$200 billion, $2.2 trillion, $900 billion, $1.9 trillion. Over a year, Congress has passed $5.2 trillion in extraordinary spending — and President Biden wants another $3-4 trillion, split between infrastructure and social spending.
When a “normal” federal budget, pre-COVID, was $4.4 trillion, and with borrowing, not taxes, funding nearly half of federal spending, it’s not crazy to ask how much is too much, before we risk huge inflation.
“Modern monetary theory” is a trendy philosophy — AOC is a fan — that holds that the government can spend as much money as it wants. Drinks all around! Even if bondholders don’t feel like lending to us to make up the difference in spending and revenues, the Federal Reserve can create new money through “keystrokes,” argues the first-ever MMT textbook, published in 2019.
Photo by Doug Mills-Pool/Getty Images