What Is MMT’s State of Play in Washington?

Related publications

• Public Policy Brief No.155 30 June 2021

  Can Biden Build Back Better?

  L. Randall Wray and Yeva Nersisyan
  Abstract

  President Biden’s proposals for investing in social and physical infrastructure signal a return to a budget-neutral policymaking framework that has largely been set aside since the outbreak of the COVID-19 crisis. According Yeva Nersisyan and L. Randall Wray, this focus on ensuring revenues keep pace with spending increases can undermine the goals internal to both the public investment and tax components of the administration’s plans: the “pay for” approach limits our spending on progressive policy to what we can raise through taxes, and we will only tax the amount we need to spend.

  Nersisyan and Wray propose an alternative approach to budgeting for large-scale public expenditure programs. In their view, policymakers should evaluate spending and tax proposals on their own terms, according to the goals each is intended to meet. If the purpose of taxing corporations and wealthy individuals is to reduce inequality, then the tax changes should be formulated to accomplish that—not to “raise funds” to finance proposed spending. And while it is possible that general tax hikes might be needed to prevent public investment programs from fueling inflation, they argue that the kinds of taxes proposed by the administration would do little to relieve inflationary pressures should they arise. Under current economic circumstances, however, the president’s proposed infrastructure spending should not require budgetary offsets or other measures to control inflation in their estimation.

  Download Public Policy Brief No. 155 PDF (984.38 KB)
• One Pager No.68 01 November 2021

  Are Concerns over Growing Federal Government Debt Misplaced?

  L. Randall Wray
  Abstract

  With the US Treasury cutting checks totaling approximately $5 trillion to deal with the COVID-19 crisis, Senior Scholar L. Randall Wray argues that when it comes to the federal government, concerns about affordability and solvency can both be laid to rest. According to Wray, the question is never whether the federal government can spend more, but whether it should. And while there are still strongly held beliefs about the negative impacts of deficits and debt on inflation, interest rates, growth, and exchange rates, with two centuries of experience the evidence for these concerns is mixed at best.

  Download One-Pager No. 68 PDF (106.37 KB)
• One Pager No.65 17 February 2021

  COVID Relief and the Inflation Warriors

  L. Randall Wray and Yeva Nersisyan
  Abstract

  With the unveiling of President Biden’s nearly $2 trillion proposal for addressing the COVID-19 crisis, Democrats appear keen to avoid repeating the mistakes of the Great Recession—most notably the inadequate fiscal response.

  Yeva Nersisyan and L. Randall Wray observe that while Democrats are not falling for the “deficit bogeyman” this time, critics have pushed the idea that the increase in government spending will cause inflation. Nersisyan and Wray argue that the current fiscal package should be evaluated as a set of relief measures, not stimulus, and that the objections of the inflation worriers should not stand in the way of taking needed action.

  Download One-Pager No. 65 PDF (129.56 KB)
• Policy Notes No.3 08 June 2021

  Why President Biden Should Eliminate Corporate Taxes to Build Back Better

  L. Randall Wray and Edward Lane
  Abstract

  Edward Lane and L. Randall Wray explain how federal taxes on corporate profits are not well suited to either containing inflationary pressures or reducing inequality. They are not only a poor complement to President Biden’s proposed infrastructure plans, but are inefficient and ineffective taxes more broadly, according to Lane and Wray. The authors follow Hyman Minsky in recommending the elimination of corporate taxes, and they outline a replacement centered on the taxation of unrealized capital gains.

  Download Policy Note 2021/3 PDF (353.00 KB)