Ricardo Miranda Zúñiga

Structural Patterns

Reflections on Art, Technology and Society

Archive for the ‘Ronald Reagan’ tag

The Deficit Myth 001

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I recently finished Stephanie Kelton’s book The Deficit Myth and I’m going to create a series of blog entries considering the material of the book. In doing so, I will liberally be quoting the book as part of my goal is to consider and digest my highlights from the text.

Kelton’s goal is to have us understand Modern Monetary Theory and how if embraced, it can help us create a better society. Kelton asks “What would it look like if the government overcame the deficit myths [the concept of having to maintain a household budget] and started budgeting like a currency issuer instead of pretending that it needs to pay for its spending just like the rest of us?” (pg. 42)

Although I think that we should all read this book (though it can be a bit repetitive), I’m going to copy the main points of the United States federal deficit myths that need to be debunked. These points are in the introduction and are given a chapter each:

First Myth:
The idea that the United States federal government needs to budget like a household is pernicious… “MMT demonstrates that the federal government is not dependent on revenue form taxes or borrowing to finance its spending and that the most important constraint on government spending is inflation.” pg. 9

Second Myth:
“It is possible for the government to spend too much. Deficits can be too big. But evidence of overspending is inflation, and most of the time deficits are too small, not too big.” pg.9

Third Myth:
Deficits will burden the next generation. Ronald Reagan was one of the wort perpetrators of the myth that we would saddle our children with too much debt, because it’s powerful political rhetoric. “As a share of gross domestic product (GDP), the national debt was at its highest – 120% – in the period immediately following WWII. Yet, this was the same period during which the middle class was built, real media family income soared, and the next generation enjoyed a higher standard of living without the added burden of higher tax rates… Increasing the deficit doesn’t make future generations poorer, and reducing the deficit won’t make them any richer.” pg.9

Fourth Myth:
“…deficits are harmful because the crowd out private investment and undermine long-term investment… government deficits eat up some of the dollars that would otherwise have been invested in private sector endeavors that promote long-term prosperity. We will see why the reverse is true – fiscal deficits actually increase private savings – and can easily crowd-in private investments.” pg. 10

Fifth Myth:
“Deficits make the United States dependent on foreigners [China and Japan as they hold large quantities of U.S. debt]… this is a fiction that politicians wittingly or unwittingly propagate, often as an excuse to ignore social programs desperate need of funding. Sometimes this myth has used the metaphor of irresponsibly taken out a foreign credit card. This misses the fact that the dollars aren’t originating from China. They’re coming from the U.S. We’re not borrowing from China so much as we’re supplying China with dollars and then allowing them to trade those dollars in for a safe, interest-bearing asset called a U.S. treasury. There is absolutely nothing risky or pernicious about this. If we wanted to, we could pay off the debt immediately with a simple keystroke.” pg.10

Sixth Myth:
“Entitlements are propelling us toward a long-term fiscal crisis. Social Security, Medicare, and Medicaid are the supposed culprits… Our government will always be able to meet future obligations because it can never run out of money. The money can always be there. The question is, What will that money buy? Changing demographics and the impacts of climate change are real challenges that could put stress on available resources.” pg.11

Kelton ends the introduction with a call to arms:

“The fact that 21 percent of all children in the United States live in poverty- that’s a crisis. The fact that our infrastructure is graded at a D+ is a crisis. The fact that inequality today stands at levels last seen during America’s Gilded Age is a crisis. The fact that the typical American worker has seen virtually no real wage growth since the 1970s is a crisis. The fact that forty-four million Americans are saddled with $1.7 trillion in student loans debt is a crisis. And the fact that we ultimately won’t be able to ‘afford’ anything at all if we end up exacerbating climate change and destroy the life on this planet is perhaps the biggest crisis of them all.” pg.11

“These are real crises. The national deficit is not a crisis.” pg.12

“THE CRIME OF the tax bill signed by Trump in 2017 is not that it added to the deficit but that it used the deficit to provide help to those who needed it least. It has widened inequality, putting more political and economic power into the hands of the few… We should tax billionaires to rebalance the distribution of wealth and income and to protect the health of our democracy.” pg. 12

As the many citizens of the United States need a financial lifeline from the federal government to help make it through this pandemic, Kelton foresees the stalling of a second stimulus:

“The federal deficit, which was expected to top $1 trillion before the virus became a threat, will likely skyrocket beyond $3 trillion in the months ahead. If history is any lesson, anxiety over rising budget deficits will lead to pressure to reduce fiscal support in order to wrestle deficits lower. That would be an unmitigated disaster. Right now, and in the months ahead, the most fiscally responsible way to manage the crisis is with higher deficit spending.” pg. 13

“On Transmitting Ideology” Revisited

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I recently revisited a project from 2008 – On Transmitting Ideology, that is partly an audio montage of historically famous speeches that I feel have helped define the current conservative and liberal ideologies so prominent in the United States political and cultural arenas. Although the piece has been exhibited several times, I’d really like for more people to listen to the audio montage, particularly since we’re in a presidential election year. So much of the current rhetoric is drawn almost verbatim from our past. For example a famous speech known as “Rivers of Blood” (1968) by the conservative British Parliament member Enoch Powell strongly reflects some of the things that Donald Trump has said regarding immigration. The 1968 speech is a call to shutting down the British borders largely due to bigotry.

In the desire for more people to listen to the audio montage, I’ve created a video featuring the audio montage. Perhaps if people give it a few seconds they will be intrigued by the voices of Calvin Coolidge, George Wallace, Ronald Reagan, Martin Luther King Jr., Barry Goldwater… enough to play the entire 17 minute and 30 second video. It begins with quick snippets, but as the piece proceeds longer excerpts compliment one another, ideally to create a nice flow.

The montage only includes 12 men, however, they are amongst the most prominent in U.S. history (with exception of one Brit – Powell). At over 17 minutes the piece is already longer than most people will listen, many more diverse voices could easily be referenced, but I tried to keep it short. The 12 voices included are:
Calvin Cooldige, George Wallace, Ronald Reagan, Martin Luther King Jr., Barry Goldwater, Barack Obama, Enoch Powell, Malcolm X, Douglas MacCarthur, Noam Chomsky, William F Buckley Jr., Dwight D. Eisenhower