> >>
> 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.
> >>
>
> "Except" is a big word here. But if we take your
> point, then the bit about bonds as a device for
> redistribution holds less water.
>
When I said rich folks don't need the bonds, I meant in the sense of having lots of other alternatives. But they use them now (govt. bonds are a small part of rich folks' portfolios, but they receive the lion's share of the money, so the redistribution is there). If the debt were to be all paid off, though, they wouldn't care enough about losing that source of revenue to cause them to oppose paying off the debt in the first place. Again they see paying down the debt as one part of their desire to shrink govt.
> >>
> 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).
> >>
>
> I would dispute the potential implication that Repubs
> care about the social productivity of their assets, rather than their
> individual financial return (i.e., 'fictitious value'). If we're talking
> policy viewpoint, then sure private capital is exalted over govt bonds by
> conservatives and most others.
Not my implication; repugs don't care about that. One definition of a repug: someone who thinks private interest and public good are the same thing (add here your version of the Thatcher quote about there being no such thing as society). My point was that in the absence of safe govt bonds, and *if* they adjusted their investments toward more risky, private instruments (and they wouldn't have to since there are other opportunities that carry little risk), individual rich folks and capital as a class would surely view this as good thing for the economy as a whole (since they prefer private to public spending and most of them cling to a Say's Law type of view that investment equals growth). In other words, they will invest so as to maximize their own return, but believe themselves in service to the common good as well--an enticing twofer for them at least..
> It's harder to spend when you dedicate your receipts to
> debt reduction, but at the point where your debt service
> savings are large enough, you have more capacity to spend,
> in the vulgar static view. Remember my point about the
> logic of the long term projections, which have the Gov
> owning trillions in private sector financial assets.
>
> The deficit and now the debt are a major obstacle
> in the way of tax cuts, for mystical ideological
> reasons. Many conservatives are quite unhappy
> about this.
>
That's right, so combining your two thoughts: if you choose to pay down the debt with the surplus now, you will have similar funds later (assuming the surplus in current operations continues), but by eliminating deficits and debt you will have made stronger the argument that that money should be used to cut taxes, not for social programs. "Mystical ideological reasons" (actually not that mystical) and demo opposition to tax cuts will be weakened. The repugs will simply continue on shrinking govt. This is an important answer to Nathan's original assertion that paying down the debt now will somehow benefit social spending later.
> >>> . . .
> There is no end because the tax cuts and accompanying deficts were a
> plan to shrink govt spending.
> >>
>
> Some lunatic wrote a piece on this in 1991 entitled
> "Up From Deficit Reduction."
>
Was that an MBS kind of lunatic?