The debt hawks are to economics as the creationists are to biology.
Since this is the season for campaign promises, here are mine. When you elect me, I promise to: (O.K., I’m not running for office, but this is what I would do.)
Reform Congress
I will work to end the Senate filibuster rule. I find the notion of one person being able to thwart the will of Congress and the American people, and to prevent the appointment of federal judges and other federal personnel, to be repugnant. It’s a bad rule.
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Improve Social Security and Medicare
1. I will end FICA. This is the worst tax in America for reasons explained at FICA . Briefly, it’s a regressive tax that discourages hiring and discourages spending, and has no function. The federal government does not use FICA taxes.
2. I will reduce the retirement age back to 65 (early retirement at 62).
3. I will stop taxing Social Security benefits. Only a government mentality could pay people benefits, then tax the benefits. It makes as much sense to tax SS benefits as it would to tax Medicare benefits, i.e. no sense at all.
4. I will pay everyone, man or woman, married or single, who begins to claim benefits at age 65, the same Social Security benefit, regardless of prior earnings. Under the current system, the people who need benefits most are paid the least.
5. I will increase Medicare payments to doctors and hospitals to equal the current levels paid by private insurance companies. The current Medicare payment levels discourage doctors from accepting Medicare, and discourage young people from entering the medical profession.
6. I will include long-term care as part of Medicare. Current long-term care policies as too expensive for lower income people.
7. I will eliminate all “donut holes” and other similar limitations from Medicare Part D (drug coverage). I will cover all drugs, generic or branded, from day 1.
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Rescue the States, Counties and Cities
The primary reason the states, counties and cities are in such bad shape: They are not Monetarily Sovereign. Mathematically, inflation and population growth make long-term survival on taxes alone, impossible for any monetarily non-sovereign government. Such governments must have money coming in from outside, via exports and/or federal assistance. I will pay each state $10,000 per person in the first year, then $5,000 inflation-adjusted each year thereafter.
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Cut Income Taxes
I will cut income taxes from the bottom up. Each year, I will increase the standard deduction by $10,000. At the end of the first decade, the standard deduction would be $100,000, and the vast majority of taxpayers will file their taxes on a postcard. (This will impact charities, all of which except faith-based, should be supported by the government, anyway.)
I will eliminate business taxes. The economy is business. Taxing business = taxing the economy, exactly the opposite of what a growing economy needs.
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Support Education
I will pay all students a salary for the job of attending school. (See: Salary 1 and Salary 2 and Salary 3 ).
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Spend Liberally on Research and Infrastructure
I will offer federal support to a myriad of science research and development projects – medical, physical, military, energy – together with rebuilding our aging roads, bridges and dams. Under my watch, we will go back to the moon and on to Mars.
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Raise Interest Rates
If any debt hawks have read this far, they undoubtedly are foaming at the mouth about the federal debt being “unsustainable” (nonsensical for a monetarily sovereign nation) and inflation. There is no post-gold standard relationship between federal deficits and inflation, (See: Inflation) And federal deficit spending reduces unemployment (See: Unemployment ) there is a distant point, when federal spending could be sufficient to cause inflation. So, I will take peremptory action to increase the value of money, by increasing interest rates.
This will strengthen the dollar, providing us with more imports of better goods and services at lower prices. (See: Stronger dollar )
Higher rates also will be stimulative, as it will force the federal government to pay more interest on its debts, thereby adding money to the economy. See: Interest
On a related subject, I will increase FDIC to $1 million, to protect more Americans’ savings.
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So that’s a good start for my first year in office. What do you think? Do I have your vote?
Rodger Malcolm Mitchell
http://www.rodgermitchell.com
No nation can tax itself into prosperity
#Monetary Sovereignty - Mitchell 
Rodger,
This all sounds good. But what happens if other countries aren’t as excited about it as we are? What if they decide that they aren’t don’t want to give us stuff for dollars?
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Andrew, if all nations decide not to export to one of the world’s best customers, we either will make it ourselves or do without. But truthfully, how likely is that scenario?
Rodger Malcolm Mitchell
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In order for trade to work, both parties have to believe that they are getting a fair bargain. If others perceive that the dollar doesn’t hold value, they need not sell us goods at prices we can afford. We benefit greatly in this regard by being able to “print” the world’s reserve currency. But we don’t always have to be in charge – ask the British about that. People use to enforce debts with guns and ships, though I admit that the risk of such action seems highly unlikely.
