Two-Cent Message

By J.D. ALT

Elizabeth Warren has succeeded, I think, in framing an argument as close as anyone is going to get (in the present election cycle) to the progressive position of MMT. Warren acknowledges that she’s proposing goals and undertakings that will “cost” a lot of money. She further acknowledges that everyone asks: “How are you going to pay for it?” And she gives a very specific and simple answer: an “ultra-millionaire tax”—which she details as “two-cents on every dollar of income over $50 million.” She then goes on to list what those “two-cents” will accomplish: The cancellation of college debt; free two-year college education; universal pre-school day-care…etc.

The two-cent message is a powerful framing, I believe, because it gives people “intellectual permission” to support a significant increase in federal spending to accomplish specifically targeted, widely held social goals. By “intellectual permission” I mean this: Even if you remain skeptical and unbelieving of MMT’s message about modern fiat-currency, Warren’s two-cent formula is reasonable because (a) the government won’t be “borrowing” dollars for the spending—your biggest fear!—and (b) because the people being taxed for the spending can hardly claim any harm or hardship: one day they have $50 million in their bank account—way more than they need for even the most extravagant life-style—and the next day they have $49 million. Are they even going to notice?

While MMT will want to explain that federal spending for Warren’s proposed goals does NOT require a tax increase on anyone at all, I believe at this pivotal moment advocates would be better served to momentarily set those arguments aside and applaud those aspects of the two-cent message that are, fundamentally, compatible with MMT goals:

1. The two-cent message focuses on the federal government paying American citizens to undertake and accomplish real, specific objectives for improving the well-being of the whole society. Warren’s framing isn’t focused on “taxing the rich” but rather on accomplishing specific objectives for everyone else. This aligns with the fundamental logic of MMT: a currency-issuing sovereign government can and should pay its citizens to undertake and accomplish those things the collective well-being requires.
2. While MMT argues that tax dollars are not required to fund federal spending, MMT does argue that taxes are necessary to drive a sovereign fiat-currency—and that since taxes are necessary, the question to be asked is: Can taxes serve purposes other than funding federal spending? One purpose I believe MMT would agree with is using taxes to put some brakes on the astonishing and spiraling wealth imbalance that is straining the stability of America’s socio-economic structure. So, on that score as well, Warren’s two-cent message is a fit with MMT.

Here’s another reason to get behind the two-cent message: It may well be that MMT can never, by logic, reasoning, and relentless argument alone, succeed in altering the deeply ingrained and habitual mental models of the mainstream understanding of “money.” Another path to that end might be required, namely, for Americans first to actually experience, by whatever means necessary, the phenomenon of their federal government spending a large number of dollars to pay American citizens to accomplish a specific collective good—and seeing the benefit in that. (It’s been a long time, I believe, since we’ve had that kind of experience.) The two-cent message might be a strategy for allowing it to happen.

What’s critical, it should be emphasized, is not the spending the two-cent message makes possible, but the results. This is why Warren’s list of goals is so important. First items on the agenda should be highly visible, on-goingly newsworthy, and beneficial to both lower and middle-class families. (My vote, in this regard, is the arena of education and child-rearing: free pre-school day-care programs, forgiveness of college debt, and free college or technical training.)

In the long run, if the targeted federal spending results in real benefits that large numbers of American voters can see and experience, the political dialog—assisted by the continued MMT push to redefine the mainstream understanding of money—can transition from being focused on “where will the dollars come from” to “what are we going to accomplish”? The two-cent message, then, will transition as well: it will no longer be about paying for federal spending, but will be about creating a more equitable society. So Warren’s message might be the best strategy MMT can hope to see in the 2020 elections—and seeing her elected the best of possible outcomes.