Robert J. Samuelson's Aug. 28 op-ed, "The truth about tax 'reform,' " expressed concerns that the costs of today's deficit spending by the government "would be transferred to future generations" and that increased government borrowing would lead to "crowding out of private investment."
While about one-third of our public debt is owned by foreigners, that is a net benefit to the United States because such increased demand for Treasury securities raises their price and thus lowers the interest costs to the government and to the American taxpayer. If foreigners were to reduce their investment in Treasury securities, U.S. investors would increase their holdings, which we would owe to ourselves.
“Crowding out” of private investment happens when government spending or taxing increases, regardless of whether the increases are financed by taxes or borrowing.
Francis X. Cavanaugh, Washington
The writer was chief executive of the Federal Retirement Thrift Investment Board from 1986 to 1993 and an economist and federal debt manager at the Treasury Department from 1954 to 1986.