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Taxing Thoughts for Progressives

letsgetitdone's picture


Warren Mosler

(Posted with permission of the author)

(Editor's Note: Warren Mosler is one of the three primary innovators most responsible for formulating the Modern Monetary Theory (MMT) Approach to Economics. Warren is president of the Valance Co. Inc. a financial research services company. He is also Co-Founder and Distinguished Research Associate of The Center for Full Employment And Price Stability at the University of Missouri in Kansas City. CFEPS has supported economic research projects and graduate students at UMKC, the London School of Economics, the New School in NYC, Harvard University, and the University of Newcastle, Australia.)

Many progressives have been raising concerns about tax cuts. They are particularly concerned about proposed FICA cuts, even though FICA is a highly regressive, punishing tax, that hurts those who can afford it the least and are also doing the real work that provides the real support all of us for far less compensation than most of us would consider equitable. No progressive should stand for it for a single second.

The problem is that the non-MMT world has tied Social Security to FICA, and looks to view FICA cuts as the defunding of Social Security. And while this is nothing more than empty rhetoric, propaganda, and, at best, counterproductive and innocent (?) fear mongering, it is widely believed and accepted by the voters.

So what to do?

My approach is to support a full FICA suspension as well as the strengthening of Social Security and Medicare with an immediate increase in benefits to levels of support for our seniors that make us proud to be Americans. I add a reminder that taxes function to regulate the economy, not to bring in revenue, and right now we are obviously over taxed for the size of government we have, as evidenced by the obscene rates of unemployment.
And the true losses from unemployment in a single year exceed the material costs of all the wars in the history of the world combined.

I also add that anyone who understands actual monetary operations knows that the US can't run out of dollars to spend Congressional Appropriations unless Congress decides not to let the Government fulfill its obligations, that federal spending isn't dependent on taxing or borrowing, and that demand-pull inflation comes from excess demand that exceeds the real goods and services that are there to be produced and bought.

Fighting against FICA cuts because of concern that they will lead to defunding Social Security has been the tactic of headline progressives who have thus far lost most every battle and now look to be losing the war to stop cuts in Social Security, as well. Conceding the principle that there is a long-term deficit/debt problem, and arguing out of paradigm- what's called violating 'Lerner's Law'- is at best a high risk strategy that carries a high probability of backfiring, as we've all seen. Some examples of failed headline progressive arguments about deficit spending include:

-- it's only x% of gdp,

-- we owe it to ourselves,

-- there should be a capital budget to fund certain expenditures,

-- the low interest rates are the markets telling us they want more debt, etc. etc. etc.

have all obviously failed as both sides of the aisle now agree we need $4-6 trillion of employment -- killing deficit reduction over the next decade, even in the face of the largest output gap/lowest levels of employment since the last great depression.

So the argument against FICA elimination both supports a highly regressive policy and doesn't work to support Social Security.

I know it's easier for me to say, than for all of you to do, but my immediate proposals for today's economy remain:

1. A a full FICA holiday

2. An immediate 150 billion revenue distribution to the state govs on a $500 per capita basis

3. An $8/hr federally funded transition job for anyone willing and able to work, to assist in the transition from unemployment to private sector employment

4. Universal healthcare. See details of my proposal at

5. A 'narrowing' of banking and the financial sector in general as per proposals at

A clear and working understanding of MMT is mandatory to support these proposals and the rest of the progressive agenda in public debate.

First, when arguing it's often beneficial to begin with the primary function of the state currency and the monetary system, which is the provisioning of government. So I organize it as follows:

1. The state is desirous of provisioning itself

2. To that end, it levies a tax in its currency of issue

3. This creates sellers of real goods and services by individuals who now need that currency to pay the tax and net save.

4. These goods and services offered for sale in exchange for that currency cause others to desire the currency to be able to buy what is offered for sale

5. The government then can provision itself via the purchase of those goods and services offered for sale, as it spends the funds desired by the economy to pay taxes and fulfill desires to net save in that currency.

