i'd argue the myth never left, certainly not in the UK - it's stronger than ever and is being used to justify not doing anything about anything. Both parties are in total paralysis, with the PM making explicit contradictions in his own pledges to the country - "We will make sure our national debt is falling so that we can secure the future of public services".
That's the level we're at now!
I think believing the myth had been slowly unravelling has just been naiive and comforting in our leftie MMT circles. Social media has been really powerful in reinforcing the myth, it's that 'common sense' narrative of household budget, which has spread like a virus. It is unstoppable.
Mumble jumble! Are you talking about the interest on the debt? US dollars are Fed Gov IOUs! We know what Fed Gov debt is (financial assets of the no-government sector/money) and we know who has most of it. Who's income would like to reduce to lower the "federal government deficit"? The Fed Gov could just buy back its "debt" as it does with QE. The Fed could cut interest rates below the inflation rate decreasing the real value of its debt (gov liability), which would decrease the "real value" of the non-government assets (Treasury bonds).
Let's see what got! I don't think you know anything.
Cutting interest rates reduces interest paid on new Treasury Bonds (debt)!
Are sure reducing interest rates will increase inflation? During and following WW2 the US cut interest rates to reduce inflation. Why? Because due to production being shifted to war material's workers were asked to use part of their wages to purchase War and Freedom bonds as way of deferring their spending till after the war when production could be returned to consumer products to help control the bidding up of prices.
Why cut interest rates? Because Keynes and others had worried that as people began to spend their differed savings (bonds in the US) following the war production would not be able to keep pace with demand increasing inflationary pressures. Cutting interest paid on bonds would reduce demand and help to reduce inflation. Cutting interest paid on private sector debt (borrowing) would reduce costs on business investment which would be critical to increasing production to meet the increase in spending coming from differed savings.
Increasing interest rates was never about reducing inflation! Its primary purpose has always been about reducing labor power to cut wages. I don't know if you buy that bs and don't know any better, or if your just dishonest. Either way, you're a troll who has no interest in learning.
Huh? You're imagining a situation in which the entire federal budget is devoted to servicing the federal debt?? Yeah, that's daft idea.
At the moment, federal debt service represents about 6.3% of total federal spending. That's less than it's been in nearly every year since roughly 1950.
Monetary Gifting could end the biggest socialist piss argument of conservatives and libertarians, namely high personal, corporate and payroll re-distributive taxation...and benefit business with greater demand than they've ever had. Thats what integrative thinking and applying new paradigm concepts enables. If you can't/won't see that, then bug off. Liberals at least lean in the right direction of the new paradigm. The right hasn't been on the right side of economic and social issues since Lincoln.
I'm interested in why people reject Kelton's arguments in The Deficit Myth. Are you willing to share a specific objection or two you have to Kelton's assertions?
Yes. I will. Whether we are a currency creator or user is irrelevant. The more currency we create, the greater the inflationary pressures will be. I told Dr. Kelton this point three years ago. Everything I was concerned about came to fruition. Oh sure - we can issue more currency to keep Social Security checks flowing - but the purchasing power of the expanded money stock will continue to decline. Go to the grocery store this weekend. It's all the evidence you need.
You're espousing the Quantity Theory of Money, and surely you know that most economists now believe that inflation is far more complex than the QTM can explain.
A sincere question: I receive social security payments of about $1,400 per month. If the SS trust runs out of money, and the Fed creates the dollars to replace the approximately 30% of SS income that I would otherwise lose, how is that inflationary? My income has stayed the same; I won't suddenly experience an increases in my purchasing power. The FICA tax bite paid by folks still working won't decline, so working folks won't suddenly see an increase in their purchasing power.
So, seriously, what am I missing? How would the Fed creating dollars to replace the SS trust money be inflationary?
Thx for your question. I am an ardent believer in the teachings of Milton Friedman. He taught us that money supply was, and is, one of the most important factors influencing inflation. If the government 'prints' more money to maintain your SS benefits, and concurrently prints more to maintain its ever-growing spending, prices for good & services will inevitably rise - more dollars chasing the same level of goods.
