In Paul Ryan and the “M” Word, New Deal 2.0's Richard Kirsch reports,
"USAction President William McNary, one of the most powerful voices of my generation, often reminds us that budgets are not about numbers; budgets are moral documents, a statement of our values and priorities. Paul Ryan, the Republican Budget Committee Chair, agrees with McNary’s attention to values, saying that the goal of his proposed budget plan is to '… leave our children and our grandchildren with a debt-free nation. It is a moral imperative.'"
"Moral imperative?" True or false?
MMT says false. The national debt is actually the total amount of nongovernment saving of net financial assets accumulated from previous deficits. The only way that nongovernment can net save is through fiscal deficits that inject net financial assets into nongovernment. Balanced budgets inject no net financial assets, and budget surpluses reduce net financial assets.
Paying off the national debt would amount to destroying nongovernment net savings denominated in US dollars. Doesn't sounds so good in that light now, does it?
Bill Mitchell explains:
"It is impossible for the private domestic sector to be saving overall (a necessary condition to reduce its overall level of indebtedness) if the external sector is in deficit and the government is in surplus. It would violate the National Accounts.
"If both the private domestic and government sectors tried to reduce their net positions and push into surplus, while growth was being additionally drained by the external deficit, then the negative income adjustments would push one or both of them into deficit (depending on what was being cut and their starting positions). The private domestic sector would face reduced savings while the government sector would face lost tax revenue and increasing welfare payments.
"So it is impossible for them both to be paying back debt (in net terms) at the same time with an external deficit."
With the amount of private domestic debt outstanding, the Ryan budget would push the US into depression unless the US would become a net exporter to the degrees of offsetting the desire of the public to save and pay down debt while government in retrenching. The only way this would be possible is by depreciating the US dollar to the degree that the price of gas would tank the economy.
So we would have a depression after removing the safety nets. Moral? More like stupid.