In God’s covenant with Israel, he commanded the ancient nation to abstain from incurring debt. “For the Lord your God will bless you just as He promised you; you shall lend to many nations, but you shall not borrow; you shall reign over many nations, but they shall not reign over you” (Deuteronomy 15:6, NKJV). If Israel obeyed the law of God, they would be blessed. Conversely, if they diverged from the path revealed to them, they would face judgments, among which included the loss of sovereignty that results from the burden and obligations of indebtedness: “The alien who is among you shall rise higher and higher above you, and you shall come down lower and lower. He shall lend to you, but you shall not lend to him; he shall be the head, and you shall be the tail” (Deuteronomy 28:43-44, NKJV).
Over 3,400 years after the covenant renewal recorded by Moses in Deuteronomy, the United States of America faces one of the greatest threats to its future. America’s national debt currently exceeds $19,000,000,000,000. Since President Obama assumed office in 2009, the national debt has nearly doubled. Not counting state and local debts, interest payments, and the estimated $120 trillion in unfunded liabilities – namely, Social Security, Medicare, and federal employee and veterans’ benefits – every American family of four owes approximately $250,000 to America’s creditors.
Proverbs 22:7 says, “The rich ruleth over the poor, and the borrower is servant [other translations use ‘slave’] to the lender” (KJV). Writing about this verse, the renowned seventeenth century biblical commentator Matthew Henry astutely observed, “Some sell their liberty to gratify their luxury.” Creditors, using their liberality as leverage, often place onerous demands on their debtors. Additionally, those who are laden with debt must repay their loans before they can provide for their own needs. Nations that become burdened with debt lose their financial freedom and self-determination.
Our nation’s founding fathers held a deep understanding of this biblical truth. Thomas Jefferson, believing that “the laws of the Creator” prohibited every generation from leaving its debt to be repaid by the next, wrote to his friend John Taylor, “[T]he principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.”
We are, in effect, borrowing money on behalf of future generations, thereby robbing them of their future earnings. No loving, reasonable parents would open a credit card in their son or daughter’s name, spend until they hit the credit limit, and then stick their child with the bill. Yet that is precisely the generational theft that Americans are perpetrating against their posterity. To finance their unprecedented appetite for government services, the American public is stealing from the prosperity of future generations.
Every American child is born into this world already owing $60,000 to our nation’s creditors. These children never consented to the bill we are leaving them. Nevertheless, they will be metaphorical slaves, laboring not for their own needs, but rather to repay the debts of their ancestors.
Instead of raising taxes when the people’s appetite for government services exceeds tax revenue, governments incur debt. At some point in the future, taxpayers must repay the debt plus interest. There are only two means of reducing debt: raise taxes or significantly cut spending and use the savings to pay down the debt.
Which of these is the most effective method of reducing debt? The Laffer Curve, which refers to an economic phenomenon popularized by economist Arthur Laffer, explains the relationship between tax rates and tax revenues. Most people falsely assume that governments raise more tax revenue by increasing tax rates. However, the opposite is often true. Governments often obtain higher tax revenues by lowering tax rates. When taxes are high, there is less incentive to work and invest; people either decide to work less, or they engage in tax avoidance or evasion, to avoid paying confiscatory tax rates. The Laffer Curve explains why tax revenues soared following each of the Kennedy, Reagan, and Bush tax cuts. Increasing taxes will not bring about the desired result. Therefore, it is clear that we must make considerable cuts to the national budget, implement meaningful reforms to reduce unfunded liabilities, and get serious about paying off the national debt.
Experience shows us that we embark on the road to poverty and ruin when we disregard the biblical principles of economics. Worse yet, we doom our children to a lower standard of living than we enjoyed. It is time for us to elect leaders that will begin to reverse our country’s decades-long unbiblical practice of incurring increasingly more debt.
This column was originally published in the June/July 2016 issue of the Baptists for Liberty Newsletter: http://baptistsforliberty.weebly.com/uploads/1/1/9/8/11989443/bfl-june_and_july_2016.pdf.