This book tells the story of generations of Americans who fought for their nation's future by limiting federal debt. As debt steadily soared following the last balanced budget in 2000, their achievement seems more remarkable. I shared the frustration so many who have watched the federal government lurch from one budget crisis to another in each of the last several years. My business experience taught me that poorly defined problems are difficult to solve. I set out to use the history of federal debt as a backdrop to clarify what recently went wrong. In doing so I discovered the neglected and inspiring story of what had once gone right. Before 2001 the federal government had not always balanced its budgets. However, it had borrowed according to informal but well-understood rules, an unwritten fiscal constitution.

For most of the nation's history, federal leaders incurred debt to finance spending for only four accepted purposes. Time-tested budget practices curbed the temptation to use debt for the purpose of hiding the routine cost of government. The triumph of an unwritten or traditional American fiscal constitution would not have surprised James Madison, the architect of the written Constitution. He had hoped that the new US government would limit debt by application of principles that would be clearly "visible to the naked eye of the ordinary politician." Many generations of ordinary politicians used those principles to make budget decisions that now seem extraordinary. The very nature of federal borrowing, not just its magnitude, changed fundamentally after 2000. Never before had the federal government waged prolonged wars without raising taxes. Never before had the federal government relied so heavily on foreign creditors.

Never before had the president and Congress intended to finance a permanent vast new domestic program--the Medicare Prescription Drug, Improvement and Modernization Act of 2003--entirely with debt. Never before had a Democratic president and Congress tolerated, much less insisted on, the substitution of federal debt for payroll contributions supporting the Social Security trust fund. Never before had "conservatives" spearheaded opposition to a constitutional amendment requiring a balanced budget. Never before had mainstream leaders in both major political parties claimed that balancing the budget in normal economic conditions would damage the nation's long term economic growth. Trends in public opinion or ideology cannot adequately explain these shifts in budget policy. Americans did not wake up some morning and resolve to saddle their children with debt. The photo-finish 2000 election furnished no mandate to borrow. Even excluding debt incurred to pay for wars and recession-related relief, the federal government borrowed large amounts with a Republican president and Republican Congress, a Democratic president and Democratic Congress, a Republican president and Democratic House, a Democratic president and Republican House.

Many people believe that it is now politically impossible to balance the budget. My practical experience makes me more optimistic. For much of the last decade I served as the mayor of the nation's fourth largest city, with a population greater than many states. Like most other cities, counties and states, it abided by laws that prevented the use of debt to fund routine operating expenses. Almost daily I explained to citizens the tradeoff between taxes and spending. They did not always agree with the choices we made, but I learned that people from across the political spectrum respected the need to balance public obligations and tax revenues. I do not believe that Americans suddenly chose to elect short-sighted people to public office. Most members of Congress in 2001 who supported borrowing for routine expenses had worked hard in the 1990s to balance the budget.

For some of that time, as a chief operating officer of a cabinet department who worked to cut spending, I found that leaders in each party supported good faith efforts to promote financial discipline. For two decades I have known our presidents and many congressional leaders in each party. They and others willing to endure the ordeal of elections care at least as much about their country's future as do other citizens who sit on the sidelines. History offers a valuable perspective on the nation's sixth, and current, debt crisis. Budget battles have raged in every session of Congress since Washington took office. Today rising federal debt does threaten the value of investments, the availability of medical care for older Americans, and the viability of future American international leadership. But contemporary budget dilemmas seem manageable when compared to those that confronted Americans immediately after the Revolution, the Civil War, and tough sixteen years of Great Depression and World War II. Americans have often treated their nation's exceptional history as a form of secular scripture, a source of inspiration and instruction.

Citizens who despair of a government lurching from one annual budget crisis to another can find new hope in some old traditions. The federal government steadily paid down debt during Thomas Jefferson's administration. Jefferson believed that the nation could ultimately invest more in public improvements if federal leaders reduced the share of tax revenues required to service prior debts. He believed future voters would best be able to judge budget policies by comparing the track record of "different epochs." I wrote this book with Jefferson's vision in mind.