–Associated Press’s Nancy Benac claims taxpayers pay for Obama travels. Wrong, Nancy.

Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.

The belief that taxpayers pay for federal spending is so common and so ingrained, there probably is no cure, yet we keep trying.

INSIDE WASHINGTON: Who pays when prez politicks?
By NANCY BENAC | Associated Press – 7 hrs ago

WASHINGTON (AP) — President Barack Obama flies Air Force One when he leaves town. So does Candidate Barack Obama.
Either way, taxpayers are on the hook for a hefty amount.

The souped-up Boeing 747 that typically serves as Air Force One costs $179,750 an hour to operate, according to the latest Pentagon calculations, meaning that expenses for presidential travel mount quickly.

And, no matter what the reason for the president’s trip, there are all sorts of other necessary big expenses anytime he moves around the country: advance teams, cargo planes, armored cars, Secret Service protection, communications and medical staff and more.

Presidents always are quick to stress that they reimburse the government for the costs of their political travel.
That’s true, but they do so under rules that still leave taxpayers paying most of the tab.

Interview 1000 people and 999 will tell you that taxpayers indeed do pay for Presidential travels. And of those, 999 will be wrong. Federal taxpayers don’t pay for anything.

When the U.S. became Monetarily Sovereign in 1971, the government gave itself the unlimited ability to pay any bill of any size — without taxes or borrowing — in fact, without having income of any kind. So who pays for federal spending. The answer: Nobody pays for federal spending. It’s the ultimate free lunch.

The government pays its bills by sending instructions to banks to mark up creditors’ checking accounts. No taxes necessary. No borrowing necessary. Just instructions. Taxpayers don’t pay for federal salaries. Taxpayers didn’t pay for the GSA’s infamous Las Vegas trip. Taxpayers didn’t pay for the Secret Service hookers. Taxpayers didn’t pay for military cost overruns. Federal taxpayers simply do not pay for anything. Period.

The next time you read an article telling you how taxpayers’ money is being spend on any federal project, know this: The author of that article is clueless about Monetary Sovereignty, the basis for all economics. Now repeat after me: Taxpayers do not pay for federal spending.

So why does the federal government require us to pay federal taxes? They have not yet figured out the differences between a Monetarily Sovereign nation and one that is monetarily non-sovereign.

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. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports


9 thoughts on “–Associated Press’s Nancy Benac claims taxpayers pay for Obama travels. Wrong, Nancy.

  1. Even with Monetary Sovereignty, there are other purposes for taxes besides funding government:

    – Under MMT, taxes are what create a basic demand for a currency;
    – Along with spending aimed at the middle class and below, taxing can help achieve a more fair/efficient distribution of the existing money supply (although our current system isn’t doing a good job of that). Arguably this makes more sense than pumping in money at the bottom and letting it flow to the top, where it just sits there.


  2. Lifelong,

    Last year I reminded Warren Mosler and Randy Wray that federal taxes wer unnecessary for creating demand, because there were plenty of state and local taxes. They agreed.

    Pumping money at the bottom, where it is most needed is exactly what the economy needs.

    As for money “just sitting there,” this cannot happen. Think about it. What does a wealthy person do with his money? (Hint: He invests it, by transferring it to someone else, who invests it by transferring it to someone else, etc. etc., etc.)


    1. Re investments, this doesn’t seem to be happening, because of insufficient demand. Money’s just being saved at very low interest rates. Taxing away some of what is essentially unused money from the top, combined with spending at the bottom where I agree it is most needed, looks to me like making more efficient use of existing money, or getting the same economic result with a slower expansion of the money supply.


    2. Only so far.

      In a credit system there are almost always more people wanting to save than there are people wanting to invest.

      And the way our banks are setup that allows them to buffer those excess savings – which then show up as as Federal Reserve balances or Treasury securities.

      In other words *savings* accounts with the government sector.

      The government sector has to pump those excess savings back into the system (at the bottom as you point out) or the private sector will be slowly drained of the cash it needs to keep the engine of productivity going.

      Government is the investor of last resort.


        1. Utterly meaningless. We don’t care about dollars in savings; we care about wealth. Deficit spending doesn’t create wealth, and is quite capable of consuming it. There is no such thing as a free lunch, and your theory makes the deadly assumption that the relationship between monetary supply and price level is linear. That is, you assume that if a 10% of GDP deficit gets us half-way back to full output (even assuming that this claim is accurate), then a deficit of 20% of GDP will bring us back to full employment. More likely, the deficit for full employment would be something like 12-15%, and 20% would be quite inflationary. Why? Because monetary velocity is not independent of money supply. If it were, a nation suffering hyperinflation could simply freeze its money supply and the problem would go away.


  3. Myth buster,

    So, you don’t care about dollars, you care about wealth. Fine. I can measure dollars; can you measure wealth? Exactly how much wealth is there in the U.S.? If you care about it, you should be able to measure it.

    And if deficit spending doesn’t create wealth, what does?

    And where did I make the assumptions you mention?

    As always, tons of opinion, but not an ounce of data.


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