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Deficit Scolds Can Get Stuffed: We CAN Afford Help For Main Street

The federal budget isn't like a family budget. We can afford nice things

Well how about this. 

Rep. John Yarmuth isn’t just any old congressperson. He’s chair of the House Budget Committee, and having this basic truth said out loud—“We can spend whatever we need to spend in the interest of serving the American people”—is progress. It’s especially key for a budget leader right now as Congress is putting together the budget reconciliation bill for President Joe Biden’s Build Back Better, the plan that could truly be transformative for America. It’s essential that the deficit peacocks are answered—like Sens. Kyrsten Sinema and Joe Manchin, who continue to insist that the number is too big even though they won’t say what needs to be sacrificed.

Stephanie Kelton, former chief economist on the U.S. Senate Budget Committee for the Democrats, literally wrote the book on the myth of the deficit. She included this excerpt in a recent series of posts on the congressional “pay-for game.”

We’ve got a really screwy way of drafting, evaluating, and passing legislation. We pretend that the federal government needs to budget like a household. We think of taxes as something the government needs (i.e. revenue) instead of remembering that taxes are there to subtract spending power from the rest of us so that the government’s own spending doesn’t push the economy beyond its full-employment limit. We hamstring legislation by demanding that the government “pay for” new spending, even when the economy could safely absorb that spending without the need for higher taxes. And we do all of this because we’ve decided that these household budgeting practices somehow serve the public interest. They don’t.

They don’t at all, and when Congress and the president accept that truth, they can do great things, like spend the necessary (but still not sufficient) $4 trillion in a series of packages for COVID-19 relief. Unfortunately, that didn’t last.

Instead of taking the momentum from passing the big American Rescue Plan and using it to push through the big hard human infrastructure plans, we got Sinema and Manchin and the ridiculousness of plucking a number out of a hat—say, $900 billion—and then negotiating how much you can spend to save us from climate change, or to ensure that all the nation’s households have clean drinking water, or enough to eat. The thing is, it’s all performative, that whole “pay for” schtick. Kelton:

According to CBO, $294 billion would be offset, leaving $256 billion to fall onto deficits over the next decade. Senator Rob Portman (R-OH), one of the lead authors of the bill, was frustrated by CBO’s analysis. He and Krysten Sinema (D-AZ), another lead negotiator, issued a statement, complaining that CBO had low-balled the revenue estimate, insisting that their “pay-fors” would more than cover the full cost of the bill. [...]

The truth is, most lawmakers don’t actually care whether they’re voting for so-called “fake” offsets. If they genuinely support the policy, a “pay for” that works on paper (if not in practice) is often good enough to garner support. They understand the pay-for game, so…a wink and a nod.

In a negotiating environment where everything (except war) has to be “paid for” and none of that can be through an equitable tax system (remember revenue?) because Manchin and Sinema won’t agree to that, the possibilities for making this a better world aren’t limitless. Never mind the vast wealth this nation holds. The performance—being “bipartisan” and limiting policy to what can be “paid for” versus what needs to be done, still rules.

But there’s hope, at least, in that Yarmuth and his counterpart in the Senate, Sen. Bernie Sanders, get it. 

Republished with permission from Daily Kos.

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