{"id":17809,"date":"2012-11-17T10:41:08","date_gmt":"2012-11-17T15:41:08","guid":{"rendered":"http:\/\/quotulatiousness.ca\/blog\/?p=17809"},"modified":"2012-11-17T10:41:08","modified_gmt":"2012-11-17T15:41:08","slug":"steve-landsburg-says-paying-off-the-national-debt-would-be-a-bad-idea","status":"publish","type":"post","link":"https:\/\/quotulatiousness.ca\/blog\/2012\/11\/17\/steve-landsburg-says-paying-off-the-national-debt-would-be-a-bad-idea\/","title":{"rendered":"Steve Landsburg says paying off the national debt would be a bad idea"},"content":{"rendered":"<p>Here&#8217;s an <a href=\"http:\/\/www.thebigquestions.com\/2012\/11\/16\/how-high-should-taxes-be\/\" target=\"_blank\">interesting argument<\/a>:<\/p>\n<blockquote><p>How high should taxes be? High enough to cover expected outlays going forward \u2014 but no higher.<\/p>\n<p>That\u2019s because any additional revenue would be used to pay down the federal debt, which is a bad idea. It was almost surely a mistake to run up this much debt in the first place, but now that we\u2019ve got it, the best thing to do is to keep it forever.<\/p>\n<p>Here\u2019s why:<\/p>\n<p>Every $100 in outstanding debt commits the government to making payments with a present value of $100, and hence to collecting tax revenues with a present value of $100. In a world where the interest rate is 3%, the options include collecting (and paying off) $100 immediately, or $50 this year and $51.50 next year, or $11.38 a year for ten years running, or $3 a year forever. Because deadweight loss (i.e. the economic damage due to the disincentive effects of taxes) is roughly proportional to the square of the tax rate, it turns out that the latter \u2014 the policy of paying interest forever without ever making a principal payment \u2014 is (at least roughly) the policy that minimizes the present value of deadweight loss. <\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>Here&#8217;s an interesting argument: How high should taxes be? High enough to cover expected outlays going forward \u2014 but no higher. That\u2019s because any additional revenue would be used to pay down the federal debt, which is a bad idea. It was almost surely a mistake to run up this much debt in the first [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[84,13],"tags":[71,369,118],"class_list":["post-17809","post","type-post","status-publish","format-standard","hentry","category-government","category-usa","tag-debt","tag-interesting","tag-taxes"],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p2hpV6-4Df","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/17809","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/comments?post=17809"}],"version-history":[{"count":1,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/17809\/revisions"}],"predecessor-version":[{"id":17810,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/17809\/revisions\/17810"}],"wp:attachment":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media?parent=17809"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/categories?post=17809"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/tags?post=17809"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}