Notes, you can purchase. Tonights books by clicking on the green button below the speakers and we encourage everyone to do that to support our authors and also politics and prose. Tonight were going to encourage you to ask questions which many have. The back portion of our event will be dedicated to your questions as you click on the ask a question with the bond you can see where people have asked questions and you can vote most interested in hearingour authors answer. Lastly just a reminder that you can see us but we cannot see you so feel free to relax and get comfortable. So without further ado, it is my honor to welcome Stephanie Kelton, professor of economics and Public Policy at new york at stony brook. Shes here to discuss her new book the deficit myth. Tonight we are also luckyto be joined by Zachary Carter who is Senior Reporter at the Huffington Post andcovers congress, the white house and Economic Policy. Tonight he will be discussing his book the price of peace. Without any further ado here are zachary andstephanie. Hi everybody, nice to be with you. I want to start by talking to stephanie about her book which is called the deficit myth and stephanie all i hear about when i listen to economic commentary is this talk about debt and deficits. There was a tweet from the lincoln project, this group of antitrump republicans talking about how trump had run up 17. 8 dollars of National Debt. Their writing to the washington journal and New York Times about debt but your book called the deficit a myth. What do you mean by the deficit myth and why do you feel this book wasimportant to write at this point in time . Thank you and thanks to politics and prose for having both of us here talking about our new project. Its a pleasure to be with you. First let me start by increasing the deficit and adding to the National Debt is probably the least bad thing donald trump has done. We should just get outthere. I understand that we are inundated from the media, mainstream press, politicians , everybody talks about deficits and debt, virtually everybody talks about in an native way. When we hear people bring up the deficit is almost always the case that they are there to complain about things or the National Debt. These are presented to us as problems at a minimum and as a National Security threat or a threat to future generations. In real danger to us individually, your share of the National Debt, borrowing from china, all these things that create a lot of anxiety on the part of the American People so when you say why did you write this book i think that my hope is that i can reducethe level of anxiety. I start in chapter 1 of the book telling a story about being a child and watching the Television Show sesame street and sesame street was good at teaching us to separate things into categories. These things are similar. These things are unlike the rest of them. And as a kid my sister and i would watch and play along as the images came on the screen and they put out a bicycle and an automobile and a train and a 10 issue and say one of these things is not like the other. We would holler back at the television the issue is not like the others. So in the book i say that im an adult now but im still calling back to television all the time because i turn on the tv and i hear often socalled experts on economics to talking about the deficit for the debt in ways that i think are fundamentally wrong and they are getting some big things wrong and im hollering back at the tv so the reason i wrote the book i think is to get us to a better place, to a better understanding where we can have a more meaningful and fruitful discussion about deficits and the National Debt and government finances that ultimately i hope will get us to a place where we make better Public Policy. A common criticism you hear from people who talk about modern monetary theory or Stephanie Kelton is that you believe deficits dont matter. There was a nasty review in thewall street journal where somebody accused you of this. Do you think that deficits dont matter and what do you make of this critique . Its funny because if you go to the webpage that i created to talk about the book it literally reads dick cheney says deficits, reagan proveddeficits dont matter. He was wrong. There i am saying i disagree with cheneys characterization that deficits dont matter. My argument in the book and throughout my work is that deficits matter but not the way in which weve been taught to believe that they matter. So weve been taught as i said earlier that they are inherently dangerous. Undesirable. That theres something you do in times of crisis because you have no choice like now but that in more normal times deficits are something we ought to be avoiding. Governments should not spend more than they taken in the form of taxes. They should strive to balance budgets and avoid increasing the debt. So i walked through in the book a variety of ways in which deficits matter and one important way is every deficit is good for someone. When you see the republicans having these huge tax cuts at the end of 2017, these were massive tax cuts that republicans passed knowing they would massively increase deficits so if republicans believe that deficits were inherentlydangerous and they were going to wreak havoc and all these bad things were going to happen. They wouldnt do that. The reality is the republicans understand i think perfectly well that every deficit is good for someone so what they did was to massively cut taxes on corporations and the wealthiest people in this country, 83 percent of the benefits went to people in the top one percent of the Income Distribution and those who needed to help but the deficits the government ran and are running become financial surpluses in somebody elses pocket. There deficits become our surpluses. They are red ink is our black tank, the question is whos benefiting from that financial windfall. Republicans are happy to run deficits because they know they create a financial surplus that they can direct into the