Yes, America Can Afford To Have Nice Things

Too often, Americans think our country can’t afford nice things. Several recent letters have exemplified such thinking. In “’Free money’ could kill jobs, boost inflation,” Erich Reimer argues a universal basic income (UBI) is unaffordable. In “President working to lower drug prices,” Marvin Rosman argues that we can’t afford Medicare for All. In “Green New Deal too expensive,” Cathy Bolden argues we should think twice about the proposed economic plan because it’s so expensive.

Each letter is based upon a common fallacy — that the federal government is like a household. Therefore, it has to find the money to pay for things. This is how budgets work for individuals, families, businesses as well as local and state governments. That’s not how budgets work for the federal government. The federal government doesn’t tax then spend. It spends then taxes. That’s because the federal government is a currency issuer, not a currency user.

Does this mean the federal government has carte blanche to spend? No. The government shouldn’t spend so much that it causes excessive inflation. And it hasn’t. In 2010, the national debt was $13.5 trillion. Today, it’s $22.5 trillion. Per the Bureau of Labor and Statistics, inflation has averaged just 1.76% a year since 2010. 

That’s below the Federal Reserve’s 2% inflation target. Interest rates, which haven’t exceeded 3% since 2008, are low, too.

What does this tell us? We don’t lack resources. Low inflation tells us that. We also don’t lack capital. That’s what low interest tells us. This is an opportunity, not a burden. We can afford nice things. So, let’s invest in America and in Americans and build a prosperous future. The good dream is possible — the only thing getting in our way is the space between our ears.

Originally printed on as a letter to the editor of the Richmond Times-Dispatch. Click here to view.