The sole purpose of government

The sole purpose of government is to improve and protect the lives of the people.

We give the government our money, our time, and some of our freedom, expecting in return safety, stability, opportunity, and a better life. But when a government focuses more on protecting itself than its people, it has failed.

Government is not an end. It is a tool. Tools must serve the maker. A tool that primarily serves itself is broken.

When I owned several businesses, I went to bed each night asking myself four questions:

What can go wrong?
How do we prevent it?
How do we fix it if it happens?
What can we do better?

That is exactly how our political leaders should run our nation. Unfortunately, the current leadership asks these questions:

What’s in it for me?
How can I stay in power?
How can I get away with it?
How can I do harm to my political enemies?

What Can Go Wrong? Every economic problem falls into one of three categories:

1. Demand Failure–People don’t have enough income, so spending collapses, and the economy falls into recession
2. Supply Failure–Not enough goods, i.e. shortages, which lead to inflation and recession
3. Structural Failure–The system itself breaks down, leading to inequality, stagnation, social instability

Monetary Sovereignty: There are two repeated, false objections to the federal spending that benefits the people.

I. The “who will pay?” objection. The federal government, uniquely being Monetarily Sovereign, has the unlimited ability to create U.S. dollars at the touch of a computer key. (See: Monetary Sovereignty: Who says so?)

Our Monetarily Sovereign federal government does not need or use taxes to pay its obligations. The government pays all its bills the same way:

Congress votes
The President approves
The Treasury creates the money at the touch of a computer key

Thus, with just those three steps, the federal government can fund any program of any size, without collecting a penny in taxes.

II. The “but that will cause inflation” objection. Federal spending is not a primary cause of inflation. (See: The inflation myths debunked. It’s never “money-printing.” It’s always shortages.)

In fact, inflations are prevented and cured by government spending that addresses shortages. Reduced spending in the face of inflation does nothing to solve the primary problem — shortages — and can exacerbate the problem by causing more shortages.

That is why austerity, aka “belt tightening,” fails as a solution to any economic problem. It is popular among the elite, however, because it tends to widen the income/wealth gap between the rich and the rest.

State and local taxes pay for state and local government expenses, but federal taxes do not fund federal spending. That is the difference between monetary non-sovereignty and Monetary Sovereignty. The states (and business and individuals) primarily are money users, while the federal government primarily is a money creator.

So, why does the federal government collect taxes? Two reasons:

To control the economy by taxing what the government wishes to discourage and by giving tax breaks to what the government wishes to reward.
To assure demand for the U.S. dollar by requiring that taxes be paid in dollars

Federal spending is not funded by federal taxing.

Here are some steps to Prevent and Cure Common Economic Problems While Improving and Protecting the Lives of the People

I. Eliminate the FICA tax. FICA pays for nothing. Neither FICA nor trust funds (See: “The Phony Trust Fund Controversy“) support federal spending. Ending the FICA tax would:

Increase take-home pay for workers in the lower 95% income bracket
Reduce employment costs for businesses
Increase job availability
Narrow the income/wealth gap between the rich and the rest
Add billions of growth dollars to the economy

II. Fund Medicare for All. Provide free, comprehensive, no deductible health care insurance for every man, woman, and child in America. Employer-based healthcare traps workers, and creates job lock, fear-based employment inefficiency.

Universal healthcare would:

Improve health and health care in America
Allow for labor movement based on economic need rather than medical need
Increase American longevity
Increase productivity by reducing the number of sick workers and sick days off
Add growth dollars to the economy (Gross Domestic Product =Federal Spending + Non-federal Spending + Net Exports

Related programs would:

Pay schools to educate more medical professionals and workers — doctors, nurses, ancillary workers
Fund the construction and profitability of more hospitals and rehabilitation centers, especially in rural areas
Fund the research and development of pharmaceuticals and medical devices.

III. Fund Social Security for All, regardless of age or income. Income security is not charity. SS for all would:

Help prevent poverty and reduce the need for other welfare services
Narrow the gap between the rich and the rest
Benefit business by increasing the demand for products and services
Add growth dollars to the economy

IV Fund Grades K-16 + Advanced Education for All Who Want It. This would:

Help increase worker productivity
Increase scientific advances
Help make America more competitive vs. other nations

Some intelligent students can’t even afford free college because their families need them as workers, so we suggest:

Funding salaries for college students to assure America makes use of its best minds.

V Fund All Forms of Science Education, Research, & Development. R&D is future supply. Without it there would have been no innovation, no growth, no leadership, and America would have fallen behind, becoming more dependent on others.

VI Fund Infrastructure: Roads, bridges, rail, ports, airports, power grids, water systems, local mobility systems.

