●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.
There is universal agreement that the U.S. economy, as measured by Gross Domestic Product (GDP), is growing too slowly, and unemployment is too high. So naturally, we expect our President and Congress to do whatever necessary to grow the economy and to reduce unemployment. Right?
The Federal Eye
Posted at 06:00 AM ET, 09/18/2012
Freeze extension among last pieces of Hill business
By Eric Yoder
A bill that extends the federal employee salary rate freeze at least until April is one of the last major pieces of legislation scheduled for action in Congress until after the elections.
Hmmm . . . What is the effect of a salary rate freeze? Will it stimulate the economy? No. Will it reduce unemployment? No. It will reduce federal spending growth.
But this fundamental equation has showed us that federal spending is necessary to grow the economy:
GDP = Federal Spending + NonFederal Spending – Net Imports.
So the salary rate freeze does exactly the opposite of what the economy needs.
The Senate is scheduled to begin voting as soon as Wednesday on the House-passed “continuing resolution” that provides funds to keep the government operating through March at about current levels. It is needed because none of the regular appropriations bills have been enacted for the government budget year that starts Oct. 1.
Really, what have the President and Congress been doing all year, if not passing appropriation bills? Yes, I know: Campaigning on their sterling records.
Despite the freeze that has kept salary rates at the same level since they last were increased in January 2010, many individual employees have remained eligible for raises on promotion, for good performance or on successfully completing waiting periods to advance up the steps of their pay grades.
Eventually, all federal employees will be at pay-grade GS-15, the highest level, thus thwarting Congress’s ill-considered pay freeze. It’s like watching a Tom (cat) and Jerry (mouse) cartoon, where Tom repeatedly tries to trap Jerry, and Jerry repeatedly evades Tom — though Congress is much less funny.
The House originally had planned to take off next week and then return for one more week, but leaders announced last Friday their intention to recess after this week until Nov. 13. The Senate may also recess after this week.
Phew! These poor guys and gals have been working so hard, and have accomplished so much, they deserve a vacation.
Also apparently to be left for the post-election session are proposals to avoid automatic cutting called sequestration set to begin in January. Administration officials warned last week that such cuts could have “devastating” impacts on a wide range of government operations and could spill over to the federal workforce.
Ideas that have been raised to prevent the sequester include extending the salary rate freeze still longer, cutting the workforce by 10 percent by attrition, and requiring employees to contribute more toward their retirement benefits.
Remember: It was the President and Congress who, after months of intense debate and thoughtful consideration, created and voted for the sequestration. Now they have discovered what we all knew: Cutting the federal deficit will have a “devastating effect on government operations” (not to mention the devastating effect on the economy. But who cares about that?)
See, it goes like this. We all know we need to cut federal spending. How do we know? The Tea Party told us so. But we also know that spending cuts will have a devastating effect on the economy. So we need to find ways to cut spending, while not cutting spending. Why? Because deficits are both bad and necessary for economic growth. And cutting the federal workforce will reduce unemployment.
Simple, isn’t it?
Reminds me of the Paul Ryan budget.
Rodger Malcolm Mitchell
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