>The administration wants to pay off the federal debt by 2015.
>
>This seems like a great idea to me. Why should we be giving > 10% of
>Federal revenues each year to wealthy holders of U.S. debt?
>
>I've heard claims that it would be a bad thing, since it would soak up
>money that could otherwise be used for social investment. It strikes me
>that this is a short-term (and possibly short-sighted) objection.
>
>I was floored when I heard the announcement yesterday, since I'd never
>heard anyone "respectable" propose such a thing before. The assumption
>has seemed to be that the debt (like the poor) will always be with us.
>
>I was astonished to discover that none of the "journals of record"
>consider this headline news. Why aren't they out there trumpeting the
>administration line? As good establishment leftists, we know that's what
>they should be doing. That's how it works, right?
>
>My astonishment continues with the lack of reaction (positive or
>negative) on this list.
Hey, I personally wrote about this months ago, commenting on Clinton's Feburary budget proposal. It's also nuts. Vainly quoting myself, from LBO #88:
<quote> Clinton projects a 20% decline in government debt held by the public (as opposed to the Social Security accounts) over the next 5 years. There are some historical precedents for debt reduction on such a scale: the 1850s, 1870s, 1880s, and the late 1920s. They're not encouraging. Almost half of the second half of the 19th century was spent in recession or depression, with frequent panics and crises, and the 1920s were followed by the 1930s. Since 1869 (when decent GDP estimates begin), the U.S. has run a surplus of 1% of GDP or more in only 10 years. The longest consecutive streak of surpluses that large was three years (in the early 1870s); there were just two episodes of two consecutive surpluses of 1% or more. That's it. But Clinton's budget projects surpluses approaching 2% of GDP by 2005, and 2-3% of GDP through 2020 and beyond.
At the same time, in one of the studies published with the budget, the administration endorses the Social Security administration's preposterously glum economic projections GDP growth of 1.4% a year for the next 75 years, half the rate of the last 75 (LBO #87). While conceding that this "implies a marked departure from the historical rate of growth," it doesn't contemplate for a second that large surpluses might be inconsistent with profound economic stagnation. European countries have found it nearly impossible to bring their budgets into balance, much less surplus, with economies about as sluggish (in GDP growth terms) as the U.S. is projected to be for the next seven decades. </quote>
Doug