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Hamilton on Revenues

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This entry was posted on 11/3/2011 11:41 AM and is filed under Added Articles.

    Some things never change.  They won't no matter how many times you correct wrong opinions and bad behavior they continue to recrudesce like sludge from the polluted septic systems of the world.
    Take the tea party.  They style themselves to be one thing but are exactly in opposition to what the original Boston tea party favored. This tea party is reactionary where that Tea Party was revolutionary, therein is a great divide.
     So, according to Thom Hartmann from his original sources, the Boston Tea Party was opposed to unfair British tax breaks given to a giant multi-national corporation - the East India Company - designed by a too compliant parliament to give them a virtual monopoly on the American market.  Yet the tea party today, lower case, is rabidly in support of tax breaks for corporations and extraordinary tax breaks for the wealthy few who control them.  It's like the song, "if lovin' the right wing is wrong, I don't wanna be right," or something like that, not so much in God we trust, as on GOP we dote. 
    Strangely and embarrassingly enough the republican party is the vehicle which has allowed the tea party to gain steam. (The steam engine is an apt example here as they adamantly oppose high speed rail - and modernity in general.) The republican party is so steeped in tea today it may as well be called Lipton.
    Their policy of deny, stop, impede, block the very notion of, disinform and keep the nation from its necessary resources - all in order to continue to enrich the rich while slowly disenfranchising and impoverishing the plurality, is in impressive denial of their own best heritage as well as the best interests of the nation.  
    Rather they enthusiastically harken back to the know-nothings, the nativists, the states rights, and religious puritan (teetotalers too) crowd of Lincoln's time who, as founder of the republican party, rejected the very philosophies that his successors are embracing. 
    Lincoln, in fact, aligned himself with the old Whigs of Henry Clay which went all the way back in unbroken lineage to Alexander Hamilton. When Lincoln ran for the legislature he believed in social tolerance, internal improvements and a central bank - all anathema to republican tea-totalers today (though anti-Federal Reserve sentiments may not yet be a universally held belief among them (yet - wait till next election as they continue their southern plunge farther and farther to the right).
    So the modern anti-tax, anti-spend, deficit spending (yes, I know the last two contradict but they don't care), anti-government, religious fundamentalist, know-nothing, do-nothing, say anything, rabidly obstructionist republican party of today represents tendencies not only not native to it, but tendencies which the best of the republican party has always fought vehemently against. 
    Nothing new in this.  Many of these same negative, highly regressive elements have been in evidence from the very beginnings of the nation.  Most of these people fought if not for the British at least against the revolution and later, against the ratification of the constitution. Several of our Founding Fathers, Jay, Madison and Hamilton, wrote a series of essays which came to be known collectively as the Federalist Papers. The one by Hamilton quoted extensively below might have been specifcally designed to refute every false proposition lately put forward or action taken by (when they were in power in the last administration) McCollum and Boehner, the republican leaders in congress. This illustrates just how "new" our Founders still are at the same time revealing just how passe' their attackers remain. 
    
I have edited it for length and rearranged a few of its parts for sake of continuity but nothing has been added to the power of Hamilton's own words.
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Concerning the General Power of Taxation

From the New York Packet.
Friday, December 28, 1787.
Author: Alexander Hamilton

To the People of the State of New York:

Money is... the vital principle of the body politic; which sustains its life and motion, and enables it to perform its most essential functions. A complete power, therefore, to procure a regular and adequate supply of it, as far as the resources of the community will permit, may be regarded as an indispensable ingredient in every constitution. From a deficiency in this particular, one of two evils must ensue; either the people must be subjected to continual plunder, as a substitute for a more eligible mode of supplying the public wants, or the government must sink into a fatal atrophy, and, in a short course of time, perish.

...the federal government ought to possess the power of providing for the support of the national forces; in which proposition was intended to be included the expense of raising troops, of building and equipping fleets, and all other expenses in any wise connected with military arrangements and operations. 

Let us (say)... a war breaks out. What would be the probable conduct of the government in such an emergency? ...would it not be driven to the expedient of diverting the funds already appropriated from their proper objects to the defense of the State? It is not easy to see how a step of this kind could be avoided; and if it should be taken, it is evident that it would prove the destruction of public credit at the very moment that it was becoming essential to the public safety.

