Yves here. I’m not persuaded that that the Trump Administration will engage in meaningful fiscal stimulus, aka deficit spending, although in fairness, J.D. Alt presents it as a risk for his opponents, not a given. While Trump on the trail made only occasional hand-waves about deficits, which looked more to be designed to show that he was on board with established Republican positions, his Cabinet picks skew heavily towards billionaires who aren’t known for liking a more muscular government (save those in the military pork business). The only one on Trump’s team that I’ve seen speak in favor of deficit spending is Carl Ichan, who is a mere advisor.
Specifically, Trump’s big supposed stimulus program, his infrastructure plan, will not provide any meaningful spending boost. It is to be funded with private borrowing made cheap via special tax breaks plus tax goodies for equity investors too.
But the Fed plans interest rate increases for 2017 that pre-suppose that the incoming Trump Administration will turn up net spending. In other words, if Trump does not engage in deficit spending to offset the Fed’s monetary drag, the economy is likely to get its long-expected recession.
By J. D. Alt, author of The Architect Who Couldn’t Sing, available at Amazon.com or iBooks. Originally published at New Economic Perspectives.
I’d like to propose that it is important, right now, for existing progressive political leaders to stake out positions in support of direct sovereign spending for the creation of collective goods. If they must, they can call it “deficit spending.” What is important is that they very aggressively get on the record as proposing and supporting federal spending programs to to address specific issues that Americans are struggling with.
If this does not happen, there is a real risk that the newly empowered right-wing government of the Trump administration will propose to increase “deficit spending” first. If that were to happen, the progressive cause will have a serious dilemma: Do they push back against Trump―decrying the dangers of increasing the national debt!―or do they get aboard his spending train as more-or-less unnecessary baggage, and watch as it puffs and whistles its way into the hearts of the American heartland?
I make this suggestion because it seems fairly certain that the last eight years of conservative insistence on fiscal austerity and federal debt reduction have been primarily driven by a political strategy to prevent the Obama administration from accomplishing anything of substance that could endear it to voters. The fact that Obama, himself, aided and abetted the substantial success of this strategy―by publicly agreeing the U.S. “debt” was unsustainable, and embarking on high-profile negotiations to rein in the “federal deficit”―underlies the enormous danger America’s progressive cause now faces.
With Obama (and the Clinton legacy touting its budget “surplus”) now gone, the opportunity exists for progressives to forcefully reverse the political mistake. But there is not much time. Even though the fiscal-austerity position was a political ploy, it is still very much stuck in the thinking and rhetoric of the House and Senate Republicans. If the progressives come out first, and early―before Trump has an opportunity to reframe their allegiance―the Tea-Party politicians, who built their reputations by refusing to increase the federal debt ceiling, will have no choice but to, once again, loudly denounce and denigrate the spending proposals. If that happens, it will be much more difficult for Trump to initiate the secret weapon of every authoritarian populist government around the world: giving direct cash payments, stipends, and rebates to the unemployed and under-employed voters―transforming them into vehemently loyal supporters. (This is precisely what is happening today in Poland.)
I’m well aware that current progressive leaders and legislators abhor the possibility of being denigrated and roasted (and made into fools) by fiscal conservatives for irresponsibly proposing to “increase the federal deficit and national debt,” likely causing “run-away inflation and economic catastrophe”―of being challenged to explain how they will collect enough taxes to pay for it all, etc. The problem is―and this is the central point―these progressive leaders are in no position to turn the tables: to make the same accusations to the right-wing conservatives should they choose to play the spending card first. And I think there can be no doubt, unless they are strategically held off, that they will play it. How else can the new government possibly hope to avoid the otherwise unavoidable disappointment of “Trump-populists” when they discover that cutting taxes on the wealthy―and empowering corporations toward increased profits―results in absolutely nothing for them?
It would be better, of course, if the progressive leaders came clean and proposed the direct issuing of sovereign fiat money to pay American citizens to build and do useful things. I realize that’s too much to ask. It may well be, however, this is the best opportunity there will ever be for some brave, intelligent, progressive leader to come right out and propose that we begin properly using the money that we actually have―the democratically controlled sovereign fiat money which our government issues every day in the billions of dollars, to monetize the profit-making efforts of American enterprise. He or she, of course, will be vilified and mocked as a harlequin. But maybe it is best to play the harlequin now, let the reality of modern fiat money begin to seep into America’s awareness while, at the same time, keeping the Tea Party fiscal-“hysteriots” screaming in Donald Trump’s ear.
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So much comes down to framing. Conservatives in general have successfully tarred the left with the paint of ‘irresponsible spending’. The notion that ‘sensible people always balance their budgets at the end of the year’ is a very powerful and, to most people – commonsense one. Spending more than you take in taxes as a sensible thing to do is counterintuitive and Conservatives know it.
The worst thing of all is that most Conservatives have been happy to run up huge deficits while still preaching good housekeeping. They are so good at it that when, for example, the Conservatives in the UK abandoned austerity around 2011 nobody actually noticed it. If they hadn’t, the UK economy would have completely stagnated. But they could still, with a straight face, talk about irresponsible Labour spending. And of course its made worse by spineless left of centre politicians buying into the narrative.
I don’t honestly know the answer to this, but the fact that the main left wing parties in the US and Europe (most notably in northern Europe) have completely failed to come up with a simple, clear way of explaining why deficit spending is not just desirable, but essential to a healthy economy, is either an evidence of incompetence, or evidence of internal corruption.
Regarding the spineless center-left politicians: them buying into the austerity narrative is by design as is most of the “haplessness” that keeps them from enacting progressive people-centered policies. From EFCA to ACA, the dem party has proven worthless at moving the needle to the left. We have the people that brought us HRC to thank for it. Let the purges begin!
I think it might be effectively argued that the left was captured by the same corporate forces that have owned the right for years. Corporations have effectively bought both sides of the political aisle and impose austerity (for the workers, mind you, none for the executive suites) no matter who’s in office. America will prove to ultimately be destroyed by the idea of shareholder primacy. We’ll get more of the same from a Trump administration based on his cabinet picks.
One does wonder, though, what Trump’s administration is planning to do about all the unproductive liabilities they’ve now inherited. The usual corporate answer is to dump unproductive liabilities, not find them jobs in the mail room.
