”The Lord will open for you His good storehouse, the heavens, to give rain to your land in its season and to bless all the work of your hand; and you shall lend to many nations, but you shall not borrow.” – Deuteronomy 28:12
The first article of the United States Constitution contains a provision that big-government elites have turned to a cancer on this Country. Article I, Section 8, Clause 2, commonly referred to as the “Borrowing Clause,” has been used and abused by Republicans and Democrats with equal fervor for decades. This tiny article, which the founders thought was innocuous, has been devastating for the taxpayer since Thomas Jefferson’s day.
The “Borrowing Clause” reads as follows “The Congress shall have power to…borrow money on the credit of the United States.” The Founding Fathers put this provision in the Constitution to allow the Country to borrow in the event of national emergency (i.e. war). They believed that it should be in-place so the United States could borrow from its own citizens (via bond debt, etc) and other entities in the face of existential threats. They never envisioned that it would be used to prop-up a politician’s favorite corporation or pay for massive social entitlements.
The Founders were so concerned about the abuse of the public credit that George Washington warned against it in his farewell address. Washington wrote, “As a very important source of strength and security, cherish public credit. One method of preserving it is to use it as sparingly as possible…avoiding likewise the accumulation of debt.” The Founders believed that any deficits incurred during an event of national emergency would be paid-off in full during times of peace. It was the intent of the founding generation to leave no debt to their posterity. Unfortunately, the dream of the founders began to falter immediately after it was conceived.
Alexander Hamilton was the first public official to abuse the public credit. The first Secretary of the Treasury was a great forerunner of folks like Timothy Geithner as he, too, believed that the “Borrowing Clause” supported an expansive federal treasury and central bank that could provide capital to private companies. Hamilton’s “interpretation,” which I think is downright ignorant, was that the “Borrowing Clause” mandated the creation of a central bank…an idea opposed by many of his contemporaries, notably Jefferson. Nevertheless, his creation of a central bank has since proved true the warnings of Jefferson “that if the American people ever allow the banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers occupied.”
The current spending binge at the National, State and local level has gotten out-of-hand. Article 1, Section 8, Clause 2 has been used and abused to provide government, not the people, control over the Nation’s economy and, by extension, future.