A few weeks ago, I went into a bar at 2 o’clock in the afternoon. As I walked in, I was greeted by three Boulder City gentlemen I hadn’t seen in some time. Of course, the first thing they asked was why I was in a bar at two in the afternoon. I explained I was having a meeting, and they hadn’t seen me because I had been really busy with some serious “stuff.”
After a few minutes of small talk, I looked at the group and told them, with complete seriousness, that I was certain all of us had more in common than any of us realized. With that, I reached into what I call a purse and took out postcards that explained the federal job guarantee, a component of the Green New Deal, something they may have heard of. Then I turned and left to begin the meeting.
So I’m in my meeting. I’m listening, offering advice, asking about the next steps and, quite by chance, with no planning or forethought on my part, the conversation turns to the Green New Deal and the federal job guarantee. Now, I’m thrilled because I want to share objective, genuine information every day and at least twice on Sunday.
In order to have a Green New Deal with a federal job guarantee, one has to know how the economic systems works. The U.S. government creates the currency we use. No one creates U.S. currency other than the federal government. Try it sometime and see what happens.
The dollar isn’t backed up by gold or silver or any other item or commodity. While President Franklin Roosevelt took the U.S. off the gold standard on June 5, 1933, it was President Richard Nixon who, on Aug. 15, 1971, no longer allowed the Federal Reserve to redeem dollars with gold.
Let’s continue. The president constructs a budget, which goes to Congress. For all the details governing this process, go to the Senate’s “The Executive Budget Process: An Overview” at http://bit.ly/2lSX7G4. So, the budget is passed by Congress and the president signs it. Now what?
The federal government spends money on all sorts of things that you can examine in detail from the Congressional Budget Office at cbo.gov/publication/55342. The federal government spends first and taxes later. Taxes do not and cannot logically finance government spending.
It is the tax liability everyone has to pay that gives currency its value. Have you ever attempted to pay your taxes using anything other than U.S. currency? A government deficit is, by definition, the surplus that is out in the economy. The government deficit is a surplus in the private, nongovernmental sector.
For example, if the federal government spends $100 and taxes $30, there is a government deficit of $70.
The idea of a government deficit being a nongovernment, private sector surplus may sound odd or counterintuitive to what many believe today, but I want to share these ideas with you to demonstrate with facts and explanations very basic ways in which our economy functions. This link, https://youtu.be/hChlbfpGcTI, is from a presentation given Sept. 7 by professor Fadhel Kaboub. If you watch the video and simply read the slides, the evidence presented is clear and concise, not economic jargon that is unintelligible.
Kaboub and many other economists belong to a school of thought known as Modern Monetary Theory. It’s from this theory the Green New Deal and the federal job guarantee logically advance.
I share this economic framework because it has shown me, and countless others, how to examine federal spending priorities and remedy what is destroying the planet while creating, through local control, employment for millions with good wages and benefits. With a shift in priorities, it never has to be a question of “we have to cut this to fund that.” We can have needed infrastructure without cutting social programs.
The Green New Deal and the federal job guarantee are about real people whose lives can be improved. It’s about unlearning the myths of “the federal budget is like a household budget” and “run the government like a business” perpetuated by politicians and the powerful. I’m talking about caring to learn and sharing that message with everyone, including men in bars at 2 o’clock in the afternoon.
Rose Ann Miele is a journalist and was public information officer for Boulder City for nine years. She can be reached at firstname.lastname@example.org or at 702-339-9082.