I know a number of people who consider themselves lefties, identified mainly by being socially liberal, who continue to believe “deficits matter.” This meme is very strongly entrenched in our society and the alternative we offer (MMT) causes cognitive dissonance due to their inability to view the federal fiscal and monetary realities as markedly different than their household budget. Education (reading a book or two) seems to be the path to breaking through perceived truths, but a courageous national pol really could accelerate the process by playing the “fiscally Irresponsible Fool.” Volunteers?
Decades ago the left decided that finance was beneath them. With that decision they gave up their power.
The Democratic Party is not left-wing. It has that reputation, but it’s actions (and results) have been well to the right of center.
That’s not to say there are no left-wingers in the party, but they seem to have no effect on policy. That pretty sums it up for left-wingers around the World.
I think this is the key. For some reason I’ll never understand the left (and that includes Social Democrats) simply left economics and finance to the right. I’m old enough to remember the 1980’s and the complete inability of the left to put up any intellectual resistance to the snake oil sold by the monetarists and free marketeers.
Democrats have internalized the old Republican (pre-Reagan) hatred of deficits. Obama was clueless about the functioning of the national economy. He just mouthed the platitudes about “family budgets and tightening belts”.
Well, as I predicted, the Republicans will cast aside their hatred of red ink and spend to maintain their power and make the looting more rewarding. The bill will be left for the next Democrat to take office, if there ever is another one, and the deficit hawks return to scold him or her into austerity.
Democrats and Republicans changed roles with Reagan. Before that Democrats spent and Republicans taxed to balance the budget. Now Republicans spend and Democrats cut their favorite programs to balance budgets. What fools!
70% of the US economy reflects consumer spending. Roughly half (35%) comes from the top 20% by income; roughly half (35%) from the bottom 80%. The bottom 80% have no money to spend — and are still recovering from too much debt. The top 20% probably skew heavily to the top 5%, 1% and .1 % and so forth. In other words, maybe 3/4ths of the top 20% are not too dissimilar from the bottom 80% in terms of too little money to spend and too much debt to keep on borrowing.
Whether markets are ‘free’ (ideologically pure with zero government involvement.. which of course is nonsense) or ‘fair’ (governments play a critical role and so forth — which is not nonsense, but for the purpose at hand, matters not), the same fundamental reality pertains: if markets are 70% dependent on consumers and consumers have neither money nor debt capacity, then the markets stall out.
Progressives ought to cheer anyone who puts money (and not debt) into the hands of consumers. Progressives ought to cheer if that is Trump, Paul Ryan …. or Bernie Sanders. Progressives ought to cheer if that is Costco whose wage policies are more generous than WalMart. Progressives ought to cheer if other corporations increase wages and benefits in ways that put money (and not debt) into consumer wallets. Progressives ought to cheer if state and local governments do the same thing –either directly or indirectly through subsidizing other expenses in ways that free up consumer cash.
And progressives ought to point out the shortfalls of approaches that fail to do this — e.g. an infrastructure plan that is far more about asset values held by the 1% than about putting money (and not more debt) into consumer hands.
You make a key point, sir. One of the reasons that we’ve seen little inflation over the past eight years, despite truly stunning levels of money-printing by the Federal Reserve, is that essentially none of ended up in the hands of ordinary citizens (i.e., consumers). Even if businesses wanted to charge higher prices, their customers couldn’t afford it.
All the money piled up in the account of the large banks and the super-wealthy. And the things they buy, like stocks and high-end real estate and luxury goods? Yep. Lots of inflation there, but not counted in CPI statistics. But for Joe Q. Citizen, the “trickle-down” effect never happened.
If an economic stimulus plan is to truly benefits all Americans, it must push money into the hands of all Americans. Not just push it into little pockets here and there and hope it trickles down to everybody else.
I’ll be honest. I’m skeptical that these deficit-spending plans people keep advocating will work as desired. Even with a big infrastructure push, most of the money will end in the hands of government contractors who are already richer than most Americans. Only if new infrastructure saves people time and/or money would the benefits be truly broad-based.
Perhaps writing people checks is the better answer. That way they could “stimulate the economy” in the way that directly benefits them the most. And not rely on DC bureaucrats to somehow stimulate things for them in a way that actually benefits them. Of course, if consumers have more money, businesses could charge higher prices and actually get away with it, so we’d best be prepared for more inflation along the way.
Sigh… No easy answers, I’m afraid.
QE was not money printing. It’s an asset swap.
https://www.creditwritedowns.com/2013/10/economics-noble-winner-fama-qe-is-just-an-asset-swap.html
The Fed bought hundreds of billions of dollars worth of illiquid mortgage paper at par with “money” they conjured up from nothing. Of course it was money printing. Boy do I wish you blog people would be held more accountable for such idiotic statements.
It was not “illiquid mortgage paper”.
The Fed bought only Treasuries and Fannie and Freddie MBS, both of which are highly liquid.
And it appears you did not bother to read the link, which debunked the bogus claim that QE was monetization. There are plenty of other sources that say the same thing. Pity you are not interested in becoming better informed.
“The Fed bought only Treasuries…” with what? The answers is with printed money: look at the M0 data for goodness sake! Don’t look at “sources” – use your own brain! Here is an article which may enlighten you:
http://www.asepp.com/helicopter-money-operation/
First of all I’d recommend you better understand how money creation works. The Bank of England has a great paper that is fairly easy to read…
http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q102.pdf
Second, you need to view the FEDs balance sheet as outside of the private economy. When the FED buys something from the private sector it is effectively removing that from the private economy. Therefore when it buys financial assets, like Treasuries or mortgage backed securities (MBS), from the private sector all it is really doing is swapping different financial assets – MBS for FED Reserve Balances. The total amount of financial assets held by the private sector remains unchanged; but the price of financial assets in the private economy however have changed because the mix of financial assets within the private economy has changed. Monetary policy impacts the pricing of “money” or financial assets. Actual “helicopter money” would require the FED to give money away without receiving anything in return or to buy real goods and services (which its legal forbidden from doing, although that is not true of all central banks). This would net increase the total financial assets held by the private sector. We typically would consider these actions FISCAL policy.
The Bank of England confuses debt with money, like most economists. Commercial banks create debt only, not money. Debt increases the velocity of money. You cannot use debt, e.g. treasury bills to buy groceries or anything. Not even your credit card or debit card is necessarily accepted for purchases, particularly if there is any concern with solvency of your bank.
