Emerging narrative for Green New Deal: It doesn't matter what it costs

The Green New Deal will cost the US taxpayer tens of trillions of dollars, add trillions to the deficit, and ruin the economy in the process.

But it's OK. It doesn't matter how much it costs because unless we spend the money, the human race is doomed. Plus, all the other issues attached to the Green New Deal - "net-zero greenhouse gas emissions, clean air and water, married to traditional bread-and-butter progressive issues, such as a job guarantee and universal health care" - will cost more trillions.

How in the name of all that is good and holy do we pay for it?

The answer, according to the emerging narrative on the left, appears to be; we don't.

Slate:

Shorn of ideological rhetoric, the answer to the second question is actually quite simple. We “pay” for these specific proposals much as we do with any government initiative: Congress appropriates the funds, and the government literally spends the money into existence. The key point here is that when a government issues a currency that is not backed by any metal or pegged to another currency (i.e., the currency is created via government order, or “fiat,” hence the term, “fiat currency”), then there is no reason why it should be constrained in its ability to finance its spending by issuing currency in the way it was, say, under a gold standard (in which the supply of gold held by each nation literally controlled its capacity to spend). By extension, taxes don’t actually “fund” the government, so much as they constrain overall expenditures in the economy. In essence, government spending adds new money to the economy, whereas the imposition of taxes takes some of that money out again. The constant addition and subtraction of these spending and taxing activities is how “fiscal policy” actually works (and the sequencing is actually the opposite of what is traditionally taught in most economics textbooks). 

To paraphase my favorite home state Senator of all-time, Everett Dirksen talking about federal spending: "A trillion dollars here and a trillion dollars there and pretty soon, we're talking about real money." 

See? It's not "real" money, it's government money. There are no consequences to printing tens of trillions of dollars because nothing bad could ever happen. "There is no reason why it should be constrained in its ability to finance its spending by issuing currency" because we'll make Pollyanna our Secretary of the Treasury. 

And economics textbooks are wrong! Just add a little, and subtract a little, and presto! Socialist paradise.

I'd like to think that the left can come up with a better narrative than "it doesn't matter." Surely, the master propagandists on the left can try something a little more creative.

But the bottom line appears to be the tsunami of cash that Washington will flood the economy with won't cause inflation to rise, won't lead to catastrophically high interest rates because the Fed governors, at heart, are socialists and understand perfectly that economics textbooks are wrong, loony lefty economists are right.

Climate hysterics are not all on board the Green New Deal bandwagon - not because it isn't necessary but because it's politically impossible. Some of them worry it's far too ambitious and would like to see a scaled back version implemented.

When faced with imminent destruction, any amount of money becomes "necessary."  That looks like how the left will manage the PR effort to adopt the Green New Deal and go easy on details like no meat, no airplanes - and no economy.

 

The Green New Deal will cost the US taxpayer tens of trillions of dollars, add trillions to the deficit, and ruin the economy in the process.

But it's OK. It doesn't matter how much it costs because unless we spend the money, the human race is doomed. Plus, all the other issues attached to the Green New Deal - "net-zero greenhouse gas emissions, clean air and water, married to traditional bread-and-butter progressive issues, such as a job guarantee and universal health care" - will cost more trillions.

How in the name of all that is good and holy do we pay for it?

The answer, according to the emerging narrative on the left, appears to be; we don't.

Slate:

Shorn of ideological rhetoric, the answer to the second question is actually quite simple. We “pay” for these specific proposals much as we do with any government initiative: Congress appropriates the funds, and the government literally spends the money into existence. The key point here is that when a government issues a currency that is not backed by any metal or pegged to another currency (i.e., the currency is created via government order, or “fiat,” hence the term, “fiat currency”), then there is no reason why it should be constrained in its ability to finance its spending by issuing currency in the way it was, say, under a gold standard (in which the supply of gold held by each nation literally controlled its capacity to spend). By extension, taxes don’t actually “fund” the government, so much as they constrain overall expenditures in the economy. In essence, government spending adds new money to the economy, whereas the imposition of taxes takes some of that money out again. The constant addition and subtraction of these spending and taxing activities is how “fiscal policy” actually works (and the sequencing is actually the opposite of what is traditionally taught in most economics textbooks). 

To paraphase my favorite home state Senator of all-time, Everett Dirksen talking about federal spending: "A trillion dollars here and a trillion dollars there and pretty soon, we're talking about real money." 

See? It's not "real" money, it's government money. There are no consequences to printing tens of trillions of dollars because nothing bad could ever happen. "There is no reason why it should be constrained in its ability to finance its spending by issuing currency" because we'll make Pollyanna our Secretary of the Treasury. 

And economics textbooks are wrong! Just add a little, and subtract a little, and presto! Socialist paradise.

I'd like to think that the left can come up with a better narrative than "it doesn't matter." Surely, the master propagandists on the left can try something a little more creative.

But the bottom line appears to be the tsunami of cash that Washington will flood the economy with won't cause inflation to rise, won't lead to catastrophically high interest rates because the Fed governors, at heart, are socialists and understand perfectly that economics textbooks are wrong, loony lefty economists are right.

Climate hysterics are not all on board the Green New Deal bandwagon - not because it isn't necessary but because it's politically impossible. Some of them worry it's far too ambitious and would like to see a scaled back version implemented.

When faced with imminent destruction, any amount of money becomes "necessary."  That looks like how the left will manage the PR effort to adopt the Green New Deal and go easy on details like no meat, no airplanes - and no economy.