Here’s the issue.<p>We don’t have any serious leaders on this issue. We don’t have scholarship divorced from politics about this issue. Maybe we never will. The Austrian school basically thinks this is the end of the world. The MMT folks think this is business as usual. The Keynesians are somewhere in the middle, but being in the middle of the road politically is not the same as an apolitical view on this.<p>As a lay person who hasn’t studied economics enough to understand if this is an actual issue or a theoretical issue, I really need some politics-free scholarship on this.<p>It doesn’t help that our political leaders say it’s an issue, unless it’s their party that wants that spending, then it’s fine. The right says it’s fine as long as it goes to endless wars, and the left says it’s fine when we spend the money on social programs. Both say it’s bad when the other side spends it, but not when their own spends it.<p>This is exhausting and demonstrably not helping us resolve the fundamental issue of how do you manage a large society without it imploding.
> The MMT folks think this is business as usual<p>MMT folks generally advocate that inflation is the way to measure if the spending is "too much" and argue that spending should generally aim to improve productivity (i.e. increase gdp) to minimize this issue (e.g. spending to build infrastructure so people can get to work is productive vs spending so people stay home is inflationary).<p>There is this pervasive idea that MMT promotes limitless spending and I'm not sure where it comes from, what they actually preach feels like a reasonable way to evaluate government spending to me.
I think the major argument against MMT is that no one has the stomach to actually implement the level of taxation necessary to counteract inflation when it starts to rise too quickly. Or at least no major political party in the United States.<p>Everything can be sound on paper about MMT but if no one is going to practice it properly then the theory isn’t really going to work out.<p>As much as “eating your vegetables” in terms of government budget policy makes sense, if making people do that in practice gets you immediately voted out of office (or not even elected in the first place), then we won’t be eating our vegetables.
It's also pretty funny when you realize that the GOP loves MMT when it comes granting tax cuts but when you use the same MMT principles they use for say social welfare suddenly MMT is nonsense!
Faulty to think we can outsource our inflation globally when that chain can get yanked outside our control.
> The right says it’s fine as long as it goes to endless wars, and the left says it’s fine when we spend the money on social programs. Both say it’s bad when the other side spends it, but not when their own spends it.<p>Spending is only one part. The part that almost nobody wants to touch is raising taxes to support the spending.
I want to raise taxes to get rid of billionaires and the historically high inequality resulting in many (most?) of today's problems. More money for the government makes it a win-win. Not American, so I don't have a horse in this particular race.
Thanks for sharing your opinion. The first difficulty in real world (even idealized) politics is voicing a consistent independent stance and thinking through the implications. Many cannot even make it that far.<p>The second and greater difficulty is that realizing that a solution that is politically untenable is not a solution, it's a campaign slogan. I don't know how we get people to move past this difficulty.
I'm an American with a few horses in this race, and I also want to raise taxes to get rid of billionaires and provide more money to the government.<p>I'd prefer to use that money for "progressive" things like schools and libraries and parks (voted in 2024 to increase my own taxes on those things specifically, but my neighbors voted against them), but I'd even settle for spending it on the military if it came out of the pockets of the oligarchs to reduce inequality.
Because raising taxes has only resulted in more spending, not balancing the budget.
That's not true. Bill Clinton both slightly raised taxes and significantly lowered spending in relative terms, balancing the budget in the process.
This ignores history. We did raise taxes in the 90s and were paying off our debt. Bush senior made the big boy decision and it left us in amazing shape. Clinton handed over a government to W that was paying off debts and had surplus from 1998-2001.
The US had a balanced budget in 2001, after decades of most people claiming that was impossible. The problem with a balanced budget is we all have to live in the real world. The actual real world that you can measure, not each individual's theoretical world of choice.<p>But stories are much more fun than data, and we put everything on the credit card, and here we are.
All sibling comments are untrue, because it is the legislative branch that has the "power of the purse", including the ability to raise/lower taxes and pass budgets for spending.<p>So whether an executive takes credit for signing the bills into law, or championing the bills and advocating that Congress pass them, it was ultimately Congress--the House and the Senate--that did these things with taxes and the budget.
But cutting taxes has <i>also</i> resulted in more spending.