Still, a fall in the dollar isn’t all bad. People like jobs, and as you say, we can make things ourselves.
The risk comes at the point when real resources become scarce and people who own the resources don’t want to part with them without something that they perceive as valuable in return. China is flush with rare earth elements that we lack, and we seem to be addicted to oil that we need to import. Is it too early to worry about these things? Probably. But people like to worry.
You are fighting psychology. That’s difficult.
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Good one, Rodger, but instead of chiefly using interest rates, I would tax away economic rent and incentivize productive investment by not taxing proceeds from it.
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Tom, why would you tax economic rent? All taxes remove money from the economy, and so are anti-growth, not to mention the difficulty of measuring economic rent on an ad hoc basis.
Rodger Malcolm Mitchell
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Andrew, you’re right. Sometimes we are asked to answer “What-if-the-moon-falls-into-the-ocean?” questions.
Yes, if the U.S. fails to control inflation (which it easily does by controlling interest rates), and somehow allows the dollar to become worthless, people will not want to export to us.
But if the moon does not fall into the ocean, and the dollar does not become worthless, our 300 million population makes for an irresistible export market.
I’m fighting psychology, as you say, but the real psychology I’m fighting is described at Anthropomorphic Economics Disease
Rodger Malcolm Mitchell
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Just like most Socialist kooks you fail to realize TINSTAAFL and the intrinsic relationship in our current system between money and … productive labor … it is pretty obvious from your rants that you have no knowledge or simply disregard the Austrian school of economics which explains this dichotomy in great details … read Hayek (Road To Serfdom) or anything by Von Mises to broaden your Socialist slant and understand why your theories are significantly flawed …
We’ve seen how a general ignorance of economics works out already … see:
Greece (will default)
Iceland (already defaulted once)
Ireland (about to default)
Spain (20% unemployment)
Zimbabwe
Argentina
The list of failed nation states that have followed your policies is a lot longer than this, but again you won’t understand why these examples are failures of the policies you advocate … but please don’t let those facts get in the way of your underlying premis:
The U.S. can print our way to economic prosperity …
No thanks on your candidacy … as you’re an economic illiterate.
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IrishSamurai,
Thank you for your courteous and thoughtful comments.
You might find this very short article about Monetary Sovereignty interesting.
A monetarily sovereign nation never needs to default. The nations you mention are not monetarily sovereign. This is explained at Solution for the Euro.
Rodger Malcolm Mitchell
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I appreciate that a monetarily sovereign nation need not fear deficits. But I think you under-appreciate the value of progressive taxation. It is useful for discouraging the big corporate figures and other plutocrats from buying control of the political process and turning the republic into a feudal barony. While taxation must surely effect economic efficiency, you won’t get a lot of job creation and business expansion from the efforts of politicians who are bought by the rich to preserve their perquisites. The reign of Dubya established that in spades.
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Do you really believe that progressive taxation has been “. . . useful for discouraging the big corporate figures and other plutocrats from buying control of the political process. . . “?
The elimination of the FICA tax would put money where it is needed, don’t you think?
Rodger Malcolm Mitchell
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Comparatively speaking, yes, the high top rates of the 40s through the 70s did seem to make it harder for the rich to blatantly rule the process.
The only purpose for the FICA tax that I can see is political and psychological. The GOP has had a rough time getting rid of SS when people feel like they have a stake because they “paid in.” Especially us Boomers who had to “double up.” Otherwise, I agree that the FICA tax serves no purpose.
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parsac,
Interesting thought: “I paid so I am entitled.”
Why do you suppose the GOP would want to get rid of SS? It puts money in the hands of business customers. You would think the “business party,” would want to get rid of FICA.
Rodger Malcolm Mitchell
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You’re not offering free health care for everyone, from day 1? Aside from that, you have my vote. The question is: What will make you run next year?
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$1 billion and a great campaign manager. Warren Mosler tried to do without those two, and he got killed.
Rodger Malcolm Mitchell
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Obviously it’s not possible for us who support you to raise that kind of money. I wonder how long it will take Wall Street to realize that bankrolling your campaign would be a screaming deal for their bottom line.
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You’ve got my vote! My favorite idea was “I will reduce the retirement age back to 65 (early retirement at 62).” I think this would reduce the unemployment rate swiftly and significantly.
It’s immoral that I, a federal employee, can retire at 60, yet private employees cannot receive full social security benefits until they are 67.
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