Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
Here is the latest addition to the Idiot Patrol: Sen. Tom Coburn (R-Oklahoma) Read all about it:
Washington Post: Sen. Tom Coburn’s cuts: Tackling Social Security
By Walter Pincus, Published: August 4
Editor’s note: Sen. Tom Coburn (R-Okla.) released a plan in July that he said would achieve $9 trillion in deficit savings over the next decade. Here we review parts of the proposal.
Wonderful. That’s $9 trillion less in an economy starved for money. What a concept!
“Today, Americans on average live 14 years longer, retire three years earlier (at 62) and spend 20 years in retirement,” Coburn has written, implying correctly that this is one reason the system is running out of money.
No, Tom and no, Washington Post. Social Security is an agency of the Monetarily Sovereign U.S. government, which cannot run out of money. If every man, woman and child received Social Security benefits from the day of birth, the federal government still would have no difficulty supporting the program to infinity.
(And pul-eeeze don’t tell me about inflation. I know. I know. If the federal government spent unlimited money, at some time in the future we’d have inflation. I’m not suggesting everyone go on SS from the date of birth. I’m just talking about federal spending capabilities).
Here is Coburn’s “Work ‘Til You Drop” plan:
Pertinent facts that “better reflect life expectancy,” Coburn argues, justify his plan to continually raise the Social Security retirement age beyond the scheduled bump to 67 in 2027. Those who want to retire early, at age 62, will be able to do so in 2022, but they would receive only 70 percent of what they would have received by retiring at 67.
Coburn would have retirement ages automatically increase, but gradually, one month every two years. Under his plan, someone who turns 62 in 2026 could begin collecting at 68 and someone who hits 62 in 2070 would have to wait until age 69.
This is how Congress will provide a better life for us, our children and our grandchildren: Continually raise the retirement age.
But that’s not all. We need to restrict payments to disabled people, too.
Coburn directs much of his attention in preserving Social Security to two other programs run by the Social Security Administration.
One is the Social Security Disability Insurance program. . . Created in 1956, SSDI was to be “a safety net of last resort for disabled Americans who could not work” . . .Coburn argues that billions could be saved on SSDI if the Social Security Administration conducted “continuing disability reviews” of beneficiaries.
Coburn quotes a Social Security inspector general’s finding last year that eliminating the medical CDR backlog “would result in saving $15.8 billion in improperly paid lifetime federal benefits.”
“Saving” for whom? For a government with the unlimited ability to pay its bills, a government that never, ever, ever can run short of dollars? Or for the American economy that is starved for cash, and sinking deeper into recession?
The second troubled program is Supplemental Security Income (SSI), which was established in 1972 and is a means-tested benefit to the disabled poor, elderly and blind.
Coburn said one serious concern in the program, which sets income limits and the holding of assets, is that payments are going to improper people or at the wrong level. The Social Security inspector general testified in June that in 2009 $4 billion in overpayments went “to SSI recipients who did not properly report assets,” one of the main qualifying elements.
Yes, there must be millions of people who no longer are elderly, no longer are disabled and no longer are blind. They must be getting rich on those meager payments. We have to crack down. The next thing you know, those cheats actually will want subsistence benefits, to pay for food, clothing, housing and (gasp!) air conditioning. The nerve of them! We have to crack down.
The Social Security inspector general said that if redeterminations had been carried out at the 2003 level, his agency “would have saved taxpayers $3.3 billion during fiscal years 2008 and 2009.”
No, Tom. No SS inspector general. Taxpayers do not pay one cent toward the disabled poor, elderly and blind. If taxes fell to $0 or rose to $100 trillion, neither event would affect by even one penny, the federal government’s ability to support every federal agency.
Yes, yes, I know, Tom. Inflation. Zimbabwe, Weimar Republic. Hyper-inflation, big government. Those are today’s real problems. Forget about unemployment, recession, homelessness, starvation, disability, health, education, poverty, the infrastructure, crime, security and food and medicine safety.
We need to cut, cut, cut — drain that money out of the economy — especially during a recession.
Let’s save as much money as possible for a government that doesn’t need it, so we can starve the economy and its people of the money they urgently need. Welcome to the Idiot Patrol, Tom.
And welcome to the mean, cruel world you wish to create for our children and us.
Rodger Malcolm Mitchell
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. The key equation in economics: Federal Deficits – Net Imports = Net Private Savings
10 thoughts on “–Latest addition to the Idiot Patrol: Sen. Tom Coburn”
I just want to scream everytime I read this this stuff. I worry for my parents who are on SS. They are just getting by. If things get worse and these guys start messing with current benefits, they are in serious trouble. I guess I will never be able to retire at this rate when I’m in that range based on what Sen Coburn is proposing. I always wonder who the savings are for myself. My son is 4 years old. I don’t envision a happy future for him. I don’t see him getting a gread education if they keep cutting those funds. i don’t see him enjoying our country if the infrastructure is crumbling or already crumbled. If I lose my job in the near future, what kind of future will he have? It makes no sense whatsoever. This mythical future they talk about isn’t going to be peaches and cream with what they are doing now to us. Too bad they are only worried about the upcoming election and not really worrying about the future of this country. They all just want to get votes so they can get back to DC.