<i>The part that almost nobody wants to touch is raising taxes to support the spending.</i><p>NYC passed their pied a terre tax. Even federally, at least some in congress are trying to push for new taxes. Taxing the wealthy is the most popular way to lower the debt.<p><a href="https://jayapal.house.gov/2026/03/26/jayapal-warren-boyle-45-lawmakers-renew-push-for-wealth-tax-on-ultra-millionaires-and-billionaires/" rel="nofollow">https://jayapal.house.gov/2026/03/26/jayapal-warren-boyle-45...</a><p><a href="https://thehill.com/business/economy/5554777-gallup-poll-national-debt-tax-the-rich-trump-tariffs/" rel="nofollow">https://thehill.com/business/economy/5554777-gallup-poll-nat...</a>
Yeah, this. The one issue that unites left and right (and pretty much everyone else): <i>We do not want to pay for this much government</i>.<p>One step past there, of course, there is no more unity. Can we just run a deficit forever with no consequences? I have a profound distrust of free lunches, but I can't prove that MMT is false. I'm almost certain that it is, but I can't prove it to the satisfaction of anyone who believes it.<p>But even if you don't believe MMT, then what? Can we keep going a while longer without too much damage? Should we?<p>And if not, then we have to cut some things or raise some taxes or both, and that's where the political trench warfare starts.
Money is make believe if it’s not backed by something. Ever since 1970s, money has been a figment of imaginations. We only have a semblance of balancing (or attempting to) the budget but reality is they just print the paper or update a sql row. Done. More money.
As somebody already pointed, you should always ignore the Austrians.<p>Now, keep in mind that "business as usual" is different from "not an issue". The MMT folks will be able to tell you exactly what the consequences are (a hint, they are not very different from when it was 95% of the GDP), while the Keynesians will rush to tell you that the stuff the MMT people are talking about isn't as important as other stuff the government could be doing. Notice that both can be correct at the same time.<p>Empirically, at some level of inflation the Keynesians become just wrong. Most people usually stop being Keynesian at that level.
Having an economic science without politics at all isn't really possible - you have to define a goal for economic development to evaluate different approaches. And defining that goal introduces politics into economics. "Development for what or whom or whether at all" simply can't answered in a neutral way, it will always be in the interests of some and against the interests of others.
> <i>MMT folks</i><p>Does this still have purchase? I thought following post-Covid inflation, the MMT folks took a backseat (in politics).
MMT - it was a flash in the pan pre-COVID during the "capital is infinite / ZIRP" era. It was used as a political tool to justify increasing deficits/debt.<p>The challenge with this problem set is the timeline is tricky. At some point the bridge can only handle so much weight before it buckles and collapses but we don't know how strong the bridge is and we have no way of measuring it.<p>MMT is the equivalent of saying the bridge doesn't have to worry about physics because (a) we said so and that the (b) bridge hasn't broken yet so its fine. It is a bad economic philosophy.
I’m not economist but my impression when I learned about MMT is that it’s predicated on the idea that money isn’t like bridges at all. And is actually at this point of history a purely abstract model where “we said so” works. Meanwhile lots of people really believe a country can “run out of money” or whatever. You run out of trees, teachers and nurses, not money. Anyway what’s clear to me is that the metrics we picked like gdp or debt ratio or whatever aren’t helping us make good choices.
> I really need some politics-free scholarship on this.<p>It's impossible to discuss GDP without politics, could you describe exactly what it is about political discussion that you'd want to avoid?
If it’s impossible to discuss GDP without politics, then it’s impossible in our current political climate to discuss whether or not debt as a function of GDP is a valid measure of an issue, and the practical effects of that issue.<p>It would seem that functionally the only real world impact would be spending more money to service that debt.<p>Ok, what about just cancelling that debt? Some economists have said “it’s money we owe ourselves”, so why not just forgive ourselves of our own debt? What would be the real world impact? What would happen?<p>We keep attaching political value judgments to this without reasonably discussing the practical implications free of our own political dogmas.
>Ok, what about just cancelling that debt? Some economists have said “it’s money we owe ourselves”, so why not just forgive ourselves of our own debt? What would be the real world impact? What would happen?<p>It's tied to Treasury Bonds that people hold so they would become worthless.
