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From the Editors: But Who’s ‘Handling the Finances’?

With his Cabinet selections, President-elect Barack Obama has focused attention on Abraham Lincoln and his “team of rivals,” a Cabinet that included three men he defeated for the presidency. One of those rivals, Treasury Secretary Salmon Chase, lived at 601 E St. in Washington, where, coincidentally, AARP’s national headquarters stands today.

Square-jawed, rugged and a stubborn foe of slavery, Chase could never quite contain his ambition. He always thought he should be president, and while serving as treasury secretary even plotted his own presidential campaign—against Lincoln!—in 1864. Eventually, Lincoln appointed him chief justice of the United States, and he later presided over the impeachment trial of Andrew Johnson.

Chase’s real contribution was to shepherd the nation’s finances during the Civil War. His challenge was daunting—the $532 million annual cost of the war dwarfed the annual $55 million federal revenue from taxes and tariffs. Further, Lincoln was preoccupied with war strategy. As they took office, Chase warned that Lincoln was “heedless of the abyss of bankruptcy and ruin which yawn before us.”

Chase devised the strategy for funding the war with new taxes and special bond sales and developed the national network of local banks essential for selling the bonds. At the height of the war, Lincoln regularly overruled his military leaders. But on questions of money, he deferred to Chase and would tell visitors: “Go see Secretary Chase, as he handles the finances.”

Chase tracked Union spending and insisted that the government would pay its bills. Meeting its obligations was—and is—the American way, what Alexander Hamilton called “the price of liberty.”

Today, a new president prepares for office facing a national economy in seeming free fall. Give him credit for assembling a team whose talent trumps their past personal and party loyalties. But they face the challenge of shuttered industries, shattered retirement dreams, lost jobs and soaring costs.

Policymakers have zigged and zagged with little effect. “When you see so many changes,” said an exasperated Sen. Chuck Grassley, R-Iowa, “you wonder if they really know what they’re doing.” We already have nearly $1 trillion in unsecured loans, guarantees and grants, and an unbridled economic stimulus plan could add an additional $1 trillion to the staggering $10 trillion national debt.

The government response is an ever-expanding collection of initiatives with an exploding price tag. But who today raises Chase’s voice? Who is keeping the tally? Who is figuring how this all will be paid for? Who is “handling the finances”?

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