Government remains essential for the nation’s financial stability and prosperity

A national leader finds himself face-to-face with a polarized Congress. He passes major legislation investing in his country’s infrastructure and economy but receives little credit for doing so. Instead, he becomes a target of overzealous political opponents, who do not hesitate to make all manner of conspiratorial accusations about him.

It will sound, of course, that we’re writing about Joe Biden, but we’re not. These familiar and fraught circumstances befell Alexander Hamilton, one of our nation’s earliest statesmen. Hamilton, too, persuaded Congress to make economically consequential investments to grow the economy in the newly formed country. He also found that his efforts were vigorously opposed by no less than the man who would become the third president of the United States — Thomas Jefferson. And Hamilton’s opponents did not hold back when it came to trumping up charges against him and his family, not unlike the ridiculous smears against President Biden and his son Hunter.

But, as we cover in our new book, “How Government Built America,” the similarities between Hamilton and Biden are more than a historical coincidence. From the beginning of the country until now, government investments have been necessary for a strong economy, and the political figures who have called for these democratic interventions have always found themselves bitterly at odds with advocates for smaller government.

But the American economy has never been the product of either all government or all markets. It has always been a complementary combination of both. Both have been needed to move the country closer to its fundamental values of liberty, equality, fairness and the public interest.

When George Washington appointed Hamilton as the first secretary of the Treasury, the country was hopelessly in debt — along with the states, it owed about $75 million that had been borrowed to fight the Revolutionary War. Hamilton boldly proposed a plan to refinance the debt. Like Lin-Manuel Miranda’s namesake musical, his plan was a smash hit, saving the country and its fledgling economy.

In spring 2019, as the coronavirus deflated the economy, kept people at home, and shut down businesses, the federal government stepped forward to save the economy. Just as it was done in Hamilton’s day and during the New Deal.

Hamilton’s role for the new federal government also included financing infrastructure, such as roads and canals, protecting fledgling industries and creating monetary controls. When the 2022 CHIPS and Science Act invested $280 billion to subsidize the domestic manufacture of computer chips and billions of dollars in science and technology research, Biden was following Hamilton’s earlier blueprint. And the recent action of the Federal Reserve to raise interest rates to bring down inflation confirmed Hamilton’s long-ago recognition of the necessity for the federal government to steer the economy.

Thomas Jefferson, who opposed Hamilton’s plans for an active federal government, believed that the federal government was more likely to be corrupted by the influence of power and wealth than by keeping government local and closer to home.

The attacks on Hamilton, however, were not always so high minded. In 1797, a political opponent of Hamilton published a book accusing him of financial irregulates and of having had an affair with a married woman. The first charge was not true, but the second was accurate. Hamilton was forced to publicly admit to the affair to be able to deny the false allegation.

It is disappointing to know that American politics have not changed all that much between Hamilton’s day and the recent so far unsuccessful efforts by House Republicans to tie President Biden to the alleged financial misdealing by his son, Hunter.

But there is a more important lesson in American history — one that is purposefully ignored by small-government advocates such as Steve Bannon, who promised a daily fight to “deconstruct the administrative state” when he was President Donald Trump’s chief White House strategist, or Americans for Tax Reform founder Grover Norquist, who declared in 2001, “I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.” 

As we have detailed in our book, government has built our country by steering the market from the first presidential administration to the current one. Despite “anti-government rhetoric,” government has been, and remains, essential for achieving the financial stability and prosperity essential to preserving the values of our democracy.

Sidney A. Shapiro is the Frank U. Fletcher Chair in Law, Wake Forest University, and Joseph Tomain is Dean Emeritus and Wilbert and Helen Ziegler Professor of Law, College of Law. Both are member scholars of the Center for Progressive Reform.