In other words, the function of taxes is to create what we call unemployment - people looking for paid work. Without taxes there would not be any unemployment as we know and define it. Non-monetary societies don't have any of our type of unemployment. Our type of unemployment is necessarily a monetary phenomenon.

And the purpose of taxing is the transfer of real resources, and particularly labor, from private to public domain.

So, knowing that, for a given size government there will always be a level of taxation that 'unemploys' approximately the number of people the government wants to hire. If taxes are more than government wants to hire, the result is unemployment. The government can then either decide to hire more people or cut the tax. However, a government that understands this, would decide how many employees it wants first, and then size taxes to unemploy that many people. In other words, a knowledgeable government. would use taxes as the thermostat, having first decided on it's desired level of provisioning.

I'll next address a common misconception. The following question has been asked more than once, "what if FICA is cut and the economy doesn't improve?" Yes, that could happen. But all that would mean is that the FICA taxes served no purpose in the first place. It's all about knowing that the purpose of federal taxation is to regulate aggregate demand, and not to raise revenue per se. That is, the federal government hasn't lost anything by cutting a tax that wasn't functioning to reduce demand in the first place, as evidenced by the fact that cutting it didn't restore any demand that it was presumably removing.

As a final point, let me address the use of taxation for social engineering. Yes, this is a perfectly legitimate thing to do, but most often it's 'second order' and used to address a presumed inequity that in fact is being caused by the existing institutional structure. That is, the reason one group or another, such as the financial sector, has income that is arguably disproportionate to any real contribution to the general welfare, is the institutional structure.

The most obvious example might be the US Treasury market, where incomes of those working in that industry often fall into the upper 1% of the population. The headline progressive response has been to hike tax rates progressively. My take is that historically those types of responses don't work particularly well to produce desired outcomes. So in this case, my proposal is to get at the root of the issue, and order the US Treasury to sell and issue nothing longer than 3 month T-bills. Likewise, I would not allow insured pension funds to buy any stocks, but be limited instead to government annuities, as per my article in the Huffington Post. For me, best to eliminate predators by cutting off their food supply.

So to conclude, the headline progressives, due to their lack of understanding of MMT, are losing the battles and the wars, at a time when, in fact, the progressive agenda has never been more affordable in every way. With MMT, and perhaps only with MMT, can the good fight be won.

(Cross-posted at All Life Is Problem Solving and Fiscal Sustainability).

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Roman Berry's picture
Submitted by Roman Berry on

I can't get past Mosler's BS on FICA. Is he simply ignorant of the history of Social Security and why it was set up with a dedicated funding stream that was never fiddled with until this "Democratic" president decided that fiddling with it was just fine?

FDR said that payroll taxes “give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program.” Exactly so.

Mosler is, on FICA, just wrong. Mess with the dedicated funding and Social Security becomes just another government program to be gutted...which is where Obama is headed with it.

letsgetitdone's picture
Submitted by letsgetitdone on

Here's Warren's reply:

"Yes, what has been called a 'useful fiction' isn't so useful any more.
'With those taxes in there' they ARE scrapping it.

The mmt high ground is the only argument that can be definitively won.
And the only argument that hasn't been lost."

Roman Berry's picture
Submitted by Roman Berry on

Progressives and liberals aren't losing. They aren't even in the fight.* Democrats are losing. Democrats refuse to tell the liberal story, and refuse to tell the New Deal narrative. No disrespect to Mr. Mosler, but no frame is going to be successful when the people we elect to represent us are wholly owned by corporation and rentiers who are determined to tear these programs down.

In a perfect world with honest debate, Mr. Mosler may have a point. In this world, he does not.

Want to save Social Security? Then don't vote for either legacy party...'cause they are in this together, and the lack of proper frame is not the problem. Actual animosity to social insurance and any program that does not bow before the false gods of the (non-existent) free market is the problem.

