#3 owl

3 The National Debt (That Isn’t) 

MYTH #3: One way or another, we’re all on the hook. 

REALITY: The national debt poses no financial burden whatsoever. 

When I arrived in Washington, DC, in January 2015, I was the only staffer on the US Senate Budget Committee who looked at the world through the lens of a currency issuer. I knew the federal government wasn’t like a household or a private business. I knew Uncle Sam could never run out of money. I knew that inflation, rather than insolvency, was the relevant punishment for overspending. I also knew I was alone in this thinking. Everyone else fell into one of two camps: deficit hawks and deficit doves. The hawks were the hard-liners. Mainly, but not exclusively, Republicans, who looked at fiscal deficits as evidence of an epic mismanagement of our nation’s finances. Budgets should balance. Period. Any imbalance between spending and taxation ruffled their feathers. They warned of a looming debt crisis and called for swift action to rein in fiscal deficits. The label was meant to symbolize their hawkish determination—at least rhetorically—to balance the budget and zero out the national debt. The hawks taunted their opponents, the deficit doves, accusing them of being too sanguine (dovish) about the threat posed by the nation’s mounting debt. The hawks mostly blamed entitlement programs—Social Security, Medicare, and Medicaid—while the doves pointed to tax cuts for the rich and trillion-dollar wars as the main drivers of government debt. While beltway pundits and Washington insiders depicted them as polar opposites, I saw them as birds of a feather. Both considered the long-term fiscal outlook a problem that needed to be fixed. The main differences came down to disagreements about who (and what) had gotten us into this mess and how quickly we should act to repair the damage. Most Republicans wanted to slash entitlements, while most Democrats wanted to raise taxes. Different paths to the same destination. By the time I joined the Budget Committee, I had established myself as a contrarian in this arena. As word spread that I would be heading to the nation’s capital to advise the Democrats, journalists fired off articles with headlines like “Sanders Hires Deficit Owl.” I had coined the term in 2010, as a way to distinguish the views held by MMT economists from those of the more deficit-anxious birds. I decided the owl would make a good mascot for MMT because people associate owls with wisdom and also because owls’ ability to rotate their heads nearly 360 degrees would allow them to look at deficits from a different perspective. Most of the senators on the committee had never heard of MMT. Even the senator who hired me, Bernie Sanders, was initially surprised by the media attention surrounding his pick. When I met with the members of the committee for the first time, Virginia senator Tim Kaine told me that he had read about my appointment in the Kansas City Star. No one was rude, but I could sense that there was reticence about expanding the deficit aviary. It wasn’t easy being the new bird in town. I knew that my views differed sharply from theirs. The Democrats I was there to serve included a number of senators who had earned reputations as fiscal conservatives. Three of them had even been anointed “Fiscal Heroes” by the notorious debt-shaming front group Fix the Debt. 1