Eventually all the debt is canceled right after dollar looses it's reserved currency status
You keep using words like “us” and “ourselves” but I don’t think you understand that you’re not in the same class as the people who lend the money or the people who lobby for how any public resources are going to be spent at all.
> Ok, what about just cancelling that debt? Some economists have said “it’s money we owe ourselves”, so why not just forgive ourselves of our own debt? What would be the real world impact? What would happen?<p>It's not money we owe "ourselves", it's money we owe each other. When you buy government bonds you're lending money to the government. Cancelling the debt is just stealing the money everyday people and investment institutions have lent to the government. What would happen is people would lose a huge portion of their investments and pensions and it would be catastrophic.<p>Honestly it's wild to spout an opinion in this thread if you don't understand this.
Gortok is very obviously talking about red/blue team bias, trying to get objective scholarship on the issue that is unbiased in that sense.
That wasn't so clear IMO, or do you see those three schools (Austrian, MMT, Keynes) mapping cleanly to the two teams somehow?
It is not about scholarly discussion. These are problems that are too difficult to objectively map out.<p>Only way to fix this kind of thing is to make the person at least try to fix it when he is in power. They should know they will be buried if they fail, then it will look a lot different.<p>For example you can see how scared American politicians are of Israel.<p>I don't see why this would ever be fixed since people don't vote on this issue. Most people seem to prefer to vote on different things.<p>I am not American but we also have similar issues in our country.<p>Old people cannot comprehend that the current person that is responsible of something has failed and needs to be changed. There are 80 million other people in the country but it is somehow incomprehensible to them that the person responsible for the whole country should be fired really fast if he is failing.<p>In case of America, it is insane that last election candidates were Kamala Harris and Trump, out of 350 million people
You don't have to speculatively both sides the issue. There is a track record: <a href="https://amarkfoundation.org/reports/u-s-presidents-and-the-federal-deficit/#:~:text=%5B%24%20in%20Billions%5D-,Federal%20Deficits%20and%20Surpluses%20from%201981%20through%202021,-The%20chart%20below" rel="nofollow">https://amarkfoundation.org/reports/u-s-presidents-and-the-f...</a><p>Some of this is political, but Trump especially wildly makes a mockery of Republican supposed deficit hawkishness, not based on ideology, but by lack of a competent cabinet.
I view it as a rational play of prisoners dilemma in a nation with central bank and fiat currency. You will ~always lose (well until things get hyperinflationary) to someone promising OPM without more taxes. The system since the 70s ensures that.
Here's the real issue. Economic innovation only really happens when the government is spending big on some issue. That's at least half the reason war advances technology so fast. It's not like Ukrainians weren't able to figure out drones 5 years ago.<p>Stopping spending kills the economy. Which kills tax income. Which puts far more stringent limits on spending. Which reinforces the need to stop even more spending.
I dunno it seems to me that whenever the Democrats are in office the deficits start to go down; and whenever there is a Republican in office they tend to go up. That's been the pattern my whole life so far.<p>Like, you say the two sides are the same because one wants to spend endless money on wars and the other wants to spend endless money on social programs, but we only ever spend endless money on wars. There's no spending comparable to war on poverty / illiteracy / sickness / homelessness.
The parties were not symmetric on this issue. They were not symmetric in terms of actual behavior (as in how much debt each added when in government) nor in terms of rhetorics. For a start, Democratic party was acting mostly in centrist technocratic manner and rather then radical leftist manner you are implying.<p>It is really not necessary to knee jerk bothside everything.
<i>the left says it’s fine when we spend the money on social programs.</i><p>FWIW, for every dollar given to people for social programs like the child tax credit, they spend $1.50-$2 locally. This seems fine to me & it was popular country-wide. Meanwhile, we've gained nothing from the Iran war. We've obviously lost money and probably weakened our global standing and strengthened some of our enemies. It is also unpopular with the people. You don't <i>have to</i> "both sides" every issue. You can assume republican leadership is generally bad and don't have to give them the benefit of the doubt on issues you're not studied on.<p><a href="https://www.ncsl.org/state-legislatures-news/details/tax-credits-are-powerful-weapon-in-fight-against-poverty" rel="nofollow">https://www.ncsl.org/state-legislatures-news/details/tax-cre...</a>
<a href="https://economicsecurityproject.org/resource/public-opinion-on-the-child-tax-credit/" rel="nofollow">https://economicsecurityproject.org/resource/public-opinion-...</a>
1/3 of the debt has come under Trump. This isn't political, it is just a fact.<p>He passed tax cuts (which are the real debt driver) that are just not sustainable. Without those, we have a reasonable debt to GDP ratio.
