Mitchell’s laws:
●The more budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor,
which leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.

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Is it possible for the federal budget process to get crazier? Here is the latest on Congress’s attempt to make the easy impossible and widen the income gap.

Washington Post
Defense a big winner in spending talks
By Walter Pincus, Published: September 12, 2012

A first step to deal with the nation’s budgetary problems began Tuesday with the introduction of a bipartisan fiscal 2013 Continuing Appropriations Resolution, which would provide funds to continue running the government at least through March 27.

The CR (Continuing Resolution) for the most part continues spending at the fiscal 2012 level, but based on an agreement among the House, the Senate and the White House, it contains an across-the-board increase of 0.6 percent.

Gross Domestic Product = Federal Spending + Non-federal Spending – Net Imports. So, if nothing else changes, a 0.6% increase in federal spending would push GDP up only 0.6% next year — pretty close to recession. Of course, if Net Imports go up or Non-federal spending goes down, we will be in a full blown recession.

Can it get any crazier? Yes.

Overall discretionary spending is $26.6 billion less than this year. That’s primarily because of a $32 billion reduction in fiscal 2013 projected costs for Afghanistan and other overseas military-related operations.

The country, however, is far from out of the woods. Beyond the CR looms sequestration, the across-the-board reductions of some 10 percent a year in all discretionary spending if Congress — by the end of this year — does not come up with a plan for $1.2 trillion in deficit reductions over the next 10 years. That could be done by program cuts or increased revenue, or a mixture of both. That’s the law approved by a bipartisan vote in Congress and signed by President Obama last year with the passage of the Budget Control Act (BCA).

And who created the sequestration that Congress and the President pretend they are so desperately trying to avoid? Congress and the President. Can it get any crazier? Yes.

How Congress handles sequestration depends on who wins the November presidential election. Take defense spending. Obama’s plans are laid out in the Pentagon budget delivered to Congress and in testimony before congressional committees.

Romney and congressional Republicans, meanwhile, accuse Obama of reducing defense spending by $1 trillion over the next 10 years. Here’s the math for their claim: They add the congressionally approved $487 billion from the BCA with $500 billion more that would emerge if sequestration happens.

Translation: Romney, the leader of the Tea/Republican party, blames Obama for the sequestration that the Tea/Republican party insisted on. Can it get any crazier? Yes.

But forget reducing spending when it comes to the Romney plan for defense. Obama has called for reducing U.S. troop levels by 100,000 over five years as U.S. combat forces leave Afghanistan. But Romney wants to increase force levels by 100,000. That could cost an additional $20 billion a year, or $200 billion over the next 10 years.

Isn’t Romney the titular head of the “cut-spending” party? But it gets crazier:

He also has said that he wants to increase U.S. Navy shipbuilding, from nine vessels a year to 15. It costs roughly $18 billion for the current pace of nine ships a year. The Romney plan would add an additional $12 billion, or more than $120 billion to defense spending over the next 10 years.

And crazier:

On Saturday, he threw another costly item into his Pentagon shopping cart. During an interview with WAVY television in Virginia Beach, he raised the idea of reopening the F-22 Raptor fifth-generation stealth fighter production line.

Saying he opposes Obama’s “defense cuts in addition to the sequestration,” Romney said: “Rather than completing nine ships a year, I would complete 15. I would add more F-22s and add more than 100,000 active-duty personnel to our military team.

And crazier:

He was not asked why he wanted more of what currently is the most expensive fighter ever built or what that would mean for the F-35 Lightning II Joint Strike Fighter now being flight tested.

And crazier:

Meanwhile, an $11.7 billion Air Force program is underway to upgrade the F-22, a cost that “more than doubled” since 2003, when the first estimates were made, according to a Government Accountability Office report. When that is concluded, the total cost for 188 F-22s would reach $80 billion.

Romney did not indicate how many more F-22s he might want. Like many of the former Massachusetts governor’s plans, serious details are missing.

One thing is certain: No matter who wins the election, the Defense Department budget will continue to grow — assuming sequestration is headed off. That growth would be less under Obama, but who knows how high it would go with Romney.

And then, when you think it can’t get any crazier, it gets crazier. Check this excerpt from another article in the Washington Post:

Fed announces new mortgage bond-buying plan, keeps interest rates low

Rep. Spencer Bachus (R-Ala.), chairman of the House Financial Services Committee, alluded to the fiscal cliff in a statement Thursday: “Chairman Bernanke has repeatedly – and rightfully – warned Congress and the Administration that without action, growing deficits and debt will erode our prosperity and leave the next generation of Americans with less opportunity. To avoid this fate, we must tackle the necessary long-term reform of the spending programs that drive our debt.

So while Romney, the head of the Tea/Republican Party, tells the world he wants to spend, spend, spend, Republican Bachus says deficits and debt must be reduced.

Each time a politician opens his/her mouth, the craziness just grows and grows. But the ultimate craziness is the fact that all of this is unnecessary. The deficit and debt should not be reduced. For GDP to grow, federal deficits must be increased. The calculation of GDP demands it.

And because the U.S. is Monetarily Sovereign, meaning it is sovereign over the dollar and can create all it needs, there are zero reasons to reduce the deficit.

Oh yes, there is one reason. If you want to establish a false rationale to fool the voters, so you can cut spending for social programs — Social Security, Medicare and Medicaid — this is the way to do it. Emphasize the need for more defense spending and to “pay for it” cut Obamacare and increase FICA.

Obamacare, Social Security and Medicaid benefit the lower 99% income group and FICA penalizes the same people. The upper 1% could not ask for a better outcome than increased defense spending and reduced social services, along with a tax that is aimed at the middle and lower classes. Perfect.

So, the politicians, are crazy like foxes. They have executed the ideal plan to increase the income gap, and the voters have fallen for it.

So who is crazy, now?

Rodger Malcolm Mitchell
Monetary Sovereignty

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Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99%

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 Imports

#MONETARY SOVEREIGNTY