The idea that “taxpayer money” pays for our federal programs is economically inaccurate. The truth is that, ever since 1796, when the first dollar was created, every single dollar of spending by the US federal government has been with created currency. This includes the military; Social Security, Medicare, and Medicaid benefits; FBI, Congressmen, and judge salaries; interest on US Treasury securities; and so on. (That the federal government pays for everything with created currency, logically extends to, “Federal taxes do not and cannot pay for any federal spending.”)
But more than being economically inaccurate, the idea of “taxpayer money” is a profoundly sinister and insidious one for our society. It further enables and promotes the neoliberal “monetarist” austerity economics that guarantees that the people will never actually get the big programs that we need to not die, suffer, or go bankrupt. “Taxpayer money” is also a racist, sexist, and classist dogwhistle.
(And if you think about it: If all of these things – Social Security, Medicare, and Medicaid – are funded with created currency… then how can they “go broke”?)
Below is confirmation by many different economists, experts, and people in power, confirming that the above is true. Each contains a link to the original source so you can independently confirm.
(Here is a link to these same resources in Twitter form.)
The powerful: Federal Reserve Chairmen
Ben Bernanke was the Chairman of the Federal Reserve during the Great Financial Crisis of 2008. In an interview on CBS’ 60 Minutes in 2009, at the eight minute mark in this video, he says:
The banks have accounts at the Federal Reserve. To lend to a bank, we simply use a computer to mark up the size of the account.
In 2013, Ben Bernanke testified to Congress. According to Forbes magazine:
Congressman: “Where does the Fed get the money to buy [assets]? Do you create the reserves?”
Congressman: “Are you printing money?”
Bernanke: “Not literally.”
(“Not literally” refers to the fact that the money was created in a computer, not literally printing physical bills.)
Alan Greenspan was the Chariman of the Federal Reserve from 1987-2006. In 2005 he testified in Congress to then Republican Speaker Paul Ryan:
There is nothing to prevent the government from creating as much money as it wants.
Alan Greenspan on NBC’s Meet The Press in 2012:
The United States can pay any debt it has because we can always print money to do that…. There is zero probability of default.
Beardsley Ruml was the Chairman of the New York Federal Reserve from 1941-1946. In the January 1946 issue of American Affairs quarterly journal, he wrote an article called “TAXES FOR REVENUE ARE OBSOLETE.”
ABOVE: American Economist Stephanie Kelton, in the abstract of her 1998 paper, “Can Taxes and Bonds Finance Government Spending?”.
Australian economist William Mitchell
Australian economist William Mitchell wrote in 2010 on his blog:
Taxpayers do not fund anything. So when you hear commentators and politicians and the like use terms like “taxpayers’ funds are being mis-spent” etc, you can immediately conclude they do not understand how the monetary system functions.
American economist L Randall Wray
Wray wrote in a 2014 article on Naked Capitalism:
Taxes are not needed to “pay for” government spending.
Economist Pavlina Tcherneva.
Warren Mosler is the “father” of Modern Monetary Theory (MMT). It is his ideas that were adopted, polished, and formalized by economists (including the above), starting in the 1990s. The above is on page nine in his book, The Seven Deadly Innocent Frauds of Economic Policy (2010).
The following quote is on page 15.
It makes no sense at all to think that the government has to get money by taxing in order to spend.
Macroeconomics expert Ellis Winningham
Macroeconomics expert Ellis Winningham, in his 2018 blog post, “On the Use of the Ubiquitous Term “Printing Money” by MMT Novices – Please Stop Using It.”
In short, you do not fund the US government, the US government funds you.