To imagine that at such a crisis credit might be dispensed with, would be the extreme of infatuation. In the modern system of war, nations the most wealthy are obliged to have recourse to large loans. But who would lend to a government that prefaced its overtures for borrowing by an act which demonstrated that no reliance could be placed on the steadiness of its measures for paying? The loans it might be able to procure would be as limited in their extent as burdensome in their conditions. They would be made upon the same principles that usurers commonly lend to bankrupt and fraudulent debtors, with a sparing hand and at enormous premiums.

But these are not the only objects to which the jurisdiction of the Union, in respect to revenue, must necessarily be empowered to extend. It must embrace a provision for the support of the national civil list; for the payment of the national debts contracted, or that may be contracted; and, in general, for all those matters which will call for disbursements out of the national treasury. The conclusion is, that there must be interwoven, in the frame of the government, a general power of taxation, in one shape or another.

In America... the government of the Union has gradually dwindled into a state of decay, approaching nearly to annihilation. Who can doubt, that the happiness of the people... would be promoted by competent authorities in the proper hands, to provide the revenues which the necessities of the public might require? The present Confederation... (has) an unlimited power of providing for the pecuniary wants of the Union.

But proceeding upon an erroneous principle, it has been done in such a manner as entirely to have frustrated the intention. Congress, by the articles which compose that compact... are authorized to ascertain and call for any sums of money necessary, in their judgment, to the service of the United States; and their requisitions, if conformable to the rule of apportionment, are in every constitutional sense obligatory upon the States. What the consequences of this system have been, is within the knowledge of every man the least conversant in our public affairs, and has been amply unfolded in different parts of these inquiries. It is this which has chiefly contributed to reduce us to a situation, which affords ample cause both of mortification to ourselves, and of triumph to our enemies.

What remedy can there be for this situation but... in a change of the fallacious and delusive system of quotas and requisitions? What substitute can there be imagined for this ignis fatuus in finance, but that of permitting the national government to raise its own revenues by the ordinary methods of taxation authorized in every well-ordered constitution of civil government? Ingenious men may declaim with plausibility on any subject; but no human ingenuity can point out any other expedient to rescue us from the inconveniences and embarrassments naturally resulting from defective supplies of the public treasury.

I believe it may be regarded as a position warranted by the history of mankind, that, IN THE USUAL PROGRESS OF THINGS, THE NECESSITIES OF A NATION, IN EVERY STAGE OF ITS EXISTENCE, WILL BE FOUND AT LEAST EQUAL TO ITS RESOURCES.

The more intelligent adversaries of the new Constitution admit the force of this reasoning; but they qualify their admission by a distinction... This distinction, however, would violate the maxim of good sense and sound policy, which dictates that every POWER ought to be in proportion to its OBJECT; and would still leave the general government in a kind of tutelage... inconsistent with every idea of vigor or efficiency.      

Taking into the account the existing debt, foreign and domestic, upon any plan of extinguishment which a man moderately impressed with the importance of public justice and public credit could approve..., we could not reasonably flatter ourselves, that this resource alone, upon the most improved scale, would even suffice for its present necessities. Its future necessities admit not of calculation or limitation; and... the power of making provision for them as they arise ought to be equally unconfined.  

If the opinions of those who contend for the distinction which has been mentioned were to be received as evidence of truth, one would be led to conclude that there was some known point in the economy of national affairs at which it would be safe to stop and to say: thus far the ends of public happiness will be promoted by supplying the wants of government, and all beyond this is unworthy of our care or anxiety. (Or as they might put it more succinctly today: "No new taxes or revenues - ever again!"- editor's note)

Its inevitable tendency, whenever it is brought into activity, must be to enfeeble the Union, and sow the seeds of discord and contention between the federal head and its members, and between the members themselves. It ought to be recollected that if less will be required from the States, they will have proportionably less means to answer the demand.

How is it possible that a government half supplied and always necessitous, can fulfill the purposes of its institution, can provide for the security, advance the prosperity, or support the reputation of the commonwealth? How can it ever possess either energy or stability, dignity or credit, confidence at home or respectability abroad? How can its administration be any thing else than a succession of expedients temporizing, impotent, disgraceful? How will it be able to avoid a frequent sacrifice of its engagements to immediate necessity? How can it undertake or execute any liberal or enlarged plans of public good?

