambit, Coburn’s $9 trillion slash, Cut-Cap-and-Balance, and the Gang of Six (Pt. 2), Obama and Boehner’s near-deal, and as of this week Reid and Boehner’s dueling plans. But even the most austere of these proposals would have left us more than $5 trillion in debt, and the one likely to pass—if one passes, that is—will likely still leave us with more than $10 trillion of obligations. Somewhere, Andrew Jackson is shaking his skeletal head, pissed that a bunch of profligate Americans have soiled his legacy.
As president, Jackson was responsible for the first and only time the country stood at a true Debt Zero. The debt was $58.4 million when he first took office in 1829; six years later, as he would announce in his 1835 State of the Union, the country was finally in the black, with $440,000 in the bank. All it took to get there was a maniacal devotion to small government, the forced removal of tens of thousands of Native Americans, and tariffs so high the union nearly broke apart. The kind of thing that’s easily replicable in 2011.
So while we’re counting down the days until the U.S. bursts through the ceiling like a Roald Dahl character, let’s dwell on a different timeline: Andrew Jackson’s. It’ll remind you that Debt Zero doesn’t happen overnight.
1795: For Jackson, debt became his white whale from an early age. Before he went to battle and burnished his Old Hickory* legacy, he was a lawyer and real-estate man, and a rich one at that. When Jackson was 32, he sold 68,000 acres of land to a guy named David Allison. But Allison didn’t have the most stable of financial lives, and soon ended up declaring bankruptcy and rotting in a debtors prison, where he’d die in 1798. Jackson, meanwhile, was left in a lurch, having used the promise of Allison’s money to start buying supplies for a trading post he was starting. According to John Steele Gordon’s surprisingly readable history of U.S. debt, Hamilton’s Blessing, Jackson would spend the next 15 years sorting it all out.
1824: When Jackson first unsuccessfully campaigned for president he did it on a platform that would make Tea Partiers blush. He framed the federal debt as an almost-spiritual affliction, calling it “a national curse.” As Jon Meacham writes in, American Lion, his Pulitzer-winning biography of Jackson: “To him debt was dangerous, for debt put power in the hands of creditors—and if power was in the hands of creditors, it could not be in the hands of the people, where Jackson believed it belonged.”
1828: Likewise, he was adamant power not be in the hands of the Brits. The country’s protectionist streak meant a series of tariffs were passed to help build the economy. Starting in 1824, when Jackson was still a Senator, he voted in favor of tariffs in an attempt to raise revenue on imports and help the country’s fledgling manufacturing industry compete with Britain’s. 1828′s Tariff Act, menacingly nicknamed the “Tariff of Abominations,” was especially restrictive, and South Carolina, whose economy was already suffering, was furious (again—some things never change) that the legislation would raise duties from 33 to 50 percent, reinforce Britain’s unwillingness to import its cotton, and keep prices on manufactured goods from the north high. The Union was threatening to fracture, but the Treasury was getting rich. Tradeoffs.
1829: Once he took office, Jackson finally had enough power to spear the debt, pursuing it single-mindedly, no matter the costs. He refused to finance state projects with federal funds, partly because he believed in a small federal government, and partly because it would cost too much. Predictably, congressmen who were trying to get funding for local projects (proto-pork!) were angry, but Jackson wouldn’t budge. In 1830, he threatened to veto any funding for state infrastructure. “I stand committed before the country to pay off the national debt at the earliest practicable moment,” he told a Kentucky congressman seeking funding. “Are you willing–are my friends willing to lay taxes to pay for internal improvements?–for be assured I will not borrow a cent except in cases of absolute necessity!” The Congressman replied, “No, that would be worse than a veto.” (Some things never change.)
1830: Congress passes the Indian Removal Act of 1830, offering 25 million acres of new land in exchange for the forced eviction of tens of thousands of Native Americans. That land was later sold, and between 1832 and 1836 federal land sales increased 1,000 percent, brining more than $25 million into federal coffers in 1836 alone. The U.S. was committing human-rights atrocities, but the Treasury was getting rich. More tradeoffs.
1832: Jackson was now President, and South Carolina’s anger finally boiled over. It threatened to circumvent federal law and lift the tariffs on British imports, both lowering plantation owners’ costs and reopening a market. Jackson, with the end of the federal debt in sight, agreed to relax the tariffs and coaxed South Carolina off the ledge. Twenty-nine years later, they would push back over by taking first shots of the Civil War.
1835: It only took 40 years, but Jackson had finally done it—exorcised both him and the country of its debt curse. “Free from public debt, at peace with all the world,” he wrote to Congress. The U.S. was finally debt-free. The Democrats held a banquet to celebrate, but Jackson was too modest to attend. No reason to celebrate what was sure to be the new normal.
2011: The US hasn’t reached Debt Zero since.
*Editor’s Note: This article originally referred to Jackson as “Stonewall,” however Stonewall Jackson was a confederate Civil War general. The sentence has been corrected to use President Jackson’s nickname of “Old Hickory.”