A101 Team If you thought the national debt was bad now, brace yourself. Michael Tanner at National Review Online explains the latest fad theory that’s taken Washington by storm: modern monetary theory.
In April of this year, the Congressional Budget Office warned that we were on track to return to trillion-dollar budget deficits by 2020. That warning turns out to have understated the problem: The latest estimates suggest we will now reach the dubious trillion-dollar milestone this coming fiscal year, and the deficit for the current year is now expected to be close to $900 billion, $222 billion more than last year. Our current $21 trillion national debt will likely top $30 trillion by 2025.
Democrats were quick to blame last year’s Republican tax cuts for exacerbating the deficit, but tax revenues, fed by increased economic growth, are actually up one percent over this time last year. The real culprit is spending, which increased by 7 percent from last year, the largest year-over-year increase since 2009.
In short, economic growth will only go so far if no one in Congress is willing to tame spending, and the “minibus” spending packages that congressional Republicans and Democrats are currently negotiating to avoid a government shutdown won’t do the trick.
But not to worry; both the Left and Right have discovered a magic money tree in the form of a concept known as Modern Monetary Theory (MMT), an idea prominently promulgated by Bernie Sanders’s chief economic adviser, Stephanie Kelton, that is now being used to argue that lawmakers shouldn’t worry about the size of the national debt.
Read more about “modern monetary theory” here.
