GEORGE WASHINGTON -- first in war, first in peace, first in the hearts of his countrymen and first president to agonize over taxes, budgets, debt, deficits and a sound currency.
That economic agenda still confronts his successors and would-be successors 200 years later. But for Washington, there were few answers or options: no bloated spending to cut, no Fed to fine-tune the economy, no significant federal holdings to sell off, no supply-side tax cuts to stimulate growth.
Washington had only his own old-fashioned, direct economic maxims:
. . . towards the payment of debts there must be revenue -- to have revenue there must be taxes -- no taxes can be devised which are not more or less inconvenient and unpleasant . . . .
Washington acknowledged that "the selection of the proper objects" for taxation "is always a choice of difficulties" involving "intrinsic embarrassment." His solutions were "a decisive motive" for the imposition of a tax and "a spirit of acquiescence." He observed that " "it is necessary that public opinion should cooperate."
Washington was troubled about the the emerging nation's economy long before he became president in 1789. The cost of the Revolutionary War and the inefffectiveness of the Continental Congress had left the national currency so worthless that items of negligible value were said to be "not worth a Continental." In 1778, Washington wrote Benjamin Harrison, a delegate to the Continental Congress:
. . . party disputes and personal quarrels are the great business of the day whilst the momentous concerns of an empire, a great and accumulated debt, ruined finances, depreciated money and want of credit . . . are but secondary considerations and postponed from day to day, from week to week, as if our affairs wore the most promising aspect . . . .
In 1779, he lamented "the depreciation of our currency, proceeding in great measure from speculation, peculation, engrossing, forestalling, stockjobbing, and party dissensions." He worried that "a few designing men" might "gratify their own avarice" and pursue their "abominable lust for gain" at the expense of the nation.
Washington favored an import duty known as "the Impost." In 1783, he explained, "I know of no tax more convenient; none so agreeable as that which every man may pay, or let it alone, as his convenience, abilities, or inclination shall prompt." But since the Articles of Confederation had not given Congress the power to impose such a tax, a lone state (with strong import interests) could block it. And block they did.
Washington complained that while the new government had been charged with a great purpose and mission, the constituent states deprived it of such powers as are adequate to the great ends of government." "To me," he wrote, "it would seem not more absurd to hear a traveller, who was setting out on a long journey, declare he would take no money in his pocket to defray the expenses of the journey but rather depend upon chance and charity lest he should misapply the money."
Chance and charity were not the foundations of great government, in Washington's view. For him, greatness had a price; government would have to impose it and the people would have to pay it.
Washington's convictions were vindicated in the new Constitution of 1787, and as president he them but had the courage to enforce them with the full might of the law. When excise taxes imposed on distilled spirits in 1791 and 1792 led to the violent Whisky Rebellion in western Pennsylvania, Washington sent the militia to subdue the insurrection. A month before he was unanimously re-elected in 1792, he spoke to the Congress about the rebellion and the excise-tax law and warned that "all lawful ways and means would be strictly put in execution for bringing to justice the infractors thereof, and securing obedience thereto."
But in the same address, Washington also spoke of new loans that had been "effected for the reduction of the public debt" and made it clear that, favorable though they were, future loans were not the answer to the nation's fiscal difficulties:
I entertain a strong hope that the state of the national finances is now sufficiently matured to enable you to enter upon a systematic and effectual arrangement for the regular redemption and discharge of the public debt . . . .
Washington didn't back off. In his 1793 address to Congress, he asserted that "no pecuniary consideration is more urgent than the regular redemption and discharge of the public debt." And he was foresighted. He looked ahead to the nation's needs and the necessity of funding those needs -- with increased taxes.
The productiveness of the public revenues, hitherto, has continued to equal the anticipations which were formed of it; but it is not expected to prove commensurate with all the objects, which have been suggested. Some auxiliary provisions will, therefore, it is presumed, be requisite; and it is hoped that these may be made, consistently with a due regard to the convenience of our citizens, who cannot but be sensible of the true wisdom of encountering a small present addition to their contributions, to obviate a future accumulation of burdens.
Washington kept up the pressure. In his 1794 address to Congress, he urged the House to develop "a definitive plan for the redemption of the public debt." He argued, "Nothing can more promote the permanent welfare of the nation, and nothing would be more grateful to our constituents." His recommendation: "As far as may be practicable, we ought to place that credit on grounds which cannot be disturbed, and to prevent that progressive accumulation of debt which must ultimately endanger all governments."
In 1795, he seems to have taken a subtler, or perhaps more diplomatic, approach: "Whether measures may not be advisable to reinforce the provision for the redemption of the public debt, will naturally engage your examination. And he emphasized the political aspect of such an examination: "Whatsoever will tend to accelerate the honorable extinction of our public debt accords as much with the true interest of our country as with the general sense of our constituents."
This tact and theme must have showed some promise, for they were echoed in 1796, in Washington's last annual address to Congress. He noted that "some preliminary steps were taken towards the discharging of our public debt, the maturing of which will, no doubt, engage your zealous attention." He added that "it will afford me heartfelt satisfaction to concur in such further measures as will ascertain to our country the prospect of a speedy extinguishment of the debt. Posterity may have cause to regret if, from any motive, intervals of tranquility are left unimproved for accelerating this valuable end."
Ultimately, Washington failed to eliminate the debt. But he never stopped trying. In his 1796 Farewell Address -- famous for its warning against "permanennt alliances" with other nations, Washington spoke just as passsionately of "public credit" as "a very important source of strength and security," to be used "as sparingly as possible." To cherish and preserve public credit, he advised "avoiding occasions of expense by cultivating peace" and "avoiding likewise the accumulation of debt."
The public Washington was also the private Washington. From macro-pronouncements to micro-counseling, he was consistent, as in a 1797 letter to his brother Samuel, who was heavily in debt and who again was looking to George for funds:
. . . you may be assured that there is no practice more dangerous than that of borrowing money . . . . For when money can be had in this way, repayment is seldom thought of in time; the interest becomes a moth; exertions to raise it by dint of industry ceases -- it comes easy and is spent freely; and many things indulged in that would never be thought of, if to be purchased by the sweat of the brow. In the meantime, the debt is accumulating like a snowball in rolling. Joseph Cooper is the editorial counsel at The New Yorker magazine.