If there’s one indication of the radical new direction in which Sanders plans to take the Budget Committee, consider the most eye-popping minority staff hire so far. As his committee staff’s chief economist, Sanders chose Stephanie Kelton, a leading proponent of Modern Monetary Theory (MMT). It was Kelton who coined the term “deficit owl,”—in contrast to “deficit hawks” and “deficit doves”—to describe those, like her, who “don’t concede we need to balance [the budget] at all,” according to the Washington Post’s Dylan Matthews.
Matthews writes that “owls” such as Kelton and the University of Texas’s James K.Galbraith “see government spending that leads to deficits as integral to economic growth, even in good times.”
The MMT has existed far outside the Overton window of fiscal policies pushed by either party. Galbraith described being “laughed at” by “hundreds” of “economists” during a panel at the White House in April of 2000 for his assertion that the surplus then run by the government posed a danger.
Reporters suggest the hiring of Kelton by Sanders was a move towards this school of economics.
Not so according to Sanders’s staff. Sanders does believe that deficits matter, they insist. When I raised MMT on two separate occasions, Sanders aides chafed at the notion, proclaiming their boss, far from an “owl,” is a “deficit hawk.”
The American Prospect
How Bernie Sanders, In New Role, Could Make Wall Streeters Very, Very UnhappyAri Rabin-Havt
"Sanders, according to staff members, has a long history of taking stands against deficits—but in distinctly progressive terms. They cite rising deficits as part of the reasoning behind his opposition to the war in Iraq, his votes against the 2001 and 2003 Bush tax cuts, and his opposition to Medicare prescription drug coverage because the legislation did not allow program officials to negotiate with pharmaceutical companies for lower drug prices.
ReplyDeleteBut Sanders is not opposed to running deficits for spending that could produce future gains, such as new and rebuilt infrastructure, or to pull the nation out of economic downturns. This position is one articulated even by leaders of centrist Democratic institutions."
Makes perfect sense.
There is no "good news" in this article imo...
ReplyDeleteThe money quote: Sanders aides chafed at the notion, proclaiming their boss, far from an “owl,” is a “deficit hawk.”
ReplyDeleteAnd there you have it.
... his new position as ranking member of the Senate Budget Committee
Uh, Bernie is the ranking minority member of the committee. Which means he has zero power, and which means Steph has zero power. It'll be a great learning experience for Stephanie, but that's about as far as it goes. She's not going to be running things.
On free trade: Sanders plans to examine the budgetary impacts of past trade deals to help make the case against the Trans Pacific Partnership and the granting of “fast track” authority
But no mention of introducing a bill to bring back tariffs. Well, if there are no tariffs, that's free trade!!!
In other words, Sanders is going to give lip service to opposing free trade, but he won't actually DO ANYTHING about it, like fight to institute tariffs. Ditto every other congresscritter who claims to oppose free trade -- not one of them is proposing to bring back tariffs. Instead, they merely want to tweak the free trade bills a little bit -- so called "fair" trade, which has never actually existed and never will exist.
I'm not impressed with Bernie at all. His voting record (as opposed to his rhetoric) is closer to Nixon than to Eugene Debs.
Deficit hawks own the government, at least rhetoric wise. Practically speaking the owls do get their way to a great degree--viz, $18 trillion "deficit". The problem is that the public is conditioned to think any deficit is bad, even if it's only $10. Go and ask any random person if deficits (even small ones) are bad. Ten out of ten will say yes.
ReplyDeleteI hope Stephanie will make inroads and will help frame this in a way that can be grasped by the masses. That's one hell of a tall order, though. I'm not hopeful.
Nothing is changing. Business as usual.
ReplyDeleteAs Matt usually says "there are only a handful of us...". As long as that does not change all this 'hope' is just wishful thinking.
I love to read NA blogs because of the usually overoptimistic and idealistic (almost childish sometimes, in a good way) nature of their ethos. Unfortunately it does not seem to turn out like that 95% of the times.
In order to get elected certain things must be said because the majority of the electorate is taught in public schools which teach orthodox economics.
ReplyDeleteIf he was quoted as saying that deficits don't matter, in the next election there would be commercials up skewering him. 30 second attack ads do harm before a candidate has a chance to make a case.
So even if Sanders knows that deficit-hawkery is complete rubbish, he is a politician and not a professor and doesn't have time to teach the entire population economics. He can however still enact laws and legislation that will change the way monetary system functions in law and also taught in schools so that in a generation or two, the old orthodox views are eliminated from the system. Congress is incredibly powerful in creating the system and rules that will eventually be studied and then documented in text books and taken for granted as simply the way things work.
Eventually, economists will study the system and create complex theories that simply assume deficit owlery because it is so obvious from the way government funds itself. But for now, the way the system works, with a gold standard type bond issuance before spending, deficits do matter.
We've documented, the one or two lines in the US Code that require bond issuance before spending. He could change that one line of text in any budget bill and it would allow the treasury to run overdrafts.
It is an interesting dilemma that we place our politicians in. People that don't understand the elect the leaders with specific instructions, often misguided.