The plans of Warren and Sanders beg the question, “Do we have enough as a nation to meet the needs of our people?”
While both campaigns are centered around this question, it isn’t relative to the actual struggle taking place for the soul of the Democratic party currently. I don’t make any claims of being a political insider or having an inside track on either campaign, but I do know several of their economic advisors and what they are telling the candidates is possible. None of it requires revenue.
From this knowledge, I believe I can state that the purpose behind the taxing of extreme wealth has little to do with funding the various programs and policies either candidate is proposing but is considered by both to be essential in preserving our democratic process and routing the rampant corruption from our political/economic system. It is this unified view of our economic system that explains the total lack of any attack between the two that has their respective support camps somewhat baffled.
Bernie’s policy positions are completely predictable from his Democratic Socialist leaning, very much resembling many successful European economies in their purpose and implementation. Warren is quick to adopt those policies that poll favorably, but she dials them back just enough to avoid being seen as a socialist herself and attracting a more conservative following. This has made her appear somewhat flexible in her convictions as she is viewed as being more prone to nibbling at the edges of the rampant income inequality where Bernie takes it on directly and with considerable visible disdain for the top earners and their well-known neoliberal establishment supporters within the Democratic party and media.
However, both fully understand the mechanics of our monetary system and that spending and taxation are separate functions that are only loosely connected via deficit/debt, both only tracking functions to enable proper accounting and to advise Congress of the total net money supply, the national debt. While taxation drives the acceptance of the nation’s currency and controls inflation, the money doesn’t exist to be taxed (or borrowed) until it is spent into existence in the private sector by Congress which holds the monopoly patent on creating the US dollar.
This order of operations along with the requirement that every dollar created in the non-government (private) sector be matched with an opposing entry (debt) in the government sector to comply with standard dual entry spreadsheet accounting means that taxes are simply balanced to zero upon entry into the government sector by the debt and cannot survive to be respent. This makes “ALL” spending by Congress “NEW MONEY CREATION” and the US dollar self-funding. The government sector can never “have” money, but also can never need it, or run out of it.
By accounting definition, this also means that the private sector can never owe a public Treasury debt resulting from that money creation by government, or “ALL” money in the economy would be balanced to zero. While reducing the deficit/debt has been the holy grail for econ illiterate politicians and voters who project their own budgeting rules on the monopoly issuer of the currency, actually accomplishing it would have, and has had, detrimental consequences for the economy.
The red ink of the government is the only source of net black ink the economy has that is able to fund growth, provide a store of value in commerce, and net retire private bank debt. Is $22 Trillion too much money to have in our complex economy? We can, and should, have that conversation, but that would certainly negate much of the political rhetoric surrounding government spending that both parties use as well as force us to take a hard look at distribution given that both wealth accumulation and trade deficits represent “drains” of currency in the economy.
The federal government, even without revenue, can “afford” anything that is priced in the dollar Congress creates at will without incurring “monetary” inflation, including the excess labor the private sector rejects. This makes “ANY” misery in the economy that can be mitigated by federal spending entirely a “POLITICAL DECISION”, not economics. Politicians would be wise to figure this out before the people do, or their fate may be worse than not being re-elected.
