Tue Oct 7th, 2014 at 02:12:55 AM EST
Since those with great wealth hold most of the debt issued by the US Government in the form of bonds, and since they have disproportionate influence on Congress via large campaign contributions they could insist that the government buy back their bonds and retire them. But they don't because that is not what they really want. The main reason they hold this debt is that there are no alternative investments they find attractive. The USA desperately needs to build a renewable energy and transportation infrastructure before the cost of fossil fuels makes such an investment much more expensive, and building that infrastructure now would cap the cost of electricity, as there is no fuel cost for renewables, so renewables come on line first, per the Merit Order Effect. But this would cut into the profits from their fossil fuel holdings. The real reason they are pushing this faux debt crisis is to provide a reason to cut program they despise - namely anything that benefits the average citizen: food stamps, long term unemployment, Social Security and Medicare.
This Peterson Institute sponsored add claims: "88% of Americans will have more confidence in the economy IF THE UNITED STATES REDUCES ITS NATIONAL DEBT." If this is even true it is only because organizations like the Peterson Institute have spent so much money telling them it is true. In fact, seriously reducing the National Debt by reducing or eliminating the amount of US Government Bonds outstanding would cripple and crash the economy, as this asset class it the foundation for banks and finance. If a bank needs more reserves because it has just made a large loan or because assets on its balance sheet have just been shown to be impaired it is their US Government Bonds that they can 'repo' with the Fed or other banks most cheaply and reliably. And that is just one thing US bonds do. Paying off the National Debt would reliably crash the economy. It is an insane goal.