Deficit Owls Say You Shouldn’t Give a Hoot About $1 Trillion Budget Shortfall
The Debt

Deficit Owls Say You Shouldn’t Give a Hoot About $1 Trillion Budget Shortfall


As warnings rise about the Congressional Budget Office’s projection that the federal budget deficit is on pace to top $1 trillion in 2020, The Washington Post’s Jeff Stein on Friday highlighted a small but pugnacious group of economists who argue that deficit spending isn’t the threat it’s so often made out to be.

The headline on his piece: “These economists say a $1 trillion deficit is just a good start.”

Those economists are mostly proponents of a heterodox economic school called “Modern Monetary Theory,” which holds, among other things, that governments that control their own currency, as the U.S. does, should never default. They call themselves “deficit owls,” a term coined by Professor Stephanie Kelton, an economic adviser to Sen. Bernie Sanders.

“Deficit spending, they say, has given the government extra money to fund social services, stimulate the economy, and react to natural disasters,” Stein wrote. “And all the dire warnings of a coming crisis, they say, are, at best, well-intended alarmism — and, at worst, a sneak attack on welfare, Medicare and other progressive priorities.”

Read Stein’s piece for a comprehensive overview of the arguments and counter-arguments. And check out economist Jared Bernstein’s take on where he disagrees with the owls — “Part of the problem is that they’re just way too sure they’re right,” he says. “Or, more precisely, they’re too sure that the fact that they’ve been right about the past means they’ll be right about the future.” — how politics plays into the debate and why we still need to have a more robust national discussion about when and why deficits matter.