VII Fund Renewable Energy: This includes R&D and infrastructure for:

Electric vehicles and charging stations of all kinds — Trains, cars, trucks, boats, planes, people movers, busses,
Batteries
Solar panels
Nuclear
Geothermal
Wind
Hydro
Wave

VIII Fund Advanced Food Production

Farming Methods Education, R&D
Develop more productive, weather and insect resistant, nourishing crops that require less water and fertilizer
Advanced planting, harvesting, storage, shipping, and delivery methods

IX Fund Affordable Housing

R&D to reduce the costs of housing (building materials, methods, and locations)
Tax breaks for home ownership and renting
Fund trade schools for carpenters, electricians, roofers, etc.
Fund R&D for alternative building materials.

X Financially support State and Local Governments. Every state, county, city, and local government faces its own unique challenges they know best, along with issues similar to those of others. However, they all share the common struggle of having limited funds to tackle these problems.

Fund inter-government educational schools and meetings so government representatives can compare notes on problem solving
Fund the execution of solutions to those problems
Pay each state a per capita annual award to be used for any specified public purpose.

IN SUMMARY

The federal government, having unlimited access to funds., is best at paying for things, which it can do infinitely. The federal government also is good at addressing inter-state problems that might be intractable for individual states.

By contrast, state and local governments may understand local problems best, but often finds solutions unaffordable.

The recommendation is to combine the strengths of the federal government (paying, mediating interstate problems) with what state and local governments do best (understand local needs and solutions).

The proper combination of federal and state/local strengths and understanding will grow and enrich America while improving and protecting the lives of the people.

Rodger Malcolm Mitchell

Monetary Sovereignty

Twitter: @rodgermitchell

Search #monetarysovereignty

Facebook: Rodger Malcolm Mitchell;

MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell;

https://www.academia.edu/

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A Government’s Sole Purpose is to Improve and Protect The People’s Lives.

MONETARY SOVEREIGNTY

Yes, the government can pay for wars, health care and Social Security.

Politicians, the news media, and certain economists keep repeating the outdated myth that federal finances work like personal budgets. As a result, they insist that federal spending is restricted to the amount collected in taxes.

As Barack Obama once misguidedly put it, “If you have to live within your means, the federal government should live within its means.”

Sadly, for Obama’s legacy, the Federal Government has no “means.” Being Monetarily Sovereign, the federal government has the infinite ability to create dollars. It never can run short of money.

President Donald Trump says the federal government is spending so much on war that it can’t afford programs like day care and health care.

“The United States can’t take care of day care. That has to be up to a state,” Trump said during a White House event (1). “We’re fighting wars. We can’t take care of day care.”

Not true. The federal government has the unlimited ability to create the dollars to support wars abroad and health and wellbeing at home.

He extended that logic to major health care programs as well.

“Medicaid, Medicare, all these individual things … You can’t do it,” Trump said during a White House Easter lunch (2). “We have to take care of one thing: military protection — we have to guard the country.”

The remarks come as Republicans weigh potential cuts to federal health spending, while the Pentagon reportedly seeks an additional $200 billion to bankroll the conflict.

Again, not true. As the world’s leading Monetary Sovereign, the U.S. can fund it all, and without even collecting a penny in taxes.

The tradeoff between war spending and everyday expenses

Trump framed programs like child care and health care as responsibilities that should shift away from the federal government.

“You’ve got to let a state take care of day care, and they should pay for it too,” he said, calling some federal programs “little scams” that should be handled locally.

Once again, a lie. The states are monetarily NON sovereign. They cannot create unlimited dollars. They can run short of money. The do need to collect taxes. The federal government can fund these domestic programs simply by pressing computer keys.

Pushing the spending obligation onto the states merely obligates taxpayers. The federal government can do it without collecting taxes.

Rather than providing spending funds, federal taxes:

Control the economy by taxing what the government wishes to discourage and by giving tax breaks to what (or who) the government wishes to reward, and
Assure demand for the U.S. dollar by requiring taxes be paid in dollars.

That is the purpose of federal taxes.

Critics like Elizabeth Warren pushed back on that framing.

“Imagine if instead of funding forever wars in the Middle East, the United States delivered universal child care and health care for all Americans,” Warren wrote on X.

Sadly, Ms. Warren does not seem to understand Monetary Sovereignty. There is no “instead” needed. The government never is limited by dollars. It can do everything at once, and never borrow or tax.

Elsewhere, lawmaker Brendan Boyle warned that proposed spending changes could leave millions more Americans without coverage if cuts to programs like Medicaid move forward.

“Now, Republicans in Washington want to rip health care away from even more people to fund Trump’s reckless war in the Middle East,” Boyle wrote on X.

“It’s shameful,” he added.

These concerns don’t float in a vacuum. According to the American Psychological Association, cuts will result in 11.8 million individuals losing their health insurance coverage under Medicaid, with another 3.1 million losing out on Medicaid under their marketplace plans.

Given that we know American families will be put under pressure by the cuts, the bigger question is how households will absorb those costs if public support shrinks.

What about inflation?

There’s a common myth that federal spending causes inflation. In reality, inflation historically has been driven by shortages of essential goods—most often oil and food—and has been addressed through federal spending aimed at resolving those shortages.

