(FORTUNE Magazine) – Could the national debt soon be an endangered species? Although $7.5 trillion in outstanding notes and bonds won't fade away quickly, the capital is agog with the notion that both the deficit and the debt might be wiped clear in the foreseeable future. It sounds great. But would it actually be great? Intriguing question.

Sure, the government would no longer have to earmark $215 billion a year for interest payments. And the lack of government competition in the mortgage market would allow individual homeowner's rates to fall further than they already have in these boom times. But the Federal Reserve, which relies on Treasury securities to alter the money supply, would have to find a new way to manage monetary policy. T-bills and federal bonds--safe harbors for banks, individuals, and foreigners who want to park their money in the U.S.--would be a thing of the past. "Treasury securities are a bit like gold," says Robert D. Reischauer, former head of the Congressional Budget Office. "They are a haven in a nervous time." They're also a great way to maintain the value of the dollar in world markets.

Before long, politicians in both parties would see dark linings in the silver cloud of a zero-debt world. And not only because the bond market wants the government to continue issuing 30-year notes to keep the economy liquid. "There isn't a financial planner in the world who would tell you that borrowing is bad," says Stanley Collender, managing director of the federal budget group at Fleishman-Hillard, a communications and consulting firm. "A little leveraging is probably good."

Democrats' second thoughts: Paying down the debt is fine, but it's not the answer to all of society's ills. We have social problems that are far bigger than any economic problem created by government debt. Let's clean up the environment, invest in education, and provide health care for the uninsured.

Republicans' second thoughts: Paying down the debt is fine, but it's not the answer to all of the economy's ills. The strength of the country depends more on low taxes than on low debt. Let's promote economic growth by using those surpluses to reduce our tax burden.

Already some lawmakers are concluding that a no-debt government isn't the no-problem proposition that President Clinton and his economic advisers portray. "There are real problems with the no-problem analysis," warns Representative Rob Portman, an Ohio Republican on the House Ways and Means Committee. "If the Social Security trust fund surpluses are used to reduce the debt, then the surpluses are not going to be there when the baby-boomers retire and the big Social Security obligations are due." The devil, and the debt, are in the details.

All this will likely serve as a brake on the drive to eliminate the debt, so don't hold your breath. Consider the healthy skepticism of Manhattan real estate developer Douglas Durst, whose late father started the national debt clock near Times Square in 1986. "In those days the clock ran so fast that you couldn't even see the numbers," says Durst. (He says his father, Seymore, spent $200,000 to build the clock because he wanted Americans to know how bad the debt was getting.) The clock does have the ability to deal with a sudden drop in the debt, he says. "We can run the debt clock backward, and I would certainly look forward to doing that." But he's making no plans to dismantle the clock. "I think it will go down slightly. But then it will start back up again. The politicians will find ways to spend the money."

DAVID SHRIBMAN is Washington bureau chief of the Boston Globe and a Pulitzer Prize-winning political reporter.