I liken it to a really simple analogy. If I stand at the door of a college town bar on a Friday night and hand each patron $100 to spend as they walk in, what's going to happen to the price of beer?
During COVID the government sent out stimulus checks. I talked to people who received them but didn't really need them since they're retired and financially secure. So what did they do? Spent the money on new toys and things they wanted. This action pushed prices up.
I agree money supply is not exclusively controlling inflation. But it's probably the single most dominant factor. Todays inflation was entirely predictable. Beginning in early 2020, M2 money stock increase more than 30% in less than 24 months. By 2021 the damage was already evident - copper was up 40%. Steel up 70%. Wheat up 20% or more... these are all raw materials for finished goods. It was a given that consumer prices would rise over the next 12 to 18 months.
I read it. There are some good discussion points on matters like foreign trade but the overall premise of MMT is a fallacy. No country has ever used monetary expansion over the long term to propagate healthy long term growth.
Both sides can spin this all they want, this deal was an utter disaster for America and as Stephanie mentioned, this will come up again in 2025 and possibly under a GOP president and that guy sprouted deficit myths of his own in Ron DeSantis. Yep, we are truly backsliding into dangerous austerity that is no good for working class people. There were alternatives (minting the coin) that could've alleviated this nonsense but hey this is what happens when you have a two party system that doesn't understand how deficits work.
It is difficult to get [a politician] to understand something when their [salary/campaign donations/illegal kickbacks/insider stock trading tips] depends on them not understanding it.
You are probably correct about the “deficit”...the real severe damage is government spending.. period...would you buy your home, car, food, medical care From a horribly wasteful government monopoly??
I expect demagogues like Kevin McCarthy and every other Republican in Congress to keep whipping up debt/deficit hysteria. But I find it even more disturbing that not a single Congressional Democrat, and certainly no one in the Biden administration, nor Biden himself, have come forward to even timidly address the absurdities of the deficit myth.
This could have been a teachable moment, one in which people who should know better step up to speak truth to idiocy. That no one who could do so has done so is just infuriating.
MMT an important economic paradigm, but do think it needs to directly address the following: what is a sustainable interest cost of debt as a percentage of US federal inflows? As GDP grows you can grow debt and the corresponding interest cost, but if interest cost grows due to higher interest rate and debt growing much more quickly than GDP, where is the sustainable ratio - this is a math question and not a political question -
The "cost" of increased interest on Treasuries - as Warren Mosler points out - is the potential for inflation. The Federal government can always spend more money into existence to pay the holders of Treasuries that reach their maturity date. As Mosler points out, however, all spending is potentially inflationary. So I'd say the point you raise isn't so much a math question as it is a policy question: into whose pockets do we want to put the dollars the Federal government spends into existence?
Ken - thanks for your comments, and understand all spending is potentially inflationary. And yes, the question certainly has a policy question - i.e. where do you spend dollars into existence, but if the interest expense grows from say 10% of inflows, to 20-30-40% of inflows it compounds (similar to compounding interest) and know all dollars are fungible, but you start borrowing the pay interest - and seems this dynamic then becomes very inflationary, so a mathematical consideration as well as a policy one....
Sorry for taking so long to reply to your comment. I do think you ask a very good question, so I'd like your opinion on this issue: I've listened to and read MMT-aligned economists who propose that governments with fiat currencies stop issuing government bonds when deficit spending (I'm tying to remember who proposed this - Steven Hail? Steve Keen? Bob Mitchell?).
So what do you think of that idea? If the government didn't issue bonds, then presumably there would be no interest paid, right?
I still think, however, that the biggest problem with paying interest on government bonds is that those interest payments tend to go to people who already have plenty of money, thus increasing inequality.
