"Human Sacrifice"

"Human Sacrifice" by heyyu on flickr

Yesterday, must have been jobs day at The Washington Post since they ran two columns calling for job creation: one by Katrina vanden Heuvel and the other by Harold Meyerson. The crux of vanden Heuvel’s column is:

Consistent, tenacious persuasion is an extraordinarily powerful tool. The Republican Party understands this. Over the past several months, it has relentlessly repeated its false mantra that spending cuts create jobs. And the public, in response, increasingly believes this to be true. What then, is to stop the president, powered by a movement of dedicated and mobilized Americans, from making his own case for the economy? What is to stop him from convincing the American people that the things the economy requires are the things we ought to be fighting for? What is required other than will? Great leaders, when confronted by crisis, act.

The answer to this question is that President Obama’s been telling people since 2009 that we are running out of money and can’t afford programs that aren’t deficit neutral, and recently he’s made clear that he’s for $4 Trillion in spending cuts/tax increases including cuts to entitlements over the next decade. So how can he now argue that we can afford the many things we need to do to create jobs and improve the economy?

Katrina vanden Heuvel doesn’t address this question. She advises him about what he ought do to improve the economy; but not on how he can show Congress, a media steeped in neoliberalism, and the people that not only do we need his job creation measures but also that we can afford them. Without that kind of explanation, what good is the exhortation that he should vigorously advocate for job creation policies? The first pushback he’ll get to any proposal is “that’s irresponsible; we can’t afford it”!

I found Harold Meyerson’s column a good bit more interesting than Katrina vanden Heuvel’s, but no more enlightening about how to get around the “we can’t afford it” objection. He says:

Which leaves us with this stark reality: If the federal government doesn’t intervene massively to help the economy, the economy will oscillate between neutral and reverse for many years.

What should that intervention look like? First, don’t just extend the 2-percentage-point reduction in the employee payroll tax, which is normally set at 6.2 percent. Eliminate the tax altogether, for employers and employees, at least temporarily. It would increase by $2,100 the take-home pay, and buying power, of workers making $50,000 annually. It would make it easier for small businesses to resume hiring. . . .

The payroll tax can’t be suspended indefinitely without compromising Social Security, which it funds. Its suspension should end when unemployment falls to a specified level — say, 7 percent.

Interestingly, this is an important provision in Warren Mosler’s multi-part Modern Monetary Theory (MMT) –based proposal for creating full employment. Warren’s been advocating it for 3 years now. Glad to see Harold Meyerson take it up. Meyerson goes on:

We’ll need other, less fleeting forms of stimulus, too. You should call for renewing aid to state and local governments. . . .

Warren and other MMT economists also advocate state revenue sharing. In Warren’s proposal the states would be given $500 per person which they might use to prevent Government lay-offs. Some propose as much as $1,000 per person in revenue sharing.

Meyerson’s next and last proposal is:

Infrastructure bank or no, you need a long-term program to make our nation navigable again. . . .

Those kinds of projects may take years to realize. Your first stimulus failed to establish a fast track for creating less-capital-intensive jobs in maintenance, rehabilitating buildings, and child- and elder care. It deferred job creation to state and local governments, which have taken forever to set up even such relatively low-tech endeavors as home-weatherization projects. This time around, you should acknowledge the bottlenecks in your first stimulus and call for a federal job corps to do this kind of work.

This is also reminiscent of an MMT proposal, specifically the MMT Federal Job Guarantee, which would end unemployment in a few months by providing a job at a living wage with fringe benefits to any American who wanted to work.

In sum, even though he doesn’t admit it in his column, Meyerson’s program is very similar to the program for recovery proposed by MMT economists such as Warren Mosler, L. Randall Wray, Stephanie Kelton, and others. Is this a case of MMT reaching the mainstream? That may be the case; but if so it’s without attribution.

Both vanden Heuvel’s and Meyerson’s column, while exhorting him to do things that are undeniably needed by Americans, fail to tell him how, given the Republican House, he can politically beat the drive toward austerity to get them done. Without that, it’s hard to see how either of these posts can help anyone. Fortunately, I’ve already done that here and here.

The ONLY practical way to do it given the current political and institutional constraints in Washington is to use very high value Proof Platinum Coin Seigniorage (PPCS) to demonstrate to people that 1) the national debt is being extinguished and will be nearly completely eliminated in 3 years; 2) Congressional Appropriations for deficit spending can be made without issuing debt for the foreseeable future; 3) the Federal Government can never become insolvent (“run out of money”), unless Congress makes that happen; and 4) there’s plenty of money available for not only jobs programs like Meyerson’s, but also for Medicare for All, rebuilding infrastructure, creating a world class educational system, and all the other critical things the US must do to make things work here again.

The basic idea is to mint a $60 Trillion platinum coin, turn it into electronic credits at the Fed, use the money, first to pay down $6.2 Trillion in debt immediately and the rest as it falls due, and confront Congress with a balance of of about $52 Trillion in the Treasury General Account (TGA). Then, facing that $52 Trillion in available financial resources, and with the President using the bully pulpit, let’s see the austerity/human sacrifice crowd, even with all the money in the world behind them, try to justify voting against a job program like Meyerson’s or Warren Mosler’s. Please see the posts I’ve linked to above for more details of my proposal.

(Cross-posted from Correntewire.