Recalling the Lost Paradise of Budget Surpluses

By Froma Harrop
Providence Journal

Hard to believe, but once upon a time, economists worried that the U.S. government would pay off all its debt. Also hard to believe, once upon a time was only 11 years ago.

President Clinton had bequeathed his successor budget surpluses "as far as the eye could see." He wanted some of them used to speed up repayment of the remaining $3.6 trillion still owed the public in Treasury bonds. He said it could all be paid off by 2013.

No magic there. A modest tax increase, controlled spending and a strong economy made more confident by disciplined budgeting had ended a scary era of deficit spending.

Can you imagine this causing concern? If the federal government didn't need to borrow and paid off outstanding debt, it was said, U.S. Treasury bonds would disappear. Where would investors find a safe haven for their money? And suppose the U.S. government needed to borrow again in the future. How easily could it re-establish a market for Treasuries?

(More here.)