*If you call yourself a progressive or a liberal and you vote for Democrats, then you're a Democrat, and with the party being what it is, that means you absolutely are not a progressive or a liberal. These are exclusive qualities. If you're one and say you're also the other, you're just lying to yourself.

letsgetitdone's picture
Submitted by letsgetitdone on

about how the economics really work. I agree with you about our political system. I write about that too. I don't necessarily agree that a third party will help us in time, however. The way the primary rules work, I think it may be easier for a movement to take over the legacy parties than it is to build a viable third party in enough time to prevent the plutocracy. See:


here and


letsgetitdone's picture
Submitted by letsgetitdone on

Face it! The old argument is losing; and it's also not based on truth.

Social Security is not funded by FICA contributions. No Federal spending is "funded." It's all money that is created as it is spent.

We have to educate people about that. We have to educate them about the fact that The Government can never run out of money unless it chooses to.

And we have to educate people about the second New Deal and tell them that the safety net is going to be strengthened and that we can afford to strengthen it because the fiscal capacity of the Federal Government is unbounded.

Read Mosler's It won't take you long, it may open your eyes

wuming's picture
Submitted by wuming on

The Noble Lie, isn't. And that's what the FICA-- SSA link is. It's why the wingers can run the "SS is a pyramid scheme" argument successfully.

People have known the truth about monetary operations since 1948 and we don't do ourselves any favors by lying about it.

The truth is the strongest weapon we have and we should wield it like the sword it is.

Roman Berry's picture
Submitted by Roman Berry on

Yes, it IS based on truth. And it's also based on GOOD politics, not some fantasy that you seem to be having.

Let's look at the FDR quote just a little more fully:

In the course of this discussion I raised the question of the ultimate abandonment the pay roll taxes in connection with old age security and unemployment relief in the event of another period of depression. I suggested that it had been a mistake to levy these taxes in the 1930’s when the social security program was originally adopted. FDR said, “I guess you’re right on the economics. They are politics all the way through. We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics.

Got that? Those dedicated taxes are straight politics, and this from a master politician. Warren Mosler or FDR? I'll stick with FDR.

I'm not sure why you think this Mosler thing is a winner. It isn't. It's political suicide. The arguments have all been had and won. Just because we don't have people and politicians who know their history and know the winning arguments which already exist does not mean those winning arguments are not there.

Mosler has some good points, but on FICA and the politics of it, he is out to lunch.

Submitted by lambert on

And FDR would be the first to try something new. FDR is a politician to be emulated, not the author of religious texts to be cited to, as if they were the ultimate authority.

And I hadn't thought of the "no darn politician" argument as a "noble lie," but it is, isn't it?

nihil obstet's picture
Submitted by nihil obstet on

It has worked, and that's why the oligarchs are proposing FICA cuts. Yes, realistically, payroll taxes are a scam, but Social Security has survived because people think "I paid for it and it's rightfully mine." There are all kinds of tax changes that could be made to make the tax code more progressive. The only one on the table, as they say, is a cut to FICA. Why do you think that is?

I think it's another move to establish that, OMG, Social Security is running out of money and has to be cut!!! Just look at the slavering elites practically drowning in their own drool at the thought of cutting Social Security, and think about what battles have been won and lost in the past ten years. The only real battle won was the heading off of their attempted privatization of Social Security under Bush. Obama's Bowles-Simpson comedy duo couldn't get to cutting Social Security recommendations fast enough, even though they admitted that it has nothing to do with the deficit!

In short, I don't think I'd willingly enter a battlefield of arguments on Social Security in the belief that MMS truth will triumph over the mighty Wurlitzer to preserve and extend Social Security. Let's let MMS win on fronts like health care, where we have a lot to win and little to lose, rather than on Social Security where we have something to win but lots to lose. A few victories of that kind will convince me that we can discard the simplistic inaccurate model that's currently protecting us.

scottfullwiler's picture
Submitted by scottfullwiler on

If it's "protecting" SS, why is it even thinkable right now that cuts to SS could pass? I don't see anyone cutting defense or ag subsidies, and those are less popular than SS (or at least no more popular) and we don't pretend we pay for them with a particular tax.