M0 is the only real legal tender. (The advent of the internet and electronic transactions has confused economists even more. Banning cash shows this.) The government has to make special emergency provisions of deposit insurance to prevent bank runs. If bank deposits are money, why are there bank runs?
With quantitative easing (QE) the US Federal Reserve printed over $3 trillion of money (currency) as measured by M0. Eugene Fama, Randall Wray, Ed Harrison, all talk nonsense about asset swaps – the amount of outstanding US treasury bills increased from $1 trillion in 2007 to about $1.5 trillion in 2015. QE is a lot more than $0.5 trillion. The Fed did not issue treasury bills to swap for long-term debt securities – it printed M0 money. Fama made up the idea of a debt swap, just like he made up the idea of efficent markets.
Economists waffle too much about their theories, without looking at the facts or experiences of the real world. MMT is clueless about money (little or no facts); MMT is only unscientific story-telling, lobotomizing the public.
Helicopter money is the Fed printing money giving it to the government (buying its bonds) which then spends it by distributing to welfare recipients (including academics). This already has been happening, but will accelerate with President-to-be Trump. 2017 will be the start of another era of 1970s – stagflation.
http://www.asepp.com/helicopter-money-operation/
Debt is money. :)
Nonsense. Give me all your money (currency) and I’ll give you debt. as much as you like.
“Lyonwiss
December 26, 2016 at 8:29 pm
Nonsense. Give me all your money (currency) and I’ll give you debt. as much as you like.”
Lyonwiss, I will give you ten thousand dollars cash for a mortgage on your house! Deal? :)
Sure I’ll take your money and give you a 30 year mortgage at minus 5 percent pa.
Thank you for your comments Lyonwiss. I used to think that credit card purchases were in effect “printing money” but as you point out it’s just debt. Buying a coffee at Starbucks is a contractual arrangement between three parties with no asset side of the ledger at the point of sale. All you’re doing is creating an obligation which is a liability. Yeah, it’s putting a bid under prices but whether it’s “money” is another question I.e. Starbucks will accept your Visa for a coffee but if you ask a customer to sell you her coffee for a your Visa card she won’t. Therefore, not money because not fungible. Which is important because at the end of the day it’s fungible money that services debt. Don’t know why this hadn’t occurred to me before but thanks again you’re comments were enlightening. It just hit me more than ever before that there’s a hell of a lot more debt out there than fungible money to pay it back.
I second vteodorescu’s comment: Debt *is* money.
If you gave your neighbor an IOU at a garage sale for his old skis, and he used the IOU to pay someone else, that IOU (i.e. “debt”) is a “money thing.”
You are most familiar with this if you have a bank account. That is your asset, but the bank’s liability (i.e. debt). You assign a portion of your bank’s liability to the payee each time you write a check.
Currency is simply checks made out to cash, drawn on the Federal Reserve (which carries currency on its books as a liability).
Debt **IS** money. Q.E.D.
Nonsense. No one in their right mind would accept yours or anyone’s IOU. Go to your supermarket, try and pay your shopping with an IOU. If IOU is money then everyone would be rich.
The root problem today is two fold; consumers are too burden with debt from credit cards to student loans to spend and the rich are hording more and more wealth.
i.e. Scrooge McDuck and Money
https://www.youtube.com/watch?v=bEmjiCoZ6e4
If the the past is a guide to the future, wealth will be redistributed. If not peacefully then by force.
The problem is, consumer spending isn’t telling your story. I see little fall off in spending. Matter of fact, the last 20 years of consumer spending have been fairly solid when you get rid of the waves.
Maybe the real debt levels are over estimated.
“If the the past is a guide to the future, wealth will be redistributed. If not peacefully then by force.”
Seconded.
“The Pitchforks Are Coming… For Us Plutocrats”:
http://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014#.U62q-LFqeWV – from June 2014, still germane.
“Those who make peaceful change impossible make violent change inevitable.”
Those infrastructure plans will only work if they are publicly financed and if they provide follow-on productivity that outlasts the debt service.
As currently envisioned by the Trump administrations, those plans come with toll booths that will extract more cash flow in the long run than they generate. Much of what is planned is repairing existing bridges and airports. Those repaired assets will probably not be enough more productive to justify the cost unless other structural changes are made in the regional economies to upgrade the human capital.
I envision new water systems with ever increasing monthly bills and toll bridges that downwardly mobile residents cannot afford to drive on. They think they are angry now!
You mean little inflation since 1997, maybe even 1995. Part of it is how the government calculate’s “inflation”. It is not the same as in the past. Maybe inflation is low, or the government is trying to stop the jumps, which means the 05-8 run up and 09-12 run down were under calculated both ways.
Absolutely agree. Whoever is first at the table with a new New Deal will be very popular and likely, re-elected.
It is weird to see this polarity shift …am I in bizzaro world?
You are lost on this one. There is no polarity shift or a “new deal” necessary. Your not paying attention to the cycle.
I suppose the progressives will need to thread the needle.
They will need to frame their ideas in “good government” terms.
For example: As the opposition party we do not have a problem with deficit spending in general. That’s the Tea Party Gold Bug’s bugaboo. We told the truth about Trump’s policy proposals when he was a candidate and now we see that we were correct; deficit spending will be necessary. But we are concerned about the measurable benefits, and the fair allocation of the benefits. And we are vigilant about waste, fraud, and abuse. We don’t want to simple-mindedly pay Trump’s cronies to drop concrete out of helicopters.
Short term projects with no long term benefit, projects like building nuclear silos in Montana, is a bad use of deficit spending. But long term projects are “investments”; building roads and bridges in Montana is a good use of deficit spending. etc
It’s not the deficits that are the problem. It’s the autocratic, self-dealing, global warming denying, race baiting candidate who arrogantly promised to miraculously find billions of dollars in efficiency gains but now as president realizes that the savings aren’t there after all and he will need to begin deficit spending, who is the problem. Trump’s willingness to throw away our future by spending money on pipelines instead of alternative energy, weapons instead of education, tax breaks for billionaires and coddling corporations that hide their income in shell companies overseas. That is the problem.
etc.
And his Catfood Democrat collaborators will be a major part of the Trump problem.
‘the last eight years of conservative insistence on fiscal austerity and federal debt reduction have been primarily driven by a political strategy to prevent the Obama administration from accomplishing anything’ — J. D. Alt
1. There hasn’t been any fiscal austerity. Despite the US being in the eighth year of an economic expansion, it STILL hasn’t moved into budget surplus. And owing to the deterioration of entitlement demographics, it never will.