Canada had very high taxes covering everything from income to sales and yet our debt is ballooning at the federal and provincial level.<p>Its like saying that uncle bob has a ton of credit card debt because he doesn’t make enough money and not because he spends too much.
Disclaimer: lay person, not American or Canadian.<p>Whilst I understand your point in isolation, I don't understand how it refutes GP.<p>AFAIK, the current US administration has <i>cut</i> spending on most things (the military and ICE being notable exceptions).<p>As such, the suggestion that the ballooning debt is due to tax cuts seems perfectly valid.
And the other side would say that if we cut welfare spending we'd have a reasonable debt to GDP ratio.<p>It's very much political and it's a joke to pretend otherwise.
Yes "If" spending is cut or "If" taxes are not cut then you might have a balance.<p>But just implement balanced budget goals. Accept at most a deficit of 1% in the budget or whatever. Allow for a deviation from this to do QE but require a more qualified majority and limit to 1 year only.<p>Want to cut taxes? Fine - but don't do it with deficit spending. Want to increase welfare spending? Fine - but remember to then cut somewhere else OR increase taxes.<p>The fact that one side can implement large tax cuts funded by borrowing over and over (and still be elected again) is absolutely _crazy_ on a scale that is perhaps only rivaled by the healthcare system.
They can say that, but it will not be true. The tax cuts, plus new military spending and new ICE spending dwarf welfare they want to cut.
This.<p>ICE is now larger and more expensive than the entire United States Marine Corps.<p>Let that sink in.<p>Not only that, we also seem to start a new war every 6 months. Demanding money for each one of them. SS/Pensions/Medicare seem to trend nowhere but up. And like Santa Claus the party in power keeps handing out tax cuts.<p>We have to make a change guys. The old ways aren't working. We can't be distracting from the central problems by yelling "welfare!". That doesn't work anymore.
This is kind of the point though.<p>Cutting welfare spending will get us no where. The majority components of the federal budget are Defense, SS/Medicare/Medicaid, and debt payments. Not the forestry service or what we commonly know as welfare. At this point, even cutting everything else to zero still lands us in deficit. (Unless taxes are raised.)<p>To be serious, we need to talk about what cuts are to be made to SS/Medicare/Medicaid and the military. But no one wants to have that discussion. So we throw out meaningless issues like welfare and the forestry service. We quibble around at the extreme edges, never addressing the central problems. That's the essence of the politics being discussed. Those politics make the issue impossible to fix.<p>I honestly don't know why it's so hard? I'd be totally willing to countenance the necessary cuts to the sacred cow programs at this point. Why is everyone so opposed to it?
Would have had, not have.
The problem isn't politics, its been made to look that way but the issue is that the people who would know have been silenced in a way that the general public hasn't recognized. Its not in the benefit of the corporate overlords that you be properly educated on this.<p>I'll give you a brief TL;DR on the issues.<p>The wealth of a nation is based in its ability to produce primarily goods, and sometimes services. Pricing is a signaling mechanism that allows efficient resource allocation of both goods, and factor market labor.<p>When misallocation results, you get things like busts and booms where the benefits are front-loaded and a resource exhaustion cycle takes place. There are constraints which cannot be breached for any length of time, such as wages being lower than the cost of living enough to support a wife and three children to 18, and other things. Legitimate business can't operate if it can't make a profit.<p>There is silently nationalized industry that is unconstrained via a cycle of money-printing that has sieved assets into few hands, and risk concentrated in few hands. This is part of the danger of the ECP, and other fundamental failures related to centralized systems.<p>The Austrian school lives in the future. The future under a breakdown of organized society is one of death and potentially extinction. We depend on food production in ecological overshoot which depends on technology and farming. The 1970s represented ecological overshoot. When that fails you get shortage, that then sustains, famine, slavery, death, and then extinction.<p>Under socio-economic collapse everything fails. Currency is abandoned. Exchange cannot happen. The store of value and exchange of value fails. This happened during the Bronze Age (of which we have very little records that remain).<p>If these happen for extended periods of time, capital dries up and you get something like the great depression, Nintendo, and other places where logistics refuses to deliver goods at any potential profit because they were burned too many times.