The problem with that crusade is that trying to maintain a high surplus to pay off the entire debt over the next 10 years or so requires us to keep tax rates much higher than otherwise. The economic destruction of these higher rates far outweighs any economic benefits from paying off the debt. Debt retirement does not lower interest rates, nor does it increase national saving. Debt retirement does not strengthen Social Security. Debt reduction does not promote economic growth.
Economic growth reduces the burden of debt.
High tax rates do not promote growth they stifle it. Mr. Kemp unmasks the fallacy that eliminating the debt would reduce interest rates by noting that neither the Congressional Budget Office nor the Council of Economic Advisers are projecting a reduction in interest rates as a result of the enormous debt paydown over the next 10 years that Congress and the administration are now planning. The wide swings in deficits and surpluses we have experienced over the past 20 years do not correlate with interest rates, which are determined by time preferences of consumers, monetary policy, worldwide capital market flows, and other factors. Such a minor debt is not an economic problem. The national debt was 60 percent of GDP in 1950 and just under 50 percent in 1960.