2. There hasn’t been any federal debt reduction. Federal debt roughly doubled from $10 to $20 trillion under Obama. Even during the so-called surplus years of 1998-2001, it carried on rising, as budget cash accounting does not accurately reflect borrowing needs.
3. Budget constraints didn’t “prevent Obama from accomplishing anything.” He got all the supplemental war appropriations he requested. His signature ACA bill provided subsidies for both private health coverage and Medicare expansion. And so forth.
Not to worry — John Mauldin has projected that annual deficits will soar to $1.5 trillion in the next recession, which likely isn’t that far away. Progressives fighting to take credit for this coming tidal wave of red ink will delegitimize themselves by their own hand. So by all means, go for it. :-)
“1. There hasn’t been any fiscal austerity. Despite the US being in the eighth year of an economic expansion, it STILL hasn’t moved into budget surplus.”
Another load of nonsense. Austerity is not defined as a budget surplus.
Since WWII annual growth in federal spending averaged 5%. Over the past 4 years it has averaged about 1%. In relative terms that is lower spending and qualifies as austerity.
So we have a new definition of austeriTAH, as the MMT elders gravely call it in their mellifluous Oxford-don parlance. But it has some problems.
For one thing, using a trendline based on nominal growth isn’t meaningful when inflation has been trending down, briefly falling below zero in 2009. Nor it valid to cherry pick “the past four years,” although one can readily understand why this would be convenient for number-gaming.
As a percentage of GDP (a good broad measure, commonly used in international comparisons of fiscal stimulus), federal spending vs GDP actually rose sharply back to its trendline post-2008, after FALLING throughout the booming Nineties.
Rather disturbing, no? Either there’s no relationship of fiscal stimulus to growth, or perhaps it’s even negative.
Deficits and bank lending both inject cash into the economy, though bank loans have to be repaid, plus interest continuously transfer wealth from consumers to the 1%.
So need to look at change in bank loans, trade deficits that drain cash to foreigners that want to save dollars, changes in local savings that drains cash, where we are in the business cycle, etc, as well as deficits.
The main thing is that unemployment is far higher than BLS says, I.e. Should go back to how it was calculated under Reagan (for starters add the 16mm that have given up plus the part timers, and with current massive unemployment deficits are far too low.
“I suppose the progressives…”
Which progressives are we talking about? There may be three or four in the entire Party. True as opposed to faux.
You kind of lost me when you started making fun of the way people speak.
Haygood does this kind of thing regularly. In this instance not only is it stupid, it isn’t even valid, since Oxbridge types are precisely the type of economist who don’t understand fiat money. I can’t think of a single MMTer who has such an accent.
Thank you,paulmeli.. You are so right. Sequestration has crippled government departments such as SS and the IRS for example:https://www.washingtonpost.com/news/powerpost/wp/2016/12/09/social-security-service-declines-as-waits-at-offices-grow/
Education cutbacks have been numerous. Food stamps have been cut back. And on and on.
Yes, austerity not as bad as say in Britain, but yes, austerity and very bad for the country.
Which is part of why Obusha did it. The other part of why Obusha did it was to create the necessary pressure to make the Obusha tax cuts permanent, and keep them permanent.
Its part of what Obama expects to be paid millions of dollars for . . . after he leaves office.
The US government is a sovereign issuer of its own currency. It is not tied to another currency or a commodity (gold). It cannot go broke and it does not borrow money to pay its bills. The US creates money. Taxes per se pay for some of what is spent. There is a difference between the ability to pay and the willingness to pay. Our politicians are either ignorant of how a national economy works or it is manipulating the public with this idea that the US will default. The US can never default because they print or use a computer key stoke to create the money that is needed to pay any bill. It is Congress that does not have the willingness to spend the money necessary for the economy to regain its growth. When Congress debates a particular program the question should be if it is beneficial and if the cost could cause high inflation. Since we have pumped trillions of dollars into the economy over the last few decades and inflation has been manageable this should not even be part of the debate.
According to its own audit, the Fed issued between $16 – $29 trillion to cure Wall Street’s frauds in 2007-8.
But we can’t possibly come up with $4 trillion for Social Security because grandma might feel too secure.
“annual deficits will soar to $1.5 trillion in the next recession”
The deficit soared to $1.4T in the last recession. The ‘blame’ goes to the automatic stabilizers, i.e. unemployment and welfare transfers as a result of massive job loss.
Without the ‘red ink’ we would be in constant recession or depression with even more massive unemployment. Please learn the arithmetic of growing systems before commenting on one.
Unfortunately, under modern capitalism, almost none of government deficits (people’s net savings) will accrue to working people, but to the top 1%.
You do know that this site implicitly endorses MMT do you not?
John Mauldin’s projection of a $1.5 trillion deficit in the next recession probably assumes an “ordinary” recession, not a life-threatening meltdown like 2008. On that basis, a $1.5 trillion deficit seems to be in the ballpark. If it’s 2008 deja vu, double the estimate to $3.0 trillion.
Supporting consumption with automatic stabilizers is reasonable. But only a tiny fraction of such spending is being invested to engender future growth — perhaps so little that the growth-retarding effect of added debt more than cancels any stimulus from infrastructure spending and the like. US gov debt is headed well over 100 percent of GDP in the next recession: two digits good, three digits bad!
Before Saint Frank Roosevelt, when federal spending was on the order of 3 to 5 percent of GDP except in wartime, the US was not in “constant recession or depression.” Big Gov is a recent invention. Humans got along for millennia without it, and in fact did rather well for themselves.
Before Fdr we were on gold standard. During that 150 year history recessions happened twice as frequently, every 3 years, and were twice as deep, as when we moved to fiat. The Great Depression was neither deepest, I.e. GDP decline, or longest. Cross of gold indeed… fiat means that banks and savings accounts never fail, the basis of depressions.
For some years now fed has bought more treasuries than were issued. Lots of people said hyper inflation would ensue. Inflation declined because unemployment remained high, plus private sector receives less interest payments. Treasury instead pays interest to fed, fed returns to treasury. No reason why this paper couldn’t be burned.
There is no deficit too high, I.e. No spending too high when unemployment is high.
Quoting someone else who is also wrong is not making a reasoned argument. You are apparently one of those people that believes we can increase spending (and therefore GDP) without increasing one of the four sources of spending…government spending, business investment, a trade surplus or people borrowing from banks to spend. GDP equation:
Y=G + I + C + NX, where C is a function of G and I and NX is negative.
