Forget the mantra, “how are you going to pay for it?”
On page 182 of The Deficit Myth, author Stephanie Kelton quotes Alan Greenspan expressing the key idea that underpins Modern Monetary Theory (MMT)—that’s the theory that shows we can dispense with pointless agonizing over federal budget deficits. Deficit spending is the bugaboo that looms menacingly over every proposal to spend big on some government program—the bugaboo that elicits the refrain, “How are you going to pay for it?”
The bugaboo can be easily slain, and conservative Alan Greenspan was just the man for the job.
The Greenspan quote at the end of this paragraph is an answer he gave to famous deficit hawk Congressman Paul Ryan in a hearing about entitlement reform. Ryan was hoping to elicit Greenspan’s endorsement of privatizing social security—Ryan’s premise being that government-supported Social Security was insecure due to impending deficits, and that “personal retirement accounts” were the remedy. Greenspan, however, disappointed him. His answer was, “I wouldn’t say pay-as-you-go benefits are insecure. There’s nothing to prevent the federal government from creating as much money as it wants and paying it to somebody.”
Whoa! Was Greenspan—chairman of the Federal Reserve at the time, and self-described “lifelong libertarian Republican”—really pulling the rug from under Paul Ryan’s cherished agenda to wrest safety-net programs away from the federal government and hand them over to his big-money donors? Was he really saying that the federal government could pluck money out of thin air to fund an entitlement?
Continue reading “The Fix for the Economy You Never Hear About: Slaying the Budget Deficit Myth”