Professor Stephanie Kelton, in her book, “The Deficit Myth” explains “Modern Monetary Theory” [MMT], and provides examples of desirable social programs suitable for today’s economy which can be implemented after the Democrats win the Presidency, take back the Senate, and retain the House.
All of these programs are popular with Democratic voters, and after they are explained to them, will be popular with Republican and Independent voters.
These programs include: Medicare for All, Tuition Free College Education at all State run Universities, and Community Colleges, a federal guarantee that Social Security will be funded indefinitely, and benefits never reduced, a Green Revolution, and most importantly, a guarantee of a well paid job, with adequate benefits for anyone who wants to work.
YES! Democrats can and should guarantee all of this to the American voter.
A bedrock principle to understanding how MMT works is to understand the difference between a currency issuer, and a currency user. The Federal Government is the only entity in the United States with the legal authority to issue currency, ie: U.S. Dollars.
Therefore, it is the only currency issuer in the United States. State and local governments, the private sector, and the taxpayers cannot issue currency, and are all currency users. MMT recognizes that it is the Federal Government, not the taxpayer, that finances all government expenditures. Taxpayers do not pay for what the government spends. Income taxes should be used progressively to eliminate wealth and income inequality, not pay for needed government programs. Don’t confuse your need to balance your budget with that of the Federal Government. You cannot legally print money to pay your expenses. Neither can private industry.
The danger of a growing government deficit is a myth. The Federal Government, as the only currency issuer, has a virtually unlimited access to dollars, and can payoff the entire government deficit any time it has the political will to do so. Congress merely has to pass legislation eliminating the “debt ceiling,” and mandate that the Treasury, and the Fed pay for any government expenditures approved by Congress, and enacted into law. Thus, the Federal Deficit will disappear, not by magic, but because, it never really existed in the first place. It only exists because Congress passed a law establishing a “debt ceiling.“ Repeal the “debt ceiling “ and the deficit is gone.
Instead of wasting its time worrying about illusionary budget deficits, Congress can now devote its time and energy building an economy that benefits all of the people, not just those at the top.
However, Congress will have to closely monitor inflation in order to insure the new growing economy does not overheat, and cause hyper-inflation.
However, there is a limit on how much an economy can grow, and this is expressed in the economies real access to productive assets, an adequate supply of educated workers who are willing and able to work, and use their skills to build an economy that produces the goods necessary to provide society with the products required to sustain a decent standard of living for the entire population, not just the 1% at the top.
Of course, physical assets are also necessary. This includes natural resources [oil, gas, minerals, lumber], and physical resources [infrastructure, roads, bridges, factories, hospitals, schools, etc.]. The United States has access to all of the necessary physical resources.
The proposed Federal Jobs Guarantee can help supply the workforce necessary to rebuild the infrastructure, and construct, and install solar panels, and wind farms necessary to reduce our carbon footprint, and lead to a greener environment for everyone.
JOBS! JOBS! JOBS!
Problem solved. Congress need only pass legislation guaranteeing a good job for every citizen who wants to work. The Federal Government will set the basic wage, and benefits; however, state, local governments, and local communities will determine the kinds of jobs offered, in accordance with state and local needs. In the current economic climate a Federal jobs guarantee would dramatically reduce unemployment, and create a major economic stimulus helping the overall economy to continue to grow. If there are millions of people looking for paid work and our economy has the capacity to produce more goods and services without raising price, then we have the fiscal space to bring those resources into productive employment. [Kelton, at pg.235]
Also when the economy begins to improve private employers will start to hire workers away from their government funded jobs; thus, these workers will no longer be on the public payroll, automatically helping to curb any rising inflation.
Medicare for all is affordable. Congress need only enact legislation mandating that the Treasury, and the Fed pay for the health care expenses authorized by Medicare. Medicare should be authorized to establish the amount it will pay health care providers for the services they provide. This should include monetary limits for prescription drugs. Of course, the limits imposed by Medicare should be sufficient to provide quality health care for the entire population. The private sector would no longer br required to provide health insurance as an employee benefit. This means private employers would retain more of their profits, some of which could be used to raise the wages of their workers.
Free college education at public universities, and community colleges is also affordable under MMT. Once again all that is necessary is that Congress enact such a program into law. The Department of Education or other administrative agency would set limits on the amount of tuition they will pay to the educational institutions for each student enrolled. Of course, this amount must be sufficient to pay the reasonable costs of a quality education. With a virtual guarantee of students and adequate financial resources, public colleges, and universities would be in a position to upgrade their institution by hiring the most qualified professors, and establishing quality research departments. They would be able to compete favorably with private colleges and universities.
The Green Revolution could also be funded by Congress authorizing funds for research and development of alternate sources of energy, like solar panels, wind farms. This would provide jobs for thousands of workers in development, installation and maintenance our new green infrastructure.
An economic program like the one stated above will benefit the entire country, and will inspire voters to elect Kamala Harris, as the first woman to be elected President.
For additional reading see: “Modern Monetary Theory,” 2nd Edition, by L. Randall Wray, and “Modern Monetary Theory and its Critics,” Edited by Edward Fullbrook & Jamie Morgan of the World Economics Association.
