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Mosler on FOX: "US government spending is not operationally constrained by revenues..."

and therefore taxes function to regulate aggregate demand, and not to collect revenue per se."

And the link, in case the embed doesn't work.

NOTE I have to say that, although I agree on the "not operationally constrained" part, I'm leery of ideas like the "payroll tax holiday," putting the emphasis on the political part of political economy. What happens if Versailles embraces the idea and then uses them to drown government in a bathtub more effectively than Gingrich did? Suppose, for example, they eliminate the taxes, and then cut spending too? So we end up with no stimulus, and a smoking crater where the government used to be?

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warren mosler's picture
Submitted by warren mosler on

That's a risk, but the risk of the cuts are a lot higher now, as they think they need to cut 1.5 trillion to balance the budget, and they have most of the nation and the world convinced as well.

And they want to cut taxes as well, and cut spending that much more.

Seems to me the big thing is to break the 'balanced budget= fiscal responsibility' mindset.