With a debt pay-down, "other things being equal," the Feds would have lower interest expenses in the future and be better able to pay benefits under Social Security and Medicare.
Problem is, the pay-down could retard growth in two ways: it could reduce aggregate demand inordinately and at inopportune times; and it will preclude public investments the economy needs but which the private sector will not undertake.
> Blair government also shackled itself by its pre-election pledge
> which not only promised to tax increase (which could have been interpreted
to mean no basic income tax rate hike), but also a 2-year standstill on existing departmental budgets.>
That's basically what prevails here in what is called discretionary spending, though thankfully not for social insurance and most aid to the poor.
> The Blairites claim that this was essential to make
> Labour electable, as the taint of tax-and-spend was supposed to have
torpedoed Kinnock in 1992.>
As a share of GDP, taxes here are as high as they've ever been. The two saving graces for Clinton are the high employment level, and the fact that much of the increase in burden is concentrated at the upper end. So low overall taxes are not necessarily a prerequisite to political sustenance for the left, by the U.S. case.
> Is the Clinton package designed to try to avoid a deadlock with a
> Republican-dominated Congress? Or are both of them appeasing
I suspect the package is designed to tie the other side up but ultimately to fail. It starts too many arguments. In the fall, when they are compelled to agree on a budget, my prediction right now is for another package of jive "emergency" spending that gets enough votes to pass and preserves most of the projected surplus.
What is remarkable to me is the apparent launch of this debt-reduction campaign, which has to have major implications for and origins with the interests of Capital. On the other hand, I could be making too much of the routine, pedestrian cravenness of the White House, who will apparently essay any intellectual posture on any topic for short-term, narrow political advantage.
> Relatedly, is there any movement around an Alternative
> Budget? I have
> heard that this has proved a fairly effective rallying-point in Canada.
Unfortunately, much of the reformist left has been gulled into passivity, out of gratitude that Social Security was not surrendered. I think this is mistaken because forthright criticism is what changes the boundaries of debate and acceptable commentary, because elements of the budget give credence to Social Security privatization (e.g., the stock market purchase, the acknowledgement of a "crisis," and the creation of individual savings accounts for 140 million workers), and because the notion of debt elimination is just the wildest thing I could ever imagine emerging as mainstream economic policy.