Does everyone agree with this?

1. The cost of debt raised to support a given transfer program is just the future value of the cost of taxes to support the same transfer program.

2. The cost of taxes to support a given transfer program are distributional and incentive costs. These can of course have second order effects.

If you accept both 1 and 2, is it fair to say that unless you're taking an individual perspective - like the way a family looks at its debt - the only cost of debt is distributional and incentive costs (and their associated second order effects)?

And further, is it safe to say that we all agree that since our society is composed of borrowers (all of us, when it comes to public debt) and lenders (bondholders) it's best not to think about public debt the way we think of a family's debts?

I don't care about Krugman.

This is right, right?

UPDATE: OK, let me clarify #2 a little. We call taxing the rich to give to the poor "redistribution" and we talk about the distributional effects of taxation. Why is it then not right to call taxing a guy in period 6 to pay a bondholder in period 6 a "distributional issue"? Why is it not right to observe that all debt does is move this "distributional issue" forward in time?