The author correctly states that it has been Republicans that adhere to MMT and Democrats that deny it, but then assumes that it is Democrats who want to spend in deficit without restraint. This is the product of conditioning that has shaped the political dialogue for decades, much to our detriment.
The deficit is a product of comparison between spending and taxation and both have equal impact on that product, but it’s always spending that takes the negative hit because people equate the budget process of the federal government with their own kitchen table budgeting where money must be acquired by some means and is not a factor after it is spent. The truth is that all spending moves money from one entity to another. One entity’s loss is another’s gain when the perspective is viewed in macro.
In the case of the federal government, the monopoly issuer of the US dollar, there is no need to acquire its own dollars back to enable it to spend, and it never takes on debt in the process of spending, as it must first spend money into existence before it is available to tax or borrow. It is more accurate to say that spending “funds” both than is the reverse. Even when we used the gold standard the test of “first dollar” used to acquire gold supports MMT’s view.
When sectoral balances are considered in budgeting it becomes obvious that the only “net” source of dollars in the private sector is the deficit spending of the federal government. The government’s red ink is the only source of black ink the private sector has after private bank debt is accounted for. If the government achieves the holy grail of a balanced budget it does so by clawing back all dollars paid to the private sector to compensate for the resources of provisioning itself and removes any store of value from the economy. It is theft, not prudent management.
The only way to counter this very simple math is to deny the role of taxation/debt in the economy. If voters, never known for appreciating nuance, especially during political campaigns, believe that “their” tax dollars are funding their government they will naturally view it as a competing “user” of the currency and resent any use of the currency that doesn’t directly benefit them. This erroneous view of taxation and spending has been so effectively promoted that it has become the common consensus, fueling much of the racism and class envy now giving material support to conservative and neoliberal politicians.
