Political gridlock prevents successful fiscal policy
Sumner and Horan, 19 (Scott Sumner is the Ralph G. Hawtrey Chair Emeritus of Monetary Policy at the Mercatus Center at George Mason University; PhD in economics from the University of Chicago; Patrick Horan is a research fellow focusing on monetary policy and the Federal Reserve System; MA in economics from George Mason University; “How Reliable Is Modern Monetary Theory as a Guide to Policy?”; Mercatus Center; https://www.mercatus.org/research/policy-briefs/how-reliable-modern-monetary-theory-guide-policy) //LVL
Suppose that an MMT regime is implemented and inflation rises. The MMT prescription is to then raise taxes. Would Congress vote to increase taxes at a time when prices are already rising? Would the president also sign the legislation to increases taxes? It is difficult to imagine that the answer to these questions is yes, particularly with the current political gridlock in Washington, DC. Moreover, even if Congress possessed the political will to handle inflation responsibly, Congress would likely face serious informational challenges. Under the current regime, the Federal Open Market Committee (FOMC) meets roughly every six weeks to adjust its stance on monetary policy. If inflation were to become high, the FOMC would adjust monetary policy at its next scheduled meeting (or even call an emergency meeting if necessary). The Fed has decades of experience in learning how its policy tools affect the inflation rate. If inflation became a function of fiscal policy, Congress would have to learn how to adjust taxes in order to control inflation. This involves a learning curve that could prove very costly while inflation is doing serious damage to the economy. This is especially true if a zero-interest-rate policy were adopted, which would reduce the impact of tax changes on inflation.