Increased federal spending increases economic growth, as demonstrated by the formula: Gross Domestic Product = Federal Spending + Nonfederal Spending + Net Exports.

Reduced federal deficit spending leads to recessions. Increased deficit spending cures recessions.

Reduced federal deficit spending (red line) leads to recessions, which are cured by increased deficit spending.

What it could mean for your finances

The federal government currently spends about $9,000 per child each year across programs like Medicaid, nutrition assistance and tax credits.

The government could triple or quadruple that amount and still not tax or run short.

Even without any immediate policy changes, the direction of the conversation suggests that families are going to have to take on more costs in the near future, including the following:

higher childcare costs, especially if federal support stalls or shifts to states

more out-of-pocket health care spending, particularly for those relying on programs like Medicaid

rising cost of living, driven in part by global instability and energy prices tied to conflict

These are likely to hit many middle-income families hard, especially the households balancing childcare, health care and long-term savings simultaneously.

In fact, childcare already cost the average U.S. family about $13,000 in 2024 — or a touch over $1,000 a month — for one child. If support is reduced, even a $300 increase would add up to $3,600 in additional expenses per year.

Add in higher insurance premiums or medical bills, and that financial strain can quickly multiply.

Why do the politicians, the news media, and certain economists keep repeating the lie?

The are two reasons:

I. Ignorance: Politicians, the news media, and some economists misunderstand Monetary Sovereignty. They wrongly assume that the federal government, like state governments must collect taxes or borrow money in order to spend.

II. Bribery by the rich: Most media are owned by the rich.

Many politicians also are owned by the rich. This ownership is in the form of campaign contributions and promises of lucrative jobs after retiring from office.

Some economists are bribed by university endowments and promises of lucrative employment in propaganda organizations.

Why do the rich want to end Medicare and Social Security?

“Rich” is a comparative. The person who has one thousand dollars is rich if everyone else has ten dollars. But that person is poor if everyone else has ten thousand dollars.

To get richer, you either need to earn more money yourself or ensure that others have less.

Cutting Medicare and Social Security ultimately benefits the wealthy while leaving those with fewer resources worse off. Trump, along with the Republican Party (though some Democrats also are at fault), often support policies that favor the rich.

This becomes easier to achieve when the public doesn’t grasp the federal government’s unlimited spending power or hesitates to voice concerns to political leaders.

If you, your friends, and their friends don’t speak up about your complaints and skip voting in the next elections, you’ll face the consequences—unless you’re wealthy and prefer the gap between the rich and everyone else to grow.

Your future is in your hands. Fight today or lose tomorrow.

Rodger Malcolm Mitchell

Monetary Sovereignty

Twitter: @rodgermitchell

Search #monetarysovereignty

Facebook: Rodger Malcolm Mitchell;

MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell;

https://www.academia.edu/

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A Government’s Sole Purpose is to Improve and Protect The People’s Lives.

MONETARY SOVEREIGNTY

Monetary Sovereignty: Who says so?

We often have told you that the U.S. federal government, being Monetarily Sovereign can spend unlimited amounts of money, not collect taxes, and still never run short.

State and local governments, businesses and individuals are monetarily Non-sovereign, and so, they can run short of money.

Just as a reminder, here are some of the experts who agree:

Alan Greenspan, Former Federal Reserve Chairman: “A government cannot become insolvent with respect to obligations in its own currency. There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody. The United States can pay any debt it has because we can always print the money to do that.”

Ben Bernanke, Former Federal Reserve Chairman: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. It’s not tax money… We simply use the computer to mark up the size of the account.”

Beardsley Ruml, former Chairman of the Federal Reserve Bank of New York . “The necessity for a government to tax in order to maintain both its independence and its solvency is true for state and local governments, but it is not true for a national government. All federal taxes must meet the test of public policy and practical effect. The public purpose which is served should never be obscured in a tax program under the mask of raising revenue.”

Federal Reserve Chairman, Jerome Powell: “As a central bank, we have the ability to create money digitally.”

Statement from the St. Louis Fed: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets (i.e. borrowing) to remain operational.”

Paul O’Neill, “I come to you as a managing trustee of Social Security. Today we have no assets in the trust fund. We have promises of the good faith and credit of the United States government that benefits will flow.”

Paul Krugman, Nobel Prize–winning economist: “The U.S. government is not like a household. It literally prints money, and it can’t run out. The government can always finance its spending by creating money.”

Eric Tymoigne (Economist) “A sovereign government does not need to collect taxes or issue bonds to finance spending. It finances directly through money creation.”

Rodger Malcolm Mitchell

Monetary Sovereignty

Twitter: @rodgermitchell

Search #monetarysovereignty

Facebook: Rodger Malcolm Mitchell;

MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell;

https://www.academia.edu/

……………………………………………………………………..

A Government’s Sole Purpose is to Improve and Protect The People’s Lives.

MONETARY SOVEREIGNTY