1913: The Turning Point
In
1913, Woodrow Wilson was the newly elected president. Wilson and his
fellow progressives scorned the Constitution and the Declaration. They
moved swiftly to replace the Founders' republic with a new regime.
There
is widespread agreement that Wilson did not always show good judgment –
for example, in his blunders in international relations – but in the
project of overturning the Founding, he and the movement he led selected
their targets shrewdly. By the time he left office, the American
republic was, as they say, history. The fundamentals of the new regime
were in place, and the expansion of government under FDR, LBJ, and Obama
was made easy, perhaps even inevitable.
Nineteen-thirteen
gave us the 16th and 17th Amendments to the Constitution. That year
also saw the creation of the Federal Reserve. This burst of changes
marks the effective beginning of the Progressive Era in American
politics, the era in which we now live. Wilson was to do much more that
would once have been considered out of bounds, but these three changes
were enough to change everything. In 1913, the fundamental agreement
the Founders made with the American people about the relation of the
states and the federal government was broken.
Here is the Founders' original bargain, stated by James Madison in Federalist 45:
is important to remember that when we speak of the ratification of the
Constitution, this is what was ratified. But this is not the government
we now have. Today's central government is not the federal government
of the original Constitution. For example, thanks to Obamacare, the
central government can penalize you if you do not purchase a health
insurance policy approved by the central government. Also, bizarrely,
Obamacare federalized loans for college students – by actually putting
the central government in the student loan business! These are not
"external objects, as war, peace, negotiation, and foreign commerce."
Clearly,
the bargain, honorably entered into by the Founders' generation, was
broken. It was broken by the 17th Amendment, which instituted the
direct election of U.S. senators. That amendment struck directly at the
heart of the Founders' design. According to the original Constitution,
senators were chosen by the state legislators. Unlike the members of
the House, who represent the people of their district, the senators had a special responsibility to represent their states
in the deliberations having to do with the those "few and defined"
powers the Constitution transferred from the states to the federal
government. That is why the states with small populations and the
states with larger populations got the same number of senators and the
same number of votes in the Senate. It is also why the Constitution
gives the Senate power over treaties and over the appointment of the
senior officials of the executive, those whose responsibilities include
"war, peace, negotiation, and foreign commerce." The 17th Amendment
eliminated the fundamental electoral guarantee of the Founders' vision
of a federal government with limited powers.
The
system we have today bypasses the state legislatures. The consequences
have been many and profound. Probably the most obvious has been the
inevitable erosion of the independence of the states and of their
ability to counterbalance federal power. The Senate was a barrier to
the passage of federal laws infringing on the powers reserved to state
governments, but senators abandoned that responsibility under the
incentives of the new system of election. Because the states no longer
have a powerful standing body representing their interests within the
central government, the power of the central government has rapidly
grown at the expense of the states. The states increasingly are
relegated to functioning as administrative units of today's gargantuan
central government. The Tenth Amendment has become in our time a dead
letter:
of retaining many of their powers and responsibilities, and
surrendering only a limited number of their powers to the federal
government, as the Framers intended, the states are today greatly
diminished politically. They are increasingly entangled in
administering programs and carrying out mandates of the central
government. These mandates are often not even funded by the central
government; the costs of unfunded mandates falls on the states. The many
new departments that have accumulated in Washington during the
Progressive Era, such as HUD (Housing and Urban Development) and HHS
(Health and Human Services), involve themselves in, and even direct,
functions that, according to the Constitution as drafted by the
Founders, are outside the scope of the federal government.
The
result – a central government that can fine a farmer millions of
dollars for plowing on his own land across a "vernal pool" (standing
water in the springtime) without its permission – is obvious to us all,
although this new regime's origin in the 17th Amendment generally goes
unnoticed.
Then
there is the 16th Amendment. It introduced the progressive income tax,
one of the most prominent jewels in the progressive crown. Changing
the federal government's revenue base from tariffs, which are largely
self-limiting, removed a fundamental limit to the growth of federal
power. In 1910, the government's revenue looked much like how it did in
the time of George Washington: about 3 percent of GDP, earned primarily
through tariffs. The 16th Amendment overthrew the limited government
of the Founders by opening the door to the unlimited revenue needed to
finance the central government's unending expansion into every area of
American life.
It
also corrupted the federal government. The federal government once had
a reputation for being fairly free of corruption. In part, this was
simply because it was limited government. The bigger it got and the
more areas of life and the economy it entered into, the greater were the
opportunities for corruption. Today, the fantastic corruption of the
Clintons is only the tip of the iceberg. Their brazenness tells you
what you already know: Washington is corrupt on a scale undreamed of by
the Founders.
As
it happens, this is precisely the point where the 16th and the 17th
Amendments shake hands. You can understand this better if you ask
yourself why the federal tax code in 2016 swelled to 75,000 pages.