Roman Berry's picture
Submitted by Roman Berry on

Don't tell me it's not working when the story is not even being told. Mosler (and I guess you) want to reinvent the wheel when the wheel we have rolls just fine if given a push. You think Democratic leaders are all going to get behind Mosler's argument and speak with one voice? You gotta be kidding. Those leaders can't even be bothered to learn their history and make the proven arguments, or worse, they can't be dissuaded by history and proven arguments from continuing on their path of destruction of working and middle class people in response to the demands of their masters.

Don't tell me something isn't working when it isn't even being tried. It's like telling me that a fire hose and hydrant sitting unused aren't working against the fire in your kitchen. They only work when used. Use them.

scottfullwiler's picture
Submitted by scottfullwiler on

If it's "working," why is it even thinkable right now that cuts to SS could pass? I don't see anyone cutting defense or ag subsidies, and those are less popular than SS (or at least no more popular) and we don't pretend we pay for them with a particular tax.

CMike's picture
Submitted by CMike on

Hard to believe the bold "new" idea being presented here is yet another round of tax cuts.

scottfullwiler's picture
Submitted by scottfullwiler on

We've actually been saying it for about 4 years. And if you think it's the same thing as what's already been tried, then you really aren't thinking.

CMike's picture
Submitted by CMike on

I mostly just cut and paste.

[BTW, some of us, for a lot longer than four years now, have been advocating for a revenue neutral oil or fossil fuel tax to be levied for the purpose of replacing some percentage of the Social Security payroll taxes which are being credited to the Social Security accounts of individual earners along with increasing Social Security payouts to offset the average cost of the that new fuel tax.]

scottfullwiler's picture
Submitted by scottfullwiler on

I'm totally with you on that fossil tax to replace SS. I've actually had a similar idea--taxes on non-renewable energy, carbon, whatever and reduce other taxes $ for $.

scottfullwiler's picture
Submitted by scottfullwiler on

I'm amazed at how many progressives continue to defend supporting a lie about how SS works, and how they somehow think this lie is what protects SS. In truth, the only reason anyone can get away politically with discussing gutting the most popular govt program ever is because of the fiction that its "funding" won't be sufficient. The sooner progressives accept that, the sooner they can successfully defend SS AND stop levying such an absolutely onerous tax on working families (both from in terms of the taxes they pay and the reduced salaries they receive from employers paying the tax). Raising the ceiling on FICA just exposes SS to additional attacks from the right regarding subsidization by, in their view, the "so-called rich."

I've never heard a progressive successfully counter this point--take any spending on defense, ag subsidies, or corporate welfare or whatever else progressives would like to reduce but can't because of the politics or special interest money, or whatever. Don't you think it would be easier for progressives to be successful politically in pushing through reductions in spending for said program if we pretended it was funded by a particular tax that was becoming insufficient to "cover" the program's expenses at some future date?

I want to see the GOP just try and push through cuts in SS once the AARP understands that SS spending doesn't need FICA or the trust fund to "fund" it, just like any program that can't be touched because the political support is too strong, but even more so given that none of those programs are nearly as popular as SS.

The sooner the truth about SS is understood, the sooner we can really protect SS AND stop the extraordinarily stupid practice of over taxing the income of the poor and lower middle income earners, as well as stop providing such a strong disincentive to businesses in hiring the poor and lower middle income earners.

Submitted by hipparchia on

providing such a strong disincentive to businesses in hiring the poor and lower middle income earners

huh? fica taxes are paid on what - the first $106,000 or so? since practically all of us make <$100,000/yr, and since a goodly portion of people making more than $100,000/yr are doctors, lawyers, small business owners, etc, it would seem that businesses hire only people that cost them the full fica tax.

businesses hire people when they have customers for their products and services, not when they get indiscriminate tax breaks.

as for social security and medicare being safer if they were paid for out of general funds instead of dedicated trust funds, i'm not sure i buy that. if you dig down into the medicare trustees reports [page 11 of the 2011 report] you find these 2 paragraphs [ever since the 2003 medicare modernization act]:

Transfers from the general fund are an important source of financing for the SMI trust fund and are central to the automatic financial balance of the fund’s two accounts. Such transfers represent a large and growing requirement for the Federal Budget. SMI general revenues currently equal 1.5 percent of GDP and would increase to an estimated 3.0 percent in 2085 under current law (or to 4.8 percent under the illustrative alternative to current law).

