Ezra Klein did a piece yesterday offering the conventional deficit dove position on deficits and debt. Here’s a commentary on it.

By

Marshall Auerback

Hint: it’s not Republicans.

Social Security remains one of the greatest achievements of the Democratic Party since its creation 75 years ago. Although Republicans have historically fulminated against the program (Ronald Reagan once likened it as something akin to “socialism”), they have actually made little headway in touching this sacred “third rail” in American politics. President Bush pushed for partial privatization of the program in 2005, but the proposal gained no policy traction (even within his own party) because Social Security continues to be hugely popular with American voters. It’s a universal program that benefits all Americans, not a government handout to a few privileged corporations.

I’m not entirely sure how to put this, so I guess I’ll just come right out and say it. During the last presidential campaign and in the context of John McCain’s admission that he didn’t understand economics very well, you let us know that you thought you had a very good understanding of it. Well, Mr. President, I’m here to let you know that you don’t understand it, don’t know what you’re doing, and are now preparing to do exactly the wrong things. And, I’ve got lots of evidence for thinking that. What’s my evidence?

At the very end of the Seminal/FireDogLake discussion of my last post, “How Are You Going To Pay For It”, two commenters, ironymeter and konst, offered some comments about the idea in Modern Monetary Theory (MMT) that fiat currency is, to a great extent, accepted, because the Government mandates its status as sole legal tender which can be used for paying taxes imposed by the Government. Let’s begin with a reply to ironymeter

For everyone who wasn’t able to attend Wednesday’s Fiscal Sustainability Teach-In and Counter-Conference at GWU, with help from the volunteers who made the recordings, I’ve posted each session’s audio along with speaker slideshows for viewing (here). Hopefully transcripts will be added soon. And for anyone who is willing to make a contribution but has not yet done so, donations are still most welcome.

Warning: At the end of this diary, I’m going to be asking for your support. Your financial support. Please consider making a donation today.

A little more than a week ago, I proposed a Fiscal Sustainability Teach-In and Counter-Conference to be held in Washington, DC as a response to the First Meeting of the Administration’s National Commission on Fiscal Responsibility and Reform, sardonically called by some the “steal our retirements commission,” on April 27th. The Counter-conference would also be a response to the Conference scheduled by The Peter G, Peterson Foundation’s (PGPF’s) “fiscal summit” on April 28th. This conference will be full of notables but won’t include even a single economist who doesn’t share the neo-liberal view of fiscal sustainability, centered around budget deficits, the national debt, and the debt held by the public to GDP ratio. The PGPF Conference, some powerful Senators and the President’s commission are spearheading a very broad-ranging campaign to persuade the American people that austerity is necessary for ordinary Americans (as if we haven’t had enough of that since the crash of 2008), including cutbacks on entitlements while, at the same time, the same people do all they can to preserve one of the periodic “great barbeques” in American history where well-off people accumulate immense wealth by looting the few resources owned by working people. It’s the purpose of the teach-in Counter-conference to oppose this deficit hawkism point of view with a alternate new economic paradigm offered by Modern Monetary Theory (MMT) that offers opportunity, balanced growth, and public purpose, in place of austerity, private irresponsibility, and hopeless Hooverism.