The National Debt: A Time-Honored Tradition Older Than Our Country : Economy: Wednesday marks the 300th anniversary of the modern budget deficit. May we have another 300 years of ruin like that last.

The Clinton inaugural is beginning to look like the christening of Sleeping Beauty: The uninvited guest is getting all the attention. At Sleeping Beauty’s party, it was the wicked fairy; at the inaugural ball, it is the national debt. With budget deficits estimated at $300 billion as far as the eye can see, and the national debt heading toward $5 trillion, dark shadows are already closing in around the young Administration.

But the wicked fairy is also a birthday girl: Jan. 20 marks not only the inauguration of President Bill Clinton, but the 300th anniversary of the modern budget deficit and national debt. Three hundred years to the day before Clinton takes the oath, merchants and bankers of revolutionary London passed an act of Parliament providing for the establishment of Britain’s national debt and for annual budget deficits as a matter of routine.

Pity the poor wicked fairy. She’s like a pretty girl with a bad reputation--everybody wants to take her to the drive-in, but she can’t get a date to the prom. Everybody is against her. The debt is ruining the country. It is a burden on our grandchildren. It crowds out private investment. The interest will bankrupt us. Our deficits are fueling the fires of inflation and, in general, making everything worse. If there is an American political consensus, a point on which conservatives and liberals agree, it is this: The national debt is a monster that must be tamed before it destroys us all.

But maybe it isn’t as bad as it looks. Jan. 20 isn’t just the 300th anniversary of national debt; it is the 300th anniversary of predictions that the national debt would drive us into the poorhouse. We aren’t the first generation to think its debt outrageous. Our grandparents castigated themselves for the debt they were leaving us, and predicted the country’s ruin. Their grandparents said the same thing, as did their grandparents. They have all been crying wolf for 300 years but, so far, no wolves have appeared.

In 1713, after 20 years of deficits and wars, Britain had a national debt of 50 million pounds, and politicians and economists united in declaring that the nation was crippled forever. Wolf! Wolf! The next generation saw another war, and the debt rose to 80 million pounds. The cries of anguish grew louder. This time the wolf was really at the door. No kidding!

But somehow, the country limped on. The conclusion of the Seven Years’ War, in 1763, left the debt at 140 million pounds. Now the wailing became intense. “The endless increase of the national debt is the direct road to national ruin,” wrote David Hume.

The debt did not have any consequences, but the fear of it did. The English government was so appalled by the size of its national debt that it decided to tax the American colonies to bring it down.

We know how that came out--but it is worth noting that England incurred another 100 million pounds of debt in the Revolution. The English went on, not only to live with their debt, but to fight the infinitely more expensive Napoleonic Wars, raise their national debt to 800 million pounds in 1815, and, far from crowding out private savings or ruining the country, go on to launch the Industrial Revolution and establish the greatest empire the world had ever seen.

Meanwhile, the newly independent American states were faced with a national debt because of the Revolutionary War, and the cries of despair crossed the Atlantic. “A public debt is a public curse,” wailed James Madison in 1790, when the debt was $75.5 million--$19.21 per capita. Thomas Jefferson wondered if democracy could stand the strain. It could.

The Civil War pushed the debt to $7.4 billion, a mind-boggling $68 dollars per person. Ruin was at hand. President Andrew Johnson compared the debt to slavery: How ironic, he mourned, that the American people had freed 4 million slaves only to see 40 million Americans made slaves to “bondholders and tax-gatherers.”

Ruined by their unprecedented debts, with private investment crowded out by shameless government borrowing, Americans built the transcontinental railroad, electrified the nation’s cities, created vast new industries and forged the world’s leading economic power.

Then came World War I and, once again, the debt shot up: $84 billion in 1919, more than a thousand times the size of the debt that Madison thought was a terrible curse. It was “Wolf!” once again. And again, the debt-burdened nation set off on a decade of unprecedented prosperity--during the Roaring ‘20s, the nation invested and built as never before.

Then came the Depression--blamed, of course, on the deficits. A nation that behaves like a spendthrift, throws discretion to the winds and continues to pile up deficits, said Franklin D. Roosevelt, is “on the road to bankruptcy.”

It is obviously a long road. The British have been on it since 1693, and the Americans since 1776. Roosevelt’s own deficits appalled his contemporaries--the end of World War II saw the U.S. national debt at $211 billion, or $1,848 per person. Now the wolf was at the door; now the end would come. A 1944 book predicted the debt would lead to fascism. Yet the nation struggled on, racking up its most impressive economic performance ever in the 15 years after the war.

Harry S. Truman and Dwight D. Eisenhower struggled to tame the monster; “We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage,” Eisenhower warned in 1961. That dratted wolf was back again, but true to form, the economy then set off on the longest boom in our history.

Now the Cold War is over and the United States has, again, piled up a national debt that dwarfs everything anybody previously imagined. Wolf! Wolf! We have mortgaged our future, ruined our grandchildren and destroyed the material basis of our future prosperity--again. This is getting to be a habit.

The national debt is no doubt a terrible thing. One day it will ruin us all. Everybody says it, so it must be true. But it is 300 years old, and it hasn’t ruined us yet. On the contrary, sinking deeper into debt, first Britain and then the United States created the richest, freest and most dynamic societies the world has ever known. These two feckless debtors beat back tyrants like Napoleon and Hitler. They settled continents, created new technologies and flew to the moon.

Maybe there is a lesson here for Clinton. Meanwhile, amid all the inaugural festivities, let us spare a thought for the uninvited guest, and drink one quick toast to the lonely birthday girl.

Here’s looking at you, kid. May you grow to be a thousand years old and a quintillion dollars tall. May our grandchildren worry about you as much as our grandparents did. May the English-speaking world enjoy another 300 years of ruin like the last, and may you scare foolish economists and hack politicians long into the future. Long life and good health, dear. National Deficit, happy birthday to you.