I’m interrupting my series on US Government Real Fiscal Responsibility since the Carter Administration to write about something Chris Hayes said relating to Real Fiscal Responsibility. Back in February of 2014, he tweeted:
— All In w/Chris Hayes (@allinwithchris) March 1, 2014
Recently, that tweet along with an image has been making the rounds on Facebook as an Alternet photo. The sound bite in the tweet looks great, after the manner of a logical truism.
But, logically, it doesn’t follow, because one can easily say that as long as the Government implicit in the statement isn’t a currency issuer, but a currency user who must acquire its funds by taxing or borrowing alone, that Government can involuntarily run out of funds. And it is conceivable that funds might be raised to fund a war, while that same Government might not have the funds available to take care of the people who fought for the nation, without defaulting on its obligations.
So, assuming that the Government is one that can involuntarily run out of money, the rich are saying that they think fighting a war using deficit spending is worthwhile and one’s patriotic duty; but that there are more important priorities than taking care of the people who fought it for their country. So, what are those priorities and what are the moral judgments in back of them? That is really the issue in a situation of limited Government financial resources!
The rich often believe, that lowering the risk of inflation which, they think, would cost them money, or avoiding taxes, which would also cost them money, are more important priorities than taking care of the people who fought the wars for us and them. They don’t think they owe them a thing. Or alternatively, they think that what is owed to them should come out of other people’s pockets, so that it should be “paid for” by increased taxes on the poor and the middle class, or perhaps by cutting Government programs that serve them.
This view is morally reprehensible, of course, and it is also despicable when you consider that they and theirs also make sure that they don’t have to fight the wars, so that burden too falls on the poor and the middle class. So, Chris’s statement makes political sense because it sounds like an undeniable moral proposition, a moral truism.
On the other hand, a Government like the US’s with the authority and capability to create unlimited currency if it needs to, can always afford to both deficit spend on a war, and also deficit spend to take care of those who fought it. So, in that situation, the US’s current one, it is a truism that the Government can afford to deficit spend to fight a war and also to take care of the people who fought it for us. But, here, there are no “ifs” about it.
We can do both. And we can also expand Social Security benefits, and deficit spend on new energy foundations, and deficit spend on an enhanced Medicare for All program. We can do all these things and more without running out of money, because, as the currency issuer, the Government can do all sorts of things and never run out of money.
So, what is the fiscally responsible thing to do? The answer is to run a fiscal policy that gets the nation as close to public purpose as possible, using deficit spending or any tool at its disposal to accomplish that. Whatever else that includes, it certainly includes taking care of the people who fought the war the nation asked them to fight. To do anything else is fiscal irresponsibility.
And that’s exactly what the Republicans and some Democrats worried about deficit reduction, and the rich, are practicing when they shout and scream that fiscal responsibility demands that veterans benefits should not be paid for with deficit spending. And, more importantly, when they choose to vote against providing those benefits, or to demand that other necessary spending should be cut to pay for them.
So, let’s be clear, shall we? Real Fiscal Responsibility is what Real Fiscal Responsibility does (h/t you know who), and people refusing to deficit spend to provide those benefits just aren’t acting in a fiscally responsible way, but are doing the opposite for the sake of greed and for the sake of those, who, reading too much Ayn Rand, think that their inherited wealth, and previous success entitles them to reject any obligations they may have to other people. If we want our democracy back, we must firmly reject their claims to entitlement, since they have no moral foundation, and make them fulfill their obligations either through increasing their tax bills, or subjecting them to whatever impact increased deficit spending has on their accumulated wealth.
Cross-posted from New Economic Perspectives