hands of the people that they are most interested in helping and what i would hope is that democrats would reach the point where they to understand that deficits are something we should be striving to wrestle down and reduce but that the deficits can be used as a tool to carry out an agenda that serves the broaderpublic. That benefits people who are truly hurting. So thats a lot of what i talk about in the book. It feels weird when i read the book whether its in the blog or oped youvewritten over the years. There is a real emphasis on economic distribution whether its the distribution of resources. How you move supply chains to point a to point b or what kind of society you want to live in in terms of economic inequality so the focus seems to be on a sort of social vision more so than, i dont want to say youre not an economist but the way the traditional economists focus on debt and deficit as the primary way of understanding the economy, you seem to have in my mind a broader social vision. First of all is that an accurate description of the way you think about your work and second, what do you think it says about the economics profession that we have this focus on debt and deficits instead of these other social priorities . In the book chapter 7 is called the deficits that matter. So thats what im trying to do is redirect our obsession with deficits to the very real deficits that surround us in our everyday life and that are crushing in many ways for millions of people inthis country. So you are right that for me i look at the federal budget as a moral document and in the federal government there are elected officials and they get to write and pass the budget that determines where Financial Resources will be dedicated and to what end and in my view anyway our elected officials are there to act in the interest of the broad majority of the people of this country. And if the people of this country indicate that they want everybody to have healthcare for example, then i think congress should be looking for ways to budget our nations real resources so we can deliver thatmaterial wellbeing to people. So its about saying the easiest part of any agenda is finding the money. Thats the easiest part. The challenge is how many of our nations real productive resources, howmany workers, how many people , how much of our factories, how much real resources do we want directed to producing public goods, healthcare, education, infrastructure. Those sorts of things and how much do we want to leave to the private sector sothere is a balance there. When i talk about addressing the deficits that matter whether its climate or higher insecurity or education, student loan debt, healthcare, all that is in the chapter i talk about. Im focusing in ways that may be do not comment about economists to think about directing real resources to solve real problems in our economy. Id have to say that focus reminds me a bit of a fellow i spent a lot of timestudying. His name was John Maynard Keynes, are you familiar with his work . And i familiar with his work. I dont know. It rings a bell. That guy . That guy, a famous political cartoon on that mug of keynes looking like a spiderin a chair , frankly. Its very lengthy. One of the things i love about studying keynes ishes one of these kind of broad thinkers. Hes kind of an economist by activist. I feel like his life is one where hes constantly surrounded by all these philosophers and artists and great writers like for daniel wolf and em forster and all the merchant ivory sweeping melodrama from the 80s and 90s. He would go get early drafts before they came out and he of course would be like dont tell anybody but let me know what you think maynard and he was concerned with art and this big grand vision of society but because he realized economics was the science that he could pursue that would give his ideas access to power. And i feel like when i read his work his tougher economic work like the general theory is dense and kind of like like eating a pretzel covered in corn. Its very nasty at times but a lot ofhis other books , his essays, his letters its very clear he has the ability to distill the big complex ideas into fragments that ordinary people can understand because i think hes fundamentally concerned with ordinary people and what they can understand because he believes the economy is not this weird thing that have to be it off away from social policy. He believes its a way to address the social policy cares about. Is concerned with war and peace and democracy and all the problems of the early 20th century. And when i read that stuff i have to say i feel like the economics profession today doesnt seem to be working at the same level of ambition for the most part. There are exceptions clearly and there are a lot of good economists out there but the idea that you would sit down with, i feel like economists are there to tell us know, that we cant do the things that we want to do. Cant solve the problems we need to solve. So my question for you stephanie is what are the big problems that economists need to solve today if its not debt and deficits . What should the great minds from academia be focusing their attention on its not debt and deficits . I think in the moment it seems to me that the obvious answer is unemployment. And this is of course the big problem that came to wrestle with in the general theory because the economy was in the gripsof the great depression. So here we find ourselves again with tens of millions of people who have lost jobs in the course of the shortest span of this magnitude of job losses in our nations history so weve got to figure that out. I think that probably right now theres no higher calling and to deal with unemployment you know this. You and i know a lot of these people. There are economists all over the country. You and i might agree that there arent enough there are economists that are also engaging in the climate space , not necessarily as experts on Climate Science but there are environmental economists working in