The difference between Medicare’s total outlays and its “dedicated financing sources” is estimated to reach 45 percent of outlays in fiscal year 2011, the first year of the projection. Based on this result, the Board of Trustees is required to issue a determination of projected “excess general revenue Medicare funding” in this report. This is the sixth consecutive such finding, and it again triggers a statutory “Medicare funding warning,” indicating that Federal general revenues are becoming a substantial share of total financing for Medicare. The law directs the President to submit to Congress proposed legislation to respond to the warning within 15 days after the date of the Budget submission for the succeeding year.

which suggests the possibility that no, having medicare paid for entirely out of the general fund would not slake the kleptocrats' desire to gut the program, and by extension, would not keep them from gutting any other social program paid for out of the general fund.

warren mosler's picture
Submitted by warren mosler on

FICA is paid by both employees and employers.

suspending FICA will support incomes of employees and thereby add to sales and employment.

the way it all works is that business competes for consumer dollars. and a restaurant doesn't lay people off when they are full of paying customers. Or a department store. Nor does an engineering firm lay people off when orders are growing. Employment is a function of sales. We lost 8 million jobs almost all at once because sales fell off.
And when sales go up, that's when employment increases.

suspending fica also reduces costs for business, and in a competitive environment that reduces prices paid by consumers. this is a good thing- lower prices for what we want people to be able to buy. but it doesn't directly increase jobs.

so a fica suspension helps people working for a living two ways- more take home pay and downward pressure on prices.

but the administration's current trial balloon is only for a fica cut for business in the name of jobs. this is but one more gross error seemingly supported by both sides.

Submitted by lambert on

I like that formulation. The parties are in a state of collapse in every respect except hanging onto power, which is the message of the Weiner debacle.

And the economists are in a state of collapse in every respect except hanging onto position, which is the message of the "pivot" last year from the inadequate stimulus to "ZOMG!!!! The debt!!!!!" That goes for both salt and freshwater economists; either institutionally, intellectually, ideologically, or all three, they all worked together to create the mess we're now in, this so-called recovery. They baked the cake. [Paul! One of the factors holding "recovery" back is perceived bankster impunity for accounting control fraud. So why not either name names, or debunk the idea? You've got the platform. So the silence is telling.]

* * *

As far as Mosler's MMT summary, it makes sense to me that money is the creation of the state; perhaps not in all societies throughout recorded time, but in our system, for sure. I mean, we know this because we've seen it done. When the Fed wants to create money, they change digits on a spreadsheet. That's what they say, and that's what they do. However, if the state exists to serve the public purpose ("... provide for the general welfare...", Constitution, Preamble), it follows that when the state creates money, it must do so for public purpose, which is what the Fed does not do -- unless making the banksters whole, and bigger and more powerful than ever, after they looted and crashed the world economy through accounting control fraud, be conceived of as public purpose -- which, to be fair, our Versailles elite no doubt do, all the way up to Obama and his owners. Personally, I see looting and fraud as over on the private side of things, but maybe that's just me.

Now, it's true that there can be great conflict over the notion of what the public purpose is or should be. In 1865, for example, we decided that protecting the property interests of slaveowners in slaves was not. But it would be a great improvement to be having these conflicts grounded in a real understanding of how money works, as opposed to fighting on slippery and shifting layers of impacted bullshit.

* * *

For Mosler's policy prescriptions, I'm going to plug the 12-word platform once again, since the 12-word platform has been quietly propagating, far away from the headlines, in some actually progressive sites. Let me lay them down side by side here:

-- --
12 Word Platform Mosler "immediate proposals"
1. Medicare for All 4. Universal healthcare.
2. End the Wars --
3. Tax the rich 1. A full FICA holiday
4. Jobs for All 3. An $8/hr federally funded transition job for anyone willing and able to work, to assist in the transition from unemployment to private sector employment
2. An immediate 150 billion revenue distribution to the states ...
5. A 'narrowing' of banking and the financial sector...

