Vintage deficit

The headline struck me. ''How fast should United States try to pay off its $ 250 billion debt?'' The paper was the Monitor and the date was April 18, 1947 - two years after World War II. The US, many felt, carried a crushing debt load. In question-answer form I interviewed my friend Alvin H. Hansen, a famous Harvard economist - hence a yellowed clipping in my files.

''Professor Hansen,'' I began briskly, ''we haven't had a balanced budget for 18 years. As an authority on debt management, what should we do now?''

''You mean, should we pay the debt off?'' he asked half smiling. ''Yes,'' I replied astonished. ''I suppose we have to pay off a national debt ultimately, don't we?''

The answer surprised me: ''Not necessarily,'' he said. England never retired its debts from the Napoleonic wars. The important thing was the size of the debt in comparison with total national production.

''Question: You think the US economy is a good risk, then, despite our huge debt?

''Answer: No government in all history, no private institution, ever enjoyed a higher credit rating than the United States does now....''

So the exchange went, and as I read the dialogue of 1947 I reflect that the US has gone through tough times before. In the current issue of The Brookings Review, for example, Dr. Alice Rivlin, former director of the Congressional Budget Office, notes that ''the federal deficit soared to $193 billion, or 6 percent of the gross national product, in fiscal year 1983.'' Is she frightened? Like Dr. Hansen, she sees warnings that something is out of kilter and that strong measures are needed. Dr. Hansen had said: ''I think that nearly all thoughtful economists will agree that the debt, under responsible management, doesn't stand in the way of high-level production and employment and an ever-rising standard of living.'' Yes, but, I reply, some people think America is living in a fool's paradise. He answers:

''That depends. Primarily it depends on the goods we turn out. It depends on our capacity year after year to put real values behind the flow of current money income and of liquid assets held by the public by volume of output.''

The accelerator pedal of inflation had to be adjusted cannily with the brakes of deflation. And other factors: ''If national income distribution is so unequal , for example, that the public cannot buy the goods produced, we experience deflation and unemployment.''

I tried to sum it up: ''You feel the present debt will be harmful unless checked?'' Answer: Yes, if it grows to a size in relation to national income where the liquid assets become inflationary.... We need wise control of expenditures, taxes, and borrowing. We need rapid output of new homes, clothing, and durable consumer goods. We need continued high taxation....

It was the end of the interview and I asked, ''How about the budget? Wouldn't you curb inflation by balancing the budget?''

''Not merely balancing it,'' he replied emphatically, ''overbalancing it, to produce a surplus. Taxes should be kept high, I believe, and revenue surplus should go largely to debt retirement. ... Currently, it is more important to reduce the public debt than to reduce taxes. I do not think this is the time to reduce taxes.''

''Question: And then?

''Answer: Sooner or later the present re-stocking boom will turn the other way. We shall face the possibility of a new depression....''

There it was, the ups and downs of the business cycle, as seen in the exciting days after a world war, by what was vaguely called a ''liberal.'' I thanked Dr. Hansen, and he commented ''that the job of handling our big debt certainly is no easy one. It cannot be achieved by simple rules that are supposed to operate without anyone at the controls. It is a continuing task. It requires flexible adjustments to changing conditions. The modern economy will not run itself. But the task is a manageable one.''

Well, that was the story of the debt problem 37 years ago, a bit like what it is today. And so I turn back to Alice Rivlin in her current article, ''Why and How to Cut the Deficit.'' She says, ''... large deficits are bad news for America. They are enemies of economic growth, impediments to American competitiveness in the international marketplace, and aggravators of the increasingly grave international debt problem.''