People have largely forgotten about this, but back in the 1999–2001 era instead of complaining about the deficit being too high conservatives were obsessed with the need to prevent the national debt from getting too low. The reason was that they feared that there might not be enough "on-budget" debt for the Social Security Trust Fund to buy, which would lead the Social Security Trust Fund to act like the Canada Pension Plan and start investing in equity and other financial vehicles. This, according to Alan Greenspan and others, would rapidly put us on the road to serfdom.
And also this:
But as sovereign wealth funds are spreading from Persian Gulf petrodictatorships to oil-free dictatorships (Singapore) and oil-rich democracies (Norway) and now even America's friendly next door neighbor Canada, I think it's time to rethink this opinion.
But the larger point here, surely, is that Rehn has let the mask slip. It’s not about fiscal responsibility; it never was. It was always about using hyperbole about the dangers of debt to dismantle the welfare state. How dare the French take the alleged worries about the deficit literally, while declining to remake their society along neoliberal lines?
In a sense I think we should be mad at the Austerity advocates for hopelessly confusing the debt issue. Debt is bad but increased taxation is always worse seems to be the argument. But by trying to confuse the issues they are merging two very different propositions. High taxation can be bad but the evidence for this is much weaker than for government financial crisis due to debt loads.
But it becomes impossible to talk about the debt without getting drawn into the quagmire of the appropriate level of taxes. But it is notable that the argument against running a surplus appears to be bogus (the disaster of paying off the debt seems to not be a disaster elsewhere). The level of taxes in the United States is low relative to other first world countries -- that makes it hard to argue that small tax increases would immediately lead to disaster.
This is making me want to be almost dismissive of the deficit. Not because the debt wouldn't be lower in my ideal world, but because all of the action is about the size and scope of government (and a strange argument about whether government should be intrusive at the federal or state level). These are interesting arguments, to be sure, but they are only distantly related to the question of fiscal responsibility.