Two of those have left the building and the other two are in decline. A refresher course in 5th grade arithmetic is recommended for you.
“Big Gov is a recent invention”
I don’t know about Big Gov but whatever else we need it’s spending. Since WWII at least government spending has been the main driver of the economy. Without it there would be little incentive to invest…no one sits at a poker game where the only money they can win is their own.
Only an extremely, willfully historically ignorant person could claim that humanity got along fine for millennia. A huge amount of modern ‘big gov’ consists of welfare programs that have manifestly, objectively, massively improved the livelihoods and longevity of the old and the poor. In fact what you’ve said here is not only wrong, it’s rather disgusting.
What is “Big Gov” anyway? Did you, by any chance, mean democracy?
The size of government is measured by government expenditure as a percentage of GDP. Big government (socialist) is when this percentage is greater than about 30 percent. Some European countries have large governments of about 50 percent, which is why they are hardly growing at all.
http://www.asepp.com/capitalism-economic-growth/
The big lie is that U.S. government spending is “big”–a relative term.
Wikipedia has a handy article ranking government spending as a percentage of GDP. (https://en.wikipedia.org/wiki/Government_spending) Notice that clicking the headers sorts the table.
If you sort on spending, the U.S. ranks 46th in the world, between Argentina and Luxemborg. If you remove 11% of its spending (to normalize the egregious military expenditure so it’s only twice as much as China), it ranks between Bhutan and Namibia.
Gosh, I wonder why our infrastructure is starting to look third-world-ish?
The bigger lie is that bigger spending means worse economies. You know, like the Germans, who rank 27th, and have lower unemployment than the 46th ranked U.S. Or the Danes (rank 7) which polls as the happiest nation on earth.
Wikipedia is not an authority. One year of data from the Heritage Foundation is hardly reliable. I worked with 10 years of average data from the IMF. Sure there are relatively bigger governments than the US and they are generally worse off. Over the ten year period of the IMF data, the bigger the relative size of government the lower the economic growth rate (without adjusting for the size of the economy).
http://www.asepp.com/capitalism-economic-growth/
modern capitalism = crony capitalism
Why not just call it that?
Thanks for posting this.
I’d add the job guarantee.
The only reason Trump is gaining traction with these ideas is the CW that trade barriers will create jobs. But the number of jobs needed to approach real full employment is what 20M? And that’s going to achieved with tariffs?
Of course not. Those jobs are already gone and if they “come back” it will be in the form of automated workers.
You cannot ever go back, you can only go forward. Anyone who thought Trump (or anyone else) was going to return America to a time when a worker with only a high school degree and skill with manual labor could feed a family on one income, buy a house, and watch his kids grow up to a higher income that he had is dreaming.
It’s really a gimmick, a cheap shot at quick growth. All it risks is our position as the number one world market…
Deficit spending is a much better tool.
All the more reason to claim it as progressive.
That sounds like Free Trade Globalization hasbara to me. “Bringing back the jobs” is as simple as abolishing Free Trade, restoring Militant Belligerent Protectionism, forbidding the import of things that Americans can make in America once the exiled industries are rebuilt in America. Americans are smart enough to make a knife, spoon and fork. So ban foreign knives, spoons and forks from the American market and rebuild knife-spoon-fork factories here. And have a rigid minimum wage for knife-spoon-fork makers. And because foreign knives, spoons, and forks will be banned under Militant Belligerent Protectionism, the excuse of “foreign competition” forcing domestically restored knife-spoon-fork makers to charge “low prices” to pay “low wages” will be destroyed.
The barriers to doing this are political, cultural, etc. Including the silly progressive belief that history “has laws”, moves “forward not backward”, etc. History has no “laws”. History is just a bunch of stuff that happened. And there is nothing wrong with Free Trade supporters that can’t be solved with a hundred million rounds of 50 caliber machine gun fire and a few ten thousand big pits, long trenches, and bulldozers.
But, do we need to make “knives, spoons and forks”? Yes, there are critical industries that we desperately need to bring back to the US (e.g. computer chip foundries) but don’t you think we can better utilize the human resources we have (doctors, scientists, teachers, elder care, etc?
” If the progressives come out first, and early―before Trump has an opportunity to reframe their allegiance―the Tea-Party politicians, who built their reputations by refusing to increase the federal debt ceiling, will have no choice but to, once again, loudly denounce and denigrate the spending proposals. If that happens, it will be much more difficult for Trump to initiate the secret weapon of every authoritarian populist government around the world: giving direct cash payments, stipends, and rebates to the unemployed and under-employed voters―transforming them into vehemently loyal supporters.”
So, I’m confused. “We Progressives” don’t want Trump to do what “we” think is good for the people? So we should preemptively, loudly advocate for same, so that Trump’s right flank will rise up to block its implementation? All so “we” can do it later, ourselves, I suppose? (But we will do it smart, of course, not like the goosestepping Trumpf! We’ll do it right and for the right reasons!) But will we have forgotten that “we” wanted to do this thing, when the clotted coils of time finally twist things to “our” turn?
There is something here that goes to the root of the rot, all backwards.
It seems “we Progressives” can become most forceful advocates for doing the right thing after we begin to fear the Right is about to stumble into doing them first.
Nothing good will happen until the politicians acknowledge, and the populace understand, Monetary Sovereignty.
I see far too many articles, even on nakedcapitalism, indicating the author is completely ignorant about Monetary Sovereignty.
The false notion that federal deficits are “unsustainable” and federal debt is a “burden,” simply must be overcome, else we will continue to be flogged with the Big Lie (the lie that federal taxes fund federal spending.)
Monetary sovereignty is coupled with being able to persuade people to place their money into the country’s interest bearing accounts (aka Bonds).
I the country’s currency depreciates against the Dollar, or is perceive to fave future values against the dollar lower (running a trade deficit), then the country has to have doll denominated interest accounts (bonds), and that places the country in a non-sovereign situation.
Trade is a curse. It removes sovereignty, and consequently democracy.
The so called trifecta of democracy, Trade and Sovereignty is a dilemma – Sovereignty and optionally Democracy vs Trade.
Democracy is a sub-set of Sovereignty. The set of of trade an Sovereignty is null if ruining trade deficit.
Trade is a curse.
