The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. Cutting the federal deficit is the most ignorant and damaging step the federal government could take. It ranks ahead of the Hawley-Smoot Tariff.
House Speaker John Boehner was asked about the probability that the GOP plan to cut $100 billion from government spending would cause federal job cuts: He replied, “Over the last two years since President Obama has taken office, the federal government has added 200,000 new federal jobs. And if some of those jobs are lost in this, so be it. We’re broke. It’s time for us to get serious about how we’re spending the nation’s money.“
Two problems with this:
1. We’re not “broke.” As a Monetarily Sovereign government, the U.S. has the power to pay any bill of any size. No federal check ever has bounced and none ever will (unless this silly Congress fails to raise their silly debt ceiling) – not even during the Great Depression, and not even during the worst recession in recent history, and not even while spending trillions to cure that recession.
In short, John Boehner simply does not know what the heck he is talking about. The man is completely ignorant of modern economics and is using that ignorance to guide the American economy. Visualize the Large Hadron Collider run by Mortimer Snerd (You young folks can look him up.)
2. The GOP repeatedly criticized the Obama initiatives for failure to add jobs, but their own “job-killing” (GOP phraseology) plan receives a shrug and a “. . . so be it.”
Not that the Democrats are without guilt. Obama wishes to “pay for” federal spending by raising taxes on the rich. Two problems with this:
1. In a Monetarily Sovereign government, taxes do not “pay for” spending. In fact, federal taxes have zero relationship to federal spending; the two processes are completely separate, independent and unconnected. The proof: We could eliminate federal taxes without changing federal spending, and we could eliminate federal spending without changing federal taxes. Federal taxes are a relic of the gold standard days.
2. Soaking the rich either is meaningless or harmful, depending on how successful it is. The more taxes collected, the more damage is done. Contrary to popular myth, taxing the rich does not add one penny to the pockets of the poor, in fact, such taxes remove money from the pockets of the poor. (See: Does taxing the rich help the poor? )
So here is what I think will happen, based on what we know now: The economy will grow, albeit slowly, for the next three years, because of projected, large, so-called “deficits” (i.e., money creation), while Congressional ignorance and hubris will cause a continual struggle to maintain spending on beneficial projects.
The poor and the jobless will be the primary losers, as these beneficial projects will be squeezed. Obama repeatedly will play the class-warfare card, using poverty as evidence taxes on the rich should be increased. (Visualize warming the poor by shredding the clothes of the rich.)
After three years, when fiscal “prudence” (i.e., reduced money creation) takes hold, the economy will tank, again. Meanwhile, the right will offer a plan to solve the economic problem: Eliminate abortion and Medicare, and allow everyone to carry a gun. The left also will offer a plan: Raise taxes on everyone making “too much” money and require the states (who really are broke) to absorb more unfunded mandates for the poor.
In answer to the title question, ‘Who cares about jobs?”, Congressmen and Congresswomen do. But, it’s their own jobs, not yours.
Rodger Malcolm Mitchell
No nation can tax itself into prosperity, nor grow without money growth.