The Meeting and the Dinner: The Historical Significance of Today's Powwow on the Bush Bailout

The meeting today between George Bush, John McCain and Barack Obama has me thinking back to the most famous meeting among three political leaders in U.S. history: the dinner between Thomas Jefferson, James Madison and Alexander Hamilton, where these great Americans agreed that the federal government would assume $25 million in state Revolutionary War debt incurred and the nation's capital would be moved to the District of Columbia to placate the southern states that had already levied high taxes to pay off their debts.

Try to stop laughing. I know, this sounds like the set up for one of those Letterman skits that compare speeches by FDR, JFK and Reagan to the bumbling oratory of George W. Bush. Stick with me, there is a serious point here.

The Dinner remains famous today because it set the precedent for a strong federal role in guiding and shaping the national economy. For Hamilton, the federal government's assumption of the states' war debt was the knot that would tie the states together in a national union. As Ron Chernow says in his wonderful biography of Hamilton, this debt assumption "created an unshakable foundation for federal power in America."

This consolidation of federal power was controversial then and it remains controversial to this day. Jefferson stated later in his life that the debate over debt assumption was "the most bitter and angry contest known in Congress before or since the union of the states." Jefferson complained that he was "duped" by Hamilton and he viewed his role in having brokered the deal that led to assumption as the political error that "has occasioned me the deepest regret." As Chernow tells it, Hamilton's victory on the issue of debt assumption led directly to the division of this country into two rival political parties, divided over the proper role and reach of the federal government.

It is no surprise that Hamilton's vision about the need for a strong national government will prevail at today's Meeting. That has happened repeatedly in our nation's history: in the Civil War, the Progressive Era, the New Deal and the decision to intervene into two world wars.

But what is certainly remarkable about the federal bailout on the table today is that it is being engineered by a Republican president whose party views itself as the ideological heirs of the small federal government views of Jefferson and Madison. The modern Republican Party, built by Goldwater and Reagan, is premised on the idea of lower taxes and shrinking the federal government. Today, George Bush is seeking authority for his Treasury Secretary to assume $700 billion in private financial debt -- a figure that, according to my calculation, is almost 10 times greater in terms of percentage of U.S. GDP than the Revolutionary War debt assumption engineered by Hamilton.

In pushing for a massive federal bailout of our nation's financial system, Bush is raising a white flag in the war over the size and role of the federal government. This is the right thing to do: history has again and again proven Hamilton right in the vision he laid out for America both in the Federalist Papers and in his work as the nation's first Treasury Secretary. It is too bad this revelation happened before the financial crisis got to this point -- if there had been greater federal oversight in the first place, we wouldn't be in this mess.

If the bailout works, the Meeting today may be viewed by history as the day when the central role of the federal government in American life, first forged at the Dinner, finally was accepted by Americans across the political spectrum. At the very least, the Meeting, like the Dinner, should include a discussion about what those left footing the bill for bailout get out of the deal. After all, the southern states that had paid their war debts got the nation's capital out of the Dinner. Perhaps the American people can get a federal government committed to protect their rights and interests, and not just the pocket books of corporate fat cats, out of the Meeting.

This article is crossposted on Text and History

Comments

[EndangeredJackalope]

(cont'd)
Its probably more likely that the anxiety over the recession/depression will have the public less involved in public policy debate b/c elected officials will be rolling the dice w/ all kinds of new foreign programs. The public will get fatigued & in that resignation, who knows what will be pushed through by the only group still enjoying & exercising economic freedom? I'm prone to believe Naomi Klein's prediction that more deregulation is to come, along with the dire warnings used to peddle it.

Think the WTO will by sympathetic also? Maybe we'll just get a taste of our own medicine. The increasing sense of an international identity people have will be and is becoming more founded in the individual feeling empowered over national govts & culture by their wealth rather than their morality. The poor will have the moral high ground by default, and can fight their way back, but we've been here before. Sounds like we are walking into the narrow repetitive dream of conservatism.

The states weren't compelled by reason to see the mutual benefit of the Union, they were simply shackled & lead, right? So who will be wearing the shackles now? An expanding govt w/ a vague mandate from an anxious public? The rich who will ride out the storm on a trillion dollar bail out? Not likely.

My parents are socialists and we live in D.C., just in case you're wondering...

[polaris12]

But the role of the Federal government in encouraging and stimulating growth of the private sector and being a stabilizing force in our federal system, right from the founding of our country, is something the Repubs never want to concede. Their ideology of free market fundamentalism promoted by Milton Friedman and the Chicago School has now come crashing down and its a hard pill to swallow. I doubt very much they are all of a sudden going to be converts to what they are labeling as socialism.

[EndangeredJackalope]

I don't understand your logic.

Hamilton united the states in a delicate time by making them indebted to the govt. How does making us & future generations indebted to the govt increase the likelihood that we'll have a govt more interested in protecting our rights? Wall St isn't having its hands bound, lower & middle class people are. They MAY have more regulation, but in the likely ensuing poverty, they'll have this bail out to float on.

Govt suddenly going to get bit by the altruism bug, and decide to dedicate itself to "protecting our rights"? Where is your logic? That govt will just be sympathetic to us? And how about the govt that is in place after the economic meltdown, the govt that only the rich have the money to influence. Here's what your logic sounds like - a giant bailout of the wealthy will suddenly make govt sympathetic to the poor, and BUY us "rights" that we already have, but which govt has eroded. Listen to that, govt (for whatever reason) takes away our freedom, then if we pay out the wealthy to buy sympathy, that will inspire govt to return to us "rights" they've taken away.

Money isn't going into a govt coffer for social programs, we'll see no material benefits - its bailing out the rich & tying the lower and middle class' hands. It sounds more like we're entering an era where economics/poverty & not constitutional liberties are going to determine the degree of freedom

[Rantman]

Or we could also interpret this as the continuation of the neo-con plunder and destruction of government. The last coup d'etat of finance interests taking over government. A socialist solution with full capitalist ownership retained.

The greatest asset of our government now, seems to be the ability to tax citizens of the future.
Since this is such a Gordian knot, why do we narrow our vision of a solution?

[erykah]

Don't hold you breath!

[Dynamohum]

I would love to see your proposals become reality. However, while it is wonderful to be optimistic and hopeful, one must be ready for the possibility that the challenge might be met with more greed and philandering.