Publication Date

November 1, 2009

Perspectives Section




When I teach post-World War II U.S. history, I make it a point to build in discussion of federal finances and all the concomitant policy, economic, and cultural issues related to the growing national debt, expansion of the federal government, tax and spending debates, macroeconomic effects of fiscal policy, and the growth of both entitlement programs and our much decried “culture of entitlement.” A mouthful, perhaps. A challenge to make clear and compelling, undoubtedly. Yet essential to understanding the United States since FDR and America today—absolutely.

That’s why a free suite of readings, student discussion guides, films, assignments, and other downloadable materials at—part of a nonprofit educational initiative, Students Face Up to the Nation’s Finances—can be so useful to modern U.S. history professors.

Many courses in 20th-century or postwar U.S. history hit the obligatory points about the Cold War and consumer culture, the Great Society and the Reagan revolution, and civil rights and the counterculture, but history professors often eschew federal budget issues, seeing them as the province of political science, economics, or public policy courses. However, the growth of the federal government and the decades-long political and philosophical battles over spending, taxes, and deficits are central to the story of post-New Deal America. How could a historian talk about 20th-century social insurance or healthcare policy without talking about Social Security, Medicare, Medicaid, and how they have changed? Teaching about Reagan, the Perot campaign, Clinton, and George W. Bush, how could one not discuss “deficits as far as the eye can see,” as David Stockman put it? And how could one teach about the last 70 years of economic policy without addressing Keynesian countercyclical deficit spending or the Reagan-Gingrich antitax revolt?

Then there’s the relevance factor: With America facing its worst economic crisis since the Depression and the Obama Administration embarking on sweeping, multi-trillion-dollar policies, it is no accident that policymakers, journalists, and, yes, historians rightly contextualize them in terms of the New Deal, Eisenhower-era infrastructure initiatives, Kennedy’s Keynesian fiscal stimulus, and the budget-deficit battles of the Reagan and Clinton eras. And when today’s college students think of the Baby Boom, one of the first and most personal reactions is to bemoan the economic effects of rising national debt on their generation.

In short, there are many reasons why students must understand the nature and trajectory of their government’s finances. To make these issues understandable and vibrant, the Students Face Up to the Nation’s Finances materials not only teach the basics of U.S. government budget policy and our nation’s growing fiscal crisis, but also challenge students to be hands-on policy makers, discussing issues from Medicare and health care, more generally, to tax policy and the appropriations process, and proposing reforms. Students also can submit their ideas as papers or films to an online forum and contest enabling their voices to be heard by policymakers. The readings, lectures, films, and slides are pedagogical stage-setters for small- and large-group discussions. Students in a Social Security group in my course reported to the larger class the pros and cons of personal retirement accounts, raising the retirement age, means-testing of benefits, and raising the payroll tax cap.

Students in the other three groups—focusing on healthcare reform, tax policy, and government accountability—also held lively discussions and presented on a parallel array of policy options. These immeasurably helped them to better understand the changing role of government, public policy, and finances in the United States between the New Deal and the new century.

With a rapidly rising $11 trillion national debt, another $45 trillion in unfunded promises to future retirees, deepening economic crisis, a trillion-dollar deficit in 2009, and long-term debt projected to soar largely due to rising Medicare, Medicaid, and other healthcare costs, these are subjects that have both important historical roots and huge repercussions for students and the nation’s future. For students, the subject of federal finances links history with their future. As Herbert Hoover joked: “Blessed are the young, for they shall inherit the national debt.” Federal debt and unfunded liabilities represent mind-boggling IOUs being passed on to college students and other young Americans. Without a modicum of fiscal responsibility—bringing federal spending and revenues more or less in line with each other—growing debt threatens to lead to longer term economic crises and declining living standards, drastic tax increases and benefit cuts, an erosion of U.S. economic and geopolitical clout, and a straitjacketing of the ability of future generations to spend taxpayer dollars on anything other than entitlement programs and interest payments of the national debt itself.

In my courses at American University, learning about federal finances has been an eye-opener. Some students initially have said they were “somewhat worried” about federal debt and most didn’t think that Social Security would be around when they retired, but most also had no idea of the size or composition of the federal budget, that Medicare and Medicaid are much larger long-term problems than Social Security, or that interest payments on our current debt far exceed spending on the Iraq War. By the end of the module, not only were students very concerned and able to accurately say that mandatory spending is already four times the size of domestic discretionary spending, but they also heatedly debated policy reforms and felt motivated to become more engaged citizens. As one student said: “Prior to this class, I was extremely uneducated about the national debt… I do not understand how this huge problem which is going to face future generations continues to be pushed under the carpet… Through this exercise, I have learned a lot about the budget the problems of debt. Education started here, so we should now move to the next step of active involvement and change.”

Teaching about U.S. government finances and America’s dangerous fiscal imbalances are at least as central to modern U.S. history courses as they are to public policy or political science classes. Using materials such as those provided at offer a great opportunity to learn a vital aspect of modern America history and to help students think more broadly about our nation’s priorities and future.

—Andrew L. Yarrow, vice president of Public Agenda, is the author of Forgive Us Our Debts: The Intergenerational Dangers of Fiscal Irresponsibility (Yale University Press), and is project director for Students Face Up to the Nation’s Finances. He has a joint appointment in the history and government departments at American University.

Further Resources

Faculty members can download and use the teaching and student discussion materials at, and students can check out materials and submit essays, films, or other projects online to
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