It has gone up every year since 1958.”

Well that might better be called “partial history of the debt”. Because if we look at this application from that same site we get a different take:
http://www.treasurydirect.gov/NP/NPGateway
“Total Public Debt Outstanding” = “Debt Held by the Public” + “Intragovernmental Holdings”. And “Debt Held by the Public” is by far a better measure of the effect of current Federal budgeting on world debt markets. Precisely because Intragovernmental Holdings are by and large not marketable (supposedly their weakness). If you use the web tool at the above link which is Treasury’s “Debt to the Penny” and insert start date Sept 30, 1999 and end date Sept 30, 2010, thus capturing the last full Fiscal Year of the Clinton Presidency you will see total “Debt Held by the Public” on the former date at $3.631 trillion and the latter at $3.405 trillion, or down by more than $200 billion over the year. Now true enough that same table shows “Total Public Debt Outstanding” actually going from $5.656 trillion on the former date to $5.674 trillion and so narrowly justifying your claim “it has gone up every year”, this is entirely due to the fact that Social Security surpluses end up scoring as current year Public Debt even as they represent obligations that might not be due for thirty or more years. But it is at least conceptually odd to claim that excess collections of Social Security FICA in 1999 that ended up adding to Intragovernmental Holdings and so Total Public Debt Outstanding make the undoubted fact that Clinton’s final full fiscal year showed a clear General Fund surplus and so a reduction in Debt Held by the Public “the lie that wouldn’t die”.

I am afraid too narrow a focus on the Debt Clock/Total Public Debt/Debt Subject to the Limit simply misses the counterintuitive effect of Social Security Trust Fund surpluses on that total.

Social Security surpluses score as reducing current year “Unified Budget” deficits even as they increase current year “Total Public Debt”. An odd result perhaps but doesn’t make true claims about Clinton surpluses undying lies. You are just using the wrong metric.

What Baumol studiously avoids, which the classical economists, of course, focused on, was economic rent. What distinguishes the New Deal political economy from the Reagan economy is that the New Deal, through taxation and regulation was at pains to restrain the destructive potential of the rentier class. The classical economists, living in a political economy dominated by rentiers of the landed aristocracy and landed gentry, could scarcely overlook the implications of giving free rein to the greed and stupidity of the enormously wealthy.

Any sensible economic policy, of taxation or regulation, would divert economic rents to public purposes, and radically reduce the claims of the very wealthy. And, consequently, any sensible economic policy would be tantamount to revolution. The Democratic Party establishment is unlikely to get behind revolution, even if the Republican Party adopts pre-emptive counterrevolution as its policy. So, the U.S. will continue driving toward the cliff, and almost certainly go straight over the precipice.

Here in Italy, we have a mostly public (statalized) health service. This would be an example of a public service where “productivity” did rise in half a century.
The Italian state had an option: a) it could arguably use the productivity increase to keep falling real prices and a health service fixed at some “real” level, say that of 1960; or b) it could use the productivity rise to actually deliver better care thanks to new technology, but at a price that rises in real terms but is arguably fixed in relative terms.
I think that most people would call A disinvestiment and B constant policy, since in reality most of us think of technological increases as something external to policy.

Long answer:

“Baumol disease” is just a clumsy way to explain something that was already obvious to classical economist through the labor theory of value: when productivity increase in one sector, the marginal utility of the stuff produced in that sector decreases.
For example, suppose that in country A a new technology is created, thorugh which t-shirts can be produced at half the cost (+100% material productivity in that sector), but the technology in throusers-making is unchanged (+0% productivity in that sector).
At some point there will be a lot of t-shirts and very few throusers, hence the marginal utility of t-shirts falls: people will be willing to pay pay very few for a new t-shirt. Hence, people in the t-shirt industry will be underpaid and/or will lose their jobs for “luddite” reasons. Those people will change jobs and become throusers-makers; this will go on until t-shirt makers and throusers-makers will have similar incomes.
Thus the “Baumol disease” is not at all a disease, it is the actual “ivisible hand” that drives resources from a field that had an increase in productivity (and hence a decrease of “added value per piece”) to one that, at the new conditions, produce more “added value”.
Thus in terms of “added value” a society has only a general increase of productivity, and not different productivity increases “per sector” (as long as the market works correctly), and real wages in the whole economy tend to grow at the same speed (excluding the period of “adjustment” to the new technology, when the market is not in equilibrium and in fact peple are supposed to change field of production).
In other words the distiction between sector that had an increase in productivty and sector that hadn’t is moot.

But if you speak of “real” spending, you have to take in account that government worker’s wages will usually rise whith productivity, so government spending will also rise with productivity.

Unless you expect government workers to have the same “real” wages they had in the ’30s: maybe some will even be able to buy black and white TV!

In other words government spending will always rise in “real” terms, the important variable is spending in relative terms (that is, as a % of GDP).

Now if you wanted to tell me that our measurements of the economy are over focused on GDP or other values based around “How much goods/services/money is there” and under focused on various metrics of employment and distribution I’m very sympathetic. But it seems to me that a discussion of taxes and spending levels over the long term is exactly where big aggregates of money are sensible metrics. Per capita is just baffling.

On the issue of how to Keynesianism despite racheting effects, the traditional way is automatic stabilizers. We actually do have these to a limited extent in the US. A progressive income tax collects much less money as income drops, while means tested aid programs pay out more. In a boom, the same policies become increased tax revenue and decreased spending.

We just need much bigger stabilizers.

Paved roads? Indoor plumbing? Decent lifestyles for the retired? Health care for all citizens (leading more of them to live long enough to retire)? Educational opportunity regardless of the students’ parents’ personal wealth? Feeding all hungry children in the country regardless of their parents’ personal wealth? Third world and preindustrial countries can’t afford these things, but countries that can afford them are likely to want them.

Of course, if more of the nation’s wealth is shared by the working class, the need for some of these things to be publicly paid for might diminish, but that’s not the country we have. Inequality has been growing so much faster than income itself that the working class has actually been losing ground since Reagan or so.

Also, a rich country might need to spend more to defend itself and enforce the law because it is a more attractive target for criminals of all sorts, both foreign and domestic. This effect might specifically depend on being *richer than other countries* as much as on being absolutely rich.

Personally I think there shouldn’t be, but am open to persuasion.

It has gone up every year since 1958.

Note:”Includes legal tender notes, gold and silver certificates, etc. “

If you are reckoning debt you don’t just count the bank loans but the credit cards, iou’s, pawn tickets and the mob marker you’re paying the weekly vig on.

Always. The democrats are always better Watson.