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Hugh Hewitt: The Grand Bargain of 1790

Jon Meacham’s wonderful new biography, Thomas Jefferson: The Art of Power, has within it four pages of particular interest to today’s governing class in D.C.

In late April 1790, the new United States was poised on its first fiscal cliff, a massive public debt held by many but not all states, dating from the Revolutionary War. Some states had acted responsibly toward their obligations. Others had not. The former did not want to bail out the latter, and the genius of the young republic’s finances, Treasury Secretary Alexander Hamilton despaired of finding some way of persuading the recalcitrant to agree to have the federal government assume the debt and lay on the taxes and tariffs necessary to pay it off responsibly.

Thomas Jefferson, the secretary of state and Hamilton’s opponent in theory and soon in practice, met the Treasury secretary in the street and began a conversation on the impasse which led to the grand bargain: federal assumption of the debt in exchange for the placement of the new nation’s new capital on the Potomac. (Virginia and Maryland were among the responsible states which resisted transferring the debt to the national government.)

Today’s “drama” is so much smaller than that of 1790, as it seems are the leaders and the capacity to see the outlines of the sort of “grand bargain” that would assist the country in righting itself.

There are four huge issues: federal entitlements, immigration reform, unfunded state pension liabilities and defense spending. On two of these issues the heirs of Hamilton — the GOP — are demanding action, and Jefferson’s heirs (the common wisdom though Meacham does much to undermine the idea) in the Democratic Party would welcome sweeping change in immigration laws and assistance to some states facing massive shortfalls in their commitments to public employees. Tax rates are simply means to the ends of making rational these four enormous messes.

There are obvious trade-offs to be made, and indeed last year’s “Super Committee” might have made them if it had been broader in its vision or less hobbled by the looming election. Perhaps a second go at it would make sense, and the debt ceiling crisis looms as a “trigger.”

There are some truly brilliant legislators in both parties who, if free from the press of permanent interests, could offer up a new grand bargain. No one is a Jefferson or a Hamilton, or a Madison or an Adams, and certainly there is no Washington in the capital, but there are talented, smart people who, working in a small group and against a deadline, could offer one big bill to fix these problems.

Everyone, though, needs a win — the defense hawks, the budget hawks, the public employee unions, the advocates of regularization of the millions in the country illegally. It requires genuine compromise, not the sort of compromise where real dollars are spent now in exchange for spending reforms that never follow. “Jefferson believed in compromise,” Meacham writes, even when enormous criticism followed in its wake. Jefferson was blasted by both Northern and Southern interests when he helped shepherd the debt assumption/Potomac capital through the Congress, but the deal was a good one because it was significant and lasting in its consequences and not done with an eye on an immediate election.

Whatever the result of the current reality show, the looming debt ceiling crisis offers another chance for the grand bargain on the big four issues to emerge. Jefferson, Hamilton and Madison settled the first over dinner and worked out the details in the weeks that followed.

All it requires is leadership, and a trust in the capacity and intelligence of the best minds in Congress.

Examiner Columnist Hugh Hewitt is a law professor at Chapman University Law School and a nationally syndicated radio talk show host who blogs daily at

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