Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
I first thought it was ignorance, then stupidity. Now, I’m convinced it is insanity: The notion that cuts in federal spending, along with increases in federal taxes, will is some magical way, grow the economy.
No rational human could believe applying leeches will cure anemia, but that is what Congress and the President tell the American people: Cut off the arms and legs and head and heart of the economy to create health, wealth and happiness. Yikes!
Here are a few excerpts from the latest folly:
White House threatens to veto student loan bill
By ALAN FRAM | Associated Press
WASHINGTON (AP) — The White House threatened a veto Friday of a Republican bill keeping the interest rates on federal student loans from doubling this summer, objecting that the measure would finance its $5.9 billion cost by abolishing a (preventive) health care program.
The veto warning came as GOP leaders hunted for votes for the measure, which they were trying to push through the House. They were running into opposition from outside conservative groups like the Club for Growth, which was pressuring Republicans to oppose the legislation because, they said, the government should not subsidize student loans.
Abolishing a preventive health care program will benefit the nation??? And the ironically named “Club for Growth” thinks the government should not subsidize education. Well, what should the government subsidize if not education?
Republicans noted that many Democrats had voted earlier this year to take money from the preventive health fund to help pay to keep doctors’ Medicare reimbursements from dropping. Obama’s own budget in February proposed cutting $4 billion from the same fund to pay for some of his priorities.
Hmmm . . . Pay doctors, but reduce illness prevention. Wonder who thought of that gem?? This is what happens when you begin with the false premise that deficits must be You confront economic realities.
The House bill would keep interest rates for subsidized Stafford loans at 3.4 percent . . . Senate Democrats (would extend) the lower interest rate and pay for by boosting payroll taxes paid by high-earning owners of some private firms. Republicans oppose it.
Sadly, neither the Democrats nor the Republicans understand or will admit that federal taxes do not pay for federal spending. If federal taxes rose to $100 trillion, gazillion or fell to $0, neither event would affect by even one penny, the federal government’s ability to spend.
So they run wildly in circles, trying to figure out how to pour two gallons of milk from a one-gallon bottle, when all they need do is buy an additional bottle. Those who do not understand Monetary Sovereignty do not understand economics.
Friday’s vote comes with congressional Republicans and Democrats, as well as Obama and his near-certain GOP opponent this fall, Mitt Romney, competing at every turn over who has the best prescription to wring jobs out of the still-struggling economy. The student loan battle fits nicely into that theme, with 7.4 million low- and middle-income students and their parents reliant on Stafford loans and a college education symbolizing the ticket to economic success.
Will someone please tell the “Club for Growth”?
On Thursday, Boehner tried putting the focus on Obama’s travel this week to three college campuses. He said Obama should repay taxpayers for the use of Air Force One for the trip.
Never mind that taxpayers do not pay for federal spending.. Boehner’s legacy will be as the fool who said the Monetarily Sovereign U.S. is “broke.”
For House Minority Leader Nancy Pelosi, D-Calif., the emphasis was the GOP’s cuts in the preventive health program, whose initiatives she said include breast cancer screening and children’s immunizations. She contrasted that with a Democratic bill extending the low student rates by cutting subsidies to oil and natural gas companies, which is opposed by the GOP.
Pelosi characterized the Republican view as, “‘We prefer tax subsidies for big oil rather than the health of America’s women.’”
These arbitrary trade-offs are amazing. Who decided on health vs. oil? How about Congressional salaries vs. oil? How about military cost overruns vs. Secret Service hookers? Who decides on these weird tit-for-tats?
Heritage Action for America, a conservative group, was lobbying Republicans to oppose the GOP bill and let interest rates rise, saying to do otherwise would burden taxpayers.
Another legacy established. How will the HAA explain their position when people begin to understand Monetary Sovereignty?
Several conservative GOP lawmakers said Thursday they hadn’t decided how to vote. Some Democrats were eager to vote to keep student loan rates low, though it meant accepting GOP health care cuts.
Rep. Gerald Connolly, D-Va., said some Democrats “may feel upon reflection that they’ve got to swallow hard but swallow” those health care reductions. He said he hadn’t decided how to vote.
I award Congress, the President and all those who subscribe to the “cut-deficit” philosophy, five dunce caps, which I will have to pay for by taxing Congress, the President et al, five of the dunce caps previously awarded:
Rodger Malcolm Mitchell
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports