–Letters to the Chicago Tribune

The debt hawks are to economics as the creationists are to biology.

I read the Chicago Tribune. It’s my hometown newspaper. Over the years I have written many letters to the editors, trying to help them understand our economy. I have failed.

The Tribune editors still live in the gold standard world, where the money supply and the government’s ability to pay its bills is limited. In short, the Tribune editors are debt-hawks.

I should have done this long ago, but I now have decided to begin posting my Tribune letters all in one spot — here. I put today’s letter in this post, and subsequent letters will be in the comments, below.

My hope: Some of you will write to Pat Widder, chief economic correspondent (Can you believe they have one?), and give her the facts. Perhaps if she hears from enough people . . . who knows? Maybe she’ll decide to learn something. Her Email is: PWidder@tribune.com

Pat, I don’t get it. Why do the Tribune editors intentionally resist knowledge?

In today’s editorial, “Stop Spending, Part I, your editors refer to the proposed $250 payment to each Social Securities recipient as “$14 billion that the government doesn’t have, putting the taxpayers of today and tomorrow deeper in debt.” Nothing could be further from the truth.

First, the government “has” an unlimited amount of money. The government became monetarily sovereign in 1971, the end of the gold standard, and since then, has had the unlimited ability to create money. To say the government does not “have” money is more misleading than the lies our worst politicians tell.

Second, although Illinois taxpayers do pay for Illinois spending, and Chicago taxpayers do pay for Chicago spending, U.S. taxpayers do not pay for U.S. spending. The reason: Illinois and Chicago are not monetarily sovereign; the U.S. is. And in a monetarily sovereign nation, taxpayers do not pay for government spending. There is zero relationship between federal taxes and federal spending. Taxpayers do not owe federal debt.

Are your editors being deliberately dishonest or are they too lazy to learn the facts? It has to be one of the two. When I see the typical, misleading political advertising these days, all I can think is, “My God, the Tribune is worse.”
Rodger Malcolm Mitchell

No nation can tax itself into prosperity

8 thoughts on “–Letters to the Chicago Tribune

  1. 10/22/10
    Pat, in the editorial titled, “Third rail politics,” your editors said, “Social Security’s trust fund is set to run our in 2037.” In fact, that is not true. All Social Security benefits are paid ad hoc, by federal deficit spending. There is no Social Security trust fund.

    Nor is the a Department of Defense Trust fund. Nor a Supreme Court trust fund. Nor a Congress trust fund, nor a White House trust fund, nor a trust fund for the other 1,100 federal government agencies. The so-called “Social Security trust fund” is an unnecessary accounting fiction.

    If FICA taxes were completely eliminated, as they should be (See: FICA), this would not change by even one penny the federal government’s ability to pay Social Security and Medicare benefits.

    Your editorial spoke of “fixing” Social Security. But what really needs fixing is the false belief that Social Security is supported by earmarked taxes. It isn’t. In a monetarily sovereign nation, federal spending is not constrained by tax receipts.

    Rodger Malcolm Mitchell


  2. 10/22/10

    Great news, Pat. Here is how the Chicago Tribune editors can make a quick $100 million and help save the Tribune. The story is at Easy $100 million

    Good luck

    Rodger Malcolm Mitchell

    Senate Candidate Bets Congress $100 Million That the U.S. Government Cannot Run out of Money

    Warren Mosler Offers $100 Million of His Own Money to Pay Down the Federal Deficit If Any Lawmaker Can Prove Him Wrong

    WATERBURY, Conn.–(BUSINESS WIRE)–Warren Mosler, Connecticut’s Independent candidate for U.S. Senate today announced that it is an indisputable fact that U.S. Government spending is not operationally constrained by revenue and will give $100 million of his own money to pay down the Federal deficit if any Congressman or Senator can prove him wrong. “I am running for U.S. Senate to see my policies implemented to create the 20 million jobs we need. And to do this it must be understood that there is simply no such thing as the U.S. Federal government running out of money, nor is the Federal government operationally dependent on borrowing from China or anyone else. U.S. states, individuals, and companies can indeed become insolvent, but U.S. government checks will never bounce,” states Mosler. “Yes, large Federal deficits that push the economy beyond the point of full employment can lead to inflation or currency devaluation, but not bankruptcy and not bounced checks. If lawmakers today understood this fact, they would not be looking to cut Social Security and we would not still be mired in this disastrous recession.”

    With 37 years of experience as an ‘insider’ in monetary operations, Mosler knows that President Obama is wrong when he says that the U.S. government has ‘run out of money’ and is dependent on borrowing from China in order to spend. As Fed Chairman Bernanke publicly stated in March of 2009, the Fed makes payments by simply marking up numbers in bank accounts with its computer. Mosler explains further; “The Government doesn’t get anything ‘real’ when it taxes and doesn’t give up anything ‘real’ when it spends. There is no gold coin that goes into a bucket at the Fed when you are taxed and the government doesn’t hammer a gold coin into its computer when it spends. It just changes numbers in our bank accounts.” Mosler likens this scenario to a football game; when a touchdown is scored, the number on the scoreboard changes from 0 to 6. No one wonders where the stadium got the 6 points, no one demands that stadiums keep a reserve of points in a “lockbox” and no one is worried about using up all the points and thereby denying our children the chance to play.

    Warren Mosler urges his opponents, Linda McMahon and Richard Blumenthal, and the entirety of Congress to recognize how the monetary system actually works and implement a full payroll tax (FICA) holiday and his other proposals to restore full employment and prosperity while not cutting Social Security benefits or eligibility.


  3. 10/25/10 Letter to Pat Widder and Bruce Dold of the Chicago Tribune:

    Once again the Chicago Tribune editors demonstrate they have no idea what they are talking about, and specifically do not know the difference between a political entity that is monetarily sovereign and one that is not.

    In their 10/25/10 editorial titled, “The Old World’s Pain,” the Tribune talks about France’s “necessary plan to cut back public entitlements, including a two-year increase in the nations minimum retirement age . . . in a marked contrast to America’s free-spenders . . .” Sorry Tribune, but America is monetarily sovereign, meaning it cannot go bankrupt, while France is not monetarily sovereign, meaning it can go bankrupt. Two completely different, non-comparable situations. When you compare them, you demonstrate ignorance of economics, though you write about economics.

    Then amazingly, the Tribune says, “In the absence of a credible plan for controlling runaway costs, consumers and businesses lack the confidence to spend and invest.” Huh? Runaway costs??!! Has anyone mentioned to you that recipients of Social Security will not receive a benefit increase because of the lack of inflation? Has anyone mentioned the Fed’s current fear of deflation?

    Without providing one ounce of data, the Tribune says, “We can’t afford gold-plated pensions for public employees, and money’s-no-object health care system, a sprawling government payroll and a retirement system that’s destined to run out of cash.”

    Forget the clever little pejoratives, “gold-plated,” “money’s-no-object” and “sprawling,” that are the Tribune’s substitute for facts, and let’s cut to the chase. Pensions are stimulative and large pensions are very stimulative. The federal government creates pension money ad hoc, so federal pensions do not cost taxpayers one cent. Cutting federal pensions will hurt the economy.

    Patriotic bluster aside, America does not have the world’s best health-care system. Far from it. There is no excuse for that. A better system would easily be affordable for a monetarily sovereign government.

    And no agency of the federal government can run out of cash, simply because a monetarily sovereign nation never can run out of cash. Why does the Tribune think Social Security can run out of cash, when it expresses no such concerns about other federal agencies such as the Department of Defense, the Supreme Court, the White House, Congress and the other 1,100 federal agencies? Try asking the Tribune executives that question and you will receive no answer, simply because there is no answer. They hide behind silence.

    Then the Tribune says, “Illinois is a perfect example.” No, Tribune editors, Illinois is not a perfect example. It is not monetarily sovereign. It cannot create unlimited dollars. The U.S. can. Illinois is, however, a perfect example of Greece, Italy, France et al, which surrendered their monetary sovereignty to the euro.

    The editorial ends with, “Watch what’s happening in Europe. And understand that if we continue to do nothing the Old World’s pain will hit us, too.” Utter nonsense. One wishes the Tribune would hire someone who understood economics rather than parroting the popular myths of the day. Either that, or stop writing about economics.

    Most newspapers insist their reporters provide hard evidence when they make assertions. Too bad that policy does not extend to Tribune editors.

    Rodger Malcolm Mitchell


  4. 10/27/10 letter sent to Bruce Dold and Pat Widder:

    Your 10/27 editorial titled, “Deficit delivery,” said, “We know that if we do nothing, the cost of Medicare and Medicaid will be ruinous.” You’ve managed to commit more misleading media sins than I thought possible in only 16 words.

