back to 1835!

Roger Odisio rodisio at
Wed Aug 4 09:42:15 PDT 1999

Max Sawicky wrote:

> If you think public debt benefits rich bondholders,
> you might like to answer the question of why the
> Administration is going ass-over-teakettle to
> eliminate public debt, with the tacit approval
> of a lot of Republicans. Don't feel bad if
> you don't know the answer. Nobody on PEN-L
> does either, including me.
> If bondholders didn't have bonds to buy, they'd
> buy some other asset -- somewhat less safe perhaps,
> perhaps also with a higher return. On balance they
> would not be appreciably richer or poorer in either
> instance.

There's some of the answer, at least for the repugs, which is the easier part. Rich people don't need government bonds, except to balance portfolios. Most don't hold many anyway (as a percent of their holdings). They would invest in alternative assets with more risk, higher returns, and, in the republican view, such investments are inherently more productive (adding to private capital). Repugs get a smaller govt too. The more eliminating the debt is seen as a completely good thing and accomplished, the harder it will become to later expand spending. Raising taxes are out now. Deficits will follow. This is a further trip down the road Reagan started, which became the centerpiece of his campaign '84--cutting taxes and raising defense spending as a way to force spending cuts and shrink govt.

You may recall Mondale's idiotic reponse in '84 nomination acceptance speech. He's going to raise taxes (meaning Reagan), but he won't tell you. So am I and I just did (tell you). Exactly what Reagan wanted him to say, which both paved the way for Mondale's landslide drubbing and set the issue in the public mind ever since.

So why is Clinton supporting this? A bit tougher question. But it may be this simple. Cutting taxes and less govt is the most popular part of what he thinks of as the "center", which is the object of his lust, beyond even that with assorted occasional women.. So much so that he can't give it up even tho he is done running. Probably thinks this will help him with historians. Partly too he proposes this because the repugs want it so much, and in his weakened position, he needs to give them a lot of what they want to have any hope of getting anything he wants. I think what we have here is Clinton going along with what he knows repugs want, rather than a proposal of his that has repug support.

> We've been hearing since 1984 that once
> we get rid of the deficit, spending can
> increase. Now the refrain is, once we
> fix social security, yadda yadda. I
> predict that if we did "fix" Social
> Security, we would next be told we
> can't increase spending until we "fix"
> Medicare. There is no end to this!

See above. There is no end because the tax cuts and accompanying deficts were a plan to shrink govt spending.

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