On Monday, Massachusetts Democrat Senator Ed Markey, in an attempt to exhibit largesse in the most hyperbolic manner possible, garner mass approval and launch the American economy into oblivion, tweeted, “Give every person in our country $2000/month for the duration of the pandemic, $2000/month for 3 months after that, and $2000/month retroactive to March.”
Give every person in our country $2000/month for the duration of the pandemic, $2000/month for 3 months after that, and $2000/month retroactive to March.
— Ed Markey (@EdMarkey) August 10, 2020
That economically illiterate suggestion was countered by Senator Ted Cruz (R-TX), who took Markey’s hyperbolic suggestion and took it to the extreme to point out how crazy the idea was. Cruz tweeted, “Why be so cheap? Give everyone $1 million a day, every day, forever. And three soy lattes a day. And a foot massage. We have a magic money tree — we should use it!”
Why be so cheap? Give everyone $1 million a day, every day, forever. And three soy lattes a day. And a foot massage.
We have a magic money tree — we should use it! https://t.co/0ODgPBhc4O
— Ted Cruz (@tedcruz) August 10, 2020
Markey, it should be noted, was the Senate author of the Green New Deal. “Liberal economist Noah Smith estimated that the cost of the Green New Deal without all the promises listed in the FAQ would be $6.6 trillion annually. That is three times as much as the federal government collects in tax revenue and about 34% of U.S. GDP,” the Congressional Western Caucus reported.
The Adam Smith Institute noted in May 2019:
Modern Monetary Theory (MMT) contends that government can spend without restraint and large deficits and debt don’t matter when the economy is not at full capacity. It asserts that the state, as the issuer of the nation’s currency, cannot go bankrupt because it can just keep creating and printing money; taxation exists not to obtain revenue but to oblige people to use a nation’s currency and control inflation; and that all public expenditure can be financed by debt or creating money …
MMT advocacy, particularly in the political sphere, is often driven by Utopian thinking by those who want massive unaffordable public spending programmes … MMT asserts, with limited evidence, that there is substantial unused economic capacity that government spending can activate. However, in practice, when government excessively expands the monetary supply (prints money) the impact is inflationary, if not hyperinflationary – as was the case in the Weimar Republic, Zimbabwe, and today in Venezuela.
As legendary economist Henry Hazlitt noted in his classic “Economics in One Lesson”:
Everywhere government spending is presented as a panacea for all our economic ills. An enormous literature is based on this fallacy, and, as so often happens with doctrines of this sort, it has become part of an intricate network of fallacies that mutually support each other … Everything we get must in some way be paid for and all government expenditures must eventually be paid out of the proceeds of taxation… Practically all government attempts to redistribute wealth and income tend to smother productive incentives and lead toward general impoverishment.
Famed economist Walter E. Williams explained, “The fact that Congress has no resources of its very own forces us to recognize that the only way Congress can give one American one dollar is to first — through intimidation, threats and coercion — confiscate that dollar from some other American through the tax code.”