Reflections of this kind may have trifling weight with men who hope to see realized in America the halcyon scenes of the poetic or fabulous age; but to those who believe we are likely to experience a common portion of the vicissitudes and calamities which have fallen to the lot of other nations, they must appear entitled to serious attention. Such men must behold the actual situation of their country with painful solicitude, and deprecate the evils which ambition or revenge might, with too much facility, inflict upon it.
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    The republican tea party justifies and glorifies their often noxious behavior by claiming they exemplify the spirit of the Founders. The question must be, Which Founders? Where?  When? and of What?" Of course with attitudes as nihilistic and greed-filled as theirs they could never be founders of anything but merely plunderers of what has already been built by others more far-sighted than themselves.
    Despite the fact that that they claim connection with some sort of original intent as their inspiration and a spiritual affinity with the "Founders," here we have Alexander Hamilton, who is both a Founder and an icon of conservatism as well as the first and most illustrious Secretary of the Treasury and the father of American solvency, who has his face stamped on the fifty dollar bill - found in a nearly point by point refutation of virtually everything the tea party republicans claim to stand for today.  
    Of course the situation we face today is different today, but only superficially.  Hamilton was faced not with opposition to big government but opposition to the establishment of a national American government in any form. If some republicans today sound as if they would abolish all effective government in this country today, as the bizarre and destructive debt ceiling debates dragged on, well, that must be just a passing coincidence.  Though some might be forgiven if they saw in the republicans selfish determination to enrich their friends at the expense of the rest of us, and in their refusal to see the larger framework and potential of the nation, a certain similarity of ilk between the naysayers of the two eras.  Some things never change.  Hamilton's vision and the foresight and patriotism of the Founders was proven right then, and their vision, if allowed to prevail now, will certainly prove as revolutionary now as it was then.  

    Meanwhile the republican party of today has beggared us, first by novel theories of economics which have led to massive systemic debt, but then by refusing to let any more responsible government raise revenues to attempt to cure us from the straightened fiscal circumstances they are responsible for putting us in, thus embarrassing us in the eyes of the world and reducing us to penury and destitution at home.
    
They have done this simply by an intentional greedy wrenching of the entire taxcode of the US egregiously and unfairly in favor of the rich.  They then use the onerous unfairness they have built into their collection as a proof and wedge against any and all taxes in general.  As taxes on the middle class are confiscatory and on the wealthy light, the shrill cry of "no new taxes" has a particularly willing accomplice in the overburdened middle class which has been chiefly victimized by this process of calculated rapacity.    
    The only appropriate national response to this cruel political blackmail which holds our neediest citizens hostage to the extreme and exalted wealth of the very, very few is true tax reform which may begin to redress the endemic unfairness written into the current tax code.  This must necessarily include measures which will substantially raise taxes on the wealthiest Americans. Even if not all guilty as authors they all have been the chief beneficiaries of the corruption which has essentially profiteered our society for the last thirty years.
     It is time to raise their taxes in order to reduce taxes on everyone else and let our entire economy breath again.  Only then will the demagogic scream of "no new taxes" lose its appeal to the congenitally overtaxed and abused middle class. Only then will some degree of fairness and rationality return to our debate over raising revenues equal to rebuild our country's troubled economy and return us to the world fiscal sanity.
    This aligns the democrats and the Obama administration, rather unjustifiably, simply by default, with the best elements of our history - it puts them on the side of the better angels of our nature - if they will only rise to the occasion.  It has been frustrating to notice that they don't seem to recognize the historic opportunity and necessity which faces them.  They seem to be waiting for their greatness to be thrust upon them, rather than reach out in search of it themselves.  For even when they take the proper positions they do so with timidity, a lack of alacrity, defensively, as if frightened that the cannons of the republican propaganda machine trained upo them might actually be loaded with more than confetti.  
    As for the republicans no matter how you gauge it, they are arrayed on the wrong end of history, supporting the people and policies who've created all our problems rather than those who would rectify them.  They are the defeatists among us, the ones who fail to face the future squarely. They were the ones who tried to bring us back from the brink of history at the start of our country and are the ones who are determined to thwart all efforts at progress now. They wrap themselves in the flag yet dishonor by comparison the memory of those far better than them, when these reactionaries claim they are equivalent to the revolutionaries who founded the very American government they are still trying to undermine and destroy.

 

 

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