Early this morning, I appeared on CNBC’s Squawk Box to talk about Democrats’ new proposal to include a “billionaire’s tax” in their (ever-dwindling) list of budget “pay-fors.” Andrew Ross-Sorkin, one of the show’s hosts, asked me what I’d do if I were “king or queen for the day.” I should have started by saying that I would proclaim that henceforth the pay-for game shall be banished from this land. Unfortunately, Democrats dug in early, pledging that the entire Build Back Better agenda would be fully “paid for,” so it’s too late for a more sensible approach to drafting this legislation.
It's not MMT, it's not "envy". It is the same issue that countries are facing when the loopholes allow money to flow to tax advantaged sites, or to be harbored thru lobbied tax avoidance laws that shift the public's responsibilities onto those who don't have a level playing field to lobby for their own interests. It is related to what happens to countries with dollarized debt and are forced to privatize public assets (c.f. the saga of the economic hit men) or the outcome from the housing collapse of '08)
I’m sure you must have reasons for not just saying the truth about MMT on TV. I guess the neolib ‘truth’ is still too entrenched. Being a believer, hook line and sinker’, of MMT, it is so disheartening to still see this fight over the debt ceiling and this never ending ‘pay for’ nonsense. I applaud your stamina. I am convinced all our ‘leaders’ are ignoramouses and beyond hope. I would have given up long ago. Milton Friedman has been a curse on our nation.
Am I missing something here? Stephanie's 1998 groundbreaking paper showed that federal "Tax revenue" is an oxymoron. Why? Since the gov't runs deficits ($28.5 trillion so far), any tax receipts collected by the IRS get deposited in the Treasury's general account at the Federal Reserve, get credited against the spending that has already occurred, and, to keep the books straight, the credits offset the debits and the money simply disappears with a few computer keystrokes! There is no IRS piggy bank! If I'm understanding Stephanie's argument, this is why she argues so strenuously against "pay-fors." Federal taxes can't possibly pay for anything, although it's certainly true that state and local taxes can be construed as true revenue. Why? Because those gov'ts don't issue the currency! They actually need the money.
So why tax the wealthy? Because they have a high propensity to save, as Stephanie has argued, their wealth probably doesn't add much to inflation (the rich already have all the toilet paper and toothpaste that they need). OK, so the price of yachts and summer homes on Martha's Vineyard might go up, but who cares? So curbing inflation is not the reason to tax the wealthy, and we've already seen that we can't spend their tax "revenue" because it doesn't exist. So the absolute and moral reason to tax the rich is to limit their economic/political power. The key insight here is that we don't need taxes from the rich to invest in the programs that will benefit our citizens.
A final thought. Where do the rich suppose their financial wealth came from? US dollars don't grow on trees. And private banks have a nasty habit of wanting their loans to be repaid in full. So if you analyze the gross financial wealth denominated in US dollars around the world, you'll find that it tracks quite closely to the so-called US "national debt." The rich are wealthy precisely because the US gov't doesn't care about collecting as much tax as it spends in any given year. As Stephanie is fond of saying, the gov't's red ink is our black ink!
MMT of course is entirely correct about the mechanics of money creation and also about the fact that deficits are harmful is a myth. What MMT needs however is a paradigm changing policy like a 50% discount at retail sale every penny of which is rebated back to the enterprise giving the discount by the monetary authority so they can be whole on their overheads and margins of profit.
This immediately would double everyone's potential purchasing power, read what the democrats want, and also doubles the potential demand for every retail enterprise's goods and services, in other words exactly what the republican business constituency wants.
Furthermore, if you paired a $1000/mo. universal dividend policy for everyone 18 and older with the above retail discount/rebate the payroll taxes that both individuals and enterprise pay for welfare, unemployment insurance and social security would become redundant and so you'd be able to virtually eliminate them, again integrating the interests of opposing political constiuencies in the process.
If we view today's prices of investment products such as stocks, bonds and art as a fundamentally different class of prices than the consumer price index, then we can argue from MMT that the high rate of inflation in such prices (measured against their cash returns) indicates that those assets have not been taxed enough to control inflation. The reason for a tax on wealth (in addition to "property taxes") is to keep their price increases in line with incomes.