I have also read of this approach; no issuing of debt but creation of money supply..I don’t know nitty gritty legal ability for congress to authorize spending without a corresponding accounting entry and issuing of debt…but seems like the same overarching issue present itself, namely inflation due to too may dollars chasing a resource constrained world…
Kevin McCarthy: "...the debt limit is like letting your child go crazy with the family credit card." Perhaps the strategy for MMT'ers should be NOT to ridicule this analogy, BUT TO EMBRACE IT. What if the family credit card had an interest rate of--not 25%--but 2%? Running up credit card debit would then be the responsible thing to do for any family trying to get ahead or just improve their standard of living.
Just think, a family with a combined income of $100,000 could BORROW $100,000 at a cost of a mere $2,000/year. Want to really go rogue? Borrow $200,000 with interest of only $4,000/year. You'd have to be an idiot not to do this. The credit card company NEVER wants you to pay it back. Charging interest is how it makes money.
Now what's the problem with this example? Credit card companies can't charge a 2% interest rate and stay in business. BUT THE FEDERAL GOVERNMENT CAN. This simple example reveals the idiocy of the fiscal hawk argument.
With all due respect, IMO the problem with embracing the credit card analogy is that it reinforces the "Federal government budget is just like your household budget" fallacy.
Full disclosure: I am a firm believer in cognitive scientist George Lakoff's assertion that using conservative's language in attempts to refute their arguments actually just reinforces those arguments. If you haven't read it, his book on political discourse entitled "Don't Think of an Elephant" explains the concept. It's a pretty quick and illuminating read.
And I'm a firm believer in cognitive dissonance theory. People will believe all kinds of shit but, if they're not totally nuts, they can eventually be persuaded to change their opinion if confronted with enough evidence that contradicts their belief. Let's say you don't believe in the existence of zebras. I show you a photo of a zebra but you object that it's a doctored pic. OK. So I bring you out to a zoo and I show you a live zebra, but you claim that it's a donkey with its body painted. OK. But then I show you a momma zebra giving birth to her baby, and suddenly you don't have a comeback. The evidence that contradicts your belief at some point becomes overwhelming. If you're not mentally disabled, you'll relent and agree that zebras actually do exist. BTW, I'm not sure baby zebras are actually born with stripes, but I hope you get the idea.
I have a different understanding of cognitive dissonance, then. My reading tells me it's why people resort to rationalizations to reject new information and cling to their previously held beliefs.
Of course, people do change their minds about important topics sometimes.
So, hey, I hope you're right and we can convince believers of the deficit myth that the Federal government's budget is nothing like a household budget.
I think your take on cognitive dissonance is correct. So we can give up on the intellectual intransigence of people, or we can try to overload their entrenched positions with an overwhelming barrage of persuasive insights in the hope of eventually making a breakthrough.
I'm all for continuing the fight to enlighten folks on how the Federal government actually finances its operations. Just speaking for myself, though, I'm going to stay away from using metaphors that reinforce the household budget imagery.
In all sincerity, my hat is off to you for engaging in the battle. Good luck to us all!
Thanks for the book recommendation, KenS. And thanks, too, for your civil, informed, rational exchange with Wally Grigio which follows your book recommendation. It was a pleasure to read and rarely seen in “Comments” sections.
Thank you very much for your kind words. I'm practicing trying to be civil and rational and keeping my mouth (or keyboard) shut on topics on which I am not informed, so I am gratified to know that I came close to my targets.
One more downside to this deficit myth capitulation by the Dems-how do you get out of a recession without fiscal stimulus? The Rs already have the answer-tax cuts for the rich. What happens when you lose your job in a recession? Go to the junk food bank line because there won’t be any food stamps for you. Does inflation go away? No, all domestic programs get cut by at least the rate of inflation because their costs go up by the rate of inflation and the money they receive from the budget remains the same.
So come an economic downturn Biden and the Dems in Congress that vote for budget austerity with the deficit myth as the excuse lose the 2024 election. And then the Rs go after Medicare and Social Security.
Can the Dems be that dumb or has Washington corruption reached the point where they don’t care?
