Pavlina Tcherneva Discusses Budget Deficit and Government Financing

Bard Professor of Economics and President of the Levy Economics Institute Pavlina Tcherneva joined WAMC’s Roundtable to discuss the debt ceiling, how the US government spends, and repercussions from potential disruptions to the payments system. She emphasized how Covid relief payments clearly demonstrated that the government does not depend on borrowing or wealthy taxpayers to fund its expenditures but can self-finance. Elon Musk's discovery of so-called “magic money computers” betrays ignorance about the architecture of our federal financial system. Government payments are typically made via electronic means by issuing electronic payments on as-needed basis. As a practical matter, it is virtually impossible for the government to run out of cash. Slash-and-burn policies to cut federal spending are politically motivated and not about US government solvency. 

On Marketplace, Tcherneva noted that while small businesses make up a small share of total employment their behavior is a “bellwether for overall trends in the economy”—and small business hiring slowed down in February’s Job Openings and Labor Market Survey.
 

Post Date: 04-08-2025