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The Real Fiscal Responsibility Today Pilot Project

letsgetitdone's picture

This pilot project and the radio/video shows it will produce and place on the web is for everyone tired of hearing economic commentary from those who got everything wrong. For decades, the doctrine of "Fiscal Responsibility" interpreted as long-term deficit reduction and Government austerity has had a secure place in American politics. This doctrine is the economic equivalent of the medieval notion that patients must be bled to cure them of disease. And this truth is reflected in the economic history of the United States at least since 1976, when we first began to practice ideology-based austerity in its modern form by planning for deficit reduction and balanced budgets in order to decrease the debt-to-GDP ratio.

Yes, there were short periods of expansive GDP growth during the Reagan and Clinton Administrations, but when one compares job creation and growth rates across the decades, one can see from Table One, that new job creation and GDP growth during the 70s, 80s, 90s, and the first 10 years of this century don't compare to the 40s, 50s, and 60s of the 20th century. By comparison we've been experiencing a stagnant economy in varying degrees for more than 40 years now.

Table One: Percent Changes in Some

Key Indicators Across the Decades*

Key indicators across decades

*The first four columns in the table were taken from Neil Irwin's 2010 article emphasizing that the first decade of the 21st Century was a lost decade for the US economy and its workers. I added the last four columns, myself. All the numbers in the Table are percent changes, or ratios of percent changes during each decade beginning in 1940. I took the percent population change column from the US Census Bureau via Wikipedia, and then calculated the ratios in the last three columns.

The notion that austerity is necessary after running budget deficits caused by economic downturns is false and damaging to economies all over the world. We have opposed targeted deficit reduction and austerity in the blogosphere and in an e-book since 2010. Yet despite our efforts and the efforts of many others who using the Modern Money Theory (MMT) approach to economics, as well as other post-Keynesians, the mythology of austerity still survives as a political doctrine echoed by various figures in Congress and occasionally by the President of the United States and some of his cabinet officers, waiting in the wings until the next debt ceiling or budgetary crisis provides an opportunity for austerity partisans to push their nostrums of spending cuts and "Grand Bargains" once again.

Why does austerity ideology still survive? Because the developing oligarchy uses its false notion of fiscal responsibility to justify its refusal to support solutions to our problems that require deficit spending. “Fiscal Responsibility” is used as a moral cudgel to get some things done and to block other things. Thus far, it has been used to get the wrong things done in the wrong way by politicians and pundits of every stripe working at the behest of the developing oligarchy.

So, the importance of our project is that it is aimed at overturning their myth of fiscal responsibility and replacing it with Real Fiscal Responsibility. If we can do that, with your help, then an important tool used to create and maintain the oligarchy will be gone, replaced by one that we can use to drive fiscal policies designed to fulfill the public purpose as seen by the people.

We value Real Fiscal Responsibility highly, and we want it very badly; but it doesn't lie in targeted deficit reduction, or in spending cuts for their own sake, or in balanced budgets, or in paying off debt, in the abstract. We know that this kind of conception of fiscal responsibility is actually the height of fiscal irresponsibility, because it has been responsible for most of the increasing economic misery and growing idleness and economic inequality that many of the people of the United States have endured for decades.

Instead, Real Fiscal Responsibility lies in targeting real impacts, real benefits, and real results, and fulfilling the needs of real people. We want to replace the false and damaging austerian accountant's green eyeshade paradigm of so-called “Fiscal Responsibility,” evaluated against the arbitrary standards and scare tactics of debt-to-GDP ratios and public debt levels, with the human scale paradigm of Real Fiscal Responsibility, evaluated against the standard of fulfilling public purpose.

We seek funding for a pilot project for a new radio/video series that will present, and advocate for this paradigm change. The project will create six shows that we will then use to get the series picked up by an existing cable network.

Only by exposing the fallacies of austerity systematically, week by week, can we end its reign of error and needless privation. Only by describing the implications of fiat currency systems in detail can we communicate the opportunities existing for people who will use the expanded policy space they provide.

Getting this done is enormously important, because working people are suffering and the middle class is being destroyed needlessly by austerity policies, and by some with malice aforethought. Our paradigm of Real Fiscal Responsibility makes clear that Governments with fiat currency systems like those found in the US, UK, Canada, Australia, Japan, and many other nations issuing their own currency cannot run out of money. They have no solvency risk. Their level of debt and debt-to-GDP ratios don't matter from a financial risk point of view.

Here's Professor Stephanie Kelton being interviewed by Richard Eskow on this point and the general orientation of MMT.

Once people understand the expanded policy space implications of fiat currency systems they will know that any budget cuts or tax increases or rejections of new legislation on solvency or financial scarcity grounds alone are unjustified. And they will know that all the troubles caused by refusals to pass full employment, Medicare for All, new energy foundations, educational reform, infrastructure reinvention, extensions of the social safety net, and other highly desirable fiscal policies create gratuitous and cruel individual and societal hardships for most of us. All proposals to cut entitlements and the social safety net on grounds of cost or so-called future liabilities are equally unjustified, and certain to cause entirely unnecessary suffering.

These spending cuts on purely deficit reduction grounds harm America. They sell it short. They damage future generations. They prevent us from seriously considering new and innovative policy proposals which address a number of our problems simultaneously such as this one, and in so doing hurt our ability to adapt to change and challenge. They must be eliminated as a factor in politics once and for all if we are to progress as a nation.

Our proposed Radio/Video program is about presenting the paradigm of Real Fiscal Responsibility to the general public. It will explain all facets of the new paradigm through interviews and discussions with the main thinkers in Modern Money Theory and other post-Keynesian approaches who have developed aspects of the new approach.

The show will feature discussions of policy alternatives that may be effective in solving the problems listed earlier. It will feature advocates for alternative policies and discuss their proposals. We will talk to economists and policy makers who share our perspective and also to some who don't.

We will also provide a forum for discussing all the implications of Real Fiscal Responsibility for both fiscal policy and for politics more broadly. The show will be supplemented by a web site providing blogs, commentary, and discussion forums about the various policy issues covered in the shows.

Our goal for this pilot project is to raise $30,000 to create the six programs. Please help us to meet this goal at our indiegogo site. If we can do it, and then get the program picked up, our voice may be the decisive one in defeating the austerians and their policies, and in opening the way to create the America of economic opportunity and social justice we all long for.

(Cross-posted from New Economic Perspectives.)

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Submitted by lambert on

I believe that the show will help do what Joe wants -- and that MMT is the way out of 40 years of policy failure in macro-economics. So please give if you can.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi