Since August 2011, the U.S. public debt has increased by almost $9 trillion, to $23 trillion, and virtually no one has batted an eye, S&P included. Benchmark 10-year Treasury yields are lower, not higher.(2) Main Street hasn’t faced any hint of runaway inflation. Government debt hasn’t crowded out companies from borrowing and investing. Simply put, nothing the Tea Party warned about has come to pass.
Perhaps this is why, in what may ultimately be seen as a watershed moment, the House Budget Committee last month held a hearing titled “Reexamining the Economic Costs of Debt.” The session included testimony from four economists, including Randall Wray, a senior scholar at the Levy Economics Institute of Bard College and a leading thinker in Modern Monetary Theory. Though he wasn’t given much time to speak, when he did, he told lawmakers this: “We do not have to repay the debt — what we have to do is make the interest payments.”