The Constitution came about precisely to enable a newly large government -- a national one -- to tax all Americans for the specific purpose of funding a large public debt. Neither Alexander Hamilton nor his mentor the financier Robert Morris made any bones about that purpose; James Madison was among their closest allies; and Edmund Randolph of Virginia opened the Constitutional Convention by charging the delegates to redress the country’s failure to fund -- not pay off, fund -- the public debt, by creating a national government.
Beginning during the War of Independence, and continuing throughout the 1780s, American nationalists committed themselves to a small class of upscale high financiers (largely identical with the American nationalists), who had bought bonds from the confederation Congress in hopes of earning regular, tax-free, 6% interest payments -- not in the Congress’s crashing paper currency but in hard, cold metal or its equivalent, stable bills of exchange. Morris, Hamilton, Madison, and others believed that swelling the debt to immense proportions would make a coherent nation out of thirteen squabbling states and make that nation a player on the world economic stage. Their plan to do so depended partly on making military-officer pay a pension, thus turning the entire officer class into public bondholders -- and giving Congress new power to tax all Americans to support that debt.
Hamilton is often reflexively presented as finding inventive ways to pay down the national debt. His real accomplishments were of course “funding and assumption” -- absorbing the states’ war debts in the federal one and funding that huge obligation via nationally collected and nationally enforced taxes.
Hence the all-important provisions of the Constitution giving Congress very broad powers to tax and acquire debt. To 18th-century American nationalists across the political spectrum -- to our founders and framers, that is, from Hamilton to Madison, from Morris to Randolph, from the financiers to the planters -- national taxing and borrowing were ineluctably connected to the very purpose of national government.
Nobody has to like it. But the original intent of the Constitution involved sustaining and managing public debt via taxation.
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It’s hard to imagine liberals bringing to debt-ceiling and balanced-budget debates the painful realpolitik of our national origins, which show the Constitution existing, originally, to finance the investing class and yoke that class’s interest (in every sense) to national power.