collaboration. They mentioned keynes working alongside philosophers and people with areas of expertise outside his own those collaborativeefforts are important. When it comes to healthcare or education there are things economists can do and ways in which we can be useful but we i think need to sometimes show some humility and recognize that scholars in other fields bring a lot to the table and to the extent that we can work Better Together and i think economists are sometimes not good at this. We think our disciplines sit higher in the pyramid, in the hierarchy that a lot of other disciplines. And so unemployment, health care, the environment, those are problems as i said i did a chapter in the book on this but i want to talk about your book. Lets talk. I want you to share with all these wonderful people who are here what made you want to study this man who i think is a fascinating figure but what was it about him that made you want to study and study years i presume that he and his life. I didnt come at keynes from an economics background. I have a masters and i studied philosophy and undergraduate but in 2006 the job i fell into after from college was a job in the financial journalist and i was sitting in Central Virginia working for a trade publication as part of s p global but i wasnt terribly thrilled to be covering backing as a 22yearold, it just didnt seem like the most exciting job in the world but then the Banking Sector did me a huge favor and exploded. And it became very exciting to cover the bankingsector. And there was this very clear shift that happened over the course of 2007 and 2008 where everybody who i talk to in the markets was like we all agree the markets are rational. We agree that supply and the mind, they will find a prosperous equilibrium and we know that things are going to work out if the government stays out of the way and then there very quickly said obviously the government needs to intervene immediately to rescue the Financial Sector otherwise the economy is going to collapse and society is going to fall into disrepair and when that shift happened, people were very open with me , at least Financial Market participants were open about the fact that they were changing their minds, i dont want to accuse these people of hypocrisy but all of a sudden they were talking about this guy John Maynard Keynes and saying his ideas were relevant and they were key in a way where previously he had been sort of dismissed through academic margins, if you were a kenyan specialist, i guess paul krugman had a job at theNew York Times but academically it wasnt taken seriously. You have to work for a particularly specialist keynesian institution and in the markets people didnt really talk about it like it was areal thing. Suddenly it was totally legitimate. And i thought that was incredible. I thought that shift was remarkable not only because people had changed their tune but because the possibilities that were available in terms of policymaking seemed incredibly broad and the specific policies that we pursued in 2008 where we basically bailed out the Financial Sector and let everyone else twist in the wind, that struck me as not terribly a great way to go about rescuing an economy. It struck me as odd fellow who was a sadist would prescribe Something Like that so i tried to read the general theory and like i said, the general theory is that thisis a nasty piece of work. If you want to give yourself a big headache go open the general theory and start on page 1 and try to get through it. Its a brilliant book, is one of the great triumphs of western letters but its like reading nietzsche or heidegger where you have to slog through dozens of pages of nasty crazy concepts until you get to that one jim very suddenly. The seas part and the skies open and youre like this mans genius but i went and read consequence of the peace which is his piece on the treaty of verse either ends world war i this is a much clearer document. Its easier to understand. Economically its not as sophisticated as what makes him famous i think today as an economist but the moral and philosophical force of the document and the political ideas involve i think are just as urgent as everything in the general theory and as really any piece of political writing i ever encountered and that book just lit a fire under me. This guy is onto something serious. Its about about political accountability and he says essentially the leaders who have organized this peace treaty settled every country with insurmountable debt whether its the war debt for theallies , that theyve assumed over the course of the war or the reparations that has been assessed on germany. That lost world war i obviously and as a result people are going to be shipping money across different borders and theyre not going to have the Funds Available to mobilize those resources that are going to make their economies recover and generate prosperity. And the really i think brilliant point is thats not just going to be an economic problem. People are going to blame outsiders for the fact that theyre not recovering and theyre not going to be totally wrong because it will be shipping capital abroad could be spent at home. And thats going to fuel international resentment and going to lead to dictatorship and war and i thought connection between economic dysfunction and social crisis was something that i just had not, i felt this sense of unfairness over the bailouts in 2008. I didnt feel like there were economists who were putting it together saying the reason these numbers appear to add up on paper but actually result in socially terrible results, that didnt feel like it was something that was coming down from on high from people whether republicans or democrats in positions of economic expertise and keynes in his work i felt like this deep moral force and also this concern for the things that were not really about dollars and cents but he was concerned about the equations that he was really afraid of dictatorship and war area he was focused on