Part One, American Government and U.S. Constitution

Lesson 26: Avoiding the Burden of Debt

(Principle 27)	Name: _______________________

Part II: The Founders' Basic Principles –	28 Great Ideas that Changed the World

Lesson 26 Time: 42:56 [for Sunday, September 14, 2014]

The 5000 Year Leap: 27th Principle, Reading Assignment: (pages 291-303);

Avoiding the Burden of Debt

Lesson objectives: As a result of this lesson, the student should be able to discuss the following questions/topics:

1. Describe at least two ways a person can become a slave. (page 291)

The Burden of Debt = Slavery

o Slavery occurs two ways

- by conquest

- by debt

- defined as borrowing against future income

o Debt

- temporary handicap

- get out as soon as possible

2. What is debt? (291-292)

Debt Benumbs the Spirit

o curtails freedom

o hesitant to make change

o pass up financial opportunities

o burdened every hour

o sense of waste

o sleepless nights

o avoid people

3. How did Thomas Jefferson and Benjamin Franklin feel about personal debt? (293-294)

Founders Hated Debt

o Jefferson

- don't buy till you have the money

- worst kind of debt is "splurge spending"

[- one of the greatest dangers to be feared for a republic]

o Franklin

- debt gives another power over your liberty

- debt invites lying

4. Did the founders feel any differently toward national debt? What about inherited debt? (294- 296)

Passing Debt on to the Next Generation

o Argument that future generations benefit

- bond issues to build roads and schools

o Jefferson said it is immoral (quote)

- should pass on freedom

- taxation without representation

o US began with $79,000,000 debt

5. What priority did the founders give to debt retirement? (296-97)

o Washington wanted schedule to pay off national debt

o Couldn't get Congress to do it

6. What fundamental principles have U.S. political leaders violated in the process of accumulating today's massive national debt? (297-301)

o [1812-1815] War increased debt

o Jefferson and Jackson paid off much

- sold public land, had surplus!

o Depression increased debt

- New Deal - Borrow ourselves wealthy!

o [after WWII] No more attempts to pay off debt

7. What remedies can solve our national debt crisis? Do you think politicians know the real answers? (301-303)

The Fix

o Denounce high taxes

o Cut spending on welfare programs

- violent outcries

- political suicide

o Need courageous Congressmen

In economics, the Khaldun-Laffer curve is a representation of the relationship between possible rates of taxation and the resulting levels of government revenue. It illustrates the concept of taxable income elasticity—i.e., taxable income will change in response to changes in the rate of taxation. It postulates that no tax revenue will be raised at the extreme tax rates of 0 % and 100 % and that there must be at least one rate where tax revenue would be a non-zero maximum.

The Laffer curve is typically represented as a graph which starts at 0% tax with zero revenue, rises to a maximum rate of revenue at an intermediate rate of taxation, and then falls again to zero revenue at a 100% tax rate. The actual existence and shape of the curve is uncertain and disputed.[1]

s= http://en.wikipedia.org/wiki/Laffer_curve