By Clinton Alden
Republished from the author’s substack.
For decades, the ruling class has perpetuated one of the greatest economic deceptions of our time: the myth that federal government spending is funded by taxpayer money. This narrative has been used as a bludgeon against working-class movements, reinforcing austerity, denying economic rights, and keeping the proletariat in a state of economic dependence. It’s time to shatter this illusion.
The Constitutional Foundation of Currency Issuance
The United States Constitution, in Article 1, Section 8, Clause 5, grants Congress the exclusive power “to coin money, regulate the value thereof, and of foreign coin.” This is a foundational statement that makes it clear: the United States government is the issuer of its own currency. It does not need to “collect” dollars from the public before it can spend. It creates them.
The implications of this are enormous. If the government can create money at will, then taxes do not fund federal spending. The idea that programs like Social Security, Medicare, or infrastructure development are constrained by tax revenue is simply false. Yet this lie persists because it serves the interests of the bourgeoisie—the ruling class that seeks to maintain control over labor and resources.
Taxes as a Tool of Control, Not Revenue
If taxes don’t fund spending, then what are they for? At the federal level, taxes serve three primary functions:
Regulating Inflation – By removing money from circulation, taxes help control aggregate demand and prevent runaway inflation.
Redistribution of Wealth – Taxes can be used to reduce inequality by imposing higher rates on the wealthy and redistributing purchasing power.
Incentivizing Behavior – Tax policy can be used to encourage or discourage certain economic activities, such as carbon taxes to reduce pollution or tax breaks for renewable energy investment.
But what taxes do not do is pay for federal programs. The government does not need to collect dollars before it can spend them. It spends first, then taxes afterward. This is a reality that modern monetary theory (MMT) has long pointed out, yet both mainstream economists and political leaders continue to deny it.
The Political Weaponization of the "Taxpayer Money" Myth
By convincing the public that federal spending is limited by taxes, the ruling class manufactures consent for austerity. Consider the arguments we hear whenever economic justice policies are proposed:
Medicare for All? “How are we going to pay for it?”
Student debt cancellation? “That’s taxpayer money!”
Universal housing? “We can’t afford it.”
These are not economic arguments. They are ideological weapons meant to keep the working class from demanding what should already be theirs. The reality is that the U.S. government can fund a Green New Deal, universal healthcare, and a federal job guarantee without raising taxes at all. The barrier is not money—it’s political will.
Meanwhile, when it comes to war, corporate bailouts, or tax cuts for the rich, these concerns vanish overnight. No one asked how we would pay for trillion-dollar wars in Iraq and Afghanistan. No one demanded offsets when Wall Street received billions in bailouts. The hypocrisy is glaring.
The Path to Economic Justice
If the Left, Socialists, and Communists want to win the fight for economic justice, we must stop accepting the terms of debate as set by the ruling class. We must reject the myth of "taxpayer money" and educate the working class about the monetary reality of a currency-issuing nation.
This means:
Demanding public investment without apologies or hesitation.
Refusing to engage in debates over "how to pay for it" when we know the government issues currency.
Exposing the austerity rhetoric as a tool of class warfare.
Redirecting the discussion from funding to power—who benefits from public spending, and who is left behind?
Economic justice begins with truth. And the truth is that the United States, as a sovereign currency issuer, can afford to meet the needs of its people. The only question is whether we will force the political class to act in the interests of the many rather than the few.
The working class has been deceived for too long. It’s time to tear down the illusion of "taxpayer money" and build a system based on economic rights, not economic myths