Can anyone guess why the Fed didn’t retire some of their $5 Trillion they hold in treasuries to give more space in the debt ceiling? Or, I wonder why Biden didn’t ignore republicans, not negotiate, and just veto the budget bill to allow the lawful walk-arounds to be employed. One, the Fed’s board of governors has a mandate to pay all debt in spite of failures of Congress and the White House. Why didn’t Biden allow?
Almost everyone, including educated liberals, think that deficits and the national debt are at least a "long-term" problem. See, e.g., Peter Coy's column today in the NYT about how the R's are going too far but the deficit certainly needs to be addressed. He is such a nice man and has been writing thoughtfully about economics for years. People just cannot shake the belief that the government is more or less like a family and, at least in the long-run, cannot spend [a lot] more than it takes in. A growing national debt will result in higher and higher interest payments, they say, consuming more and more of our federal budget. None of this is true, but the truth is so counter-intuitive that it's almost impossible to convince people. This has been going on since Keynes (not that he understood the whole story). But we must keep trying.
‘There are lies, damned lies, statistics and the deficit myth.’ Depressing! Please keep trying, Stephanie.
i'd argue the myth never left, certainly not in the UK - it's stronger than ever and is being used to justify not doing anything about anything. Both parties are in total paralysis, with the PM making explicit contradictions in his own pledges to the country - "We will make sure our national debt is falling so that we can secure the future of public services".
That's the level we're at now!
I think believing the myth had been slowly unravelling has just been naiive and comforting in our leftie MMT circles. Social media has been really powerful in reinforcing the myth, it's that 'common sense' narrative of household budget, which has spread like a virus. It is unstoppable.
Stephanie,
What happens when the debt gets so large it consumes the entire Federal budget?
What does "consume the entire Federal budget" even mean??
It means that say you have a 2 trillion dollar budget and the annual debt payment is 2 trillion dollars. But then I think you knew that.
Mumble jumble! Are you talking about the interest on the debt? US dollars are Fed Gov IOUs! We know what Fed Gov debt is (financial assets of the no-government sector/money) and we know who has most of it. Who's income would like to reduce to lower the "federal government deficit"? The Fed Gov could just buy back its "debt" as it does with QE. The Fed could cut interest rates below the inflation rate decreasing the real value of its debt (gov liability), which would decrease the "real value" of the non-government assets (Treasury bonds).
Let's see what got! I don't think you know anything.
Yes let’s cut interest rates below inflation. What would that do to inflation? Short answer-inflation would accelerate. Talk about mumble jumble.
Cutting interest rates reduces interest paid on new Treasury Bonds (debt)!
Are sure reducing interest rates will increase inflation? During and following WW2 the US cut interest rates to reduce inflation. Why? Because due to production being shifted to war material's workers were asked to use part of their wages to purchase War and Freedom bonds as way of deferring their spending till after the war when production could be returned to consumer products to help control the bidding up of prices.
Why cut interest rates? Because Keynes and others had worried that as people began to spend their differed savings (bonds in the US) following the war production would not be able to keep pace with demand increasing inflationary pressures. Cutting interest paid on bonds would reduce demand and help to reduce inflation. Cutting interest paid on private sector debt (borrowing) would reduce costs on business investment which would be critical to increasing production to meet the increase in spending coming from differed savings.
Increasing interest rates was never about reducing inflation! Its primary purpose has always been about reducing labor power to cut wages. I don't know if you buy that bs and don't know any better, or if your just dishonest. Either way, you're a troll who has no interest in learning.
Huh? You're imagining a situation in which the entire federal budget is devoted to servicing the federal debt?? Yeah, that's daft idea.
At the moment, federal debt service represents about 6.3% of total federal spending. That's less than it's been in nearly every year since roughly 1950.
https://www.pewresearch.org/short-reads/2023/02/14/facts-about-the-us-national-debt/ft_23-01-30_debtlimit_2/
How does the cost of debt service go from being 6.3% of federal spending to 100%??
Read the book: The Deficit Myth
I did. It’s hogwash!
...then why are you here?