the big social problem. Not the pothole, its like the march of fascism at the end of the rainbow but he was afraid of something bad happening to society and to a community. Not of an equation that failed to balance appropriately. And so i just became completely obsessed with the guy and i was a philosophy student so i found a lot of his ideas very easy to understand as a philosopher more so than as a economy, he was not somebody who cared deeply about mathematics even though he studied mathematics as an undergraduate when he was at cambridge and he didnt even have a degree in economics, use one of the greatest economists whose live because hes kind of early to the profession. Its something thats just being born when hes studying as an undergraduate. So i wrote this book because of the crash of 2008 and my feeling of confusion about where the world was going and my feeling of deep moral despair and i felt like he was somebody who could that sense of uncertainty. And of unfairness frankly that was in the air at the time. I feel like you must feel almost in a sense like you know him. Youre so inside his head that, and you come to this in the moment right on the precipice of the financial crisis and themeltdown , Global Economic meltdown and you talk about the treaty of verse i and the reparations that were imposed on germany and how keynes could foresee the rise of fascism and the social unrest and all that. How did it feel working on this project and looking at the was happening in your where the debt crisis, the countries didnt not feel like you are living inthe moment . It was terrifying. I remember when i went to cambridge to go through his papers at keans college in the spring of 2017 and this was passed the worst days of the great debt crisis but every single week you would see headlines about golden dawn and these horrible like far right fascist parties that were rising up in greece and other countries and it wasnt just these fringe parties. The conservative parties were also sort of subsuming these fringe parties and making it part of their more mainstream conservative policy agenda. And it was deeply frightening. You would go through his papers and say im really worried that germany is going to go fascist pretty soon and im worried italy is going to go fascist pretty soon they would do it. You keep turning the pages for document and he say mussolini has taken policy enrolled. I amsad. And the idea that there was an economic connectionbetween these things , to keynes it was common sense. I feel like you have to argue that now in the United States in this weird way politically that theres a connection between Economic Policy and social disruption this way which i dont think you had to do in europe. In europe people accept that they might deny whether or not their particular policymaking is responsible for the rise of fascism but the idea that these things are connected is just common sense over there so in a certain sense was nice being around other people i think saw this connection to economic and social policy the way i did. Certainly being in dc he would talk to people on the hill and 80 all we care about is growth and so long as we have growth everythings fine and youd be like okay. But there are these people in the industrial midwest who dont have jobs and their communities are rotting. Are you not worried aboutthat . No, because of all the growth. Why would you look at these metrics this way . I felt like there were some things with keynes when you go through his letters, he just has this incredible capacity to communicate to other people and you could, i dont want to say he felt the way i felt but i felt a real sense of, there was a residence with a lot of his letters when hes talking about coal miners going on strike in 1926 and saying were not going to work for this terrible wage, you want to send 10 or 12 percent pay cuts . Buzz off. And keynes is going all my god, the countries going to go into revolt and of course the country did go into revolt in 1926, they have this new general strike in britain and this its this enormous moment of people where all the labor unions refused togo to work because of the conditions being demanded from the government and in a sense i feel like were seeing some of that today. Obviously George Floyds killing is the spark for all of the unrest around the country in the United States right now but i think the underlying that is this deep sense of unfairness that everything, not just the Police Everything in life is weighted against working people. Whatever color they are but particularly black and brown people and that theres no way to guarantee yourself that tomorrow is going to be better than today. That the political system has abandoned not just a few people at the marches but most of the country. And i think that sort of sense of, that crisis is something that keynes was concerned with but it makes his writing come alive in a way that economics journal, its funny that it doesnt have the same sort of fire behind it. When you think about keynes and his economics people think that keynesian economics means that is supposed to just grease the wheels when the economy slows down. Do a little bit of stimulus and increased Government Spending and then you can safely take your hands off. And you can find a wayback to equilibrium. That theres no need for a sustained presence on thepart of the federal government. So looking at where we are today and recognizing that the risks are continued social unrest and opportunity to where people who might want to take it vantage of those anxieties and unrest to take us in a fascist sort of direction. What do you think that we could have keynes in this chat box with us. What wouldnt he say do something to safeguard the American People . You have to provide jobs for everyone, you have to safeguard healthcare and provide education, would he embrace. An fdr style new deal program for the 21st century . I think he would be, he would approve of your work tiffany but i think he be very frustrated by