●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.
The November 15th edition of the Chicago Tribune, contained two related stories. The first, titled “Guinness World Records made to be broken today.” It said:
The eight annual global celebration of the weird and wacky will see more than 420,000 people attempt to smash old favorites of the record-breaking world, many for charity.
I am from Chicago, but I don’t want you to think I am playing to home-team pride when I nominate my home town newspaper editors to a Guinness record. This strictly is well deserved, as I’m sure you will agree, when you read the rest of this post and the editorial that earned the nomination. Here it is:
U.S. House and Senate leaders will meet Friday at the White House with President Barack Obama. The president plans to greet Republicans with a reiteration of his revenue proposal from last winter — a plan popular with his liberal base, but which didn’t get a single vote in Congress last spring:
The president will call for $1.6 trillion in new taxes over the next decade, double the amount that House Speaker John Boehner offered Obama during their failed budget talks in mid-2011.
Republicans likely will resist Obama’s call to raise tax rates for high earners but suggest alternative ways for the government to soak the rich.
Translation: ” . . . didn’t get a single vote” and “soak the rich” are clues to readers that Obama’s plan is not liked by the wealthy editors of the Tribune.
A week ago, we explained why, with the economy in danger of toppling off a fiscal cliff of tax hikes and across-the-board spending cuts Jan. 1, this is the ideal moment to cut the sort of “Go Big” deal that eluded Obama and Boehner last year. The urgency of the cliff offers an opportunity — an excuse, if you prefer — for a bargain that also encompasses tax reform, entitlement programs now headed for insolvency and a $16.4 trillion federal debt limit that also arrives at year’s end.
Translation: The “fiscal cliff” is the recession to be caused by deficit reduction. So this is the ideal moment to “Go Big” with deficit reduction. (??)
“Tax reform” means cut taxes on the wealthy while broadening the tax base, by taxing more poor people. Entitlement programs, being federal agencies, never can be insolvent unless Congress refuses funding. No federal agency ever has been bankrupt.
If Congress and the president can’t reach a grand bargain in the next 47 days, there is an alternative solution. We poached a few of these ideas from interviews with Marc Goldwein, senior policy director for the bipartisan Committee for a Responsible Federal Budget. Goldwein probably has forgotten more about these crises than most of us ever will know:
Translation: We know absolutely nothing; Goldwein knows next to nothing. So he knows more than us.
•At minimum, our leaders need to temporarily extend today’s tax and spending rates rather than drive off the fiscal cliff.
•Second, Congress would signal that it’s serious about attacking deficits by plucking some low-hanging fruit, such as ending mortgage deductions for second homes, certain breaks for oil and gas companies, and deductions involving those corporate jets that so many politicians scorn (when they’re not flying in them as VIP guests).
Translation: The solution is to temporarily extend the current deficit. Meanwhile, Congress should cut the deficit. (“Mother may I go out to swim? Yes my darling daughter; hang your clothes on a hickory limb, But don’t go near the water.”)
•Third, Obama and the leaders . . . would agree that going forward, here is how much money we’ll budget for social programs and other discretionary spending, for employee pension and other mandatory spending, and for health care. Here’s how much tax revenue we’ll raise. And here’s our dollar target for Social Security reform.
Translation: Although we should not reduce the deficit (that would hurt the economy), here is how we should reduce the deficit: Screw the middle and lower classes by cutting Social Security, Medicare, Medicaid, food stamps and other social programs. And as a final stomp on the head, let’s also attack pensions for the middle and lower classes.
•The point would be to demonstrate to Americans and the world that, in future years, deficits will fall and debt will be a declining percentage of our Gross Domestic Product. “We want our growth rising faster than our debt,” Goldwein says, “not our debt rising faster than our growth.”
Translation: The guy who forgot more than we knew also forgot that GDP = Federal Spending + Non-federal Spending – Net Imports, so cutting the deficit has a negative effect on GDP growth (it’s simple algebra).
A The Simpson-Bowles report remains a superb framework for a Go Big deal. Strengthening that plan’s entitlement reforms should push to more than $4 trillion the amount that Simpson-Bowles would slice from federal deficits over 10 years. That’s enough to begin lowering our perilous ratio of debt to GDP.
Translation: A $560 billion, first year deficit reduction would send us over a “fiscal cliff,” because deficits reduce GDP. So we recommend a $4 trillion “Go Big” deficit reduction over ten years — $400 billion per year. No problem, there.
Simpson-Bowles is thick with proposals to cut spending, overhaul taxation, target health care costs, raise eligibility ages for Social Security and use a stingier measure of inflation to drive increases in all manner of government (social) programs.
One of Simpson-Bowles’ great features was its explanation (not recommendation) that eliminating all deductions, credits and other so-called tax expenditures would allow today’s tax rates to plummet to 8, 14 and 23 percent. A middle approach that retains but limits deductions and credits for charitable giving, mortgage interest, retirement savings and employee pensions, and that phases out the deduction for employer-provided health insurance over 25 years, would let rates drop to 12, 22 and 28 percent.
Translation: This would save low income taxpayers $0, and middle income taxpayers next to $0. But the rich would benefit big time. And anyway, why encourage charitable giving, saving for retirement, pensions and health insurance? Who needs that stuff?
Mr. President, ladies and gentlemen of Congress: Cut a Go Big deal right now. Or set its parameters now and commit to meeting those parameters early in 2013. Please, though, no cliffs. We’ve seen “Thelma and Louise.”
“Go Big” but no fiscal cliff. A perfect ending for a thoroughly stupid editorial in a long list of stupid editorials.
Based on this editorial, and numerous similar editorials through the years, I nominate the Chicago Tribune Editors for the Guinness World Record: Most Stupid Big City Newspaper Editors in America.
I challenge anyone to top them.
O.K., I admit it. This was not stupidity by the Tribune editors. They know full well what they are doing. They are shilling for the wealthy. They themselves are wealthy and they suck up to the wealthy. So maybe they don’t deserve the Guinness “Most Stupid Editors” award.
Maybe the Tribune Editors deserve the Romney/Trump Contempt for the Poor Award.
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