Pay-go is a dead end, unless ...

Rep. Raúl Grijalva (D-Ariz.), who heads the Congressional Progressive Caucus (CPC), said the Democrats would be foolish to adopt the fiscal restraints, especially in light of the Republicans’ newly adopted tax-reform law, which is estimated to add almost $2 trillion to the debt over the next decade.

“The pay-go thing is an absurd idea now given the times and given what’s already been done to curry favor with corporate America,” Grijalva said.

There are two ways Democrats can have pay-go and not fall on their faces. They can raise taxes on the rich, or they can money finance the federal budget.

Money financing means creating the money without creating additional debt. It means they wouldn't borrow. They wouldn't issue bonds but simply create the money.

If that new money were put to purposes that return at a neutral price-inflation rate in terms of the entire economy (in the aggregate), they'd be home free, literally. In that case, the economy will have absorbed the increased supply of money without unbalancing supply and demand for goods and services in the real economy.

Also keep in mind that not fiscally spending on a proper target ends up costing more in the longer run, as privatized costs are higher.

See if Nancy Pelosi understands it. If she doesn't, teach her until she does or replace her with someone who catches on more quickly.

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  • Tom Usher

    About Tom Usher

    Employment: 2008 - present, website developer and writer. 2015 - present, insurance broker. Education: Arizona State University, Bachelor of Science in Political Science. City University of Seattle, graduate studies in Public Administration. Volunteerism: 2007 - present, president of the Real Liberal Christian Church and Christian Commons Project.
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