Those pages are filled with favors and special deals. As a result of
the 17th Amendment, senators must chase after individual voters just as
their colleagues in the House have always done – but in all but the few
least populated states, they have to chase millions more voters. That
costs money. Instead of watching out for their states' interests, as
was originally intended, senators now must keep their focus on raising
truly fabulous sums to run for office under the new system. This is
where lobbyists come into the picture. They have clients with money who
need favors and special deals, and senators need money, and lots of it.
Also
in the banner year of 1913, Woodrow Wilson signed the Federal Reserve
Act, creating a central bank. The progressives proposed the central
bank as a government solution to bank panics. A bank panic occurs when
too many depositors want their money at the same time. Banks had always
managed bank panics among themselves, sometimes heroically, not always
perfectly. The central bank was going to change this by providing a
government solution. The Fed failed at the first crisis, and failed
spectacularly. What it did then and what it did not do in that crisis
seem inexplicable. You or I could have done a better job. In any case,
bungling by the Federal Reserve helped to turn an economic downturn
into the Great Depression.
The
Federal Reserve Act did accomplish something: it opened the door to the
complete socialization of America's currency. Instead of providing
liquidity to sound banks during a panic as the legislation provided for,
the Fed has taken control of the currency, an enormous, essentially
unchecked, and unconstitutional power over your wealth. And although it
failed spectacularly at the job it was supposed to do, the Federal
Reserve did succeed in debauching the American dollar. The value of the
dollar has collapsed; one 1910 dollar would be worth $24.89 in 2017.
According to my calculations, that means your dollar today is worth
about 4 cents compared to the days when people used to say "sound as the
dollar."
The
Fed has been using excess money creation as a hidden way of collecting
taxes for the central government. The total amount of wealth the Fed
has confiscated in this way is breathtaking.
John Maynard Keynes did a great deal of harm, but he did say at least one true thing:
Fed has actually been functioning as a kind of accomplice of the IRS.
Today, the Federal Reserve can create money without even having to
bother printing it; now the Fed can create any amount by simply entering
a number in a computer. Talk about taking the limits off government
spending!
It
is perfectly obvious that we are far down the path to a new kind of
tyranny by way of endless bureaucratic regulation and confiscation. If
we are to recover and secure our liberty, much must be done, and much
must be undone. We cannot succeed unless we carefully remove these
three pillars of the Progressive State.
1913, Woodrow Wilson was the newly elected president. Wilson and his
fellow progressives scorned the Constitution and the Declaration. They
moved swiftly to replace the Founders' republic with a new regime.
There
is widespread agreement that Wilson did not always show good judgment –
for example, in his blunders in international relations – but in the
project of overturning the Founding, he and the movement he led selected
their targets shrewdly. By the time he left office, the American
republic was, as they say, history. The fundamentals of the new regime
were in place, and the expansion of government under FDR, LBJ, and Obama
was made easy, perhaps even inevitable.
Nineteen-thirteen
gave us the 16th and 17th Amendments to the Constitution. That year
also saw the creation of the Federal Reserve. This burst of changes
marks the effective beginning of the Progressive Era in American
politics, the era in which we now live. Wilson was to do much more that
would once have been considered out of bounds, but these three changes
were enough to change everything. In 1913, the fundamental agreement
the Founders made with the American people about the relation of the
states and the federal government was broken.
Here is the Founders' original bargain, stated by James Madison in Federalist 45:
TheIt
powers delegated by the proposed Constitution to the federal government
are few and defined. Those which are to remain in the State
governments are numerous and indefinite. The former will be exercised
principally on external objects, as war, peace, negotiation, and foreign
commerce[.] ... The powers reserved to the several States will extend
to all the objects which, in the ordinary course of affairs, concern the
lives, liberties, and properties of the people, and the internal order,
improvement, and prosperity of the State.
is important to remember that when we speak of the ratification of the
Constitution, this is what was ratified. But this is not the government
we now have. Today's central government is not the federal government
of the original Constitution. For example, thanks to Obamacare, the
central government can penalize you if you do not purchase a health
insurance policy approved by the central government. Also, bizarrely,
Obamacare federalized loans for college students – by actually putting
the central government in the student loan business! These are not
"external objects, as war, peace, negotiation, and foreign commerce."
Clearly,
the bargain, honorably entered into by the Founders' generation, was
broken. It was broken by the 17th Amendment, which instituted the
direct election of U.S. senators. That amendment struck directly at the
heart of the Founders' design. According to the original Constitution,
senators were chosen by the state legislators. Unlike the members of
the House, who represent the people of their district, the senators had a special responsibility to represent their states
in the deliberations having to do with the those "few and defined"
powers the Constitution transferred from the states to the federal
government. That is why the states with small populations and the
states with larger populations got the same number of senators and the
same number of votes in the Senate. It is also why the Constitution
gives the Senate power over treaties and over the appointment of the
senior officials of the executive, those whose responsibilities include
"war, peace, negotiation, and foreign commerce." The 17th Amendment
eliminated the fundamental electoral guarantee of the Founders' vision
of a federal government with limited powers.
