The Debt

In “The Federal Debt” (November 1995), John Steele Gordon obscures a major point by not examining the data with a bit more precision. He acknowledges, for example, that when Andrew Jackson virtually eliminated the national debt by the mid-1830s, the country “plunged into depression.” He notes that cutting the debt in half during the 1850s was followed by another depression and that debt reductions were followed by “severe depression” in the 1890s.

In fact, every major depression in U.S. history has been immediately pre-.j ceded by a multiyear spasm of budget cutting and debt reduction. The depressions began in 1819, 1837, 1857, 1873, 1893, and 1929. There has beenj virtually chronic deficit spending since the Great Depression, and no new economic collapse, the longest such period in history.

Gordon also fails to note that Franklin Roosevelt was re-elected in 1936 , partly on the basis of a promise to balance the budget. He came very close to doing so in 1937, cut back the size of government, and the modest recovery of 1933–37 immediately disappeared.

The national debt now stands at 68 percent of the gross national product, Gordon reminds us, “higher than it has ever been in peacetime except in the immediate aftermath of a great war.” Actually the present debt is relatively the same as in 1955–56, an entire decade after World War II. Perhaps the appropriate question is why the debts of that war (129 percent of GNP in 1946) did not wreck the economy.