Why Modern Monetary Theory is an unserious idea for an unserious time

The Democrats' new economic idea is too good be true

Bernie Sanders and Kamala Harris.
(Image credit: Illustrated | AP Photo/Andrew Harnik, gonin/iStock)

Big ideas? Well, Democrats have plenty of those. Expensive ones, too. A "New Green Deal." Medicare for everyone. A federal job guarantee. Free college tuition.

But a way to pay for all those trillions in big ideas? That, unfortunately, Democrats do not have. Raising the top tax rate for the super-rich wouldn't raise nearly enough dough to prevent all those policy plans from ballooning the already historically high national debt. And Democrats seem to have little stomach for raising taxes on anyone else. Blue state pols have been scrambling to figure out ways to prevent upper-middle-class households from paying more taxes as a result of the Trump tax cuts capping the federal deduction for state and local taxes. House Speaker Nancy Pelosi even tried instituting a rule that would require a supermajority to raise individual income taxes on the lowest-earning 80 percent of taxpayers. So talk of America someday having broad-based, value-added tax — which the big welfare states of Europe all have — looks like a fantasy. And without something like that, the financial math for the Democratic wish list doesn't really work — economically or politically.

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James Pethokoukis

James Pethokoukis is the DeWitt Wallace Fellow at the American Enterprise Institute where he runs the AEIdeas blog. He has also written for The New York Times, National Review, Commentary, The Weekly Standard, and other places.