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Politics : The Castle -- Ignore unavailable to you. Want to Upgrade?

To: Tom C who wrote (467)	11/14/2002 10:49:40 AM
From: Neocon	Respond to of 7936

The short answer is that federal revenues grow roughly in proportion to growth in GDP, without increasing tax rates. Thus, any additional debt service would be covered by revenue, stabilizing the proportion of debt service to the whole budget, all other things being equal. As for the possibility of transforming public debt into private debt, there is a real danger of that, in fact. There is a suggestion that that happened during the late '90s: that easy consumer credit fueled consumption, leading to a high growth in GDP, leading to additional federal revenues, leading to a lowering of deficits, and even a small nod to debt reduction. Thus, the Clinton Years may have merely paid down deficits through privatizing the debt. If growth in personal borrowing remains tethered to growth in income, there should be no big problem, but if people lose all fiscal discipline, it can cause a crunch down the line, as consumption falls off precipitously in order to pay down balances. That is part of what has happened in this sluggish economy........