Most of the world, and most notably the United States, is in the grip of fiscal myths fostered by the ideology of neoliberalism. There is virtual unanimity across the major political parties in the United States in accepting the viewpoint of neoliberalism, and the fiscal myths associated with it.
This book is about these myths, the arguments showing that they are, indeed, myths, and the truths that can counter them. It is about Campaign 2016, and some of its issues, because the fiscal myths will certainly be used in the Campaign; since, for the first time in a very long time, there is a major party candidate running, who, because he advocates for a very broad agenda and for fighting inequality, will, sooner or later, find that some, and perhaps a large number, of fiscal myths are being directed at him by his opponents and their supporters, who want to persuade voters that his agenda is “fiscally irresponsible.”
The process of using fiscal myths to undermine Senator Sanders’s message has already begun with an attack by Laura Meckler of the Wall Street Journal on key elements of his program.
The attack was easily turned aside by progressive supporters, such as Gerald Friedman, who showed that the fiscal proposals being criticized as “fiscally irresponsible” were sure to net save at least $5 Trillion, rather than cost $18 Trillion over a decade, as the WSJ was claiming, because they would replace current expensive programs, and deliver huge out of pocket savings for Americans. His views were particularly effective because the WSJ had relied on his study for the data informing its critique.
Apart from Friedman’s decisive critique of Meckler’s article other notable instances of progressive pushback came quickly from James Kwak, Robert Reich, Joshua Holland, Matthew Yglesias, John T. Harvey, (who alone brought a Modern Money Theory (MMT) perspective to the debate), and John Geyman.
An important characteristic of the defenses of the Sanders agenda, with the exception of John Harvey’s, is their emphasis on the point that we can afford Bernie’s agenda because it pays for itself with increased tax revenues from various sources. These defenses are within the neoliberal framework and reinforce that framework. They pay silent homage to the fiscal myth that the Government can only get money to pay for programs by taxing or borrowing, and that this is important because the Federal Government, like a household, a State Government, and all private organizations have Government Budget Constraints (GBCs).
Attacks on other proposed fiscal policies on the Senator’s agenda in the infrastructure, climate protection and job creation areas are sure to intensify in the coming weeks and months as these policy proposals get increasing exposure and scrutiny. Critics will say that the likelihood is high that policies in these areas, will require substantial deficit spending, and increases in the national debt, and also that deficit reduction and deficit neutrality should be targeted as the first principle of responsible fiscal policy outweighing all other considerations.
But this assumption belongs to a constellation of fiscal myths that are all false. Nonetheless, as Campaign 2016 develops, faux fiscal responsibility deficit and debt memes, fueled by a chorus of think tanks where the Very Serious People (VSP) sit and talk only to one another, will take center stage in political debates. At that point, mainstream critics in the media will use these myths to whip the Sanders proposals unmercifully as the ravings of a “pie in the sky” “socialist” who knows nothing about public finance and the need for fiscal responsibility.
Rather than wait for those attacks, I decided that this book was needed to answer them now; by unmasking the myths, and offering truths to counter them. In the end, it will be point and counter-point that will supplement the Senator’s moral vision and moral appeals for certain critically important policies with new fiscal frames, memes, and truths capable of blunting the attacks, and giving people a reason to believe that those offering the old fiscal frames, memes, and myths are giving them a tired old line that has long outlived its usefulness, if it has ever had any at all since 1971.
This book analyzes and rejects numerous fiscal myths in these categories. Myths about: “Running Out of Money”; Government Debt; the “Burden of Government Debt”; the Government “Family” or “Household;”; “Spending Too Much,” Inflation, and Hyper-inflation; “Shared Sacrifice” and “Government Austerity”; “Our Economic Future”; “Money”; and “Fiscal Responsibility”; and concludes with a comparison of “Fiscal Myths and Fiscal Truths”.
During the next six months and beyond, many of us will be called upon to defend the Senator’s program by trying to banish the deficit/debt myths, memes, frames and Gods from respectable public discourse on social media. It will once again be social media vs. the mainstream media, in an effort to crack the mainstream phalanx of conventional opinion, and make its leaders, at long last, think about real issues. This book aims to make a contribution to that task and to help in the great effort to overcome the candidates of the developing oligarchy in both parties in Campaign 2016.