the fact that its necessary. I think he would say look, we know that these technical questions about money and numbers are just technical questions about money and numbers. We have aClimate Crisis approaching us. We have this huge breakdown in International Relations between the us and china and the European Union is disintegrating and we know whats happened in the past when the eu states have not gotten along, its not been good for the rest of the world and we have deep inequality in just about every country, whatever stage of development we want to describe them as being in. We have deep inequalitywithin each country and also between countries. He would be talking about trying to devise some grand plan that could be used to kill many of these birds at once with one stone. I dont think he would be killing birds with stones but one of his big complaints about america was there were not enough birds in the countryside. He felt the english countryside had more birds so it was a nicer place but he would want to do more than one thing with his Economic Policy really wouldnt want to cure unemployment, he would want to solve the Climate Crisis and would want to fix the relationship between the United States and china and he would probably have a separate agenda for europe. Theres only so much you can do with one policy but its not the sort of thing that you can do by just acting j. P. Morgan chase and Morgan Stanley to lower some Interest Rates on some loans. Its not something that can be done about coordination somewhere. So he would look to the states i think as the body that could coordinate this type of action. What he would prescribe . I find it hard to predict frankly. He is somebody who was always changing his mind and he was not ashamed tochange his mind, its one of the things i admire most about him. He got all sortsof stuff wrong. He was deeply nacve in a lot ofareas , too conservative to understand the way the world works but he is okay with admittingwhen hes wrong and changing course. Its hard for me to imagine, i will admit i think he was probably smarter than i am and maybe all able to come up with big plans that i have not seen but i do think he be looking at people who were rolling out proposals like the Green New Deal and say thats the kind of thinking we should be working with. We should not be working with these tax incentives to encourage certain types of behavior. He would say we have crises that have to be managed so lets go ahead and manage them. So keynes would not have been anudge guy. He tweeted out something nice about my book so cass, i appreciate it but i dont think so. I think depends on which keynes because he changes his mind but by the end of his life , he loses almost every single political battle that he engages in between 1919 and 1941 and when he starts winning when the labour party is in britain and the socialist labor party, very explicitly is a list in an area where being socialist was much more dangerous than it is today. And the thing that he, his first real policy victory is serving as the financial kind of technician for the British NationalHealth Service so he socializes british medicine and is not a minor player in that. Hes one of the main guys who gets the British NationalHealth Service andacted. And hes doing this when britain is basically broke in world war ii. When the blitz has devastated britain and theyve lost so many thousands of lives in the war. So hes somebody capable of thinking veryvague. Even with your back up against the wall. And i certainly thinkhe would be , if he could socialize british medicine in 1943 i certainly think the Green New Deal would seem like a, in a lot of ways i feel like teens would have been mortified by the rhetoric of the Bernie Sanders campaign, not to bust up your thoughts but talk about revolution would have made him very uncomfortable but in a certain respect i think he would have said that the policy agenda that sanders is pursuing is if anything too mild. These crises are real mild and we are seeing the effects of them in real time. So i certainly would see him as somebody who would be talking about the Green New Deal and coming up with some very complex Climatic Solutions that probably, none of his Diplomatic Solutions ever work so it probably wouldnt have worked but some way to try toresolve the tensions. Ask you one more question and i know there are a lot of people who want to jump in with their own questions but we hear people talk about inequality, income and wealth inequality all the time. Its just commonplace but keynes opens the last chapter of the general theory, the first sentence to the last chapter of the book reads from memory Something Like the two great flaws in our Economic System are its failure to provide for full employment, think about where we are today and its arbitrary and unjust distribution of income. Maybe he said income and wealth, you know i probably dont remember exactly but that keynes called out then when levels of income and wealth distribution, the degree of inequality looks like it does today. So i just wondered and i dont really recall seeing a greater treatment of that question, the inequality piece in keynes other work but i havent read it the way you have and i wonder whether you discovered that he had a lot more to say about inequality in his other writing. Keynes was concerned about economic inequality because hes worried about society being able to hang together. Hes worried about revolution and hes a perky and conservative in the sense that he doesnt want to see the people rising up and overthrowing the system. He thinks that disorder and chaos that results is not worth whatever prosperity might come from a new system that is built so hes always trying to do what you can with theexisting structures of society. But if you go back and read the economic consequences of the peace, his big work from 1919, he basically says look, economic inequality is unfair and the Economic System of the gilded age which ended at the opening of world war i was a