George Will: Democratic candidates channeling late-night infomercials
A four-word phrase common on late-night television: “Buy this kitchen knife that is so sharp it can slice and dice diamonds, and we’ll throw in a nonstick frying pan that can double as a satellite dish. BUT WAIT! THERE’S MORE! If you call immediately, we’ll include a homeopathic cure for sciatica.”
Today’s Democratic presidential candidates sound like late-night infomercials: “A Green New Deal! Medicare for all! Free college for the young! Increased Social Security for the elderly! BUT WAIT! THERE’S MORE! At no additional cost, you get Modern Monetary Theory (MMT).”
MMT, which supposedly banishes nitpicking worries about how to pay for things, is the Democrats’ intellectual breakthrough du jour. Although the theory remains somewhat hazy, it is this:
The nation has fiat money — currency whose issuer will not convert it into something valuable (e.g., gold) but that the public accepts is a reliable store of value. A government that controls its currency need never run short of it. Therefore the government can borrow and expand the money supply sufficiently to allow spending to proceed without reference to government revenues, as long as interest rates are, and are apt to remain, low.
Actually, MMT teaches that everything , feasible or not, is affordable in the sense that government can always come up with fiat money with which to pay for it.
Two more sober men, both Democrats, are too intelligent and experienced to have written what they did recently — a month before last week’s announcement that the budget deficit for October through January was 77 percent larger than in those four months a year earlier. They wrote a Foreign Affairs essay deploring what they see as Washington’s dangerous “obsession” with budget deficits.
Lawrence Summers, former Treasury secretary and current Harvard economics professor, and Jason Furman, currently at the Harvard Kennedy School of Government and formerly (2013-17) chair of the White House Council of Economic Advisers, argue that “the economics of deficits have changed,” for plausible reasons that we shall come to. But first:
In Washington, the behavioral (as distinct from rhetorical) “deficit hawk” is not a rara avis, it is extinct. The current president was elected after promising not to touch the major entitlements (Social Security, Medicare, Medicaid) that are drivers of the deficit. When the unsustainable trajectory of the entitlements was explained, he reportedly said, “Yeah, but I won’t be here.” The deficit is approaching $1 trillion with the economy humming, and the national debt heading toward 100 percent of GDP.
Summers and Furman stop far short of MMT fantasy. Good empiricists, they say only this: Because soaring deficits have not kindled inflation and the interest rate on government borrowing has declined and government borrowing has not crowded out private borrowing, we can safely have more government debt than has previously been considered prudent.
For decades, governing by both parties has been a practice in search of a justifying theory. Today, MMT rationalizes the Democratic presidential candidates’ bidding for progressives’ support, making the bidding entirely uninhibited by revenue considerations. So, to the list of memorable party slogans, from “Tippecanoe and Tyler Too” to “It’s Morning Again in America,” add this: “BUT WAIT! THERE’S MORE!”
George Will writes for The Washington Post.
George Will is a columnist for The Washington Post and can be reached via email.