Tuesday, July 26, 2011

The Debt Crisis – We’ve been here before

The party’s are split with ideological differences causing a paralysis in Washington. The Federal government is reeling from deficit spending and skyrocketing debt. Corrupt lenders foreclose on people's homes and a vicious recession sweeps across the country. No, not the battle being waged in Washington this week, I am talking, of course, about the great debt standoff of 1786: Shays' Rebellion.

While we nervously watch the upcoming August 2 deadline for raising the debt ceiling and are being told that America is entering uncharted territory, history tells us we've seen this movie before. Many of the same issues driving this modern-day standoff -- disagreement on how to handle the national debt, ineffective government and a populist citizen's revolt -- drove the 18th-century uprising that's been called America's first civil war.

There is a hard lesson to be drawn from Shays' Rebellion and other transformative events in U.S. history: Protracted political gridlock is seldom resolved through compromise. It comes when one political party finally beats the other down. Most of us have told pollsters that we want the political parties to work together to solve the debt ceiling crisis. But history tells us that political stability doesn't always come through give-and-take.

"There are times when only the outright defeat of political enemies can bring about needed reform," says Richard Striner, a history professor at Washington College in Chestertown, Maryland. "It was only by confronting and defeating the aggressive leadership of the slave states that Lincoln and the Civil War Republicans rid the nation of slavery."

Shays' Rebellion was such a crisis. Rooted in economic anxiety and political turmoil, it even involved a leader of a tea party. The country had incurred massive debt during the Revolutionary War. But it couldn't pay it off because the Colonists, distrusting "big government," had created the Articles of Confederation to run the country, which weakened the authority of a central government. -The result was anarchy.

The federal government wasn't allowed to raise taxes to pay off war debts. Various states responded with crushing taxes. Shady bankers in states such as Massachusetts foreclosed on farmers' homes and threw people in debtors' prison. Some thought the country would dissolve.

The political leaders in Massachusetts, though, didn't seem to care, says Daniel Klinghard, author of "The Nationalization of American Political Parties, 1880-1896." "The state Legislature was completely out of touch with the excruciating economic difficulties that people were going through," Klinghard says.

That's when Daniel Shays entered the picture. The Massachusetts farmer had fought in the Revolutionary War, only to return home and find himself -- like many fellow citizens -- facing foreclosure. He decided to fight back.

In 1786, he raised a private citizens' army called the "Shaysites." They marched on and shut down a debtors' court in Massachusetts and tried to storm a state arsenal. Samuel Adams, one of the Founding Fathers who had planned the Boston Tea Party, called for their capture and death.

Adams got his wish. The rebel army was routed by a state militia, and some of its leaders were hanged. Shays was arrested and later pardoned. His uprising, though, helped settle a paralyzing political question. The country was stuck between two competing views of government. Federalists such as Alexander Hamilton wanted a strong national government and president. Anti-federalists such as Thomas Jefferson wanted more state power.

Those competing views of government are being played out in Washington today. The political leaders negotiating the debt crisis face the same question that Shays' Rebellion provoked: How big should the federal government be and how much power should it have?

"It was a conflict over the nature of what the new republic would look like," Klinghard says of the rebellion. "Shays wanted this simple, agrarian existence while people like Hamilton wanted a robust government."

Shays' Rebellion frightened so many of the nation's leaders that they opted for robust national government. They met a year after the rebellion and drafted the Constitution, which gave the federal government and president more powers -- including the ability to quash "domestic disturbances."

Shays' Rebellion followed a script that would be repeated in American history, especially during the lead-up to the Civil War. President Barack Obama and others issue warnings about not kicking the debt issue down the road. Their predecessors in the 18th and 19th centuries passed the issue of slavery down to one another like it was a dinner bill no one wanted to pay. They compromised so much that it took the Civil War to abolish slavery.

"It didn't represent a momentary crisis," Klinghard says of issues such as slavery "but the culmination of years, decades of disputes during which a series of compromises results in an incoherent national policy and, despite compromise, the disputes continue to harden to the point that compromise becomes politically impossible."

Shays' Rebellion also offers another lesson for today's debt ceiling standoff. Forget all that talk about reaching across the aisle: Politicians operate like a pride of lions, and there can only be one alpha leader.

George Washington fulfilled that role after Shays' Rebellion. He abandoned retirement to become the nation's first president. His stature ensured that the president wouldn't be a token figure who deferred to state's powers.

Other periods of dangerous political gridlock in American history were resolved by alpha presidents, who had to possess a ruthless, and even deceitful, side. Consider President Abraham Lincoln, or Honest Abe. He's now known as the magnanimous president with the grandfatherly smile. He forgave personal insults and reached out to his enemies.

Yet Lincoln was also a political version of a cage fighter -- he could fight dirty. Lincoln had long wanted to abolish slavery before he became president. But after he was elected, he wrote a now-famous public letter in 1862 saying he wouldn't free slaves if their enslavement would preserve the Union. That was baloney. He was being deceptive to allay white supremacist resistance to emancipation.

Today's political leaders could learn something from Lincoln. Lincoln should be understood as a fervent anti-slavery idealist who was also a consummate Machiavellian power artist. It was this combination of qualities that meted out the death blow to American slavery. He was a moral visionary with street smarts.

A leader also has to be able to go to the people to break political gridlock.

President Franklin Roosevelt was a master of appeal during the Great Depression. He helped settle a jittery nation's nerves through his fireside chats by explaining in concrete terms why New Deal legislation was necessary.

Obama hasn't used the powers of the presidency to break through the debt ceiling gridlock by talking directly to the American people about the stakes involved. For all of his presidency, he has never given evidence that he trusted the people to consistently bring them into his confidence and explain the connections He's never gone to the people and said, 'I need your help.' It's a huge, missed opportunity on his part.

Polls show Americans are in need of reassurance. Eighty percent are dissatisfied with the federal government, according to a recent Washington Post-ABC News poll. The daily media are full of editorials blasting both Republican and Democratic leaders.

Despite the anxiety, few are talking about the end of democracy. Many Americans may regard our current system of government as perpetual. We'll always have a democracy, right? But history shows that too many internal divisions can doom a democracy. The political leaders who put down Shays' Rebellion feared this fate. They also knew from history that the world's first democratic experiment collapsed because of poor leadership. The golden age of Athens evaporated with the death of Pericles, one of its greatest leaders. After Pericles, the Athenian assembly degenerated into chaos: bickering by demagogues, the launching of ill-thought-out military campaigns and the eventual overthrow of Athens by the Spartans, who abolished democracy.

The death of Pericles left no one to master the squabbling and bickering factions. The confusion and division in Athens played into the hands of the conquering Spartans.

Sparta isn't massing at Washington's city limits if the debt negotiations fail, but the seeds of our potential collapse are still there. The internal divisions that propelled Shays' Rebellion remain a part of America's political DNA. It won't end with the resolution of the debt ceiling standoff. It is a permanent fixture in American political culture, even though its influence rises and falls.

What America needs now is a strong Alpha Leader, like Washington or Lincoln. President Obama, for all his charisma and charm, just is not that leader. The current crisis will subside but it will not end until one side or the other finds that leader and the other side is forced to capitulate.

Live Long and Prosper.....

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