ripoff for working people and the only reason people bought into this was because they believed sincerely that tomorrow is going to be better than today and once you break that faith in the future as the war had done it would be impossible to restart thisengine. The story that keynes is telling in 1919 is broad and i dont think its the case that people have this deep faith in the future in 1908 or 1903 and thought if they just kept working hard enough that tomorrow would be better than today. I think he was coming from a particularly elite perspective is concerned with the idea that inequality is unsustainable, that you have to find some way to make people feel part of the same social project. And that idea is deeper than his economic sort of technical policy prescriptions. Hes much more concerned with these moral and political beliefs and he is with whatever particular policy agenda that hes contacted at any given time to try to pursue this but there are period in time when he basically has 1 million friedman style monetarist but when that doesnt work he says lets do something out. So i think inequality matters to him on this moral level is fundamental to the way thathe thinks about the world. And he just did not believe that deeply in equal societies would be able to hang together. And he said this from the position of somebody who wants to enjoy the fruits of being on top. He loved going to the opera and art openings and hes married to a ballerina, the most famous ballerina in london. He loves the high life but he doesnt want to lose it and he feels if you dont have a more equal society and you wont get to enjoy it either because people will revolt. You said more equal and thats another thing he writes in the last chapter. Is not talking about and regulatory and distribution. He says we just have to much inequality so what we need to do is rain it in but he goes out of his way to make the argument that theres inequality, any amount of inequality does serve some useful purpose in terms of incentivizing people in innovation and that sort of thing. One thing i like about your work is i feel there are times when the focus on an np is understandably about deficits and debt but in many ways i think this more radical implications of your work seem to me and correct me if im wrong to suggest that we can focus more on these questions of distribution than we do on questions of say growth which is what economists typically, as long as we grow the pie everybodys better off. Am i wrong about that . Have i misread you in someway . You mean questions of distribution with respect to income and wealth . So one of the things that an empty yours have always pointed out with respect to what is the role of taxesin the economy , is that taxes are primarily useful because they are the source of revenue to the federal government, how the government pays the bills and and and he says taxes are important for a lot of reasons but that isnt one of them. One of the reasons that taxes are important isbecause it does give the government , gives congress a lever to pull to realign the distribution of wealth and income. If they want to make adjustments to the tax code not because they need to appeal a po box off of a billionaire here and a billionaire there to Fund Education or do Infrastructure Investments but because they genuinely want to tackle the problem of extreme concentrations of wealth and income inequality in this country. And its perfectly legitimate to set forth with an ambitious agenda to adjust taxes on the wealthy for no other reason than to realign the balance of distribution. I think in a lot of ways that we dont go far enough because we look at the very wealthy as a pay for it and lawmakers say we want to do infrastructure and we want to put more money in education and we want to improve lives for the broad majority of people but we feel we have to pay for it somehow so weve got to get money and we get money by raising revenue and we dont want to hurt the people in the middle and people at the bottom so were going to concentrate all the pain at the very top. The problem from my perspective is while that might be perfectly legitimate to try to pass a bill that says were going to spend to increase money for pell grants or infrastructure or whatever and alongside that were going to increase taxes on the rich. Very often what i observed in my brief time in the senate and in my longer journey as just an observer of the political process is that even democrats are very reluctant toincrease taxes on people at the top. Theres this notion that its punishing success in some way and the job creators will be hurt. So what happens is there that desire to spend more on education they need to raise taxes so that we dont end up adding to the deficit. That forces lawmakers to pick to fight and you dont have to pick two fights, you have to win two fights. You have to convince enough of your colleagues to vote for increased spending and you have to convince them to close the tax loophole or introduce a wealth tax or whatever it is. And when you cant win both of those fights you cant win on your agenda. Youd dont get the increased spending on education so its a doubleedged sword, this game of trying to play by the rules to avoid adding to the deficit but mmp ares say when you approach taxes in this way youre just trying to peel off enough to cover the cost of whatever it is youre trying to do so in the case of the wealth tax for example its if the wealth tax is to take two percent from people with very large fortunes and then at the same time tell them dont worry, youre not even going to feel it because your wealth is going to accumulate at a much higher rate on an annual basis than in a sense whats the point . Whats the point if theyre not going to feel it. Theyre not going to address the extreme populations. So i do approach this tax question differently and i think i come at it with a more ambitious desire to seek realignment and rebalancing. And the extreme concentrations of income and wealth are