The United States was born into debt. The long, expensive Revolutionary War devastated the infant nation's finances, and forced the United States to grapple with a primary public policy issue: How should debt and taxes be handled in the brave, new world of America?
Today, as the United States teeters on the edge of the fiscal cliff, Simon Johnson, professor at MIT’s Sloan School of Management and former chief economist at the International Monetary Fund, describes America's love affair with debt and our longstanding hatred of taxes, in his recent book, "White House Burning."
While American history is full of historical parallels on managing the debt, Johnson says, "There's also some new territory here, because all the previous big run-ups, five big run-ups in debt in American history, were all about wars or other forms of national emergency. The difference here is we have an aging population, aging society. We just had a massive financial crisis, and it's a compounding of those elements."
The wars in Iraq and Afghanistan certainly added to the current debt crisis, Johnson explains, "But that's not what's really propelled us to this difficult fiscal moment. It's much more about domestic decisions, and difficulties around deciding who's going to pay what in, and who's going to get what out."