Progressives — That’s Not How Money Works!

This post originally appeared at Imagine Democracy. Written by Dave Johnson.

There is a NYTimes Guest Essay, What Kind of Country Do You Want? Start With Taxes.. Supposedly a progressive answer to Republican tax cuts for the rich & their corporations nonsense, it actually reinforces conservative arguments about government spending.

The essay amplifies conservative propaganda about the “price tag” of government tax cuts and spending. It uses conservative terminology like “revenue,” “borrowing” and “fiscal crisis.” This wording keeps people trapped in a medieval/conservative “gold standard” thought system about money that limits what governments can do to make people’s lives better.

The US dropped the gold standard some time ago. In a modern economy the government issues currency, period. The US government is not “funded” and certainly doesn’t have to round up or borrow gold before it can do things. It is not “in debt.” Think about what “bankrupt” means to a country that prints its own currency. It certainly doesn’t mean we can’t find enough gold to hand over and have to sell off the Washington Monument or the US Capitol. (Actually Congress has already sold itself but that’s another post.)

Taxes Are Not Revenue

Taxes do not “raise revenue.” Taxes balance income and wealth distribution and bring fairness. They incentivize desired behaviours. But they do not “fund” the federal government. The US government is not a family around a kitchen table scraping together a few dollars to pay for food, it manages a modern economy.

Instead of the current medieval-based system of superstitiously limiting spending “in case” doing so might “trigger” inflation, governments must do actual work to plan spending according to production capacities, available labor, available resources, etc in order to keep inflation at bay.

Free Your Minds

Understanding how modern money and budgeting works frees progressives to be able to get things done to make people’s lives better. Why can’t government guarantee a well-paying job with benefits to people who want to help solve society’s problems. For example teacher’s aides, elder or child care, insulating homes, etc? Why can’t government do what is needed to fight the climate crisis and transform to a green economy? Once you understand how money works the possibilities reveal themselves.

However

However, the public is not caught up with an understanding of modern budgeting, and these concepts could scare people and leave them vulnerable to conservative fear-mongering about “government spending” and “debt.” Wall Street and conservatives do everything they can to scare the public into thinking progressives will “bankrupt” the country. For now please just stop reinforcing old fashioned terms that limit what we can do while we wait for people to catch up with understanding how money really works. Do not use terms like “funding” and “revenue” and “borrowing” and “deficits” and “debt” in your discussions of budgets and taxes. We can say the same things without reinforcing those harmful concepts.