#Future fight never spent money free

#Future fight never spent money free

MMT could offer a way to justify passing big priorities like single-payer health care or free college without resorting to major middle-class tax hikes.Īnd if the idea behind MMT is wrong, that shift could be a false promise, one that offers short-term political benefits at the expense of hard to foresee economic costs. Getting comfortable with new deficit-financed programs would help Democrats overcome the single biggest impediment to their agenda: raising taxes to fund their programs. MMT could be Democrats’ way of saying, “We don’t want to be suckers anymore.” The rise of MMT could allow Democrats to embrace the de facto fiscal policy of Republican presidents, who tend to explode the deficit to finance pet initiatives like tax cuts and defense spending, leaving Democrats to clean up afterward. Elizabeth Warren (D-MA) recently noted, “we need to rethink our system in a way that is genuinely about investments that pay off over time.” But some are already moving in that direction: While emphasizing that “debt matters,” Sen. How many Democrats buy that conclusion, and how far they’re willing to take it, remains to be seen. MMT is more nuanced than the “governments never have to pay for stuff” caricature it’s earned among other economists, and MMT advocates are famously (and often understandably) ornery when they sense they’re being misrepresented.Īt the same, that caricature gets at what may ultimately be the most important effect of MMT as an idea: It could convince some Democrats to break away from the view that spending always has to be “paid for” with tax increases. Or, more accurately, they attacked what they thought the theory to be. Fed Chair Jerome Powell, Bill Gates, former Treasury Secretary Larry Summers, and former IMF chief economist Kenneth Rogoff all attacked the theory. With AOC on board, a wave of denunciations from mainstream economists and others followed.

Randall Wray, Bill Mitchell (who coined the name Modern Monetary Theory), and Warren Mosler - as well as a growing number of economists at Wall Street institutions. Alexandria Ocasio-Cortez (D-NY), who told Business Insider in January that MMT “absolutely” needs to be “a larger part of our conversation.” That was the most vocal mainstream support MMT had gotten, which for years had been championed by economists like Stephanie Kelton (a former adviser to Bernie Sanders), L.

But what was once an obscure “heterodox” branch of economics has now become a major topic of debate among Democrats and economists with astonishing speed.įor that, we can thank Rep. The theory, in brief, argues that countries that issue their own currencies can never “run out of money” the way people or businesses can. Modern Monetary Theory is having a moment.