<p>There exist systems that will fail eventually and predictably (in general), but which you cannot predict specifically when those failures will happen, its unknowable, and the effects one would use to justify any decision lag behind the objective indicators of the actions that needed to be avoided.<p>Money-printing extracts value from those that hold the currency through the cantillion effect. Its an extraction of unpaid slave labor. Eventually it exceeds the store of value, and the businesses that normally produce stop producing. Exchange stops, etc. AI presents a unique spin on this as well because it accelerates the corruption of signalling presenting false signals chaotically in both labor and good markets.<p>In positive feedback systems, these type of systems commonly run-away and converge at a point of calamity. When they do the dynamics are unstoppable.<p>The MMT folks are delusional, having rested quite a lot of their false justifications on unsound practice to justify extraction of value.<p>The Keynesian's aren't so different from the MMT folks because they improperly look at certain things only in isolation with a seeming mental block to all other things, which is a form of false justification.<p>The bankers (if you can call them that) have corrupted leadership, and enabled sieving through non-reserve debt issuance. The mechanism over the years is leveraged buyout. The business cycle today largely runs on the ponzi cycle with debt issued upfront providing benefits upfront, followed by enshittification as the resource exhaustion cycle runs its course.<p>Chaos is fundamentally destructive. Large societies don't implode when they have stable stores of value, a rule of law (not by law), and manufacture goods their populace needs.<p>Market dynamics fundamentally fail to operate as a market under slave labor as a function of the cost function for the majority of participants. It doesn't matter if that labor is provided by a foreign power with costs socialized, or stolen through the currency through deficit spending. When you cannot know correct prices, everything falls apart at fundamental levels but you don't see it until its too late after which point the only thing you can do is start over; but existing structures under such systems seek control to the point of extinction.<p>No one gives power up willingly, and those that have it seek to destroy the ability for others to take it.<p>You can't ever make a consensus when a good portion of the people part of that consensus have become delusional, often without them even realizing it.
Austrian school is less an academic discipline or study of economics and more a post-hoc justification for libertarian philosophy. So you can freely ignore them.<p>Maybe decide if the right or left has better priorities. Do you think spending money on guns and war like the right is good? Do you think spending money on social programs to be good? Seems like an easy decision to me, but hey, i have empathy and don't like killing.
The Freakonomics podcast episode "Ten Myths About the U.S. Tax System (Update)" actually goes into a lot of depth about this issue: <a href="https://freakonomics.com/podcast/ten-myths-about-the-u-s-tax-system-update/" rel="nofollow">https://freakonomics.com/podcast/ten-myths-about-the-u-s-tax...</a> (Includes transcript)<p>To oversimplify, basically:<p>With the exception of Social Security, we (the US) has a balanced budget. No politician will get re-elected if they cut social security. (Thus) the politicians are working on the problem very quietly.<p>The general problem with Social Security is that it pays out way more then it takes in. Part of the issue is that <i>everybody of retirement age</i> collects social security, including multi-millionaires.
The problem with multi-millionares is not that they collect. It is that they do not pay as much as they could/should.
I’ll read that article later, but that doesn’t sound right — there can’t be so many multi-millionaires that them getting free money is stressing out the system.<p>Quick random googling, I’m seeing the number 3.2% of retirees have more than $1m<p><a href="https://www.investopedia.com/how-many-people-really-achieve-usd1-million-in-retirement-savings-11947173" rel="nofollow">https://www.investopedia.com/how-many-people-really-achieve-...</a><p>And I can’t imagine social security would become suddenly profitable by a <3% population delta
Social security is self funded and is actually a buyer of US debt. So there is no direct connection between social security shortfalls and US gross federal debt.
To be slightly fair to the parent comment, it seems at least a bit valid to choose whether to consider the social security tax to be revenue to the government and social security payments an expense or to treat them as an entirely separate account. And the social security tax structure at least appears to be quite regressive.<p>As an analogy: do you think that Costco generates most of its profits from sales of goods or from membership fees? Both answers seem valid.
> > I really need some politics-free scholarship<p>> The Freakonomics podcast<p>Yikes.