Today’s post is a repeat from my earlier blog, “Columbus Day Riot”, first posted in 1999. Since I recently commented on how so many things have gotten screwed up in the last 10 years, I thought it would be fun to remember the old daze – when the National Debt was about half what it will be shortly and our biggest concern was how to pay it off. What could have been different? If we had followed my adivce and given Texas back to Mexico we wouldn’t even have a President from that former state, for example.
The rest of it is still instructive. How did we run up such a big tab? How can we at least keep track of it? I wish we had. Here it is, just as it was in 1999 but with the links removed since so many were broken:
The last time we actually paid off the ol’ National Visa Bill in full was 1835, and Andrew Jackson did it mostly out of spite (and a chance to get on the Twenty). As our Congress debates exactly how they intend to avoid repeating this remarkable feat of history (again, mostly out of spite) it’s good to remember what exactly makes up all the line items of our whopping 5.6 trillion buck tab.
See, if you start scanning everything we picked up after 1835, it doesn’t take too long to get to the Mexican War of 1846-1848. If you recall anything from your high school history, you may remember that this is where we snagged what is now Texas, California, and some other very dry places in between. What you may not be aware of is that the Treaty of Guadalupe Hidalgo didn’t so much give us this land, but made Mexico sell what was 1/3 of their land to us for 15 million bucks. Leave it to Americans to somehow confuse naked imperialism with commerce! It seems reasonable, though, that Mexico may have actually gotten the better end of the deal, since that 15 million could have been invested in yahoo.com and turned into a large pile of money that, as I write, might well be disappearing.
Anyways, this debt has never actually been repaid, since we haven’t paid off anything in full since then. And if you fast-forward that 15 million to today at the going US bond rates, it’s now standing at 13.3 billion dollars. Leave it to Texans to figure out how to get what they want with other people’s money, I guess.
So if we were really serious about paying off all of the debt, we could take a big swipe at it by just selling Texas back to Mexico.
Now, I know what you’re thinking – can’t we sell California back instead? While this is a good idea, I doubt that Mexico would take us up on it. It’s gotten awfully polluted since they signed it over, what with the smog and celebrities who have murdered their ex-spouses running around. So Texas would be an easier sell. And we don’t have to sell all of Texas, just the part that we’d rather not have any more like, um … OK, so we could sell it all back after pumping the oil dry. I think that we could make substantially more than the 13.3 billion that is outstanding on it.
And this is all the kind of stuff that’s on our tab right now – things like the Civil War where we got to keep Alabama, WWI where we Fought to End All Wars, WWII where We Really Meant It That Time, and so on. If you scan the big Visa bill carefully, you might see a lot of useful things, like the Capitol building itself, and maybe some really bizarre things like a receipt for FDR’s dog, Fala.
Is this such a bad thing, in and of itself? Well, no, you can’t really complain about running up some kind of a tab unless you managed to buy your house with cash rather than some kind of mortgage. Despite some misgivings, Texas seems to have been a good investment (sales managed at gunpoint usually are). And there’s a lot of other good ones on there, like interstates and Hoover Dam and Yellowstone.
The real problem is separating out the things that really should be financed as a major capital purchase, like a house or a car or Arizona, and those things that shouldn’t be, like Skittles or gas for the F-16s.
It’s damned hard to have an intelligent fight about this without knowing this, because we can’t really say if it’s a problem unless you know that the 5.6 trillion outstanding debt is really higher than the net value it bought. Meredith Bagby, a member of the commentator class, has estimated that we’re only worth about 1.3 trillion, but I think that’s low. What are we really worth? What is the value of, say, the Everglades or the Smithsonian? It’s hard to make an intelligent guess on these without making a few more eyes glaze over.
And that’s the real problem — the lack of normal accounting standards (GAAP) that would separate out the capital from the expenses. Imagine if at the end of a Congressional Session we could look at the bottom line and ask, “did we increase the net worth of the United States, or not?” It would give us a handy way of determining if something was “pork” or whether large capital hogs like the military or HUD were managing their funds properly. In short, we could have some really intelligent debate about what we do and what it costs.
Then again, the lack of intelligent conversation leaves room for Congress to fill the void with statements like Pete duPont’s, “Finally, you and I both know what will happen to the … surplus if taxes are not reduced: On bipartisan votes, Congress will spend it.” Maybe, but isn’t it more to the point that we already have spent it?
And, of course, what did we get for it? Anything better than Texas?