In September 1789, Thomas Jefferson wrote to James Madison about a matter that was troubling his mind: 

The question Whether one generation of men has a right to bind another, seems never to have been started either on this or our side of the water. Yet it is a question of such consequences as not only to merit decision, but place also, among the fundamental principles of every government.

 These men strongly agreed that “the consent of the governed” was the essential basis for governing authority in a republic. In a society where all are equal, rulers can only rule because the citizens allow them to. But if this is so, can rulers make decisions that affect people who haven’t agreed – because they haven’t been born yet?

Jefferson wrote this from Paris, where he was America’s diplomatic representative. So when he says “this or our side of the water,” he meant “this” side where he was writing from, and “our side” meaning America. The year was 1789 and the French Revolution was underway. The Bastille had already been stormed and The Declaration of the Rights of Man and the Citizen had already been proclaimed. One of the primary causes of that revolution was France’s inability to pay its government debts.

Jefferson took pains in his letter to note how France’s distress grew out of past decisions. It wasn’t just that the debt was so large. French aristocrats and clergy held most of the country’s productive land but made no contribution because of centuries-old favors granted by dead kings to dead noblemen and dead bishops. There simply wasn’t enough left in the French economy, after all the historical exclusions were deducted, to keep the country going.

With the French example in mind, Jefferson invited Madison to consider whether it was ever right for the living generation to push its own debts onto the future generation. 

Turn this subject in your mind, my dear Sir, and particularly as to the power of contracting debts; and develop it with that perspicuity and cogent logic so peculiarly yours. Your station in the councils of our country gives you an opportunity of producing it to public consideration, of forcing it into discussion. At first blush it may be rallied, as a theoretical speculation: but examination will prove it to be solid and salutary. It would furnish matter for a fine preamble to our first law for appropriating the public revenue; and it will exclude at the threshold of our new government the contagious and ruinous errors of this quarter of the globe, which have armed despots with means, not sanctioned by nature, for binding in chains their fellow men. We have already given in example one effectual check to the Dog of war by transferring the power of letting him loose from the Executive to the Legislative body, from those who are to spend to those who are to pay. I should be pleased to see this second obstacle held out by us also in the first instance. No nation can make a declaration against the validity of long-contracted debts so disinterestedly as we, since we do not owe a shilling which may not be paid with ease, principal and interest, within the time of our own lives.—Establish the principle also in the new law to be passed for protecting copyrights and new inventions, by securing the exclusive right for 19. instead of 14. years. Besides familiarising us to this term, it will be an instance the more of our taking reason for our guide, instead of English precedent, the habit of which fetters us with all the political heresies of a nation equally remarkeable for it’s early excitement from some errors, and long slumbering under others.

 Jefferson was saying to Madison here that this question needed to be resolved before the country settled into its new Constitution. Recall that in September 1789 the Constitution had been adopted for only about a year. Jefferson reminded Madison that the Constitution had said nothing about inter-generational justice and that Madison was capable of forcing the conversation.

For his part, Jefferson recommended that Congress should never incur a debt without a plan to pay it off in 19 years or less – 19 years being the time when half the population (and theoretically the majority of citizens who had approved the debt) would have died. He wasn’t against debt spending in cases of necessity. But he thought the people who borrowed the money ought to pay it back and never foist it onto future generations.

Jefferson’s letter took some time to cross the ocean. It was not until February 1790, that Madison replied. He pointed out that money raised and spent by one generation can – and should – benefit the next one.

The improvement made by the dead form a debt against the living, who take the benefit of them. This debt cannot be otherwise discharged than by a proportionate obedience to the will of the authors of the improvements. . . Debts may be incurred with a direct view to the interests of the unborn, as well as of the living. Debts may even be incurred principally for the benefit of posterity.

 Madison and Jefferson agree that public debt can be necessary and proper at times. Madison recollects that America incurred debt during the Revolution, which was certainly worth it and certainly would make future generations happy and free. In any similar case, where future generations would be richer and happier because of past spending, Madison expressed himself willing for the living to pass debt onto the next generation.

Good Inter-Generational Debt

The Hoover Dam was built in 1937. Not many people lived in Arizona or Southern California at the time, and some who did live there had no use for electricity. The value of the dam for the living generation at the time was not great. It probably seemed to many people to be a crazy, wasteful boondoggle.

It was, however, the depth of the Great Depression. Men needed jobs. They worked cheap, so the whole amazing project was completed for $50 million. It couldn’t be built for $50 billion today, if it could be built at all. But the Hoover Dam generates more than 4 billion kilowatts of power every year, which is worth $500-million or so. It produces 10 times what it cost every year, and all of it benefits the living generation.

The Hoover Dam provides a strong case for debt-funded government projects of the sort Madison approved, even in excess of Jefferson’s 19-year horizon. But Madison also adds a rule to limit inter-generational debt:  “All that seems indispensible in stating the account between the dead and the living is, to see that the debts against the latter do not exceed the advances made by the former.”

In other words, the benefit of debt spending must be worthwhile projects that benefit the future generation.

The principle, then, is that wherever the living can use their labor and their lower cost of materials to build something that will last long after they are gone and be enjoyed in the future, it makes ethical sense to put a share of the cost on the future generation.

Bad Inter-Generational Debt

Government spending doesn’t always pass Madison’s test. More and more, the federal government uses deficit spending to pay for current expenses. Paying today’s government salaries and crop subsidies and social security benefits and so forth doesn’t make the country better for the future. It just makes today’s consumers wealthier and tomorrow’s taxpayers poorer. Since 2019, the national government spends more on interest than on all programs for children. Our country violates Madison’s principle for good government. And it has crossed over into the realm of injustice that Jefferson envisioned.

[S]uppose Louis XV and his contemporary generation had said to the money-lenders of Genoa, give us money that we may eat, drink, and be merry in our day; and on condition you will demand no interest till the end of 19 years. [After 19 years] you shall then for ever after receive an annual interest of 12⅝ per cent. The money is lent on these conditions, is divided among the living, eaten, drank, and squandered. Would the present generation be obliged to apply the produce of the earth and of their labour to replace their dissipations? Not at all.

 Jefferson insists here that if a living generation borrows money and spends it for their own convenience and pleasure, the future generation has no moral duty to pay it back. Not too many years into America’s future, a rising generation of young people will decide whether they will pay that debt.

Discuss

• The US government has debts of $23 Trillion. Do you feel $23 Trillion richer because of that spending? What part of all that debt helps you?

• Do future generations have a moral obligation to pay federal  debts that were “divided among the living, eaten, drank, and squandered” before they were born?

• Thomas Jefferson answers the previous question with a clear, absolute, No!” How does his opinion affect yours, and how should this guidance from a founding father affect modern policy?

• How much longer do you think the country can kick the can down the road before the debt issue becomes an immediate crisis?