During the summer between graduating James Madison High School and going SUNY, Stony Brook, I worked on the mayoral campaign of Upper West Side Congressman Bill Ryan, the first member of the House to call for ending the war against Vietnam. I met another volunteer there, Bob Lekachman who was also about to start at Stony Brrok in September, but as head of the Economics Department. He impressed me so much that summer that I decided to take a class of his in the fall. I didn't much like Economics but I think I look Eco-102 as well. And that was that for economics until I met a fellow Bernie supporter-- who just happened to also be starting at Stony Brook-- over 5 decades later.
Stephanie Kelton, who wasn't even a glimmer in her parents' eyes when I met Lekachman, probably would have been Secretary of the Treasury had Bernie won. She was the chief economist for the Democrats on the Senate Budget Committee before joining Bernie's campaign. Today she heads Stony Brook's Center for the Study of Inequality and Social Justice. And a few weeks ago she did another Ted Talk (above), a spectacular post-COVID look at what happened to the economy and, more important, how to come back and build a better one.
In their description, the TED editors wrote that "Government deficits have gotten a bad rap, says economist Stephanie Kelton. In this groundbreaking talk, she makes the case to stop looking at government spending as a path towards frightening piles of debt, but rather as a financial contribution to the things that matter-- like health care, education, infrastructure and beyond. 'We have the resources we need to begin repairing our broken systems,' Kelton says. 'But we have to believe it's possible.'"
I see that House Budget Committee chair, John Yarmuth believes. Maybe he paid a lot of attention to that Ted Talk because he seems to have adopted Modern Monetary Theory (MMT)-- something very much resisted by foolish conservatives who should embrace it for their own reasons (keeping taxes low for their wealthy campaign donors). NY Times columnist Peter Coy quoted-- not Kelton, but Yarmuth-- explaining that "Historically, what we have done is said, 'What can we afford to do?' The right question is, 'What do the American people need us to do? If we relied on taxation, purely on taxation, to fund the government, then a lot of people would suffer very seriously, because we could not provide nearly the services that the American people want us to provide."
Coy then interviewed Yarmuth who told him that his "conversion" to MMT began in 2010 when Paul Ryan (R-WI) was the ranking member of the Budget Committee. "He would come up with all these same things"-- that deficit hawks are always whining about: that federal budget deficits would consume national savings and crowd out investment by the private sector. "And yadda yadda yadda. I realized as time went by that none of the things he predicted were happening." No doubt Yarmuth didn't want to slam Pelosi for enabling this horseshit for so long but her intellectually-lazy PayGo nonsense has done immense damage to this country. Yarmith did tell coy that he's not a fan of PayGo and that it "is a scam anyway... kind of fraudulent."
Yarmuth said he’s been telling his colleagues to read Kelton’s book, The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy, which came out last year. Kelton confirmed that with a laugh: “Other members of Congress have cold-called me at home and said, ‘I read your book because Congressman Yarmuth told me I had to.’”
Several Blue America-endorsed candidates have also become big enthusiasts of MMT and fans of Kelton. One is Jason Call, the progressive Democrat running in the northwest Washington congressional district occupied by corporate Democrat Rick Larsen. This morning he told me that he was introduced to Kelton’s book about 18 months ago, "and even the opening chapter struck me as a huge revelation on how our perception of federal government economics has been wildly off base. I believe a lot of the misperception is by design, as an MMT perspective would absolutely impact the vast wealth accumulation of the top 1%. But ulterior motives aside, the reality is that MMT is actually how our government functions at the federal level. Taxing and spending are separate issues, and exist for separate purposes. The big takeaway should be that federal taxation does not exist to create funding streams for federal purposes. The federal government can literally spend on anything it wants to. When was the last time you heard an austerity hawk say 'how are we going to pay for war?' They don’t, ever. They just pay for it. The key is to get the federal government to pay for things that are beneficial to everyone (education, healthcare, public transportation, and so on) because all of these things are positive investments in general productivity. War, on the other hand, isn’t (yet they justify paying for it because???). The next key idea is that when the federal government spends a dollar, that’s a dollar now circulating in the economy for everyone’s benefit. Federal red ink is public black ink. It’s not debt that is accumulating for our children and grandchildren to pay off. It’s time for people to stop saying we need to tax the rich to pay for federal programs. That’s just not how it works. We absolutely do need to tax the rich though, and heavily, because the ultra wealthy in this country simply have way too much economic and political power. Vast wealth inequality is inherently undemocratic, and that should be enough for us to levy taxes that bring economic power back into balance. You and I have zero systemic economic power, while Jeff Bezos and Elon Musk have half the wealth of a nation behind them. I also encourage people to watch this presentation by Denison economics professor Fadhel Kaboub, head of the Global Institute for Sustainable Prosperity. I consider Fadhel my mentor on MMT issues. He’s a master at making the issues accessible for MMT beginners.
Representative Alexandria Ocasio-Cortez, Democrat of New York, has spoken positively about M.M.T., as have several of her fellow House progressives. Senator Brian Schatz, Democrat of Hawaii, has also expressed sympathy with Modern Monetary Theory and its cousin, the Green New Deal. The Times has reported that Kelton has been a regular participant in conference calls on pandemic relief organized by Senate majority leader Charles Schumer, Democrat of New York.
Yarmuth says M.M.T.’s visibility in Congress is less than its influence. “There aren’t many people who are willing to be out front about it because it doesn’t resonate with what the average person thinks,” he said. He told the Louisville Courier-Journal in August that many members of Congress are more open to deficit spending than you would guess from their anti-deficit public statements: “Ultimately I think that’s for home base consumption and not necessarily for the vote at the end of the day.”
Had Kelton been that first Economics professor of mine, I probably would have switched majors!