To keep the Socialists in check.
Monetary Gifting could end the biggest socialist piss argument of conservatives and libertarians, namely high personal, corporate and payroll re-distributive taxation...and benefit business with greater demand than they've ever had. Thats what integrative thinking and applying new paradigm concepts enables. If you can't/won't see that, then bug off. Liberals at least lean in the right direction of the new paradigm. The right hasn't been on the right side of economic and social issues since Lincoln.
“The government that governs least governs best”
Man if I ever get to retire someday I hope I have as much time on my hands as you seem to
I'm interested in why people reject Kelton's arguments in The Deficit Myth. Are you willing to share a specific objection or two you have to Kelton's assertions?
Yes. I will. Whether we are a currency creator or user is irrelevant. The more currency we create, the greater the inflationary pressures will be. I told Dr. Kelton this point three years ago. Everything I was concerned about came to fruition. Oh sure - we can issue more currency to keep Social Security checks flowing - but the purchasing power of the expanded money stock will continue to decline. Go to the grocery store this weekend. It's all the evidence you need.
You're espousing the Quantity Theory of Money, and surely you know that most economists now believe that inflation is far more complex than the QTM can explain.
A sincere question: I receive social security payments of about $1,400 per month. If the SS trust runs out of money, and the Fed creates the dollars to replace the approximately 30% of SS income that I would otherwise lose, how is that inflationary? My income has stayed the same; I won't suddenly experience an increases in my purchasing power. The FICA tax bite paid by folks still working won't decline, so working folks won't suddenly see an increase in their purchasing power.
So, seriously, what am I missing? How would the Fed creating dollars to replace the SS trust money be inflationary?
Thx for your question. I am an ardent believer in the teachings of Milton Friedman. He taught us that money supply was, and is, one of the most important factors influencing inflation. If the government 'prints' more money to maintain your SS benefits, and concurrently prints more to maintain its ever-growing spending, prices for good & services will inevitably rise - more dollars chasing the same level of goods.
I liken it to a really simple analogy. If I stand at the door of a college town bar on a Friday night and hand each patron $100 to spend as they walk in, what's going to happen to the price of beer?
During COVID the government sent out stimulus checks. I talked to people who received them but didn't really need them since they're retired and financially secure. So what did they do? Spent the money on new toys and things they wanted. This action pushed prices up.
I agree money supply is not exclusively controlling inflation. But it's probably the single most dominant factor. Todays inflation was entirely predictable. Beginning in early 2020, M2 money stock increase more than 30% in less than 24 months. By 2021 the damage was already evident - copper was up 40%. Steel up 70%. Wheat up 20% or more... these are all raw materials for finished goods. It was a given that consumer prices would rise over the next 12 to 18 months.
I read it. There are some good discussion points on matters like foreign trade but the overall premise of MMT is a fallacy. No country has ever used monetary expansion over the long term to propagate healthy long term growth.
Both sides can spin this all they want, this deal was an utter disaster for America and as Stephanie mentioned, this will come up again in 2025 and possibly under a GOP president and that guy sprouted deficit myths of his own in Ron DeSantis. Yep, we are truly backsliding into dangerous austerity that is no good for working class people. There were alternatives (minting the coin) that could've alleviated this nonsense but hey this is what happens when you have a two party system that doesn't understand how deficits work.
It is difficult to get [a politician] to understand something when their [salary/campaign donations/illegal kickbacks/insider stock trading tips] depends on them not understanding it.
You are probably correct about the “deficit”...the real severe damage is government spending.. period...would you buy your home, car, food, medical care From a horribly wasteful government monopoly??
The rest of the developed world happily accepts publicly funded medical care - a much better and fairer system.
And many provide state housing to correct the very obvious housing market failure.
I expect demagogues like Kevin McCarthy and every other Republican in Congress to keep whipping up debt/deficit hysteria. But I find it even more disturbing that not a single Congressional Democrat, and certainly no one in the Biden administration, nor Biden himself, have come forward to even timidly address the absurdities of the deficit myth.
