The Business Insider blog is usually wrong about federal finances, but every once in a while they get it partly right.
The writer agrees that Democrats, in opposing the Republican tax plan, have become the biggest deficit hawks.
There are a several ways to argue against the tax cuts, including the idea that they benefit mostly huge companies and rich Americans.
The wrong approach is to harp on about higher budget deficits and a resulting “entitlement crisis.” This is a mistake for three reasons. First, it’s hard for voters to understand, even when it’s dumbed down into the old trope of “you wouldn’t run your household like this.” Second, it’s bad economics. Unlike households, governments can run big deficits, and they should do so especially when inflation is as low as it is today. Doing so can help spur economic growth. The Democrats know this because it was a key lesson of the post-financial-crisis recovery. Third, there are much better objections to this tax plan. For example, it will lead to greater inequality and more struggles for the middle class.
“The deficit is an abstraction that is pretty much meaningless to anyone other than an economist or budget wonk,” says Dean Baker, an economist who is the co-director of the liberal Center for Economic and Policy Research in Washington.
The Center for Economic and Policy Research is fake leftist. Dean Baker is notorious for lying about federal finances. Moreover the federal deficit is not an “abstraction.” If the government puts more money into circulation, it is not an “abstraction.”
“The issue is that the Republicans want to take money from programs that people care about and need, like Medicare and Medicaid, and use it to give tax breaks to rich people. This is concrete and people can understand it. The deficit is not concrete. And as an economic matter, it is not clear that a larger deficit would be a bad thing — although I do have to say, we are likely getting close to full employment, so we probably don’t want too much larger of a deficit.”
Ah yes. When the “U.S. government is bankrupt” nonsense doesn’t work, there is the inflation bogeyman, who is always lurking outside, just waiting for a chance to slip in and devour all the boys and girls…
People use the inflation bogeyman to rationalize their misery. “If we did not have extreme poverty and inequality, we would have hyper-inflation, which is infinitely worse.”
Another favorite bogeyman is “unsustainable.”
“Our misery is necessary, because without it, everything would be unsustainable. We (needlessly) sacrifice ourselves for the common good. Our (self-caused) suffering is proof that we are noble.”
Note also that Dean Baker (above) falsely claims that federal finances are a zero-sum game. For Baker, if we pay fewer federal taxes, then we must necessarily cut social programs.
Continuing with the Business Insider post, it gets everything right until we come to this…
The only risk is inflation, if excessive bond issuance leads to rising prices. But the US economy has been suffering chronically from the opposite problem — and inflation rate that has consistently fallen short of the Federal Reserve’s 2% target for five years, pointing to an economy that is still operating below potential and reflecting stagnant wage growth for much of the population.
Inflation is not caused by an increased money supply, or by “excessive bond issuance” (whatever that means) but by an excess of money combined with shortages of goods and services to spend money on. If everyone has a mountain of cash, but little to spend it on, then sellers increase their prices. That’s inflation.
This situation does not apply to the USA. If average Americans had more money, they would spend more, which would boost the economy. However rich people don’t want that. Rich people want us permanently starved of money so we remain permanently weak and submissive. It’s called gratuitous austerity.
The starving peasants rationalize their suffering by imagining that their misery is what keeps the bogeyman away.
The Business Insider article then gets many more things correct. Example: “Unlike Greece, which actually did default on its debt because of a lack of control over its own currency, the US could default only by choice.”
The peasants ignore such articles, because the peasants are frightened by truth, freedom, and prosperity.
TRIVIA: Not long ago my next-door neighbor had a dog that she never out out of a backyard pen. Never. When I learned about this, I offered to take the dog for walks. The first time, the dog did not want to leave his pen. He was so frightened that he shivered. So I put a collar on him and dragged him out by a leash. After five minutes in the outside world, he became so happy that every day after that, he looked forward to me coming over. If he heard my voice, he would start whining to be taken out for a walk. Whenever I did take him out, he was ecstatic. One day the neighbor’s kids accidentally left a gate open, and the dog ran away, never to be seen again.
A different Business Insider post contradicts itself. Everything you thought you knew about budget deficits is wrong.
A paper was presented at the Federal Reserve Bank of Kansas City’s annual Jackson Hole symposium. “Even in countries with high public debt, the penalty for activist discretionary fiscal policy appears to be small,” wrote Alan J. Auerbach and Yuriy Gorodnichenko, economists from the University of California, Berkeley.
In other words, governments that create their own currency out of thin air cannot go bankrupt in their own currency.
Correct, but then we get this…
“The Great Recession and the Global Financial Crisis have left many developed countries with low interest rates and high levels of public debt, thus limiting the ability of policymakers to fight the next recession.”
Nonsense. Governments that create their own currency out of thin air cannot have debt problems in their own currency.
Then, just when we begin to wonder if Business Insider might be worth reading once in a while, we get this…
The article means that Congress has not yet agreed on a final budget. Therefore the U.S. government could “shut down” at midnight on Friday. Nonsense of course. Whenever this happens, the U.S. Treasury says it will continue to fund the U.S. government by using “extraordinary means,” which is code for, “We will continue funding the U.S. government by creating money out of thin air, like we always do.
BELOW: the SR-72 is an unmanned drone designed by Lockheed Martin. It will supposedly be capable of Mach 6 (4,440 mph) and be usable for reconnaissance, or for blowing up “terrorists” (i.e. used to destroy anyone who opposes the Empire’s evil).
This is a classic weapon for today. It has not even been built yet, but the artist concepts look sleek, sexy, mysterious, and impressive. Therefore Congress will throw billions of dollars at Lockheed forever without Lockheed ever producing a workable system.
This is why the USA could not prevail in a non-nuclear war against Russia or China. The USA is simply too corrupt. Rome eventually collapsed for the same reason.