Hern introduces resolution condemning Modern Monetary Theory
This week, Representative Kevin Hern (OK-01) introduced a resolution recognizing that the implementation of Modern Monetary Theory would lead to higher deficits and inflation.
“There is a startling idea popular among Democrats that says our federal debt does not matter,” said Rep. Hern. “Modern Monetary Theory is gaining traction among elected leaders at an alarming rate, worrying many on the left and the right. The notion that the U.S. government is incapable of running out of money is absurd and absolutely false. The House holds the purse strings of the federal government; it’s a heavy responsibility, but I intend to do it well. It’s really concerning that anyone in the House ascribes to a theory that dismisses the weight of our federal debt. My goal with this resolution is to make it undeniably clear where the House stands on Modern Monetary Theory and prevent dangerous, unfounded ideologies from influencing Congressional leaders.”
Seven original co-sponsors joined Rep. Hern for the introduction of the resolution:
Rep. Ted Budd (NC-13)
In addition, Rep. Hern’s resolution has earned the support of many national policy leaders.
"At a time when our national debt is soaring, it is more important than ever for Congress to push back on misguided economic gimmicks like Modern Monetary Theory and get back to responsible budgeting. I applaud Rep. Hern for addressing this issue head-on and encourage other Members to do the same," said Jessica Anderson, Executive Director of Heritage Action for America.
“The Left is using Modern Monetary Theory as a justification to drastically expand government and spend trillions in taxpayer dollars. This is nuts. Congressman Hern should be applauded for his effort to highlight the problems with this reckless theory,” said Grover Norquist, President of Americans for Tax Reform.
"With our national debt at $26 trillion and growing, it is more critical than ever that Members of Congress start thinking about how debt and deficits will impact our country's stability and security in the years to come. Modern Monetary Theory (MMT) would take the U.S. in the complete opposite direction, accelerating our country's path to a fiscal crisis. National Taxpayers Union thanks Congressman Hern for introducing this resolution, which simply states that MMT is an irresponsible and dangerous approach that Congress should reject," said Andrew Lautz, Policy and Government Affairs Manager, National Taxpayers Union.
“We commend Rep. Hern for his leadership in condemning the pseudo-economic quackery known as Modern Monetary Theory (MMT), which purports to justify unlimited deceitful spending by the federal government. These ideas have not only failed everywhere they have been tried, but have led to misery, despair and economic collapse. MMT’s embrace of unsustainable debt and hyperinflation will result in unfathomable burdens being placed on future generations, just so that politicians can continue to have taxpayer dollars for pet projects. It is the duty of all Americans to call out these irresponsible ideas, and we urge all members of Congress to support this resolution,” said Tim Andrews, Senior Fellow, Taxpayers Protection Alliance.
Senator David Perdue (R-GA) introduced a similar bill in the Senate last year, S. Res. 182, with four original co-sponsors:
Senator Mike Braun (R-IN)
Rep. Hern’s resolution resolves that the U.S. House of Representatives realizes that deficits are unsustainable, irresponsible, and dangerous; and recognizes that the implementation of Modern Monetary Theory would lead to higher deficits and inflation. The resolution also acknowledges that it is the duty of the House of Representatives to condemn Modern Monetary Theory.
Modern Monetary Theory (MMT) suggests the federal debt is not important. As prominent MMT proponent, Stephanie Kelton, states: “MMT starts with a really simple observation and that is that the U.S. dollar is a simple public monopoly. [The U.S.] can never run out of money. It cannot face a solvency problem … in order to spend, the government doesn’t have to do what a household or a private business has to do: find the money. The government can simply spend the money.” Or as L. Randall Wray puts it, “We argue that financial affordability cannot be an issue for the sovereign U.S. government.”
More than 40 leading economists were asked whether they agreed with the underlying tenets of MMT by the University of Chicago’s Booth School of Business. 100 percent of respondents disagreed or strongly disagreed with the economic principle.
Opponents of MMT worry that relying on Congress to control inflation through tax policy is likely to prove less successful than relying on monetary policy through the Federal Reserve, which can be implemented more swiftly. Therefore, following MMT would likely lead to higher inflation rates – a move that would weaken the nation’s economy, diminish the value of the dollar, increase the prices of basic goods and services, and reduce the incentive to save and invest.
February 26, 2019, Jerome Powell, Chair of the Federal Reserve, said: “The idea that deficits don’t matter for countries that can borrow in their own currency I think is just wrong.”
The bill text can be found here.