This could have been a teachable moment, one in which people who should know better step up to speak truth to idiocy. That no one who could do so has done so is just infuriating.
No link to the video...?
There is a link in the online version of the news letter. which can be found by clicking "online" in the upper right of the email. Hope this helps.
Even in the online version, Substack says "could not load video" and there is no text link to access it outside of the embed.
It should play if you just click on the image of the video.
It's maddening.
MMT an important economic paradigm, but do think it needs to directly address the following: what is a sustainable interest cost of debt as a percentage of US federal inflows? As GDP grows you can grow debt and the corresponding interest cost, but if interest cost grows due to higher interest rate and debt growing much more quickly than GDP, where is the sustainable ratio - this is a math question and not a political question -
The "cost" of increased interest on Treasuries - as Warren Mosler points out - is the potential for inflation. The Federal government can always spend more money into existence to pay the holders of Treasuries that reach their maturity date. As Mosler points out, however, all spending is potentially inflationary. So I'd say the point you raise isn't so much a math question as it is a policy question: into whose pockets do we want to put the dollars the Federal government spends into existence?
Ken - thanks for your comments, and understand all spending is potentially inflationary. And yes, the question certainly has a policy question - i.e. where do you spend dollars into existence, but if the interest expense grows from say 10% of inflows, to 20-30-40% of inflows it compounds (similar to compounding interest) and know all dollars are fungible, but you start borrowing the pay interest - and seems this dynamic then becomes very inflationary, so a mathematical consideration as well as a policy one....
Sorry for taking so long to reply to your comment. I do think you ask a very good question, so I'd like your opinion on this issue: I've listened to and read MMT-aligned economists who propose that governments with fiat currencies stop issuing government bonds when deficit spending (I'm tying to remember who proposed this - Steven Hail? Steve Keen? Bob Mitchell?).
So what do you think of that idea? If the government didn't issue bonds, then presumably there would be no interest paid, right?
I still think, however, that the biggest problem with paying interest on government bonds is that those interest payments tend to go to people who already have plenty of money, thus increasing inequality.
I have also read of this approach; no issuing of debt but creation of money supply..I don’t know nitty gritty legal ability for congress to authorize spending without a corresponding accounting entry and issuing of debt…but seems like the same overarching issue present itself, namely inflation due to too may dollars chasing a resource constrained world…
Kevin McCarthy: "...the debt limit is like letting your child go crazy with the family credit card." Perhaps the strategy for MMT'ers should be NOT to ridicule this analogy, BUT TO EMBRACE IT. What if the family credit card had an interest rate of--not 25%--but 2%? Running up credit card debit would then be the responsible thing to do for any family trying to get ahead or just improve their standard of living.
Just think, a family with a combined income of $100,000 could BORROW $100,000 at a cost of a mere $2,000/year. Want to really go rogue? Borrow $200,000 with interest of only $4,000/year. You'd have to be an idiot not to do this. The credit card company NEVER wants you to pay it back. Charging interest is how it makes money.
Now what's the problem with this example? Credit card companies can't charge a 2% interest rate and stay in business. BUT THE FEDERAL GOVERNMENT CAN. This simple example reveals the idiocy of the fiscal hawk argument.
I like it!
With all due respect, IMO the problem with embracing the credit card analogy is that it reinforces the "Federal government budget is just like your household budget" fallacy.
Full disclosure: I am a firm believer in cognitive scientist George Lakoff's assertion that using conservative's language in attempts to refute their arguments actually just reinforces those arguments. If you haven't read it, his book on political discourse entitled "Don't Think of an Elephant" explains the concept. It's a pretty quick and illuminating read.
