The Chicago Tribune Editorial Board published an article that's worthy of comment if only to appeal for similar treatment of the topic from the Functional Finance perspective. Reading like an advertorial for an organisation called First Budget, an "ascendant advocacy group...pressing, politely but relentlessly, for answers about America's perilous finances." The editorial impresses upon the reader the long term solvency issues associated with Medicare and Social Security with non nonsensical phrases and projections meant to inspire fear an calls for reform. Not because they're actually true or fixes, like raising the max contribution requirement, aren't available. Rather because the wealthy blow hard funding the operation, Pete Petersen, wants to privatise Social Security and charge you for the privilege.
The Tribune has always been a conservative publication but for the editorial board to publish what amounts to promotional material for First Budget reduces credibility. Going so far as to break down into nonsense what the debt could buy or running a clock without meaningfully acknowledging what it really means. Instead of acknowledging as the Roosevelt Institute recently did on the 80th anniversary of its signing that Social Security benefits more people than just about any other public program. Without which close to half of the elderly would be poor and lifting nearly 15 million out of poverty.
Instead they advise these program are a "Runaway train headed at us all."
These efforts are effective because the message makers are smart about establishing the straw man narrative that persists not for any realistic reason but because they continue to conflate households and governments. As witnessed by First Budget's big question for candidates "If they promise tax cuts or more spending, how will they pay for them without increasing the debt?" is clever but really not relevant and hasn't been for some time.
Still the advertorial concludes "Then let their answers guide your vote."...because everyone likes a politician who will be honest about future taxes and silver tongued politicians will be honest with you about benefit cuts!
These movements and this narrative exist because people believe the analogy that household budgets and governments are equivalent. They're not.
This is not to say the deficits don't matter, just like central banks management of money, when it is inflationary, inefficient and unproductive- policy makers need to act to reign it in or our living standards will suffer. However, our point is that until the public appreciates that the deficit exists because the government fails to collect as much in taxes as it spends into the economy only part of the story is being told.
There are 2 sources of money creation and destruction in the modern economic system-governments and banks. But while it is totally appropriate for the Federal Reserve to respond to the financial crisis by trading worthless bank bets into money for 100 cents on the dollar while lending at 0% with no strings attached as to where that money goes nor fear for the loss incurred by buying whatever the banks sell them. Our Federal government, run by our elected representatives, must be constrained in providing public investment with a more direct multiplying effect in the economy because they must get the money they spend into the economy back in taxes. If this sounds crazy we're with you.
Instead of asking the question where they're going to get the money we should be asking important questions like what are they're priorities for investment that will increase growth and public goods for future generations. But that's not really First Budgets priority or purpose. Doing the bidding of wealthy bankers is but you won't hear that from the Chicago Tribune Editorial Board!
So I decided to write a letter to the editor and since it wasn't published, can't imagine why:] have copied below. Enjoy!
Dear Editor,
I was pleased to read the boards editorial "The Next President's Debt" and appeal to you for similar advertising space to make a point quite different from that of First Budget. I believe the question isn't whether we can afford public programs that support incomes and direct investment in the public good for sustainable economic activity. That question has been definitively answered: we can, have always done and will continue too.
Rather than providing space for private actors to pursue self interested objectives, the board could provide a public service by informing the nation about the nature of modern money and prospects for practicing more relevant functional finance. The old narrative of sound money, equating government budgets and households, is a most destructive tool of economic propaganda and false.
Your efforts to serve the public by fostering economic literacy instead of false dogma are better served by highlighting the real nature of modern money. As it relates to government spending, economist Paul Samuelson provides the same insight used by the Federal Reserve in measuring its actions when he said “What is important about the budget is whether it is inflationary or deflationary, not whether [it is] balanced or unbalanced.”
If you are going to ask the public to "guide your vote" based on an answer to an economic question make sure they're asking the right one.
Thanks
Update: Editorial Board member bemoans a Katrina like disaster for Chicago's benefit. Because apparently the funding to do the right thing isn't available without destructive loss in their world.
The Tribune has always been a conservative publication but for the editorial board to publish what amounts to promotional material for First Budget reduces credibility. Going so far as to break down into nonsense what the debt could buy or running a clock without meaningfully acknowledging what it really means. Instead of acknowledging as the Roosevelt Institute recently did on the 80th anniversary of its signing that Social Security benefits more people than just about any other public program. Without which close to half of the elderly would be poor and lifting nearly 15 million out of poverty.
Instead they advise these program are a "Runaway train headed at us all."
These efforts are effective because the message makers are smart about establishing the straw man narrative that persists not for any realistic reason but because they continue to conflate households and governments. As witnessed by First Budget's big question for candidates "If they promise tax cuts or more spending, how will they pay for them without increasing the debt?" is clever but really not relevant and hasn't been for some time.
Still the advertorial concludes "Then let their answers guide your vote."...because everyone likes a politician who will be honest about future taxes and silver tongued politicians will be honest with you about benefit cuts!
These movements and this narrative exist because people believe the analogy that household budgets and governments are equivalent. They're not.
This is not to say the deficits don't matter, just like central banks management of money, when it is inflationary, inefficient and unproductive- policy makers need to act to reign it in or our living standards will suffer. However, our point is that until the public appreciates that the deficit exists because the government fails to collect as much in taxes as it spends into the economy only part of the story is being told.
There are 2 sources of money creation and destruction in the modern economic system-governments and banks. But while it is totally appropriate for the Federal Reserve to respond to the financial crisis by trading worthless bank bets into money for 100 cents on the dollar while lending at 0% with no strings attached as to where that money goes nor fear for the loss incurred by buying whatever the banks sell them. Our Federal government, run by our elected representatives, must be constrained in providing public investment with a more direct multiplying effect in the economy because they must get the money they spend into the economy back in taxes. If this sounds crazy we're with you.
Instead of asking the question where they're going to get the money we should be asking important questions like what are they're priorities for investment that will increase growth and public goods for future generations. But that's not really First Budgets priority or purpose. Doing the bidding of wealthy bankers is but you won't hear that from the Chicago Tribune Editorial Board!
So I decided to write a letter to the editor and since it wasn't published, can't imagine why:] have copied below. Enjoy!
Dear Editor,
I was pleased to read the boards editorial "The Next President's Debt" and appeal to you for similar advertising space to make a point quite different from that of First Budget. I believe the question isn't whether we can afford public programs that support incomes and direct investment in the public good for sustainable economic activity. That question has been definitively answered: we can, have always done and will continue too.
Rather than providing space for private actors to pursue self interested objectives, the board could provide a public service by informing the nation about the nature of modern money and prospects for practicing more relevant functional finance. The old narrative of sound money, equating government budgets and households, is a most destructive tool of economic propaganda and false.
Your efforts to serve the public by fostering economic literacy instead of false dogma are better served by highlighting the real nature of modern money. As it relates to government spending, economist Paul Samuelson provides the same insight used by the Federal Reserve in measuring its actions when he said “What is important about the budget is whether it is inflationary or deflationary, not whether [it is] balanced or unbalanced.”
If you are going to ask the public to "guide your vote" based on an answer to an economic question make sure they're asking the right one.
Thanks
Update: Editorial Board member bemoans a Katrina like disaster for Chicago's benefit. Because apparently the funding to do the right thing isn't available without destructive loss in their world.
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