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The trouble with all of our speculations and discussions is that we forget
the real reason both sides want to stay away from paying down the debt.
Democrats would prefer to pump up social security, (of course they could do
a lot for it if they would just stop spending all the money the second it
comes in), and help out medicare .... The Republicans prefer to give a tax
cut across the board. Both want the same thing, to buy votes! Neither
side wants to pay off debt because not only does it not buy any votes, the
advantages to doing this are not even very clear to the average American.
(Of course a pie chart showing the amount of interest we pay on the debt
might help). I've mailed my representatives, hope everyone here does the
same. I informed mine in no uncertain terms that they needed to apply any
real (or imagined), surplus to the national debt and there is no other
consideration for anyone who is up there to truly do the right thing for
America. While I hate to mention it to anyone in government, they *could*
borrow it back if there was no other choice but once spent, it's gone.
Bob
At 11:03 AM 7/23/99 -0400, you wrote:
>Howard, the biggest issue here is what is the best thing to do with the
>surplus, and when you look at all the options, I think paying off the
>national debt wins hands down for three reasons.
>
>First, the goal of any tax cut is to increase the disposable income of the
>tax payers. When you pay off debt, you lower interest rates. Lower
>interest rates in turn result in lower auto and housing payments for tax
>payers, which increases their disposable income. I know this sounds simple,
>but even the WSJ (whose been ranting against paying down the debt) doesn't
>seem to understand.
>
>Second, although Japan has clearly proved a country can save too much money,
>it's safe to say that the US is nowhere near the danger point. The best
>thing that could happen with any money returned to tax payers would be for
>them to save it, because the economy is clearly not lacking in demand right
>now. Paying off the debt actually has a better chance of accomplishing
>this. Why? Because the debt is in the form of long term bonds. How many
>bondholders do you know take the proceeds from a called-in bond and go out
>and spend the money? Not too many, I bet. Rather, they take the proceeds
>and turn right around and put it into other investments (usually other
>bonds). On the other hand, there are plenty of people who take additional
>tax refunds and immediately increase their levels of spending. This is not
>a perfect science, but the historical evidence does show that money put back
>into the economy through debt retirement, as opposed to tax reductions, has
>a greater likelihood of being saved.
>
>The third reason is the all important political factor. Every time
>Republicans try to reduce tax rates they get beaten up for favoring the
>rich. The funny thing is, debt retirement will disproportionally help the
>rich just as much as a tax reduction would (richer people have bigger auto
>loans and mortgages, obviously). Despite this, liberals seem to be very
>supportive of the idea of paying off the debt, so why pick a fight when you
>don't have to?
>
>Bruce
>
>
>----- Original Message -----
>From: Howard Hopkins <hehohop@xxxxxxxxxxx>
>To: <andrew@xxxxxxxxxxxxx>; <dickwebb711@xxxxxxxxx>;
><realtraders@xxxxxxxxxxxx>
>Sent: Friday, July 23, 1999 9:26 AM
>Subject: Re: GEN: Y2K EXTREMISM?
>
>
>> Didn't we hear this same debt arguement in the 92 elections??
>>
>> The absolute $ amount of national debt is irrelevant. The % debt relative
>> to GDP is what you need to control. Should you refinance your home
>mortgage
>> when interest rates are @ 30 year lows?? How about a second mortgage?
>>
>> Supply side economics kicked off this whole boom in the Reagan era and
>> expanded the revenue side of the equation. Why won't that work now?
>>
>> And by the way... aren't stock prices near all time highs, bond prices
>near
>> multi-decade lows, and the dollar the strongest currency in the world?
>This
>> economic theory to pay down debt to improve the US economy has been
>> invalidated in the real world... don't you agree?
>>
>
>
>
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