It's not MMT, it's not "envy". It is the same issue that countries are facing when the loopholes allow money to flow to tax advantaged sites, or to be harbored thru lobbied tax avoidance laws that shift the public's responsibilities onto those who don't have a level playing field to lobby for their own interests. It is related to what happens to countries with dollarized debt and are forced to privatize public assets (c.f. the saga of the economic hit men) or the outcome from the housing collapse of '08)
I’m sure you must have reasons for not just saying the truth about MMT on TV. I guess the neolib ‘truth’ is still too entrenched. Being a believer, hook line and sinker’, of MMT, it is so disheartening to still see this fight over the debt ceiling and this never ending ‘pay for’ nonsense. I applaud your stamina. I am convinced all our ‘leaders’ are ignoramouses and beyond hope. I would have given up long ago. Milton Friedman has been a curse on our nation.
Am I missing something here? Stephanie's 1998 groundbreaking paper showed that federal "Tax revenue" is an oxymoron. Why? Since the gov't runs deficits ($28.5 trillion so far), any tax receipts collected by the IRS get deposited in the Treasury's general account at the Federal Reserve, get credited against the spending that has already occurred, and, to keep the books straight, the credits offset the debits and the money simply disappears with a few computer keystrokes! There is no IRS piggy bank! If I'm understanding Stephanie's argument, this is why she argues so strenuously against "pay-fors." Federal taxes can't possibly pay for anything, although it's certainly true that state and local taxes can be construed as true revenue. Why? Because those gov'ts don't issue the currency! They actually need the money.
So why tax the wealthy? Because they have a high propensity to save, as Stephanie has argued, their wealth probably doesn't add much to inflation (the rich already have all the toilet paper and toothpaste that they need). OK, so the price of yachts and summer homes on Martha's Vineyard might go up, but who cares? So curbing inflation is not the reason to tax the wealthy, and we've already seen that we can't spend their tax "revenue" because it doesn't exist. So the absolute and moral reason to tax the rich is to limit their economic/political power. The key insight here is that we don't need taxes from the rich to invest in the programs that will benefit our citizens.
A final thought. Where do the rich suppose their financial wealth came from? US dollars don't grow on trees. And private banks have a nasty habit of wanting their loans to be repaid in full. So if you analyze the gross financial wealth denominated in US dollars around the world, you'll find that it tracks quite closely to the so-called US "national debt." The rich are wealthy precisely because the US gov't doesn't care about collecting as much tax as it spends in any given year. As Stephanie is fond of saying, the gov't's red ink is our black ink!
The biggest crock of shiat in recent memory.
Great appearance today (and helpful post here), thank you Stephanie for educating readers!
As you said, "It's the game the lawmakers are committed to playing," regardless of how stupid it is!
MMT of course is entirely correct about the mechanics of money creation and also about the fact that deficits are harmful is a myth. What MMT needs however is a paradigm changing policy like a 50% discount at retail sale every penny of which is rebated back to the enterprise giving the discount by the monetary authority so they can be whole on their overheads and margins of profit.
This immediately would double everyone's potential purchasing power, read what the democrats want, and also doubles the potential demand for every retail enterprise's goods and services, in other words exactly what the republican business constituency wants.
Furthermore, if you paired a $1000/mo. universal dividend policy for everyone 18 and older with the above retail discount/rebate the payroll taxes that both individuals and enterprise pay for welfare, unemployment insurance and social security would become redundant and so you'd be able to virtually eliminate them, again integrating the interests of opposing political constiuencies in the process.
Reforms are good. Paradigm changes waaaay better.
If we view today's prices of investment products such as stocks, bonds and art as a fundamentally different class of prices than the consumer price index, then we can argue from MMT that the high rate of inflation in such prices (measured against their cash returns) indicates that those assets have not been taxed enough to control inflation. The reason for a tax on wealth (in addition to "property taxes") is to keep their price increases in line with incomes.