Only through democratized finance can we build a care economy that supports the rights of women, workers, and care receivers.
Budget deficits can be a very powerful weapon in the battle against poverty, inequality, economic environmental and social justice. I worry very much about the vilifying of budget deficits and the use and reliance and dependence on questions of how social spending will impact budget deficits, to the complete disregard for the impact of programs and policies on people.
I worked with Senator Bernie Sanders as he pushed an ambitious policy agenda to do things like raise the minimum wage, put millions of people to work on large scale public investments, provide paid family leave, tuition-free colleges universal healthcare, and so on. And in every turn, no matter what he proposed, the first question on everyone’s lips was, “How are you going to pay for it?” And then, “What does the [Congressional Budget Office] say? Does it get a good score or does it get a bad score, in which case the deficit might increase and it might add to the national debt?”
Everything in Washington revolves around this impact on debt and this question of paying for it. And my opinion — and I was the chief economist on the Senate Budget Committee — is that this is absolutely the least important question that anyone could possibly ask.
It has nothing to do with people or the ways in which these policies and programs really matter. No one asks, “How many kids would be lifted out of poverty if we did program X, Y, or Z? How would the programs reduce wealth inequality? Racial wealth inequality? How would the poor, the sick, the elderly be impacted? Would they be safer and more secure if we pursued these policies? What about the planet?”
"If we are going to have programs envisioned as part of a moral agenda, then they are going to be big, they are going to be expensive, and they are going to impact the deficit. And you know what? That's okay."
We need to hold policymakers accountable and push them to focus on the things that matter. They need to know that we will not stand for excuses that have to do with the budget deficit and the impact on the national debt.
My position is that the federal government of the United States of America can move forward with a poor people’s agenda because it can always create the money to fund that agenda, and we can’t settle for any pushback that says anything else. The federal government is nothing like a household. It doesn’t have to play by the same set of rules, and in fact it’s damaging when it tries to play by the same rules of a household or a private business when it comes to its own budget.
I want to suggest that in this effort, this moment, never let anyone draw you into a toxic conversation about budget deficits or public debt. These are barriers that are erected to protect the government from the demands of its citizenry. We have public money that can be used to serve the public purpose. Settling for less is not an option. It will never get us full transformative policies.
I’ve been involved in trying to promote a federal job guarantee program. We recently looked at this, and we costed it out. If we were to do something big and bold like a living wage, and include benefits and healthcare, make it a permanent feature of the U.S. economy, we estimate that the cost of a program like this is something like $500-600 billion a year.
How are you going to get there if you have to answer to paying for the deficit? It will never cost out under any circumstance with the Congressional Budget Office or any other wonky D.C. establishment. You must push beyond settling for programs that meet their scoring targets. We can’t be worried about where the money will come from or how the program will affect the budget.
As probably the most famous economist of all time, John Maynard Keynes, said nearly 100 years ago: “Look after the unemployment and the budget will look after itself.” If we are going to have programs envisioned as part of a moral agenda, then they are going to be big, they are going to be expensive, and they are going to impact the deficit. And you know what? That’s okay.
So what I want to suggest is that there is an army of economists ready to stand by you, to use the weight of their credentials and training to defend a moral agenda against the inevitable cries that America is too poor to do anything else.
Stephanie Kelton is professor of public policy and economics at Stony Brook University. She was previously the Chief Economist for Democrats on the U.S. Senate Budget Committee and Senior Economic Advisor to Senator Bernie Sanders in his presidential campaign. She delivered this testimony during the Souls of Poor Folks Audit Virtual Hearing ahead of the launch of the Poor People’s Campaign.