David Hume wrote in his 1752 essay on public credit thatrnan unpopular government will “mortgage the public revenues,rnand trust that posterity will pay off the encumbrances contractedrnby their ancestors,” which, on the face of it, is fairlyrnpreposterous. As preposterous, say, as expecting Yeltsin’s Russiansrnto pay the debts that dictators incurred in oppressingrnthem.rnPublic borrowing, of course, leads to more public borrowingrnand ultimately to national bankruptcy, writes Hume, “as naturallyrnas an animal body to its dissolution and destruction.” Inrnthe last stage: “Where a government has mortgaged all itsrnrevenues, it necessarily sinks into a state of languor, inactivityrnand impotence.” The 1993 budget estimates we will spendrn$315 billion in interest on the national debt. We have certainlyrnreached the point, as Hume said, when “the nation becomesrnheartily sick of [its] debts, and is cruelly oppressed byrnthem.” Realistically, the government’s liabilities are unlimited,rnand when a government’s liabilities are infinite, no taxrnsystem makes any particular sense. No matter how muchrnmoney the government collects, it is not enough.rnThe country’s losses are steadily growing, with accumulatedrnlosses at $4 trillion (the national debt) and current losses runningrnaround $400 billion a year (the deficit). Who bears thernburden of the loss? Who gets to pay? It could be the individualsrnand institutions holding the debt. Or it could be therntaxpayers. All current discussion assumes the taxpayer willrnpay, but as Hume wrote, “The public is a debtor, whom nornman can oblige to pay. The only check which the creditorsrnhave upon her is the interest of preserving credit; an interestrnwhich may easily be overbalanced by a great debt, and by a difficultrnand extraordinary emergency.” The Democrats andrnRepublicans agree that the losses will continue as far as theyrncan sec. The President’s 1993 budget estimates a $209 billionrndeficit for 1997. The middle-class citizen assumes the lossesrnwill continue to be allocated on his head and will soak up everythingrnhe has now or will have in the future.rnBeginning in 1965, one administration after another pouredrndebt onto future generations. For the first time in our history,rnthe debt was far beyond what the living generation intended tornpay, or could pay in its time. The post-1965 administrations,rnin Jefferson’s words, ate “up the usufruct of the lands for severalrngenerations to come,” breaching the basic moral principlernthat the “public debts of one generation” cannot “devolve onrnthe next.” Jefferson gave the example of Louis XV:rnAgain suppose Louis XV and his contemporary generationrnhad said to the money-lenders of Genoa, give usrnmoney that we may eat, drink, and be merry in our day;rnand on condition you will demand no interest till thernend of 19 years you shall then for ever after receive anrnannual interest of 12-5/8 percent. The money is lentrnon these conditions, is divided among the living, eaten,rndrank, and squandered. Would the present generationrnbe obliged to apply the produce of the earth and ofrntheir labour to replace their dissipations? Not at all.rnI lume believed that once public debt is more than a countryrncan afford, it must be disposed of, or in financial terms, liquidated.rnHe saw two ways this was likely to happen: one herncalled the “natural death” of public credit and the other “violentrndeath.” Neither ending is appealing, but the violent deathrnis far worse than the other.rn”Natural death” would occur if the government could notrnsell all of the $400 billion notes and bonds it needs to cover thernannual deficit. While tax revenues continue to come intornthe treasury, about $315 billion come earmarked to pay interestrnon the outstanding debt. If at some point during thernyear an emergency arose, say the nation was threatened with anrninvasion, the government would act in self-preservation andrnuse the earmarked $315 billion to resist the invasion. It wouldrnpromise that the diversion is temporary, that the money wouldrnbe replaced as soon as possible. But it would not happen.rnThe national debt would then collapse, burying those whornhold it. This would mean “thousands [of debt holders] arernsacrificed to the safety of millions,” in Hume’s words. Hernnoted that history showed that in a surprisingly short timernthe national credit would revive.rn”Violent death” results when a country makes too manyrnsacrifices to meet the debt. This happens when the debtholdingrnclass controls the country and insists on sacrifices pastrnwhat “prudence, policy, or even justice” require. It runs downrnthe national defense. It puts the economy in a contorted positionrnand cuts the standard of living further in order tornsqueeze out the interest payments. Ultimately, our childrenrn”weary of the struggle and fettered with encumbrances” are sornweak that they cannot resist a takeover by foreign interests.rnIn the violent death ending “millions may be sacrificed foreverrnto the temporary safety of thousands.”rnCompetition between the political parties is supposed tornkeep government on track, but the Republican andrnDemocratic parties have not truly competed for 25 years. Indeed,rnover time, the parties have turned into deformed selfparodies.rnThe Democrats trace themselves to Thomas Jefferson,rnwho believed the American Revolution was part of arnlarger revolution of the human spirit against oppression. Jeffersonrnbelieved society would be as good as its people andrnwould be trusted largely to the good sense of the commonrnman. Beginning in the mid-1960’s, the Democrats lost confidencernin the common man; they considered the middle classrnan obstacle to the kind of society they wanted to create. Theyrntook Andrew Jackson’s equality of opportunity and spun itrninto governmentally enforced equality of result. They took Jefferson’srnidea that governments derive their just powers fromrnthe consent of the governed and turned power over to judges,rnwhom they thought agreed with their vision of a new societyrnand would force the majority into line.rnThe Republicans trace themselves to Alexander Hamiltonrnbut have lost the ability to create national wealth. The Republicansrncreated the American market and gave substancernto the belief in an ever-expanding pie. The middle class votedrnRepublican from 1860 to 1932, not out of affection, but becausernthe party had successfully managed the economy. However,rnduring the second Republican majority, 1968 to the present,rnthe party has not been able to create wealth. ThernRepublicans have abandoned sound business principles, encouragedrnfinancial manipulation, and begun the dismantlingrnand sale of the economy through a process called globalism.rnThe Republicans seem intent on getting the last bit of profitrnfrom a collapsing country.rnEconomic historian Tracy G. Herrick reports that “therernhave been three periods in the nation’s history when middleclassrnliving standards declined for more than a decade: 1804-rn1821, 1852-1882 and 1972-present.” He further notes thatrnNOVEMBER 1992/21rnrnrn