MMTers put it simply: imports are benefits, exports are costs.
The purpose of exports is gain imports.
We’re in the enviable position of not having to export to get imports. Trump is playing with fire.
If the imports are used to undercut and exterminate the domestic worker-employing industries those imports are designed to undercut and exterminate, then those imports are a pure detriment and pure social arson and sabotage.
So, if exports are costs, then that means its a ‘cost’ to have people gainfully employed? I am so confused.
@Massinissa – Exports are considered a cost because we are sending to other countries the real goods that have been produced by our workers in exchange for computer bits or pieces of paper representing money. Imports are a benefit because we receive real goods in exchange for those bits and pieces of paper. Since we have a potentially unlimited supply of bits and paper, we don’t really need more of them. However, more real goods can increase our general well-being (leaving out the philosophical issues for now). It’s the difference between looking at the real world of tangible goods and services versus the financial world of computer key strokes and paper currency.
If exports are reduced, any jobs affected could be reallocated to producing goods that could substitute for imports, which would keep some spending, and therefore, some income at home. (I understand there are practical barriers to achieving this, but I’m trying to explain the theory.)
Hope this helps.
It’s a cost because you ship out real wealth: products.
Your standard of living is your stuff. If you export it, you have less. The reason to export, then, is to import ie to obtain desirable real wealth.
The entire world wants to sell us stuff for dollars, of which we have an unlimited supply. So, let them…
At the same time, we need to be as productive as possible at home….which means jobs. If the private sector can’t generate the jobs, then the govt should supply them.
Jesus christ.
We export financial goods that wall street manufacturers.
The quality of these financial ‘goods’ has steadily deteriorated as the quantity has increased
Wall streets created paper is playing with fire and paper burns
A Monetarily Sovereign nation does not need to persuade people to buy bonds. In fact, an MS nation doesn’t need to issue bonds at all.
That is the meaning of Monetary Sovereignty.
The MS nation creates its own sovereign currency at will. It does not need or use taxes or bonds to fund spending. Even if all federal taxes fell to $0, the U.S. could continue spending, forever.
The same is true for bonds. No need.
The same is true for exports. No need.
The U.S. government creates dollars by spending dollars.
Trade does not remove sovereignty. The U.S. trades and is MS.
You might find this interesting and informative. Monetary Sovereignty
Monetary sovereignty is only a fancy term for the ability of government to print money. Any tyrannical state can physically force people to accept its paper or fiat money. But printing money has never created wealth. All fiat money systems have eventually failed due to mismanagement, declining wealth and hyperinflation. MMT pretends monetary sovereignty solves economic problems – not so. For example, Kublai Khan introduced fiat money in about 1279 and his empire collapsed in less than one hundred years. MMT does not understand that central banks have been created to control government printing money i.e. curbing monetary sovereignty.
Well, there are two circuits in the economy: the circuit of government money and the circuit of wealth/resources, and they circulate in opposite directions to one another. The qualifier “government” added to money is intentional. There is more money than government money, but the trick is getting it accepted… :). It is true, as outlined by MMT, that government money can be produced at will by the government, and it does not need any taxes to do so. However, in order to function, the government does need wealth/resources (electricity, gasoline, food, clothes, etc). As a non-productive entity, it needs to obtain these from the productive/private sector, and it obtains these through taxation. The money it taxes reduce aggregate demand, and then the government can come in with its own demand to fill the aggregate demand back to what it was without taxes. And it buys the required wealth/resources it needs to function.
For some reason, MMT concentrates only on the money circulation, and ignores the wealth circulation. The wealth circulation closely resembles the orthodox economic narrative about money circulation. I think this is one big motive why people have problems accepting MMT. They intuitively feel this wealth circulation in between the sectors, and they conflate it with the money circulation, greatly helped by the fraudulent orthodox narrative. Then when MMT says it is the other way around, the general public feels it in their bones that its wrong. MMT should acknowledge the wealth flow, and then maybe it would be easier to propagate the message.
MMT/MS briefly does a hat-tip acknowledgment of real resources when it says governments are not money-constrained, they are resource constrained, and then leaves it at that.
Telling the public that yes, their intuition is right, but it applies to wealth, whilst the government money are a government creation, and it circulates the other way round, and we are in no way constrained in money, as we can create it at will. – might get us further down the path and increase the penetration of the progressive message.
I know it is hard, I am not holding my breath, but I am still hoping… :)
Printing money is a covert tax or theft, because the government silently and without permission takes from those who have their purchasing power stolen. If the government can steal without consequence, there is no need for tax or debt to finance government spending. It is the monetary sovereignty of MMT.
By printing money which is a legally enforceable claim on goods and services, the government can acquire what it wants, without contributing to the pool of goods and services which are the objects of those claims. The government claims compete with all other money claims which have been earned from actual production of goods and services.
Money is not wealth. Money is only claims on wealth (real resources or capital). People who create wealth will soon stop producing when they find that they cannot stop their wealth being stolen. Stealing is not a zero-sum game – it leads to net social loss. This is the paradox of theft (I suggest) which is far more important than the paradox of thrift – a Keynesian fallacy.
Money printing and deficit spending are simply a scheme for the covert confiscation of wealth. The eventual result will be stagflation and economic collapse of all big governments.
http://www.asepp.com/keynesian-fallacy-collapse/
I think Alt is on to something important, with his idea that the Trumpsters will for political purposes surprise a large fraction of the R’s by adopting and re-naming some policy ideas currently favored by Progressives.
E.g., Trump has now tasked Ryan and the deficit hawks with finding a replacement for Obamacare that is both workable and politically salable. After their inevitable failure, Trump will have the option of going in a big way for single-payer – just in time for the next election.
I wouldn’t put it past him. Of course, the “Resistance” will fight tooth and nail to keep anything like that from passing.
I don’t think what Trump says and what the Trump administration (which includes all the brilliant conservative swamp dwellers of the last 3 decades) does will actually have any relation. I guess we’ll find out.
There is another “deficit”, an honesty deficit among progressive politicians who jumped on the balance-the-budget/tax-the-rich bandwagon rather than speak the truth about sovereign money (other than Kucinich of course – and where is he now?) Even recently, when a Trump supported asked Sanders on the MSNBC Chris Hayes town hall special, ‘where are we going to get the money for healthcare’, Sanders just smiled sheepishly (so much for the Kelton influence).
