NPR has a look at an unreleased government report written at the close of the Clinton administration. The premise? What would happen if the U.S. paid off the national debt entirely.

The report is called “Life After Debt”. It was written in the year 2000, when the U.S. was running a budget surplus, taking in more than it was spending every year. Economists were projecting that the entire national debt could be paid off by 2012.

This was seen in many ways as good thing. But it also posed risks. If the U.S. paid off its debt here would be no more U.S. Treasury bonds in the world.

“It was a huge issue.. for not just the U.S. economy, but the global economy,” says Diane Lim Rogers, an economist in the Clinton administration. [...]

Yes, there were ways for the world to adjust. But certain things got really tricky.

For example: What do you do with the money that comes out of people’s paychecks for Social Security? Now, a lot of that money gets invested in –- you guessed it — Treasury bonds. If there are no Treasury bonds, what do you invest it in? Stocks? Which stocks? Who picks?

In the end, Seligman concluded it was a good idea to pay down the debt — but not to pay it off entirely.

“There’s such a thing as too much debt,” he says. “But also such a thing, perhaps, as too little.” [...]

The report was intended to be included in the official “Economic Report of the President” — the final one of the Clinton administration. But in the end, people above Jason Seligman decided it was too speculative, too politically sensitive. So it was never published.

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