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Letters and Politics - April 10, 2013 at 10:00am

Letters and Politics, for April 10, 2013 - 10:00am

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Letters and Politics - Obama's Budget

President Obama releases his budget proposal for fiscal year 2014. Its considered a blueprint for the President's bargining position on future budget negotiations with Congress. We'll go over it with economists Sylvia Allegretto and Max Fraad Wolff.

As thousands rally in Washington DC today for a pathway to citizenship, we'll be in conversation about the modern history of immigration reform with Cathy Tactaquin, executive director of the National Network for Immigrants and Refugee Rights.

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Max Fraad Wolff said the ‘the

Max Fraad Wolff said the ‘the budget is imbalanced,’ which is true, but misleading. (The USA has carried a consistent trade deficit since offshore outsourcing killed domestic manufacturing. But that doesn’t mean the USA is broke or cannot afford to spend its modern money for public purpose. ) Fortunately, Dr. Sylvia Allegretto corrected him and affirmed the truth about federal budgets for a sovereign currency issuer, such as the USA: The federal budget is not like a household budget, which must be balanced. Unfortunately, Dr. Allegretto’s understanding of our monetary system is only partially formed, as she proposed the USA can borrow. The USA doesn’t need to “borrow” dollars, as it is the sovereign currency issuer of USA dollars. The USA can simply spend in bottom-up fashion, not top-down quantitative easing. The USA can afford a Job Guarantee programme to hire the unemployed when the private sector refuses to do so. The USA can afford public spending for public purpose.

For a broader explanation of these facts, I refer interested readers to UMKC’s heterodox school of economics, which is like the opposite of the Chicago School of economics (to quote Dr. Michael Hudson). The UMKC Economics blog, which has reading recommendations to inform the public about reality economics and articles on current political economics events, was started by the current Chair of UMKC’s economics department, Dr. Stephanie Kelton, and may be found here:

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