On Thursday’s broadcast of CNN’s “OutFront,” House Budget Committee Chairman John Yarmuth (D-KY) said that $3.5 trillion in spending under the reconciliation bill “is pretty inconsequential when you consider all the benefits to the American people,” and “The federal government can afford anything that it feels it needs to do.”
Yarmuth said Sen. Joe Manchin (D-WV) “has no understanding of how the federal government monetary system works. When he compared it yesterday to his household income, that has no relevance to what we can do. It’s not a question of what we can afford. The federal government can afford anything that it feels it needs to do. And right now, that’s what we ought to be focused on.”
Francis also includes a 32 second long video that you might want to watch (either at his place or here) but that's the complete transcript of what the congress critter said.
The words to focus on the are the two sentences before the last one: “It’s not a question of what we can afford. The federal government can afford anything that it feels it needs to do.” [Bold added: SiG] That's almost the definition of MMT. In the very first post I wrote on MMT, back in January of '19, I borrowed a quote that later turned out to be a common MMT refrain. The quote was that football referees can't run out of points, with the implication that therefore the government can't run out of money. No, they never really explained the connection. MMT theorists say:
The carpenter can run out of inches of wood, or inches of anything
that is used to create real things. The word "inches" means nothing
without adding inches, "of what."
Stadiums don't give out points. Teams get them from following
rules. The stadium can run out of seats, food, and anything real they sell. If a stadium put points on the scoreboards the teams didn't
score, they'd be sued out of business. No team would want to play there and no
league would allow it.
- The airline can run out of Frequent Flier miles that they can redeem: they can run out of seats to put passengers in.
The US can run out of dollars if we want them to be worth
Bill Mitchell, an Australian economist, is supposed to be the creator of MMT, but the name we see in the most in the US is that Dr. Stephanie Kelton, who was Bernie Sanders' senior economic advisor in the '19 presidential campaign. She argues the government can create all the money it wants.
Sometimes I think Dr. Kelton really came up with a good scam. There must
be books out there, public appearances for her and the other MMT acolytes so
they can rack in the wheelbarrows full of money from the Democrat apparatchiks
and do something with it before it becomes worthless. Down through
history, there has always been profit in telling the king he can do whatever
he wants; Dr. Kelton is simply this year’s royal advisor. Does she
really believe it or is she simply telling people what they want to
hear? I have no way of knowing.
The answer to Rep Yarmoth, as many people have said, is why do you tax us,
then? If you can create the money to do anything you want, then deficits
don't matter, so why collect taxes? Why not just make up every penny you
spend rather than just what the unbelievers call the "deficit spending"? Saying you need to
collect some tax but can create the rest out of thin air implies you don’t
really believe “The federal government can afford anything that it feels it needs to do.” You're not a True Believer in MMT, you're a heretic.
Maybe there's hope for you.