Well stated. At some point ( I hope within my lifetime), the politicians will get it. They’ll completely reverse their positions and even say, “I knew it all the time.”
Meanwhile, our children and grandchildren a doomed to suffer Congressional idiocy.
Because, as voters, we are stuck with whomever is running, you might want to follow my all-purpose voting formula: Always vote against the incumbent.
Rodger Malcolm Mitchell
I sent your monetary sovereignty description to a friend who labeled it as simplistic nonsense. My response to him is to say that you are describing a reality of monetary policy. The MS description does not make a judgment about debt or deficit levels or even attempt to predict them. It seems to me that an increasing money supply could increase debt and would therefore require interest to be paid on such debt. If so, then that would be an obligation of the federal government and would require revenue to pay for it, but you do not make a judgment about the effect of that increase debt or interest. Those are separate issues. Is that correct, or do I still misunderstand your description?
Roy, I’ll tell you what is simplistic nonsense: The notion that “debt is bad.” I absolutely, positively guarantee your friend has zero data to back up any of his ideas.
Show him this graph and see what he makes of it.
The graph shows that deficit growth reduction leads to recessions, and deficit growth increases cure recessions.
But as I like to say, “I’d rather teach strangers than try to educate a friend.”
Rodger Malcolm Mitchell
Sorry, but I failed to answer your question “. . . you do not make a judgment about the effect of that increase debt or interest. Those are separate issues. Is that correct, or do I still misunderstand your description?”
I do make a judgment about the effect of increased debt and interest.
1. As a Monetarily Sovereign nation, the U.S. has the unlimited ability to service any size debt. If the debt were 10 times its current size, the U.S. easily could service it. The U.S. also has the power to eliminate all federal debt tomorrow, merely by crediting the bank accounts of T-security holders.
2. Same goes for interest. The government can pay any amount of interest, and in fact, there is data showing that increased interest payments may increase GDP growth, by adding money to the economy.
Soon, your friend, to demonstrate total ignorance, will say, “What about Zimbabwe” (or the Wiemar Republic). He means, federal deficits cause inflation. The data says otherwise.
Look at this graph. Do you see any relationship between federal deficits and inflation?
Rodger Malcolm Mitchell
Like you’ve said, Rodger, at the rate we’re going, unfortunately, you’ll never run out of material. These days the chatter of the ignorant is incessant. I thought of you when hearing David Stockman interviewed on NPR last weekend.
You’re posts are always a wonderful antidote. You write with a clarity, insight and outrage befitting the times that’s a joy to read though the ignorance and policy decisions are sad, pathetic and depressing.
Rodger, what’s your opinion on the following. Do you think greater focus and attention should be given by MS/MMT advocates to the existing political constraints on the ability of the federal government to exercise its MS? From what I understand the constraints are the debt ceiling and the inability of the Tsy to run an overdraft on its Fed account. Should awareness of these constraints be stressed as well as the need to advocate and strategize for their repeal? Obviously, now, the debt ceiling is pretty darn apparent. Isn’t the no Tsy overdraft critical to reverse?
You are correct that insufficient (none?) focus has been given to the laws creating the fake debt crisis. From a financial standpoint, there is no debt crises. A Monetarily Sovereign nation can pay any debt of any size any time, so long as the debt is denominated in its own sovereign currency. The crisis is legal and political, not financial.
The debt ceiling should be eliminated. It has no function other than as a potential hostage for financial kidnappers like the Tea/Republicans.
Also, the Treasury should not be required to issue T-securities. This too has no financial function for a Monetarily Sovereign nation. It had a value during the gold standard days, when we were not Monetarily Sovereign and did not have the unlimited ability to create our sovereign currency.
If there were no T-securities, there would be no debt, though there still would be deficits (Few people understand that federal debt is not financially the sum of federal deficits, but merely the sum of open T-securities). From an accounting standpoint, there could be debt without deficits, and there could be deficits without debt.
So, no T-securities = no debt = no debt controversy = no ignorant S&P downgrade of U.S. credit. I long have advocated the end of T-securities.
Rodger Malcolm Mitchell
And the reason Treasury is required to issue T-securities is because of a rule or statute that does not permit it to run an overdraft. Is that correct?
Yes. Open T-securities, by law, must = total cumulative deficits.
And, the debt ceiling became law as part of the Second Liberty Bond Act of 1917, which helped finance the United States’ participation in World War I. The purpose was to convince the electorate that Congress was disciplined, and would not spend too much. In the 94-year period, the ceiling has been revised 102 times.
Rodger Malcolm Mitchell
Thanks, Rodger. No need for Wikipedia.