If you're referring to the Social Security "two-bond solution," as long as the Trust Fund may not hold any assets other than "Treasury specials" (non-tradable bonds), the purported rationale is that there is no other way to shield most of the projected surpluses from Republican machinations, re: defense and tax cuts.
If I could read their minds, I could tell
you whether their real goal is to simply
pay down debt or to make domestic spending
possible later, and in what proportions.
>From a political-economic standpoint,
my reading is that EVERYTHING they do
(e.g., Clintonistas) in economic policy
is geared towards free trade and debt
paydown, subject to some limited concern
for aid to the poor and endless preoccupation
with short-run political support.
> What's the fundamental point of
> political economy
> that the three-card-monte-ish scheme is meant to disguise?
I would say debt repayment, though I don't have much of a story to explain why, beyond stuff I wrote years ago (in Up from Deficit Reduction).
> And, how does
> this proposed paydown differ from the
post-WW II paydown, which coincided
> with a great boom?
WWII debt was never actually paid down; it simply fell way behind the growth of the economy.
Federal debt held by the public in 1946 was $242 billion, or 109% of GDP. It went down to $214 b by 1951 and then never looked back, rising to $785 billion by 1981, at the same time it had sunk close to its post-war low as a share of GDP, 25.8%. You don't find too many years after the WWII when there were surpluses, and only three times when the surplus exceeded a percent of GDP.
In the macro, I don't see anything in WH economic policy inconsistent with Neoliberalism -- shrinking the public sector, reducing public indebtedness, privatization, attacking Social Insurance.
There is no overt attack on Social Insurance at the moment because the left is being gulled into debt reduction. The trade is a) you don't take something away from me, and I'll give you something you don't have. The clear implication of this political policy is to end up with nothing.
mbs