Econintersect: Stephanie Kelton, Chair of the Economics Department University of Missouri St. Louis, has been named Chief Economist for the minority on the U.S. Senate Budget Committee, starting in January (2015). The ranking minority member will be Sen. Bernie Sanders (I, Vermont), a self-described democratic socialist (Wikipedia) who holds office as an Independent and caucuses with the Democrats.
Here is an excerpt from the very conservative Washington Examiner:
Since the financial crisis, Kelton has developed a following as a defender of larger deficits to counteract the recession, as well as one of the leading exponents of modern monetary theory, popularly referred to as MMT.
Deficit owls distinguish themselves from deficit “hawks,” who favor spending cuts and, in some cases, tax increases to reduce deficits.
University of Texas professor James Galbraith, another self-described deficit owl, said in a 2012 interview that “a deficit owl believes that the deficit is a result, not a cause, of economic difficulty, and that it’s not something policy should work on directly. In my opinion, the deficit is a symptom, not a disease in itself.”
Modern monetary theorists, who have pressed their case in journals and blogs in the wake of the recession and ballooning federal deficits, argue that the federal government can never run out of money, as it can print its own, and that deficits are helpful for growth.
The following comment is from Yves Smith at Naked Capitalism:
One interesting aspect of this appointment is that the Senate Budget Committee oversees the Congressional Budget Office. We’ve pointed out how the CBO, despite its supposedly non-partisan role, in fact has exhibited considerable bias in some important analyses:
CBO Issues Fed-Flattering Propaganda
Fed Budgetary Experts Demolish CBO Health Cost Model, the Lynchpin of Budget Hysteria
Jeff Madrick: CBO’s Lack of Independence Means We Need a Shadow CBO
Stephanie Kelton is the founder of the economics blog New Economic Perspectives (NEC) and has contributed to GEI. NEC, which focuses on Modern Monetary Theory (MMT) issues, frequently shares content with GEI.