And I'm a firm believer in cognitive dissonance theory. People will believe all kinds of shit but, if they're not totally nuts, they can eventually be persuaded to change their opinion if confronted with enough evidence that contradicts their belief. Let's say you don't believe in the existence of zebras. I show you a photo of a zebra but you object that it's a doctored pic. OK. So I bring you out to a zoo and I show you a live zebra, but you claim that it's a donkey with its body painted. OK. But then I show you a momma zebra giving birth to her baby, and suddenly you don't have a comeback. The evidence that contradicts your belief at some point becomes overwhelming. If you're not mentally disabled, you'll relent and agree that zebras actually do exist. BTW, I'm not sure baby zebras are actually born with stripes, but I hope you get the idea.
I have a different understanding of cognitive dissonance, then. My reading tells me it's why people resort to rationalizations to reject new information and cling to their previously held beliefs.
Of course, people do change their minds about important topics sometimes.
So, hey, I hope you're right and we can convince believers of the deficit myth that the Federal government's budget is nothing like a household budget.
I think your take on cognitive dissonance is correct. So we can give up on the intellectual intransigence of people, or we can try to overload their entrenched positions with an overwhelming barrage of persuasive insights in the hope of eventually making a breakthrough.
I'm all for continuing the fight to enlighten folks on how the Federal government actually finances its operations. Just speaking for myself, though, I'm going to stay away from using metaphors that reinforce the household budget imagery.
In all sincerity, my hat is off to you for engaging in the battle. Good luck to us all!
Well said!
Thanks for the book recommendation, KenS. And thanks, too, for your civil, informed, rational exchange with Wally Grigio which follows your book recommendation. It was a pleasure to read and rarely seen in “Comments” sections.
Thank you very much for your kind words. I'm practicing trying to be civil and rational and keeping my mouth (or keyboard) shut on topics on which I am not informed, so I am gratified to know that I came close to my targets.
I've been trying to find a way to beat/replace this metaphor for some time. Still working on your "buckets!"
If we can't replace it, can we use it? Or would that ultimately be self destructive?
Is there a metaphor to explain the need to A. Increase revenue, such as "get a raise" or to B. make worthwhile investments like "buying a house"?
As Paul Simon has observed: "One man's ceiling is another man's floor." Maybe our debt ceiling floor is TOO LOW.
One more downside to this deficit myth capitulation by the Dems-how do you get out of a recession without fiscal stimulus? The Rs already have the answer-tax cuts for the rich. What happens when you lose your job in a recession? Go to the junk food bank line because there won’t be any food stamps for you. Does inflation go away? No, all domestic programs get cut by at least the rate of inflation because their costs go up by the rate of inflation and the money they receive from the budget remains the same.
So come an economic downturn Biden and the Dems in Congress that vote for budget austerity with the deficit myth as the excuse lose the 2024 election. And then the Rs go after Medicare and Social Security.
Can the Dems be that dumb or has Washington corruption reached the point where they don’t care?
TL:DR: maintenance and expansion of empire takes priority over everything else, including its own subjects.
Everything else is theater.
Can anyone guess why the Fed didn’t retire some of their $5 Trillion they hold in treasuries to give more space in the debt ceiling? Or, I wonder why Biden didn’t ignore republicans, not negotiate, and just veto the budget bill to allow the lawful walk-arounds to be employed. One, the Fed’s board of governors has a mandate to pay all debt in spite of failures of Congress and the White House. Why didn’t Biden allow?
Because Biden is on the Republican team - he’s been on the austerity-for-the-poor bandwagon for his entire career.
Biden is just another blue Republican like the Clintons & his buddy, Obama.
Almost everyone, including educated liberals, think that deficits and the national debt are at least a "long-term" problem. See, e.g., Peter Coy's column today in the NYT about how the R's are going too far but the deficit certainly needs to be addressed. He is such a nice man and has been writing thoughtfully about economics for years. People just cannot shake the belief that the government is more or less like a family and, at least in the long-run, cannot spend [a lot] more than it takes in. A growing national debt will result in higher and higher interest payments, they say, consuming more and more of our federal budget. None of this is true, but the truth is so counter-intuitive that it's almost impossible to convince people. This has been going on since Keynes (not that he understood the whole story). But we must keep trying.
Well said!
I second that sentiment.