Dr. Stephanie Kelton
Dr. Stephanie Kelton is a professor in the forthcoming Center for the Study of Inequality and Social Justice at Stony Brook University. She served as Chief Economist on the U.S. Senate Budget Committee (minority staff) in 2015 and as an Economic Advisor to the Bernie 2016 presidential campaign.
She was the founder and editor-in- chief of the top-ranked blog New Economic Perspectives and a member of the TopWonks network of the nation’s best thinkers. In 2016, POLITICO recognized her as one of the 50 people across the country who is most influencing the political debate. She was elected Chair of the Board at Economists for Peace & Security in 2017.
Stephanie consults with policymakers and advocacy groups across the globe. Her research expertise is in government finance, employment policy, social security and international finance.
Posts by Dr. Stephanie Kelton
Dr. Jane O'Meara Sanders sits down with Sanders Institute Founding Fellow and economist Dr. Stephanie Kelton to talk about Dr. Kelton's new report on the macroeconomic effects of student loan debt cancellation in the United States.
There was only one reference to the deficit in last night’s State of the Union speech, and it had nothing to do with the federal budget. I found that refreshing — we can carry a deficit if the money’s spent wisely — but that’s another story. What President Trump talked about was America’s staggering infrastructure deficit, a whopping $2 trillion fault line in the backbone of the American economy, according to the latest estimates from the American Society of Civil Engineers.
As the GOP tax plan, officially known as the Tax Cuts and Jobs Act, awaits reconciliation with the House, the threat of a mounting deficit is once again in the news.
In 1860, Abraham Lincoln’s campaign slogan was “Vote Yourself a Farm.” In 1900, William McKinley promised “A Full Dinner Plate.” And in 1928, Herbert Hoover won a landslide victory pledging “A Chicken in Every Pot and a Car in Every Garage.” A free farm, a full belly and a shiny new car. Today’s Republicans would cringe at the thought of such rhetoric from their party’s nominees. As Ronald Reagan taught, the government is your problem, not the solution to your problems.
In this paper from the Real World Economics Review, Dr. Stephanie Kelton looks at the economic projections for the Trump administration.
Kelton approaches "Trumponomics" (economic policies of the Trump administration) through this question: "can “Trumponomics” extend the recovery?"
She argues that it will not. First she examines the economy as a whole to establish whether there is room to grow, which she believes there is. Then she looks at the policies put forward by President Trump during the 2016 campaign and his stated economic goals since - she determines that President Trump's statements on economics do not conform with a "conventional ideological matrix." However, Kelton does mention a number of policies that are Reagan-esq that severely benefitted the top 1%:
"the benefits of the Reagan expansions went overwhelmingly to those at the top of the income distribution. Tax cuts for the wealthy, attacks on unions, cuts to programs aimed at helping the poor and an obsession with deregulation and “free markets” shifted the balance of power toward owners of capital and ushered in an era of increasing insecurity and growing inequality for the working class."
Kelton then looks at whether "Trumponomics" can extend the recovery. She draws from a number of economic predictions that show less growth under Trumponomics than under current policies. However, she acknowleges that a number of economists are more positive.
In this article about a paper by Stephanie Kelton's on the current state of the economy after the 2008 recession and "recovery."
The article and Kelton argue that "there may be no more room for economic recovery given the economy has reached its true employment potential, or as Kelton puts it, ” output is near its full employment ceiling not because the economy rose to its potential but because we lowered the definition of what we believe our nation’s productive capacity to be. It’s a bit like giving up on the idea that your child is capable of achieving straight As, relaxing the goal to a 2.0 GPA, and then celebrating when he presents you with across-the-board Cs.”"
The article is critical of some of the possible outcomes of the new administration's economic policies.
“That's a good idea ... but how will you pay for it?” Dr. Stephanie Kelton joins Amar Reganti to discuss the economic priorities for the current administration.
- November 2015
In this video, Stephanie Kelton investigates the economic philosophy that states that smaller government will improve the economy. This philosophy in practice equates to: cutting taxes on the job creators to create more jobs.
Kelton argues that this doesn't work. She presents Kansas as a case study where Kansas cut taxes on job creators. Rather than seeing an increase in job creation, Kansas' job creation is lagging behind the national average. The problem with this economic approach, Kelton argues, is that "It presupposes the most important part of capitalism: demand." Businesses hire when there is demand, not when they have fewer taxes.
Kelton then goes on to describe how government spending (and therefore larger government) can be a good thing and has been a good thing in the past. She suggests that these government programs would help boost the economy: federally funded jobs program, infrastructure investment, investment in education, and investment in research & technology.
In this article Dr. Stephanie Kelton looks at the "dual mandate." The Dual Mandate is a monetary policy imposed by Congress in 1913 which "charges the Federal Reserve with responsibility for achieving two broad macroeconomic goals: “maximum employment and stable prices.”"
She discusses the different points of view that the different sides of the aisle take on the issue: "Much has been made (especially by those on the left) of the benefits of having a dual mandate." in contrast to the republicans "Not a single Republican expressed support for the dual mandate when the issue came up during a presidential debate on September 12, 2011.
Dr. Kelton then discusses some of the solutions put forward but offers her own take on the situation: "Nearly everyone seems to believe one or both of the following: (1) high levels of employment and low rates of inflation are worthwhile goals; and (2) the Fed is the right agency to deliver on these goals. I don’t dispute the former, but I often wonder about the latter."
In this article, Dr. Stephanie Kelton describes a shift in how many view debt in the U.S.
She describes that initially, "everyone knew the government spent a lot of money and that money had to come from "somewhere", but most people assumed there were limits to how much the government could afford to spend."
However, the government does not function like an individual: "The United States is already the issuer of the currency. It isn't like a household or a private business. It can always pay."
Kelton ends the article with the reminder that we should think of the government's spending differently and that our fears of falling further into deficit, while appropriate for an individual, do not necessarily apply to the U.S. government.
The ordinary American will gleefully support deficit reduction (as polling shows), but I’m confident that you’d get a very different reaction if you asked them whether they support cutting their own surplus by trillions of dollars. Almost no one recognizes that the former implies the latter.
In this article Stephanie Kelton describes the relationship between the government, the private sector, and foreign entities.
She describes that when you look at these three players in the economy, one entity's purchase is another entity's sale. Therefore, any surplus for one entity equates to a deficit for another. In more simplistic terms: wen we have a trade deficit and are importing in more goods than we are exporting, that means that when compared to us foreign entities are exporting more goods to the U.S. than they are importing from the U.S.
Kelton specifically points out that the government has a role to play to offset the trade deficit that this country has because, "Whenever the government’s deficit is too small to offset a deficit in the current account, the private sector will experience a net loss."
She concludes that: "the Government needs to loosen its belt when we tighten ours. If it doesn’t, then millions of us will lose our [jobs]."
In this article Stephanie Kelton describes the interaction between the government and the private sector in regards to spending and saving.
Kelton describes that there is a direct relationship between what is happening in the private sector and what is happening in the public sector - " the total amount of money spent buying newly produced goods and services will yield an equivalent income to the sellers of these products." Meaning that someone's purchase is another person's sale and vice versa.
The government both collects taxes, and spends money (from salaries for government workers to social programs). Kelton demonstrates that when the government runs a surplus, meaning that it is bringing in more money than it is spending, that money is removed from the private sector. She finishes with the statement "As the government “tightens” its belt, it “lightens” its load on the teeter-totter, shifting the relative burden onto you."