not just a way our economy functions but the way our democracy works. Before we go and tom will want to ask questions from the audience but before we do that i have a question about the washington legitimacy and etiquette. I feel like for a long time, and there are very good people on capitol hill who are trillions thoughtful folks who will listen to artemis no matter where they come from but there are a lot of people on capitol hill are not brilliant and thoughtful and they dont so much listen to the arguments as they listen to the prestige that surrounds the person saying them so in 1989 if Alan Greenspan and showed up on the hill and told everybody all horses are hand grenades so were going to have to stop writing them or theyll explode people said weve really got to stop writing all the sources. They would have believedthem. Did you notice a difference, youve been talking about this for a long time. Did you notice a difference in the way that you were treated by folks on the hill after you started working for thesenate Budget Committee . Did that have any sort of change in the way that your ideas seem to resonate with staff . I dont think they resonated with staff. I dont see, i talk about it a little bit in the book. I think there was a certain degree of surprise when i showed up that they were accustomed to dealing with deficit hawks, people who want to balance the budget fast. Get it done and get it done quick and the deficit does who are sore sort of more apologetic and tolerant of deficits while they wanted to see them balanced they were willing to go more slowly but those are the only two sort of birds they were accustomed to and then i shall and i claim that phrase years ago, the deficit owl to distinguish my own views from these other birds and i remember that yes, look at that. I know youve been living there in texas. I was in virginia but we had this family of owls living outside. I think of the deficit owl every time i see you to a picture. But the quick story is that people were taken aback area they didnt, a lot of folks didnt realize exactly what i was. And people actually had to use like i held. And i think it took some getting used to. And i think it over up a period of time maybe theres then, theyve been taken more seriously but i wouldnt say that it happened in that short kind of span of time that i was there. It was a warming up to but not a full embrace. Tom, i think were ready to field questions here if youve got, has anyone asked any questions you can mark. Ive got a few actually. Were not going to have a chance to get to all of them. But i will read the ones that have themost votes. So the first question for the most votes is what if any would be the impact of mmp on the Social Security trust fund which consists of exclusively special obligations treasury bonds. I feel like that for you stephanie. So mmp per se doesnt have an impact on Social Security but i did write awhole chapter on entitlements. And try to make the point that fdrs set up Social Security back in 1935 and he argues that he set it up the way he did know that these are his words, so that no damn politician could ever put his hand on my Social Security program. I got almost a direct quote and what he did was say everybody was going to pay in and you were going to seeyour contribution in the form of payroll taxes. Youd see the money go in and upon retirement you would draw your earned benefits. And so today we have a situation where we continue to believe that the only way the governments can maintain its promises to future retirees and their dependents , to the disabled is if theres enough money available to do that so we started as a consequence of Alan Greenspan and his commission in 1983 by building up this massivetrust fund. Blocking a digital dollars on a spreadsheet called the trust fund and say if we just have to not spreadsheet entries and there are enough dollars locked in place, then we can release those dollars in the future when we need to make the best payments so mmp points out the insanity of this and the proposition that the government needs to lock up its own currency in digital form. In order to be able to spend its own currency in the future so what i argue in that chapter is that theres a really quick way icould do it with a single sentence amendment to the Social Security. I could make the whole problem away with a one sentence amendment to that act. Its just about granting congress the Legal Authority to make benefit payments regardless of the balance in the trust fund. Okay. The next question, you kind of talk about it a little bit its the person asked how do you think he would have reacted to premises actions with relief, how do you think hed approach our current economicsituation . I will dont want to hijack this one i think its my question. I think keynes would have been worried at the amount of money being spent, hed agree with everything stephanie said about deficit but he wouldve been troubled by the way the money has been spent and about the conditions that had been placed on that money. I think the point that stephanie made earlier about keynes believing the general theory of employment is that the money sort of unlocks disability for the government to tackle any quality the directly as sort of a way to make markets work better. I think he would have looked at this rescue and said this is a lot of money forthe richest people in the country and not a whole lot for everybody else. And i think he also would have been, this is a deeper philosophical question but the question about work versus welfare in particular. Keynes didnt want people to have to work their whole lives. He had this sort of utopian view of the world in which we all had 15 hour work weeks which we spent the rest of the time doing art andwriting poetry. I think he would have wanted that in a certain sense but he also understood people take a great deal of moral and social satisfaction from having a job. No matter how many hoursthere working. You dont want them to have to work all the