No, its too late to for J.D. Alt’s strategy to work, as astute as it is. The left has shot itself in both feet – no time for a massive sovereign money reeducation campaign.
Sanders’ healthcare proposal was paid for through taxes. At some point in the past year, there was a website showing how much an insured was now paying in premiums v. how much that insured would pay in new taxes with no premiums. The tax funded proposal was significantly cheaper.
Don’t know why Sanders didn’t mention it in the town hall.
“Sanders’ healthcare proposal was paid for through taxes.”
Although that is what Sanders said, he was wrong. Federal spending is not funded by taxes. Even if all federal taxes were $0, the federal government could continue spending, forever.
That is the meaning of Monetary Sovereignty.
I don’t know why Sanders does not understand this.
Rodger: Under present institutional arrangements and rules, not your imagined consolidation of Treasury and the Federal Reserve with a change in rules, isn’t the Federal Reserve prohibited from buying treasuries from the Treasury– and that under these same actually existing self-imposed rules the U.S. government currently needs to borrow from the private financial sector?
What gives you such apparent great faith that under your imagined consolidation of the Federal Reserve and Treasury, such tremendous power will not inevitably be abused?
I agree with Rodger below. It is a sham to continue to use the terminology of the right-wing as the basis for left-wing policies. Its actually intellectual cowardice not to be honest in the hopes of sneaking in a societal benefit by pretending to be conservatively frugal. It is a pathological and chronic flaw in left-wing strategy. If health-care is “paid for” then how do we justify providing education, infrastructure, climate change mitigation after all these tax credits are sucked up by healthcare? We can’t, because as Rodger points out, it was a false basis for investment in our society to begin with.
Who, pray are these “Progressive Leaders?”
Name them.
Sanders who did have Stephanie Kelton as his economic advisor for his campaign.
Good point. But what’s to be done? If, after seeing the way both Sanders and Trump lit prairie fires across the country addressing all the concerns that the established politicians just hoped they could ignore, and still no national politicians are interested in addressing all that roiling demand for change, then one can only confirm that democracy in this country is dead. Dead in the sense that it no longer functions as a market where the buyers’ (voters’) wants have any chance of being addressed by producers (politicians). The situation seems ever riper for non-established politicians to step into the vacuum a la 1930s Europe.
Riper for a non-established politician to fill the void? That’s already happened by my reckoning. One who’s calling for a nuclear arms race no less. I can only hope that it’s empty words like so many campaign promises.
My thought also.
Interest rate increases do not cause recessions. The 1980-82 recession happened because the federal budget deficit was too small. Then, Reagan blew up the deficit and the economy stayed out of recession until 1990.
Huh? Banks nearly failed in the 1980-1982 recession due to short term interest rates of 22% which meant they were bleeding even on their credit card portfolios. You could finance corporations only by issuing bonds at 13-15%, and the only companies that did were ones that had unrelenting financing needs like utilities. The interest rate increase shut down corporate investment and seriously dented home buying. And the Fed long used interest rates to choke off growth via the impact on home buying and building of a rate increase.
That is the common belief. But in reality, high interest is stimulative in that the federal government must pay into the economy, more interest dollars.
Read this: The low interest rate/GDP growth fallacy
Public debt or private debt? For the housing market it seems to me that rising interest rates, in the long term, are balanced out by a compensating lowering of housing prices. Wages are fixed, something has to give.
I suppose there is a “golden mean” somewhere around 3-5% interest. If it is too low, savers get poorer, if it is too high, no real, un-subsidized company can borrow. Both ways we get economic head-winds. It is true that the government pays interest into the economy, thus increasing the money there, but if it ends in the pockets of the bank sector, it will only inflate asset prices, without much positive effect on the real economy.
1. Enact a budget resolution that embeds tax cuts in to the numbers along with some meagre apparent defense function cuts and higher cuts in foreign relations
2. dynamically score the incoming revenues using these new tax policies, obtaining less revenues (and the ability to blame CBO bureaucrats)
3. Push out a reconciliation bill that reconciles the deficit as calcuated, one that escapes the cloture vote super-majority in the Senate as you know – cutting everywhere in the domestic budget
So what do you think would be in this reconciliation? They say that in the interest of fairness every area must take a cut, so: Medicare turned into a voucher, Social Security cuts, food stamps/TANF eliminated, Medicaid and ACA subsidies gutted, the list would go on ??
I see this happening.
Not what people expected when they cast their votes in November.
The U.S. government, being Monetarily Sovereign, has no need for revenues.
Cutting the budget is recessive. Every depression in U.S. history, and most recessions, have been associated with budget cuts.
Both neoliberalism and MMT are dependent upon a powerful State to achieve their economic goals.
Both neoliberalism and MMT advocate a remaking of the State as a core agency to help create the necessary subjectivities, social relations and collective representations for their respective agendas.
Would the role of elites under MMT be similar to the role of elites under neoliberalism?
Did both neoliberalism and MMT originate under the guidance of a dedicated cadre of intellectuals?
Is there a potential Lenninist dynamic in the creation of their respective political/economic structures?
Could MMT develop a conception of the State which would enforce some type of democratic control while also engaging in “direct sovereign spending for the creation of collective goods”?
Could the creation of such a new structural model of the state then be presented as a genuine alternative to the apparent Plutocratic populism of Trump?
Plutocrats are deathly afraid of inflation. You must first convince them that spending when all necessary resources including labor is readily available is not inflationary. Or, that friedman’s ‘inflation is always and ever is a monetary phenomenom’ is false.
Only then would they be willing to consider that reduced unemployment and the resulting better growth might benefit them.
Instead of fooling around with schemes to give people money, why not just relieve a lot of the problem at the source: Cancel the debt.
Declare National Debt Relief Day. On that day, all debts are set to zero. I don’t mean the government pays it off, I mean that all the little accountants go into their ledgers and mark debt owed to zero. Done!
Freed of all current obligations, people would be able to spend money they already have or are earning.
All those wobbly banks, presto, they’re solvent now as all the non-performing loans vanish. I mean let’s face it, governments are never going to pay off their debts, so why not just recognize that fact now. Wipe the slate clean for everyone, and start over.
Once that’s done, then things like basic income schemes could be devised, and the requirements would be somewhat lower at least since there would be no debt repayment to take into consideration.
The federal government could pay off its (misnamed) “debt” tomorrow.
