Can the U.S. afford to dramatically increase public spending on a whole host of new programs, potentially including Medicare for All, expanded Social Security and a massive Green New Deal? That question is at the heart of the debate over the still-forming agenda for the Democratic Party ahead of the 2020 election.
One school of thought that’s been the focus of strenuous debate, known as Modern Monetary Theory (MMT), holds that worries about increases in public debt are misplaced, and that the federal government can easily take on much larger spending in some key areas without raising revenues through higher taxes. But at least one progressive policy wonk has his doubts about that increasingly popular approach. Matt Bruenig of the People's Policy Project accuses MMT supporters of “using word games to make people believe that the US can have Northern European levels of government spending without Northern European levels of taxation.”
Bruenig’s chart below shows the significant differences between current U.S. government fiscal policies and those of representative countries in Europe – suggesting the inescapable “necessity of taxes in a social democratic system” that provides extensive public goods.