I don't have a lot to say about the systemic effects here, because I'm not an expert on that, and there are real experts on this thread. However, I think I can claim some degree of expertise in propagating progressive talking points, and advocating for not completely insane public policy, so I'll look compare and contrast from that perspective. [Adding: The 12-word platform is meant for the long haul, and "immediate proposals" almost by definition are not. However, the best way to steer through chaos is from principle....]

The easy parts: Obviously, there's a good deal of overlap here. Medicare for All is a no-brainer for everybody except Randroid loons, career "progressives," and health insurance company shills on K Street and in academe (sorry for any redundancy). And "Jobs for All" (hipparchia advocates adding "Government Jobs) started with the MMTers and propagated outward. (Note, rhetorically, how "all" reinforces the sense of public purpose. Support from "all walks of life" is a very important baseline for any change agent to achieve.) It's also easy to throw out the money to the states as a talking point: I understand that its essential to relieve their budgetary agonies, and stimulative, too, but rhetorically it looks like an election goodie, and as a talking point for the long haul, it's ephemeral ("immediate").

As far as "narrowing" the FIRE, I'd reframe as "Turn the banks into public utilities" (which I notice, after a year or so of work, propagated over to NC ;-). For mortgages, cars, and student loans, why not make getting a loan like paying the electric bill (including cut-off), instead of like dealing with the Corleones? (As a talking point, "Turn the banks into public utilities" is too long, though. The game of the 12-word platform is concision.* But I do think we need to figure out how to add this to a 15-word platform).

The hard parts:

"End the wars." I suppose, under MMT, we can afford the empire if we want. Leaving aside the issue of blowing wedding parties to red mist (and so forth), it seems very doubtful to me that a militarized political economy is capable of recognizing any idea of public purpose other than the perpetuation of the military. Medicare for All, and Jobs for All, for example, would mean that there are fewer reasons for working class kids to join the military. And a focus on productive use of labor is directly opposed to a focus on condensing wealth into weapons. War is a racket. It's bad enough when the racketeers are operating from bullshit premises like ZOMG!!!! The debt!!!! What happens when they operate from a basis of the truth?

"Tax the rich." I get that under MMT, taxes are meant to regulate aggregate demand, and not to raise revenue, and so the Willie Sutton approach to funding social programs is off point. And I see the argument for cutting FICA for "both sides," and not just business, as Obama wishes to do. However, taxes can still be "the price we pay for civilization" even if they don't raise revenue; they're a means of social control, and a way for citizens to acknowledge which state they are members of (and which public purposes they support). It also seems to me that even if taxes regulate "the economy," those who benefit most greatly from the way "the economy" is regulated should bear more (indeed, most) of the burden for regulating it. Was life really so bad for the top 1% in the Eisenhower administration? Somehow, I don't think so.

NOTE * "FIRE department?"

Submitted by jawbone on

which can be used in calls, letters to our representatives, in talking to other people who are not among the Uberwealthy? Or Ube- informed.

I've been reading about MMT; I think I grasp its premises, but I do not trust being able to explain it to someone with no exposure to the background we've had here at Corrente.

Amazingly, the MCM (Mainstream Corporate Media) will talk about Paul Ryan as being "serious" and a bright Republican leader, but they can't defend what he wants to do. Somehow, when an idea is acceptable to the MOTU's it's acceptable to the MCM. But what Mosler is offereing? Does it even get discussed anywhere where regular, non web-involved people will learn about it?

The MCMers keep the discussion box tightly closed to any other ideas, so talking about something like MMT is...difficult, to put it mildly.

warren mosler's picture
Submitted by warren mosler on

the banks already are regulated public utilities :(

Hence my proposals for banking that reduces them to a minimum needed for promoting public purpose.

My healthcare proposal includes (enhanced) medicare for all.

