UMKC's Randall Wray on the Deficit, the Progressive Movement, and Modern Monetary Theory

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We spoke with L. Randall Wray, professor of economics at the University of Missouri-Kansas City, on his recent article in New Economic Perspectives and future US fiscal policy.

Wray discusses a series of policy-related concessions made by progressives in the last decade that have enabled the widespread condemnation of Social Security, Medicare, and the federal deficit. For Wray, government spending and subsequent debt are non-issues in the present because of the United States' ability to print more of its own currency:

“Federal government programs cannot become insolvent – period. The federal government will never run out of its own currency to finance its spending.”

Predictions of the doom of social security decades in the future don't hold any weight either. “Do we ever do a 75-year calculation of the solvency of military spending? Do we ever apply this to other parts of the federal government's budget? No – and there's a good reason for this: it's nonsense,” Wray argues. Yet somehow it has become fair game to attempt to “do the math” on Social Security and Medicare, regardless of the fact that it is impossible to predict the economic situation of the United States a few months in the future, much less decades.

In other words, progressives lost a major battle by conceding that it was even possible for Social Security to become bankrupt. Today, defeating the deficit is undoubtedly a major goal for both parties; our tens of trillions of debt is seen as a fundamental problem with the American financial system. This paradigm, now practically mainstream in Congress, the executive branch and the media, is crippling the ability of the United States to institute sound macroeconomic policy.


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