The benefits are manifest. The interest bill facing government would be progressively lower as the national debt was repaid. The economy would grow faster because government would exit the financial markets, freeing up funds for private investment instead of absorbing private savings to pay for the fiscal deficit. Interest rates and mortgage rates would go down, putting more money in Americans' pockets and stimulating growth, and the added gross domestic product growth would make the promised Social Security benefits more affordable. Paying down the debt, in short, is the best kind of tax cut and the only sensible one.
Growth is the only way to pay for the graying of our population.
If we interrupt our present trajectory, the only way to meet our promises would be to increase taxes or reduce benefits. There is far too much happy talk about giveaways. The numbers tell the story. We are borne along by an investment spending boom, especially on information technologies, which is about a half of all capital spending. Figures from the Commerce Department indicate that spending on equipment and on software, the latter now properly classified as investment spending, has increased from 6.1 percent of GDP at year-end 1991 to an astonishing 11.4 percent as of the end of 1999.