Really fuzzy math ...
The latest fiscal news out of Washington, D.C. is hard to understand by any other metric than “modern math.” In this case we must be talking about “modern monetary theory (MMT),” the latest 21st century fad that seems to be playing out with the American economy as its big fiscal laboratory.
While Americans are receiving their latest $1,400 stimulus checks — courtesy of the unaffordable $1.9 trillion “rescue plan” that is loaded with political pork — Washington is now abuzz with President Biden’s talk of a new $4 trillion spending bill that, in deference to those with unbridled faith in government intervention, seeks to stimulate the economy further.
That anyone is proposing even one more cent of additional spending suggests a Washington far removed from financial reality. But such is one of the apparent key components of MMT — a suggestion that large deficits do not matter.
This seems to rely on the supposition that because nothing has happened yet — the exploding U.S. debt has topped $28 trillion with no sign of abatement in sight and inflation is manageable — nothing bad will occur in the future.
But this is fiscal irresponsibility of the highest order. Even if deficits somehow do not matter, this type of thinking sets a terrible example that will have consequences and become very difficult to undo the longer it goes on.