time but he recognized people like participating in their committee through their work. So the fact that you were putting a lot of money into extending unemployment payments instead of making sure that people didnt lose their jobs i think would have troubled him. I think keynesian scholars could dispute me on that point but more broadly he said look, we need to rescue the economy. We need to do something and we do have to tax the rich, its not good if all these corporations fail but the focus needs to be on income support for all these people and i dont think the bill that was passed by a 9060 year margin in the senate focused its priorities on the types of things that animated keynes for most of his life. This next question is for stephanie. This person wants to know if you could walk through the mechanisms that explain why deficits do not matter. Let me reiterate first that my position has been that deficits do matter but not the way weve been taught to believe. Theymatter in a lot of ways. They are an important source of corporate profits for one thing. Lets put that aside because theres a profit equation that we dont have time to go through but let me do it the quick anddirty way. When i say every deficit is good for someone. The deficit is the difference between two numbers. One number is how many dollars the government is spending into the economy and the other is how many dollars the government is subtracting out of theeconomy by taxing us primarily. So we use this term deficit to describe the condition when the government adds more dollar into the economy and it subtracts and we call it deficits but what we forget is we could just as easily call it a surplus. Where using the word deficit because were describing whats happening on the governments ledger but if we were describing whats happening on the other ledger , the outside of government part of the economy he would call it a surplus to read a spent hundreds in and only tax 90 away from us, thats 10 gets deposited and it becomes our surplus so the real question is who got for whom and for what. What was the government doing. Was it building hospitals and schools with repairing infrastructure, was it paying for healthcare, wasnt dealing with Climate Change for is it just be coming a windfall to the people who least need help so deficits matter a lot. They are a financial deposit that shows up on somebody elses bank account. The question is for whom and for what. I think we only have time for one more question. So im going to ask this one of zach. This person would like to know a little bit about keynes and the bloomsbury group. Keynes comes of age at the turn of the 20th century and hes hanging out with all these people like Virginia Woolf and em forster are their writers and artists and its a very, its certainly given the pictures of British Society the early 20th century that its a liberated group but people are constantlyswapping lovers. Keynes is enthusiastically gay for most of his life until he falls in love with the most famous ballerina in britain and marries her. And then they have a wonderful marriage that lasts the rest of his life but these people in a lot of ways are the moral authority in keyness life. Hes not somebody who is looking around. If you hang around capitol hill long enough which of course stepping a and i have done for better or worse white of it. People are on capitol hill are looking to what business groups and lobbyists are going to think about whatthey do. Keynes did not, he was never looking over his shoulder to say whats wall street going to say. He was looking over his shoulder to say whats Virginia Woolf to think about what im doing you always felt this very intense moral pressure on these people in his life and that pressure extended to the fact that he was working in government at all it was why are you wasting your time and in this terrible public administration. You could be a writer or poet or painter, wouldnt that be a fine thing and of course hes good at. Its actually quite good for the world because he is good at it. But theyre constantly sort of writing him and the same mature at whatever it is that you do is living up to these ideals and bloomsbury has this in certain respects i think this view of the world they think that the power of love and art and the letters is capable of breaking down all these barriers between people that have been. Over time so if you just show people the right painting, if you read them the right novel will be given to communicate across different borders and different languages and understand each other. But its a beautiful vision and theyre constantly telling keynes live up to that. Liveup to that ideal. And then the other people in the world who can convince them that hes gone astray in a moral sense so i think keynes as a member of the bloomsbury set, he kind ofb causes the only economist. Everybody else is an artist or a writer but in a lot of ways hes trying to realize their vision on the world stage. Make it something that is material in concrete, in Public Policy certainly by the end of his life i think hes quite successful. I think the British NationalHealth Service is a great examplebut his great work , his first great work is the economic consequences of peace. It was really our policy to bloomsbury for his role in financing the First World War four. Basically telling everybody in bloomsbury i was wrong, this war was pointless and it wasfor nothing you guys were right and i was wrong. That dynamic is there throughout history. Its really significant and i think its one of the things that makes him a unique economist. Thank you guys, this is a fascinating talk. I want to remind everyone can purchase a deficit myth and the price of peace clicking the green button at the bottom of your screen and thank you so much. Zachary and stephanie for being here tonight. Join us again next saturday beginning at 8 am eastern for the best book. Is a look at our live Coverage Today is back the legislative business can either ends programs. Training