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Keynes's 1940 pamphlet "How to Pay For the War" reframed the question of large-scale project financing. Rather than focusing on money (which governments can print at will), it focused on how to minimize public spending's impact on physical resources.
https://ia801602.us.archive.org/18/items/in.ernet.dli.2015.499597/2015.499597.HOW-TO_text.pdf
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https://ia801602.us.archive.org/18/items/in.ernet.dli.2015.499597/2015.499597.HOW-TO_text.pdf
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Somewhere along the way, we forgot Keynes's hypothesis (which was borne out by the war itself): money is a completely different proposition for sovereign currency issuers than it is for USERS of that sovereign currency, like states, cities and households (same for debt).
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For governments, the problem with spending isn't "getting into debt" (all money in circulation is government debt: if taxes equalled spending there wouldn't any money in circulation). The problem for governments is crowding: getting into bidding wars with money-users.
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A government can procure any resource that is available for sale in its currency without negative effects, provided it isn't trying to procure something the private sector is using. They can employ all unemployed people (people whose labor the private sector doesn't want).
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This is why asking "How will you pay for [Medicare for All/free college/etc]" is foolish. If the government sunsets private health insurance, the capacity to provide medical care still exists, but there will not be any private-sector bidders for that capacity.
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The government can spend the money for public healthcare into existence without crowding private sector spending. During the war, the USG limited private-sector procurement of needed material (rationing), and enticed money-users to sequester most of what it spent (war bonds).
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This was Keynes's point: the problems the government faced in "paying for the war" were not "it costs too much" -- it was "How do we spend all this money without creating inflationary bidding wars for war materiel?"
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This is how we'll finance the "war on covid" - and the Green New Deal. Not with "payfors" (Congress's idea that all spending must be balanced with cuts), but with what @NathanTankus calls "non-fiscal payfors."
https://nathantankus.substack.com/p/how-to-pay-for-the-pandemic-war
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https://nathantankus.substack.com/p/how-to-pay-for-the-pandemic-war
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"The question of resourcing the pandemic one is a matter of supply chain and factory reconversion experts not economics per-se."
That's an important point. Congress is constrained by how fast the factories it can procure from can make ventilators - not how much they cost.
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That's an important point. Congress is constrained by how fast the factories it can procure from can make ventilators - not how much they cost.
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