The
system we have today bypasses the state legislatures. The consequences
have been many and profound. Probably the most obvious has been the
inevitable erosion of the independence of the states and of their
ability to counterbalance federal power. The Senate was a barrier to
the passage of federal laws infringing on the powers reserved to state
governments, but senators abandoned that responsibility under the
incentives of the new system of election. Because the states no longer
have a powerful standing body representing their interests within the
central government, the power of the central government has rapidly
grown at the expense of the states. The states increasingly are
relegated to functioning as administrative units of today's gargantuan
central government. The Tenth Amendment has become in our time a dead
letter:
TheInstead
powers not delegated to the United States by the Constitution, nor
prohibited by it to the States, are reserved to the States respectively,
or to the people.
of retaining many of their powers and responsibilities, and
surrendering only a limited number of their powers to the federal
government, as the Framers intended, the states are today greatly
diminished politically. They are increasingly entangled in
administering programs and carrying out mandates of the central
government. These mandates are often not even funded by the central
government; the costs of unfunded mandates falls on the states. The many
new departments that have accumulated in Washington during the
Progressive Era, such as HUD (Housing and Urban Development) and HHS
(Health and Human Services), involve themselves in, and even direct,
functions that, according to the Constitution as drafted by the
Founders, are outside the scope of the federal government.
The
result – a central government that can fine a farmer millions of
dollars for plowing on his own land across a "vernal pool" (standing
water in the springtime) without its permission – is obvious to us all,
although this new regime's origin in the 17th Amendment generally goes
unnoticed.
Then
there is the 16th Amendment. It introduced the progressive income tax,
one of the most prominent jewels in the progressive crown. Changing
the federal government's revenue base from tariffs, which are largely
self-limiting, removed a fundamental limit to the growth of federal
power. In 1910, the government's revenue looked much like how it did in
the time of George Washington: about 3 percent of GDP, earned primarily
through tariffs. The 16th Amendment overthrew the limited government
of the Founders by opening the door to the unlimited revenue needed to
finance the central government's unending expansion into every area of
American life.
It
also corrupted the federal government. The federal government once had
a reputation for being fairly free of corruption. In part, this was
simply because it was limited government. The bigger it got and the
more areas of life and the economy it entered into, the greater were the
opportunities for corruption. Today, the fantastic corruption of the
Clintons is only the tip of the iceberg. Their brazenness tells you
what you already know: Washington is corrupt on a scale undreamed of by
the Founders.
As
it happens, this is precisely the point where the 16th and the 17th
Amendments shake hands. You can understand this better if you ask
yourself why the federal tax code in 2016 swelled to 75,000 pages.
Those pages are filled with favors and special deals. As a result of
the 17th Amendment, senators must chase after individual voters just as
their colleagues in the House have always done – but in all but the few
least populated states, they have to chase millions more voters. That
costs money. Instead of watching out for their states' interests, as
was originally intended, senators now must keep their focus on raising
truly fabulous sums to run for office under the new system. This is
where lobbyists come into the picture. They have clients with money who
need favors and special deals, and senators need money, and lots of it.
Also
in the banner year of 1913, Woodrow Wilson signed the Federal Reserve
Act, creating a central bank. The progressives proposed the central
bank as a government solution to bank panics. A bank panic occurs when
too many depositors want their money at the same time. Banks had always
managed bank panics among themselves, sometimes heroically, not always
perfectly. The central bank was going to change this by providing a
government solution. The Fed failed at the first crisis, and failed
spectacularly. What it did then and what it did not do in that crisis
seem inexplicable. You or I could have done a better job. In any case,
bungling by the Federal Reserve helped to turn an economic downturn
into the Great Depression.
The
Federal Reserve Act did accomplish something: it opened the door to the
complete socialization of America's currency. Instead of providing
liquidity to sound banks during a panic as the legislation provided for,
the Fed has taken control of the currency, an enormous, essentially
unchecked, and unconstitutional power over your wealth. And although it
failed spectacularly at the job it was supposed to do, the Federal
Reserve did succeed in debauching the American dollar. The value of the
dollar has collapsed; one 1910 dollar would be worth $24.89 in 2017.
According to my calculations, that means your dollar today is worth
about 4 cents compared to the days when people used to say "sound as the
dollar."
The
Fed has been using excess money creation as a hidden way of collecting
taxes for the central government. The total amount of wealth the Fed
has confiscated in this way is breathtaking.
John Maynard Keynes did a great deal of harm, but he did say at least one true thing:
ByThe
a continuing process of inflation, governments can confiscate, secretly
and unobserved, an important part of the wealth of their citizens. By
this method they not only confiscate, but they confiscate arbitrarily;
and, while the process impoverishes many, it actually enriches some.
Fed has actually been functioning as a kind of accomplice of the IRS.
Today, the Federal Reserve can create money without even having to
bother printing it; now the Fed can create any amount by simply entering
a number in a computer. Talk about taking the limits off government
spending!
It
is perfectly obvious that we are far down the path to a new kind of
tyranny by way of endless bureaucratic regulation and confiscation. If
we are to recover and secure our liberty, much must be done, and much
must be undone. We cannot succeed unless we carefully remove these
three pillars of the Progressive State.