My proposals keep most of the would be rich from getting their to begin by eliminating wealth generating activity that does't serve public purpose. Like tsy bond trading

And when the world sees the results of my simple to implement full employment policy and does same there won't be any more wars.

glad we agree!!!


Submitted by lambert on

... but it's unclear to me how they are public utilities. Dealing with Goldman Sachs sure isn't like dealing with my local electric company.

As far as eliminating parasitical wealth-generating activity, sure. So ____ the rich, then. And not "eat."

And if war is indeed a racket, then taking an indirect approach to
there won't be any more wars" isn't going to work.

DCblogger's picture
Submitted by DCblogger on

under Reagan we drastically raised FICA taxes under the premise that we were strengthening social security. In fact we were merely transferring the tax burden from the wealthy to the middle class and poor. That they want to cut social security now is and indication that the whole thing was bait and switch. Basically they want to keep raising the retirement age until no one will live to collect. FICA is a scam as of today.

Somehow we need to get out the word that with a fiat currency taxes regulate the economy, they are not necessary for gov't spending. It took me quite a while to get this, it is so counter to everything we have heard before.

Submitted by jawbone on

on all of us who paid the O'Neill-Reagan FICA increased taxes. We were asked to "pay forward," and the monies would be held in a trust fund (Oh, the laughs the MCM had with Al Gore's use of "lock box"! The derision from BushBoy!), but instead those monies were used to fund tax cuts for the wealthy. People get that.

But they also kind of believe that since it's been used to fund those tax cuts --or at least reconcile the books to make the tax cuts look more affordable--that now we are without those monies. And they don't know how to get those monies back -- except through cuts and higher taxes.

Now, the right and Austerians are playing the voters by saying if they don't get their slashing reductions in government programs they're going to refuse to raise the debt ceiling because it just means a few days or whatever of not paying out on those Treasury notes. Which is good, unless of course it's your rent money coming from SocSec or SSI, your health insurance coming from Medicare, your family's income, your revenue from services done and items sold to the government. They make it sound like only China won't get a few payments right away, but they really want SocSec payments held back.

And that's how Obama will play it, right? Stick it to...whicheve groupr will do the least damage to him. And he doesn't seem to get that he's antagonizing the majority of voters....

Or, he's just hell bent on doing what St.Ronnie was unable to do: dismantle the New Deal and the Great Society.

Submitted by jawbone on

to Obama that the Right will gleefully attack him from the left. Just as they did with their 2010 campaign, that Obama was going to ruin Medicare. Alas, Obama has said enough about "changing" Medicare and cuts to Medicare (through his Cat Food Commission) that people can't be sure he won't ruin it.

And they see he let trillions go to the banksters, with very little getting to the little people. Either they themselves or people they know don't have jobs. It's not going to be too difficult to scare the public, even with the Repubs' lies. There's so little "there" there with Obama....

The writer appears to think there is still a possibility that Obama will do what needs to be done...heh.

malagodi's picture
Submitted by malagodi on

This is really quite interesting. But as someone who has no real grasp of MMT and its implications I want to posit something and ask a couple of questions.

First of all, it seems to me that in the end, these radical ideas about monetary supply, the basic role of money and its fluidity are, at the end of the day, still considering the evolving situation in modalities of the past. In short, the discussion has not transcended the existing ideas of commerce.

Second, on the ideas about fiat currency. It seems to me that the discussion presumes a developed, industrial economy and a functioning central state. In Haiti, for instance, the fiat currency, the Haitian Gourde, is meaningless. What is important is how much cash - in Gourdes or Dollars - must be gathered to acquire a little rice. This is important because in all economies like Haiti's, the local economy, particularly agriculture, is systematically destroyed as the first order of international business. Farmers can still grow rice and vegetables in Haiti (if they aren't forced off the land), but they cannot compete in the marketplace with subsidized American produce. So what happens is that the 'unemployed' in the rural areas don't really care so much about the national value of the currency (since they can't get any) and the economy becomes hyper localized. It is the urban dwellers who see the price of food skyrocket with every 'quantitative easing' who have real problems. So my question, not so well articulated is, how does MMT deal with these kinds of situations where the mechanisms of the state don't really exist?

