Tuesday, April 19, 2011

The Founding Father for a Strong Federal Government

William Hogeland on Alexander Hamilton, the original conservative who is the tea party's nemesis:

So as we stand on long lines at the post office hoping to avoid the midnight axe, we might spare a moment to consider the father of federal taxes, Alexander Hamilton. Our first Secretary of the Treasury, Hamilton is celebrated by both establishment liberals and establishment conservatives: The Hamilton Project is an economic effort of the liberal Brookings Institution, and former Obama budget director Peter Orszag hung a Hamilton portrait in his office; on the right, the writer David Brooks and former Bush Treasury Secretary Henry Paulson are two of Hamilton’s biggest fans. It’s not surprising. Hamilton is rightly said to have put the new nation on sound financial footing and secured its creditworthiness. He gave us our first comprehensive national finance policy.
That policy depended on exercising certain economic powers that finance nationalists like Hamilton and his mentor the rich financier Robert Morris, as well as planter nationalists like James Madison, had been striving to achieve for the federal government throughout the 1780’s, and which came to fruition at the Constitutional convention in 1787. While Hamilton and Madison would arrive at dire odds over whether the Constitution gives the federal government the right to form a central bank (Hamilton yes, Madison no), all nationalists had long agreed that a national government, unlike a confederation of states, would have a right to tax its citizens directly, throughout the states. And unlike what they saw as state governments’ susceptibility to the American popular-finance movement’s riot and noncompliance, a national government, nationalists hoped, would have both the will and the police resources to enforce and collect taxes.
So whereas Tea Partiers sometimes associate their objections to federal taxes with a desire to “get back to the Constitution,” federal taxation is one of the Constitution’s central purposes. And we can thank the wunderkind Alexander Hamilton for proposing the legislation by which the first U.S. Congress imposed the first federal tax ever on an American product.
The whole thing is worth a read, but I also found this very interesting:

Hamilton wasn’t messing around. Empowered by the new government to do what he and Morris had long been frustrated in trying to do, the young, charismatic, brilliant, diligent Secretary worked up a full-blown plan for connecting national wealth, and even more importantly national credit, to ambitious national aims. Like Morris, though to a far more sophisticated degree, Hamilton wanted the United States to become an economic powerhouse and financial empire to compete with England. And he’d been tireless in figuring out how to do it.
The key, as Morris had always suggested, was to combine a big public debt with vigorously enforced taxes earmarked for funding that debt. That is: sell U.S. bonds to the small, rich merchant lending class and, as Morris had put it, “open the purses of the people,” collecting taxes from the American people, in metal, not paper, and earmarking revenues for paying the bondholders their 6% interest in hard, cold cash — 6% untaxed interest, that is. Federal power would thus shift national wealth upward and consolidate it. Yoking national credit to national interest, government would serve as an economic pivot between the creditors and the people and thus be in a position to finance roads, canals, wars, and other national projects. (emphasis mine)
It is interesting that the purpose as laid out was to make the rich richer, and to use the government to build the infrastructure to do it.  Since the Great Depression, the government has taken the role of moderating the differences between the haves and the have nots, while building the infrastructure and schools to make further prosperity more likely.  Today's tea party is opposed to the government income-leveling process, opposed to the national debt and opposed to government spending on infrastructure and education.  They only seem interested in helping the rich get richer, usually at their own expense.  But they feel like they are ideologically pure, like their mythical portrayal of the Founding Fathers.


  1. The tea party seems to forget the Founding Father's approval and participation in slavery. The 3/5ths compromise is an example of handing power and privelege to a select few at the expense of others.

    Maybe they haven't forgotten that aspect of the founding fathers.

    I've argued that the American Revolution was not a revolution of society (like the French or Soviet Revolutions) but a revolt of the landed class against the ruling party. The rich stayed rich and created the groundwork to become richer.

  2. ...and succeeded mightily, at least until investment of capital in industrial production outstripped investment in land.