    First, you don’t mention that Medicare and Medicaid are funded differently. While Medicare is funded wholly by the federal government, Medicaid is funded partly by the states and partly by the federal government.

    Why is this important? Because while the federal government is monetarily sovereign, the states are not. So why is this important? Because a monetarily sovereign government never can be “ruined” by costs. The federal government has the unlimited ability to pay bills of any size. The states, which are not monetarily sovereign, do not have this ability. So while the state’s share of Medicaid costs can be unaffordable, the federal costs of Medicare and Medicaid easily can be afforded.

    And, what is it you want done? Would you like to see further cuts in Medicare and Medicaid benefits? Medicare benefits have been cut so much, more and more doctors have opted out of the program. Is this how you protect your readers?

    Or perhaps you favor tax increases, which always, always, always hurt taxpayers and the economy. You never say. Apparently, you feel it is sufficient to bemoan a non-existent problem by parroting the popular myth of federal bankruptcy.

    The Tribune editors neither define terms nor provide data. We are not told exactly what the Tribune editors mean by “ruinous.” Do they claim the federal government will go bankrupt (a financial impossibility)? Again, they never say.

    And then we have the embarrassing question of data. The editors provide none. We are given only the general assertion that at some unknown time in the near or distant future, some unspecified bad thing will happen to the federal government – or is it to the state governments, we don’t know which – resulting in somebody or something being ruined.

    One expects professional editors to be informative and to provide helpful facts. But this editorial could have been written by high schoolers. The Tribune editors blast political candidates who run misleading advertising, devoid of fact and content. Then the editors themselves run misleading editorials, devoid of fact and content.

    All of the above are sins, to be sure, but the worst sin is the editors’ unwillingness to learn, even when offered the facts free and on a silver platter, which I’ve done on numerous occasions. That simply is unforgivable.

    Rodger Malcolm Mitchell


  5. 11/1/10, to Pat Widder and Bruce Dold:

    In today’s editorial titled, “Time to deliver,” you wrote, “(Your children or grandchildren are) the intended victims of inter-generational grand theft. They’ll have to devote many of their adult years to retiring the massive debts our politicians have spent and borrowed in our names.”

    At this stage, the reader does not know whether the Tribune is talking about the federal government or the Illinois government, and that is the point of this note. The Tribune says exactly the same thing about the federal government, which is monetarily sovereign as it says about the Illinois government, which is not.

    Because the Tribune does not seem to understand the significance of monetary sovereignty, it confuses the enormous difference between the federal government vs. all other entities, such as the states, counties, cities, businesses, you and I. It’s like saying the Black Hawks are a bad team because they don’t have a good field goal kicker.

    One simply cannot understand federal finances without understanding monetary sovereignty. Yet, the Tribune continues to write editorials demonstrating this ignorance. If you would like to learn about that with which you write, go to (Monetary Sovereignty, The Key to Understanding Economics) or to (Seven Deadly Frauds of Economic Policy, June 17, PDF Link) or to (Conclusions).


  6. 11/11/10 Letter to Pat Widder and Bruce Dold of the Chicago Tribune:

    Pat and Bruce:

    Today’s editorial titled, “Debt dud” quotes Representative Jan Schakowski, “I agree that we have to do something, that the debt and deficit are not sustainable . . .” Nowhere do you challenge her on what she means by “not sustainable.”

    Does she mean that the federal government is not able to create enough money to pay its bills? No, that couldn’t be right, because a monetarily sovereign nation has the unlimited power to create money. Even if federal taxes were $0, that would not affect by even one penny, the government’s ability to pay its bills.

    Does she mean the large debt and deficit will have an adverse effect on our economy? No, federal deficit spending repeatedly has been shown to stimulate the economy, while reductions in the rate of deficit spending have caused almost every recession in the past 40 years.

    Does she mean the debt and deficit will cause inflation? No, currently, despite massive spending, we are most worried about deflation. In fact, since we became monetarily sovereign, there has been no relationship between federal deficits and inflation.

    What does she mean? No one knows and no one asks, least of all the Tribune, which one might expect to demand facts.

    So why does the Tribune merely accept the harmful notion that taxes must be increased and/or benefits decreased? Why do you not accept or even look at the facts? Why do you prefer austerity to prosperity?

    Rodger Malcolm Mitchell


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