While I fully agree with your assessment I would warn supporters of Sen. Sanders not to get into the weeds about paying for his platform agenda. Doing so is capitulating to the language and lies of the opposition and can never represent the reality of how our nation creates and distributes its currency. Beginning with a falsehood will never lead one to the truth.
Taxes and bonds have never directly funded the spending of Congress, and cannot do so. One simply cannot collect or borrow what doesn’t yet exist, so it is far more accurate to state that spending new currency into existence “funds” both than the other way around. The primary purpose of taxation is to establish a need for the government’s currency in the private sector so the issuing government can provision itself without revenue. While the currency-issuing government doesn’t need our money, it does need us to need its money, effectively making everyone unemployed in terms of its demand for its currency.
Only by spending more into the private sector than it taxes back can the government supply the economy with a store of value to enable healthy commerce and satisfy the private sector’s desire to grow and save. The only limitation to this spending is the availability of real resources and labor to accomplish the goals the money is created to accomplish, not a mostly meaningless number on a ledger representing the entire economy, not just the government. Every liability in the government’s sector of that ledger represents someone’s assets in the private sector.
Taxes then become a means of controlling inflation and preventing excessive wealth that is dangerous to our democracy. Treasury debt has little purpose beyond providing secure savings with dividends under the protective umbrella of the government and as leverage to control interest rates upward from zero in our banking system. Neither is possible prior to the creation of the currency, so neither can be “revenue” to the monopoly issuer of the currency that neither needs nor uses revenue from any source to enable the creation of new currency when spending.
Any attempt to limit Congress to what it can “collect” is an attempt to limit the economy to the status quo and should be rejected outright, especially considering the challenges the next President will face. FDR was, effectively, a Democratic Socialist that had to meet the challenge of funding the economy and ramping up production to enter WWII at a time when there was no money to collect or borrow in the private sector. He did so by freeing Congress of the self-imposed limitations of the gold standard, but conservatives have since effectively reinstated those limitations by promoting the propaganda of “pay for” demands, bringing an end to a half-century of historic middle-class prosperity and enabling the borderline fascist accumulation of wealth by the 1% we now see.
This was made easy by the general lack of econ savvy among voters that projected their own budget rules on the monopoly issuer of the US dollar, much to the detriment of everyone except the wealthy. People who falsely perceive the government spending “their” dollars will act as voluntary obstructionists to the public purpose and maintain the status quo of the inherent privilege and racism of a gold standard system, even where one doesn’t exist in reality.
Bernie, in spite of his reluctance to turn his campaign into a crash course in economics, understands all of this. He has one of the brightest minds in economics today, Dr. Stephanie Kelton, as his primary econ advisor. She is a proponent of Modern Monetary Theory that accurately describes money in a modern economy without the falsehoods and myths from the now-defunct gold standard. It was this understanding that enabled him to predict the inevitable crash in ’08 and the consolidation of wealth that would follow the bailouts of Wall St and banks without regard to the suffering inflicted on the people that continues today.
