The New York Times, with its insufferable class and elite bias, recently pondered economic policy–“How House Dems Plan to Raise $2.9 T”
Gee, I wonder how they will get the money? Maybe they can find some spare change under the cushions of the couch in the Oval Office? Perhaps Nancy Pelosi can hold a bake sale for her campaign contributors in Silicon Valley? Oh, I got it. Chuck Schumer can set up a lemonade stand on Wall Street where his patrons can kick in some jingle.
With Congress debating President Biden’s $3.5 trillion spending bill, we can see all of the rottenness that permeates our elite political and media institutions. A perfect encapsulation of Beltway consensus when it comes to spending money on anything besides tax cuts, Wall Street or the Pentagon is the Democratic Senator from West Virginia. In a widely circulated op-ed in the Wall Street Journal in early September, Senator Joe Manchin expressed his opposition to the budget bill, warning of excessive spending and inflation. He also argued how spending today could leave the country ill-positioned for some future crisis.
With Congress, it’s a given that they are thoroughly corrupt but even more scandalous is the corporate media. Our founders envisioned a Forth Estate that would hold elite policy holders accountable to the people rather than spew misleading propaganda.
And we really wonder why people don’t trust the corporate media?
The dishonesty is breathtaking. One of the tricks our policy makers play is to claim that the United States is like a household and is budgetary constrained when it comes to spending. And, of course the corporate media plays along. Thus we can see the class composition of the corporate media in their reporting on such topics.
For anyone who understands Modern Monetary Theory (MMT) this “conventional wisdom” is maddening. Repeat after me–Federal taxes don’t fund Federal spending. I never tire of asking people about the ongoing Wall Street Bail-Out: Where do the trillions of dollars come from that we continue to shower on the banks? Meanwhile, where did the $21 trillion come from that we lavished on the military/industrial/complex during that whole war on terror thingy?
The US’s response to Covid has definitely challenged the conventional wisdom on government spending to the point where even writers like Ezra Kline will honestly admit that the US is not budgetarily contained. “I think there’s a lot of fear that if it becomes known. If it becomes believed…that whatever we can do we can afford that that will be used irresponsibly…and create a lot of real problems like runaway inflation…The profession wants to say, ‘No, we knew all this,’ but in fact they haven’t been saying it because they’re a little bit afraid, in my view, of what people will do with these ideas if they get hold of them. If they’re sort of not protected by the responsible economists placing boundaries on what is and isn’t sober-minded policymaking.”
In other words, MMT reveals something that is simultaneously obvious within the economics profession but too dangerous to share with anyone on the outside. As a sovereign currency issuer the United States prints money into existence and how we spend the money are political choices. All of the rest of it is propaganda so that the little people don’t get any silly notions in their heads about a different world.
Even worse, Congress has invented arbitrary budgetary rules to artificially limit the amount of money they can spend on good things. Just because. For instance there’s PAYGO. PAYGO is deeply conservative and creates a structural and tactical advantage for Republicans and Blue Dog Democrats. Basically, the PAYGO rules require that any new outlay must be “paid for”—that is, it must not increase the projected deficit. In practice, this means that additional spending has to be offset, either by increased taxes or by cuts in other spending. PAYGO, in short, represents the discredited assumptions of the past restraining the expansive imperatives of the present and the future.
But this kind of thinking is madness. We should be investing in the human and physical potential of the economy, not obsessing over deficits. Keynes, said it best: “Anything we can actually do, we can afford.”
The money is always there to spend on whatever we want to spend it on. Just as a thought exercise, imagine that if in response to the pandemic we responded by pouring money into healthcare systems, or allowed Medicare to use its bulk purchasing power to negotiate lower prescription drug prices, or more radically, transferring wealth from the richest to the poorest by paying Americans to stay home, be safe and care for their families and neighbors?
How we spend money is the ultimate political choice, and if you’re playing at home, remember that your representative’s and senator’s vote reliably for war and Wall Street. Vote accordingly.
Update: Renegade economist Michael Hudson explains the calculation behind the spending bill.
“America doesn’t build infrastructure these days unless it’s monopolised. This is the political fight going on in the United States now. President Biden has a infrastructure plan that he’s scaled down from six and a half trillion to three and a half trillion. And essentially the bulk of the Democratic and Republican Party said if we can’t privatise infrastructure and make it a rent-extracting monopoly, we’re not going to do it, and we’re going to block the government from doing it. So in the United States, they’re going to have high priced infrastructure, high-priced health care and high-priced education while China is going to have low-priced transportation, low-cost infrastructure, free education, public health care. And you’re going to have a very high-cost United States unable to compete with the rest of the world. All it can do is make military threats or financial threats. If it tries to impose sanctions as it’s imposed on Russia, China and other countries, these are going to serve as protective tariffs for foreign countries.”