The “debt” is nothing more than the total of deposits in T-security accounts at the Federal Reserve Bank. The government could pay them all off simply by transferring the dollars in those accounts back the checking accounts of the bond holders.
No new dollars needed. The “debt” is the phoniest issue in politics.
And being Monetarily Sovereign, the government could and should institute the Ten Steps to Prosperity.
That would solve the personal debt problem.
Many most progressives not ready for MMT, much less pols gen pub. Suggest 3- step:
1. Push back hard on BLS bs re unemployment, calc same as during Reagan, I,e. Before Clinton changed it, the first big neolib push for austerity. E.g. Add 16mm that gave up and stopped looking plus the part timers… work 10 hrs/wk count 1/4 employed 3/4 unemployed. Maybe 15% today? This stops fed from jacking up interest rate for no reason.
2. Bring back Keynes idea that deficits ok when unemployment is high, with the idea that when unemployment is low gov can run surplus, I.e. Balanced fed spending over bus cycle. This pushes against cutting entitlements and austerity.
3. Then, with everybody seeing good growth vs e.g. Eu, and with time to educate about how fiat works, people and pols might better accept that good policy continuously injects cash to replace foreign and domestic savings drains, the desired 2% inflation, and pop growth.
A useful addition is to provide a convincing explanation that inflation is caused by shortages of real goods or labor, that money printing occurs later as a result of said shortages.
Inflation is ever and always a monetary phenomenom. Friedman.
Prices change based on the law of supply and demand.
Friedman’s statement is demonstrably false, the second is true.
I am not getting the point of this post. That is why the U-6 was brought in during the same Clinton Administration.
Understand this now or understand it later: a U-6 of 9% is by the business cycle, full employment. That is when profits can no longer rise and the rate of money must increase to compensate. By 6%, you get where the post-war era reached several times(with 67-69 hitting the nadir at 4%) and surges in inflation, which I call the “labor max”, or when full time, full benefited positions come into such a high level during the cycle, there is no room to breath and prices must be raised to keep profits cycling in and a even faster supply of money needed. This is why the U-6 was created as the economy shifted into a more part time and temporary positions that reduced costs to look at underemployment. There is a complete misunderstanding on how the business cycle works and what variables drives its existence over the centuries.
There is no “deficit” spending coming and the tax cuts/tax credits, which I suspect will be pared down, will have a source of payment with program cuts and terminations.
You may be right but I don’t think there really has been a concerted attempt to convince progressives. Dennis Kucinich certainly understood sovereign money in sponsoring his NEED Act. If progressives jumped on that legislation and made it a central theme of progressive policy, maybe by now, 4 years later the concept of sovereign moneywould have gotten embedded in the minds of the public as a viable approach. Bernie did it with socialism after all.
If there is no deficit spending there will be no economic growth. GDP growth requires money growth, and deficit spending creates money.
Every depression in U.S. history has been caused by reductions in deficit spending. The same is true for most recessions. See this.
I wouldn’t use the term “deficit spending” – or at least qualify it. It begs the question. a deficit relative to what? Taxes. If the real function of taxes to to drain the money supply – why use them as a reference point to balance what really are “investments” in our society?
The real purpose of taxes is to create a continuous need of the residents for sovereign currency, which gives the currency its unending value. A result is a drain of money from the private sector.
If tax were the only drain then the money supply would be constant when net bank loans, fed spending and tax are all in balance. However the desire for savings, not least by foreigners who in some cases use dollars for their official national currency, drains dollars through the trade deficit.
Beyond this the available cash should expand to accommodate whatever the desired inflation rate is, plus the increased population. The net increase in bank loans, itself slowing on account of too few qualified borrowers, plus deficit spending are the only legal (non counterfeit) ways to increase our sovereign money.
John – Well, I understand that one tenet of MMT is that that taxes legitimize the currency, but I wonder if that is really a primary impetus nowadays. Don’t you think the continuous need for sovereign currency is now self perpetuating? What alternatives would rush in to take the place of dollars if taxes were discontinued?
I don’t see taxes as the only drain, but under a policy where the creation of money were democratized, taxing it out of circulation could be a very effective and direct lever. It could also be used to temper the natural tendency of “naked capitalism” to lead to condensations of wealth.
I also don’t see why you would refer to the generation of new sovereign money as “counterfeiting”. Its true that the US artificially imposes a spending cap – but there is no fundamental legal or economic requirement that it does so, is there? To my knowledge the notion of the “trillion dollar coin” was not contested on constitutional grounds – only political. (And, even if it were, a constitutional amendment could take care of that if there was a popular political will.)
The “trillion-dollar coin” was a legitimate response to the “Big Lie,” the lie that federal taxes fund federal spending. Actually, even if there were no federal taxes and no federal “debt” (i.e. deposits in T-security accounts at the Federal Reserve Bank) the federal government still could continue spending, forever.
The politicians pretend the federal debt (deposits) is a burden, and the populace believes it, so the “trillion-dollar coin was suggested as a solution to what really is a non-problem.
One day, perhaps in my lifetime, a politician will stand up and say, “The so-called “debt” is simply bank deposits and the so-called “deficit” is the method by which the federal government grows the economy,”
Sadly, political cowardice has been the rule, so the populace is fed a bunch of crap, the purpose of which is to widen the gap between the rich and the rest.
I wouldn’t blame politicians lying to the public on fiat issues, but rather ignorance.
This ignorance is widespread, reaching to the treasury, fed, and Obama.
According to Kelton, it really was cowardice on the part of many politicians. It just takes a few to jump on the bandwagon, to get the ball rolling. None did, except Kucinich.
The usual pattern for Presidents is to trigger a recession in their first year of their term, and then goose the economy as much as possible with easy monetary policy and big deficits in years three and four to improve the economy for re-election.
This allows him to blame his predecessor for the bad start and claim credit for the good finish.
I expect that Trump will do the same.
The ironic thing is that government “spending” (investment) immediately goes into the private economy. i.e. corporations, small businesses, the sacred “entrepreneurs”, yet those who champion capitalism rail against government investments. My guess is that leveling the playing field via democratic money distribution discourages wealth concentration and dissipates concentrated power.
First, for the deficit doubters, Randall Wray’s article that outlines the history is essential reading.
Also worth a look: Thomas Frank’s Listen Liberal that notes Democrats were running away from the New Deal long before this election. He cites Edmund Muskie as the first politician (running against our last liberal president, Richard Nixon) who wanted the Federal government to “pay as it goes.”