Presumably, Congresswoman Allyson Schwartz of the 13th District in Pennsylvania is a Democrat in good standing. She did get to make a speech at the Democratic National Convention in Charlotte and she is the No. 2 Democrat on the House budget committee. The reason I put a question mark in the title to this post is because I have questions about any Democrat who still blathers on about balanced budgets and dealing with the deficit.
Let me explain just briefly my long-standing animosity (ever since Al Gore went on about balance in the '90s) towards the very concept of a balanced budget, because, as anyone who's paid close attention to the formation of local government and state budgets (which are to be balanced by law) knows, balancing a plan is easy, if you're clever enough to put estimated numbers in the right places. Never mind that everything can be neatened up by shifting numbers to later or prior years. In other words, the balanced budget, an attractively alliterative phrase is a red herring. It's supposed to attract lots of attention, so the really important stuff doesn't get considered because time always runs out.
The U.S. Congress has not passed a budget for quite some time and Washington has not collapsed. So, we have hard evidence that it's really not all that necessary to have a plan. But, plans earn kudos. And that's why Representative Schwartz has been recently in the news thanks to an award from the Concord Coalition, which calls her an Economic Patriot because of her bipartisan effort to get a budget approved.
Specifically, the Concord Coalition approved because:
That plan cuts the deficit by $4 trillion over the next 10 years with a balanced approach—two-thirds of the deficit savings from spending cuts and one-third from tax reform. The budget alternative also repeals sequestration, replacing the automatic, across-the-board cuts due to begin in Jan. 2013 with a comprehensive, balanced plan for deficit reduction.
Why this whole thing is a bad idea, even though our President has also chimed in and probably looks forward to the sequestration making it possible to get rid of some military hardware we don't need, is well explained by one Art Patten, a frequenct commenter at the Modern Monetary Theory (MMT) blog known as
Mike Norman Economics, in a letter to Representative Schwartz, which was
posted on the Mosler Economics site.
Although praising the Representative's work, Patten explains that:
I can’t bring myself to congratulate you on the award from the Concord Coalition, an organization that unwittingly works to undermine public purpose.
Like so many organizations, economists, politicians, and citizens, the Coalition fails to recognize that, as one writer recently put it, ‘Everything changed in 1973 [when President Nixon ended the Bretton Woods monetary system], except the economic textbooks.’
We are no longer on the gold standard. The U.S. government doesn’t ‘owe’ anybody, inside or outside the country, anything but U.S. dollars, which it is the monopoly supplier of.
Now, that's an unfortunately inartfull statement -- "which it is the monopoly supplier of."
A preposition is not supposed to come at the end of a sentence. So, it distorts the critical point that the cow which produces the milk does not incur a debt when it suckles the calf.
While I often refer to money as a figment of the imagination, Patten sees a slightly different role being played by the imagination.
The Coalition and many other groups witness the large budget deficits of recent years and imagine that the federal government faces the same constraints as any household, business, or state or municipal government. But that simply isn’t the case. The monopoly supplier of U.S. dollars can run deficits indefinitely. And if those other sectors of the economy want dollars to save, invest, or spend (and if other countries want to sell us stuff), they all need the U.S. government to run optimally sized deficits.
In other words, the federal government has to send out more dollars than it collects so there's a sufficient cushion to accommodate what people want to do with them. Just in time delivery probably doesn't work real well when nobody's quite sure what to expect.
Patten's conclusion is valid, I think.
The real burden we are imposing on future generations (and today’s lower and middle classes) is not some future date with the fiscal pied piper, but long-term and completely unnecessary opportunity costs, due in large part to the myth that we must reduce and limit federal deficits.
In other words, lots of things aren't getting done because there's not enough money moving through the economy to pay for them. And Patten seems to think that the federal government is collecting too much and, if people were taxed less, dollars would be freed to move about. I'm inclined to doubt that. Some people are hoarding money for the simple reason that they still think that, if there's less floating around, what they have in their vaults will be worth more. That the money sitting in the bank is worthless just doesn't register. So, something has to be done to make believers out of the hoarders and make them let go. Taxing their unearned income might do the trick. If not, the federal government will just have to keep pumping money out and make sure that the hoarders don't get any more.
That, fortunately is way beyond my pay grade. Of course, I may be entirely wrong. If so, I'd love for someone to show me and explain why money moving like molasses is good.