Keith —

Thanks, let me respond briefly. Your comments are always welcome and thought-provoking, but this time they are mostly about MMT and public finance rather than health care, so they are a little off-topic for this thread.

(1) You say, “ Dems aren’t likely to pass any bill that demands spending to be limited by a ‘fund’.” But if you read Sec. 601 of the Sanders bill (linked in my post), you would see that is exactly what it proposes. Even though MMT posits no inherent limit on the ability of government to spend money, that does not mean government cannot legislate self-imposed limits on spending.

(2) You say, “ Congress creates 100% of spending with new currency and deficits are “necessary” for the health of our economy as they are the only source of black ink the private sector has.” I think that is a mischaracterization of MMT. MMT says deficits are necessary for the health of the economy under conditions where aggregate demand would be deficient, given a balanced budget, but it does not say that those conditions always prevail. “Functional finance” is an essential part of MMT, and it is a two-way street. Functional finance recognizes that an appropriate level of taxes can be necessary to prevent excess aggregate demand and inflation. Yes, in practice, “deficit hawks” and their ilk often way overstate the danger of deficits and inflation, but at the same time, MMT theorists emphatically do not maintain that it is possible to run a government altogether without taxation.

Let’s stick to health care policy here, although I’d be happy to debate the fine points of the MMT view of public finance on the side at any time. Why don’t you write an independent post on the subject, to which I would be happy to reply.

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Economist, Senior Fellow at Niskanen Center, Yale Ph.D. Interests include environment, health care policy, social safety net, economic freedom.

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