Many economists (perhaps even those who agree with us) refuse to talk about the national debt and government deficits the way we do on this blog. Instead of boldly challenging the assertion that the U.S. faces a long-run debt (or deficit) problem, headline progressives typically do what Jared Bernstein did in his column today — i.e. they pay “obligatory” tribute to the Balanced Budget Gods, thereby reinforcing the case for austerity at some point in the not-so-distant future when we will be forced to to deal with this very bad thing called the government deficit. Followers of my work here and on Twitter know that I refuse to pay homage to the Balanced Budget Gods. Instead, I prefer to shift the burden of proof onto those who contend that the U.S. faces a long-term debt or deficit problem....
Charles Hayden: "God Bless our Warrior-Queen."
Amen to that.
I think eventually females get us out of this somehow or at least start to play a key role ... rsp,
ReplyDeleteFYI, the article link did not work for me.
ReplyDeleteAnyone who believes in the balanced budget cannot do basic maths. Here’s why.
ReplyDeleteGiven the 2% inflation target and given real GDP growth of say 2%, the debt and monetary base will shrink at 4%pa relative to GDP unless they are topped up via a deficit. So if the debt and base are to remain constant relative to GDP in the very long term (which they do, roughly speaking) then a balanced budget in the long term is a mathematical impossibility.
That’s nothing to do with politics. It’s nothing to do with the pros and cons of MMT. It’s just simple maths.
It also seems that in order for the govt to know exactly how much it will take in, in order to match its spending, it will have to have more control over incomes. If Im setting the rate of tax on your income but someone else is the primary determinant of your income, then they essentially control what I take in. To have a truly balanced system (which is not what the Rs want btw, they want one where the govt keeps getting less and less each year) the govt must have more determination of incomes. Think THATS gonna happen?
ReplyDeleteLink to Kelton post fixed. Thanks, Brian.
ReplyDeleteUm...your blog is not the only blog that talks that way, Stephanie. Plus, you were pretty weak on an interview with Lauren Lyster of all people, when she pushed you on gov't spending and you said, "Well, we don't have to spend, we can just do more tax cuts."
ReplyDeleteI don't call that weakness, Mike. I didn't run away from defending higher spending. I simply pointed out that MMT does not equal bigger gov't, which is a common refrain from people like Lauren. It's clearly where she was going. So i shut it down.
ReplyDeleteI also didn't say (or imply) that there aren't other blogs that defend deficit spending that way you do here, Bill Mitchell does at Billy Blog, Warren does, Neil Wilson does at MM, Dan K does at RE, Randy does at GLF, etc., etc.
I'll try to do better.