If the government does not need us to pay down its debts and obligations, then why does it bother taxing? Simple: taxes do not exist to help the government pay for things; the government can create as much money as needed in order to pay for what it wants. Instead, taxes are meant to incentivize people to work, to make them interact in an economy (Kelton, 2020). The government does not need you or me to pay its debts down, but it does need us to attend schools, sell T-shirts, see the doctor, and perform just about every other economic (and legal) interaction possible. Since every year we must collect a certain amount of money to pay taxes, then we must all interact in the economy to obtain this money. There are other notable utilities to taxes, such as controlling inflation, redistributing wealth and income, and encouraging or discouraging certain behaviors (smoking, pollution, etc.), but those all can wait for now.
It should be noted that this analysis is not applicable to every nation in the world. MMT only applies to countries with fat currencies who are also currency issuers. Countries in the EU do not have access to MMT. None of the nations in the EU issue their own currency, meaning if asked to pay their debts, they cannot simply produce that money out of thin air. Greece found themselves in this situation after a series of considerable financial crises following the 2008 recession. Certain EU rules also prohibit declaring bankruptcy (see Adults in the Room by Yanis Varoufakis), but to be brief, had Greece still been using drachmas and had the drachmas existed as a purely fat currency, they might have been able to navigate that situation much better without Germany imposing brutal austerity measures on them for borrowing (Kelton and Varoufakis, 2020)
But then this does raise the question: if the US government can theoretically pay down its debts today, then why shouldn’t it? Well, because historically, this has always ended badly. If you follow patterns throughout the history of the country, every time the US government has been in surplus (and sometimes even paid off its entire debt), a recession or even depression has followed (Kelton, 2020). The most recent example was when the dot-com bubble burst following surpluses under the Clinton administration, but some proponents of MMT have gone so far as to say that the surpluses contributed to the 2008 Great Recession as well. In the 1830s, the US government paid off its entire debt, and what soon followed was one of the worst depressions this country has seen.
The reasons for this are again complicated, but it can be explained in a simple fow model. When the government has a deficit, it means that it has printed more money than it has taxed out. For example, if the government prints $100 and distributes it to people, then taxes out $90 from each individual, each person is left with a surplus of $10. However, if the government is in surplus, then that means the opposite has happened: the government issued $100, taxed out $110, and the people now hold a $10 deficit (Kelton, 2020). Unlike the government, households can become insolvent. Meaning, while the government can hold onto debt as a currency issuer, people cannot indefinitely hold on debt. Eventually, households will have to pay for their mortgage, and since they cannot issue money, they will default. Hence, people will have less money, they will start spending less, and the entire house of cards will collapse, taking the economy with it. Thus, even though the government could pay off its debts tomorrow, according to MMT, it is not something it should do.
From here on out, I am going to be oversimplifying some technical aspects as to how the monetary system works. Unless you intend to major in economics or something finance-related, you probably will not need to know all of this on a deep level.