> On Behalf Of Doug Henwood
>
> - Interest payments would be eliminated. Currently we spend almost 14
> cents of every Federal dollar on interest payments. These payments,
> which were once projected to grow to 26 percent of all federal spending
> in 2013, would be eliminated under the President's plan.
>
> - Prepare for the retiring baby boomers. Paying off the debt will
> create room in the budget for the increased Social Security and Medicare
> costs of the baby boomers. It will also free up funds for investment,
> help keep interest rates low, and boost workers' productivity and
> incomes. This fiscal discipline is the best way to prepare the
> government, and the Nation, to meet the challenge of the retirement of
> the baby boom generation.
We had a bit of a discussion of the first gain from surpluses on PEN-L (ending payments to rich bondholders) but the second paragraph does highlight an issue that gives the rightwing hives- namely that storing up surpluses to pay for future social security payouts will create a major crisis on where to invest those surpluses. If the government holds little or no public debt, those surpluses will no longer be able to be in federal bonds.
If the Left was truly strategic and had the political strength, we would fight to have those surpluses invested in large chunks of the private economy. In its initial phase, this would create a strong public voice on corporate boards across the stock market and as the surpluses mount, could amount to government takeover of certain firms - especially if combined with more liberal union pension fund purchases that could create models of shared governance between public authorities and worker representatives.
Now, the Right already fears this scenario, which is why they are politically pushing privatization so hard. But even partially private accounts in a number of scenarios would be aggregated in funds that could be easily subject to political regulation of their use. If nothing else, it would put greater focus on grassroots mobilization of those funds owned by average income individuals -- which could become an important counterweight in many fights to corporate power.
The issue of surpluses raises a basic socialist point -- if the state is in deficit, it does not exercise control on capital in society but is itself subject to the vagaries of capitalism, most notably being at the mercy of the bond market and interest rates on its debt.(Remember James Carville wanting to come back as the bond market?) But if the government is in surplus, it has the ability to gain some degree of independence from those forces and in turn act in interventionist ways to appropriate control of capitalist enterprises.
Now, folks may prefer visions of expropriation without compensation of capitalist enterprises as the only solution, but it seems that a gradual expropriation of the wealthy through taxation that exceeds annual spending (completely legal) is a simpler and more likely scenario than one dependant on completely abandoning the constitutional framework of our laws.
It would seem a basic socialist goal to have the government control large chunks of capital in our society, which by definition would seem to require controlling surpluses beyond annual spending.
Aside from the issue of how the rightwing will try to deflect any such goal into less threatening avenues, doesn't a basic socialist goal have to be to have the government increase its net control of capital - the definition of running a surplus?
-- Nathan Newman