The Financial Experiment Behind President Biden’s Pork Spending Spree

Photo by John Guccione on Pexels.com

Selfishness and greed, individual or national, cause most of our troubles.

Harry S. Truman

These days, I find it incredibly difficult to talk to politically conservative friends and impossible to suffer through conservative-leaning “news” programming. This has nothing to do with agreeing or disagreeing with their principles. I just cannot stand the blah blah blah Marxism schtick.

I get that politically progressive millennials love calling themselves socialists. I consider myself very fortunate to have fallen on the tail end of Generation X and to have attended college when I did. When I attended college, the culturally sane Greatest Generation still exercised control over academic departments and we received fantastic, rigorous educations because of it. As soon as the 1960s generation moved into administrative positions, college became a farce. Critical theory ate the humanities and then metastasized like a cancer to professional schools (with law schools seemingly bearing the brunt). Once that happened, neo-Marxist ideological purity tests moved into the realm of politics and took over the mainstream media. Statistically, few Americans agree with these perspectives, yet we cannot stop hearing about it.

But the Biden administration is far from Marxist. They have zero interest in materially changing the power structure in the country. They could not possibly care less about reducing economic inequality or leveling the playing field, even though the echo chamber likes to pretend they have ended poverty with *temporary* welfare stipends. A significant number of Biden’s political appointees come from private equity and institutional money management (a single firm, in fact – it is obscene). When Biden’s Secretary of Defense balks at pulling the US from long-term foreign conflicts, understand that he came to the administration from a private equity firm that “invests” in government contracting, specifically the technology used in air-based attacks that dominate fighting in the Middle East. When Biden talks about a near-term climate Armageddon, something government scientists dispute, understand that his climate folks come from money management firms that have bet big on “green” energy. These folks will make sure that you will never again see images in the media of westerners raping the interior of Africa for rare metals to build “sustainable” energy technology or getting into commodities deals with warlords. Let’s just talk about making windmills safe for birds, alright?

All this is to say that the Biden administration folks collectively come from a sphere that has enriched themselves through government business and public policy for decades. The historic level of dark money that propelled Biden into the White House came from people who became extraordinarily wealthy from the coronavirus lockdown policies over the past year. When Biden talks about taxing them, it is with a wink. It’s not like extreme wealth isn’t highly portable if he did, however.

While these folks pragmatically pay public homage to “tax the rich” attitudes, they actually believe nothing of the sort. Well, they may believe it at the state and local level, as state and local governments are at least superficially required to balance their budgets. (Florida, Texas, and Tennessee thank you.) But at the federal level, they contest the idea that taxes are even levied for the purpose of funding government operations. Yeah, you read that correctly. “If taxes don’t fund government, what is their purpose?” you ask.

The establishment left has fallen hook, line, and sinker for a financial fad called Modern Monetary Theory or MMT. MMT proponents believe a government that issues its own fiat currency:

(1) Is able to pay for goods and services (and bankroll all of the “government” services that are essentially a substitute for commercial banking on a grand scale, like mortgage lending and student loans) without a need to first collect taxes;

(2) Cannot be forced to default on the debt it issues in the form of borrowing in the bond market because it can simply print new currency;

(3) Is only limited in its ability to create new money by inflation;

(4) Can control inflation by increasing taxes, and thus removes money from circulation;

(5) Does not compete with the private sector for savings by issuing bonds.

Much of this is uncontroversial until you get to the end, which essentially suggests governments can run up unlimited deficits and the markets won’t even notice. MMT started to gain popularity as a competing theory to mainstream economic theory primarily after the 2008 financial crisis. I feel like I have watched it radicalize the rent-seeking financial class in real time, like watching a slow-moving train wreck, and the whole endeavor is so transparent it is ridiculous.

We have a monetary system that repeatedly manufactures financial crises ex nihilo by replacing burst asset bubbles with new asset bubbles that will eventually burst too. It keeps the two asset classes the gerontocracy loves most – paper assets and real estate – aloft at the expense of workers, who are stuck at perennially low wages and pushed out of urban housing markets (even to the point of skyrocketing homeless populations). Rather than change that system, the establishment pushes a new theory that suggests none of it matters but preserves the financialization our economy. How convenient for them.

This theory is not popular because it makes sense, although the New York City-based financial media – which has been effectively captured by the political economy it used to rail against – tries its best to make it seem that way. It is popular because it suggests governments can print and spend virtually unlimited amounts of money. Pork all you want, it does not matter, the enterprise of government is one big free lunch.

The first thing anyone needs to understand about politicians, both right and left, is they have incredibly short time horizons. And no one has a shorter time horizon than the gerontocracy that is currently running the federal government and major financial institutions. When batshit actors in the financial markets who primarily get their money from rent-seeking tell politicians they have concocted a monetary theory where taxes do not ultimately fund government and deficits literally do not matter, it is akin to a religious experience to a leftist politician. They no longer need to be classic “tax and spend” liberals, they can be “spend and spend” liberals. And they will all be dead before a bill so large it lands squarely on the proletariat comes due, so who cares if the experiment works or not.

So, if you are wondering why the Biden administration just pushed $2 trillion of pork spending through Congress and then turned around and asked for another $3 trillion – more than has been historically required to operate every agency of the federal government – this is why. The Democratic establishment understands they got shellacked down-ballot in the 2020 election, will probably lose control of Congress in two years, so they need to deliver as much money to insiders as is humanly possible in the meantime. Cue the MMT cult spending deluge. If they got $3 trillion, they’d probably ask for $5 trillion more from the magic money machine.

The fact of the matter is, even though many of the world’s wealthiest people live in the United States, we cannot design a tax that would be sufficient to fund many of the political ideas floating around now. You could confiscate all of the wealth sloshing around the tech industry tomorrow and it won’t pay for Medicare for All and the Green New Deal. The only way any portion of this is going to get done is with monetary-policy-is-also-fiscal-policy theater.

This is not something as silly and idealistic as college campus Marxism. Biden is not a new FDR. (Seriously though, how has a politician who put Asian citizens in internment camps not been cancelled yet?) This is just an old-fashioned looting of the Treasury. Wokeism, cancel culture, neo-Marxism, the demise of the nuclear family, etc. have proven to be highly effective distractions for conservatives when it comes to talking about what is really going on behind the curtain. They should be talking about the insanity that is MMT and how it cynically enables wicked behavior on a level that may fatally sabotage our republic. You should definitely be talking about what is happening to capital, but not Das Kapital.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s