Month: March 2021

[Preamble: Along with the prospect of a massive national infrastructure program has come talk of the necessity of raising taxes in order to pay for it—from Democrats as well as Republicans. That talk is a mistake. My apologies for writing the third post on this subject in the last month, but I realize I have failed to convey the importance of it. Perhaps it’s better to frame it in the negative: how balancing the budget produces not just suffering, but gratuitous suffering. ]  

The tax and budget debate and gratuitous suffering

Continuing to talk about federal deficits and taxation is  dull, particularly when politicians from Bernie Sanders to Paul Ryan trot out the same tired commonplaces about taxing the rich (Sanders) and saddling future generations with crushing debt (Ryan & his successors).  Arguments from Left and Right are both couched in the paradigm of either balancing the federal budget or courting future disaster. Stuff we’ve heard countless times before, and just as irrelevant now as in the past.

Cloaked by the dullness is the true human cost of decision-makers getting bogged down in  meaningless arguments about budget deficits and taxes, while those who bear the greatest costs of the decisions have little voice.

The bogging-down leads to what Modern Monetary Theory champion Stephanie Kelton terms “gratuitous suffering.” Kelton:

It is just about the worst kind of suffering, because we have the capacity to do better, and to do better for our fellow Americans. To do better by others.  And if we can improve economic life for millions of people without creating harm, why wouldn’t we do that? 

Gratuitous, because there is a way out, but getting out requires something that almost no one on the public stage is talking about: to shed the mindset of having either to balance federal spending with taxes, or having to rectify crushing debt somewhere down the road with even greater taxes.

If you—despite your generous impulse to provide tens of millions of people with economic relief through government spending—still worry yourself about terrible future costs incurred by relief given in the present, then just stop worrying. Worrying about balancing the budget keeps getting  in the way of real economic progress.

For a 5-minute primer on Modern Monetary Theory and how it does away with concerns over budget deficits, watch Stephanie Kelton below:

Continue reading “Budget Policy, Taxation, and Gratuitous Suffering”

COVID-19 Relief Bill draws another round
of pointless reiterations of
“how-are-you-going-to-pay-for-it?”

Those who had the patience and tolerance to wade through my earlier post on Modern Monetary Theory (find here) might not need to read the rest of this one. This one is something of a rehash of the reasons not to pay attention to the tired refrain, in respect to a government spending program, “how are you going to pay for it?”

Specifically, how are you (that is, we the taxpayers as distinct from zillionaires whose tax bills are barely a blip on their balance sheets) going to pay for the $1.9 trillion COVID Relief Bill, without bankrupting future generations?

It seems, from most of what I’ve been seeing and hearing, just about everyone on the political Left and Right is still buying  into “The Deficit Myth”—the fertile soil from which the how-are-you-going-to-pay-for-it commonplace sprouts. In the view of both sides, the National Debt looms as colossally menacing to American financial welfare as was Sauron’s redoubt Barad-Dur  to the welfare of the peoples of Middle Earth.

Interestingly, neither current Federal Reserve chairperson Jerome Powell nor past Fed chairperson and now Secretary of the Treasury Janet Yellen are sounding alarms about national debt risk caused by a $1.9 trillion economic stimulus.  Powell, to the contrary (and to the discomfort of fiscal conservatives dismayed to find out that Powell is not exactly Their Guy), has been advocating a big stimulus bill for months in order to head off another deep recession.

Continue reading “Stop Asking That Question!”