Santa Claus and the Grinch
The annual Federal Government “deficit,” is the difference between the money Congress orders the US Treasury to create out of nowhere to spend into the economy and the money the US Internal Revenue Service removes from the economy through taxes. The Federal Government must operate in a “deficit” or there will be no money circulating in the economy to conduct private business. The “deficit” is a number on the Treasury’s computer screen. Nothing more.
Since 2016 the Republican Party has been in full control of our federal government. They own the Presidency and have had majorities in the Senate and the House of Representatives. Not once in these past two years has there been the slightest concern over the size of the so-called national “deficit.”
Is another $100 billion needed to give to wealthy investors in the arms industries or fund the money-making wars to produce more terrorism? No problem. Congress approves and Treasury creates the money. Are bigger government subsidies needed for the oil barons? No problem. Congress approves and Treasury creates the money. Are tax cuts for Wall Street and the rich needed to keep campaign donors happy? No problem. Cut the wealthy’s taxes and Treasury simply raises the “deficit” number on their computer screen. Life is good.
The leaders of the Republican Party are fully aware of how our sovereign fiat monetary system works. They know the “deficit” is a just a number on a computer screen. They know the “deficit” doesn’t need to be “paid back” and isn’t going to “bankrupt our children.” They know a fiat monetary system is not like a household budget and that “balancing” the federal government budget will drive the private sector into debt and result in economic collapse. They know all of this. Most importantly, they know that by raising the “deficit” they can be Santa Claus to the uber-wealthy that fund their elections.
But the Republican Party leaders know something else. They know the Democratic Party leadership is completely ignorant of how our sovereign fiat monetary system works.
The Democratic Party recently regained control of the House of Representatives in the midterm elections. They are about to elect Nancy Pelosi as Speaker of the House. Pelosi is already promising to be “fiscally responsible” and is vowing to enforce “pay-go” upon government spending to reduce the “deficit.” Any government spending will have to be offset by increasing taxes or cutting other government programs. The Republicans love Nancy Pelosi. She plays right into their hand.
Want Medicare for all? “The deficit is out of control!” “How are you going to pay for it?” “Cut needed programs and raise taxes on working people?” Want to rebuild America’s infrastructure? “The deficit is out of control!” “How are you going to pay for it?” “Cut needed programs and raise taxes on working people?” Want to protect and enhance social security? Want to forgive student debt? Want to provide free college education for our youth? “The deficit is out of control!” “How are you going to pay for it?” “Cut needed programs and raise taxes on working people?”
“Pay-go” Nancy Pelosi and the corporate Democratic establishment will be the party of “tax and cut.” They will be the party that imposes the long sought Republican goal of “austerity” upon the working people of America. They will be the party that stands in the way of universal healthcare, of protecting social security from privatization, of rebuilding our infrastructure, of providing for our youth. They will be the Grinch that steals Christmas. The Republicans love the pay-go Democrats. Economics Professor Stephanie Kelton calls them “economically illiterate.”
Quoting Kelton: “Instead of vowing budget chastity, Democrats should be articulating an agenda that excites voters so that they can unleash the full power of the public purse on their behalf.” Hopefully the newly elected progressive Democratic members of the House can overcome the illiteracy.
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