Third. Speaking of fiat currencies, what are the implications of the emerging digital currencies and electronic transactions that completely bypass the existing legacy financial institutions and the idea of the 'sovereign' doesn't apply?

Fourth and finally. What will be the point of discussing FICA and Social Security if the whole shithouse falls apart?

Submitted by Randall Kohn on

Just my attempt to add another 3-word slogan to the platform.

letsgetitdone's picture
Submitted by letsgetitdone on

There's no reason why the banks shouldn't be run by Federal Civil Servants. So, let's just go for it. When we get charged with Socialism; just tell them we don't believe in it; but we also don't believe in stupidity even less. And since banks don't do anything for us that a Government agency couldn't do better and cheaper and without the risk of periodic economic crashes caused by financial speculation. It's time to recognize that banking like the national defense is one of those things that's best handled by Government.

Submitted by lambert on


Or "single banker" just like "single payer" ...

Somewhere there is surely an advocacy group for this that has thought through the policy.

Submitted by lambert on

I understand and sympathize greatly with the position that the politics of FICA guarantees Social Security and that cutting it is very dangerous; that was once my position.


1. The politics of FICA are not working. We wouldn't even be having this discussion if they were. Obama put cutting Social Security right back on the table in IA 2008.

2. Today, the politics of FICA are a noble lie. If you accept the MMT account of the real operations of taxing and spending, as I do, then FICA taxes don't support the program at all.

And the left (progressives, whatever) can't work with noble lies, because (unlike the banksters) we don't have the money to architect and maintain a humongous structure of bullshit and lies. Straussians don't come cheap!

So we have to let go of an old idea, and not for the first time. Yes, it's a risk.

nihil obstet's picture
Submitted by nihil obstet on

How are the politics of convincing Americans that the financing of our health care system is wasteful and cruel coming along? The majority of Americans want Medicare for All, but what we're getting is insurance company subsidies. Given that, I'm not convinced that if we just explain MMT to Americans, we'll get our policies. Health care is a bigger issue than Social Security right now, so let me see a win there to convince me that a breezy "Yes, it's a risk" clinches the argument.

We have been having the Social Security discussion since at least 1936, when the Republican Party platform read:

The unemployment insurance and old age annuity sections of the present Social Security Act are unworkable and deny benefits to about two-thirds of our adult population, including professional men and women and all those engaged in agriculture and domestic service, and the self employed, while imposing heavy tax burdens upon all. The so-called reserve fund estimated at forty-seven billion dollars for old age insurance is no reserve at all, because the fund will contain nothing but the Government’s promise to pay, while the taxes collected in the guise of premiums will be wasted by the Government in reckless and extravagant political schemes.

Despite the fact that discussion of Social Security proved that the politics weren't working in 1936, the program has eked out a 75 year existence so far, and my time frame is such that I'm willing to have the discussion for another 75 years. However, if you have a way to guarantee Social Security (or any other good, liberal program, for that matter), please tell me cause I don't have one.

I go back to, if we can win one, let's go for something more important where a loss doesn't make things worse than no change. Things that would help far more than a moratorium on the payroll tax: a tax credit for low and moderate income families; Medicare for All; reduction of full retirement age to 60 or below and raising benefits (hey, if the payroll tax doesn't matter, this is a no-brainer. If it's politically impossible, what does that say about the politics of a dedicated tax?) And incidentally, my state is not sovereign in its own currency, but it does have some dedicated income funds and streams, and they do protect and/or constrain spending on the purpose of their funding, from clean water (protects) to highways (constrains). It's something people understand.

And on the imperative that we not disseminate lies -- OK, but I'm uncomfortable with labeling alternatives to a theoretical construct as lies. We have a very complex set of laws, principles, and practices that govern how we allocate resources. MMT is an explanation of how we can think about and modify the usages in that system. Speaking of specific practices rather than theoretical framework shouldn't be dismissed as lies or bullshit. That's setting ourselves up to be a permanent very small cult.