> Doug wrote a few years ago in LBO that government debt
> was one way that
> capital, in the form of bondholders, objectively
> limits the options of
> government. You seem to be saying that all that
I agree this is a factor. Our history since 1981 makes that pretty obvious.
> matters is mindset --
> that if the democrats were a social democratic party
> with a big majority,
> they could have done big social investments 8 years
> ago, and if the
> spectrum of social thinking is the same in 20 years as
> it is now, then
Also a factor, maybe a bigger one, is the sentiment on behalf of public spending. Our present situation makes clear this is an essential ingredient, since the deficit obstacle has fallen away entirely. Specters of future deficits can always be hoked up by somebody who is hostile to government spending. This is possible now because of insufficient enthusiasm for new spending.
> such spending will be impossible spending will be seen
> as impossible if
> the debt is zero. So whether interest payments take up
> 10% of the budget
> or zero is irrelevant? It's all purely a matter of
> perception and
> political will?
I don't think we know if political will is all that is required. If it is, then there is less reason to pay down debt now. Even a tax cut would be better.
mbs