–Congress leads us lemmings over the fiscal cliff and we happily jump. Hey, who needs Jesse Jackson, Jr.?

Mitchell’s laws:
●The more budgets are cut and taxes increased, the weaker an economy becomes.

●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●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.

==========================================================================================================================================

Early this month, Federal Reserve Chairman Ben S. Bernanke, warned Congress the U.S. was in danger of falling over a “fiscal cliff” — a recession caused by the expiration of tax cuts and the imposition of spending cuts.

Using “Fed-speak,” Bernanke correctly told Congress that deficit reduction will cause another recession.

Now, more and more people are asking Congress, “What the hell have you done?”

TPM
Massive Coalition Fights Congress Over Looming Domestic Cuts
By Brian Beutler, July 13, 2012

When debate in Washington turns to the year-end “fiscal cliff,” it invariably centers on looming cuts to defense programs, and the Bush tax cuts.

But billions of dollars in annual funding to domestic programs is also on the line. Nearly 3,000 organizations that benefit from non-defense discretionary spending, including heavy hitters like AARP, have aligned to push Congress to sort out not just the tax and defense issues, but across the board cuts that threaten medical research, border security and everything in between.

Translation: “Sort out” means, “Find a way to cut the deficit, and force the nation over a fiscal cliff, but don’t cut my budget.”

“There is bipartisan agreement that sequestration would be devastating to the nation,” the alliance writes in a letter to members of Congress. “The nearly 3,000 undersigned national, state, and local organizations — representing the hundreds of millions of Americans who support and benefit from nondefense discretionary (NDD) programs — couldn’t agree more.

Congress and the President must work together to ensure sequestration does not take effect. We strongly urge a balanced approach to deficit reduction that does not include further cuts to NDD programs, which have already done their part to reduce the deficit.”

Translation: Congress and the President worked weeks to create the sequestration plan that everyone know would be a disaster. Now that what everyone knew would happen, soon will happen, we ask that Congress work just as hard to undo the plan they created.

[Aside: Rep. Jesse Jackson, Jr. has disappeared. Some people are outraged, and want him to return, now. But Chicago Mayor Rahm Emanuel said, “Why would he get back to work to a Congress that does no work?” That says it all.]

Last year’s debt limit deal created the sequester as a mechanism to force Congress to cut $1.2 trillion from the deficit. But that came on top of nearly $1 trillion in locked-in cuts to domestic programs over the coming decade. The groups say its time for other parts of the budget to take a hit.

Translation: We know cutting deficits will force the economy over a “fiscal cliff,” but no one can prevent Congress from destroying America. So just don’t cut my budget.

Here are excerpts from the alliance’s letter to Congress:

July 12, 2012
Dear Member of Congress:

We strongly urge a balanced approach to deficit reduction that does not include further cuts to NDD programs, which have already done their part to reduce the deficit.

NDD programs are core functions government provides for the benefit of all, including medical and scientific research; education and job training; infrastructure; public safety and law enforcement; public health; weather monitoring and environmental protection; natural and cultural resources; housing and social services; and international relations.

Every day these programs support economic growth and strengthen the safety and security of every American in every state and community across the nation. Yet NDD programs have borne the brunt of deficit reduction efforts.

For example, there will be fewer scientific and technological innovations, fewer teachers in classrooms, fewer job opportunities, fewer National Park visitor hours, fewer air traffic controllers, fewer food and drug inspectors, and fewer first responders. America’s day-to-day security requires more than military might.

NDD programs support our economy, drive our global competitiveness, and provide an environment where all Americans may lead healthy, productive lives. Only a balanced approach to deficit reduction can restore fiscal stability, and NDD has done its part.

Sadly, these people do not object to deficit reduction. In fact, they favor it. They just don’t want their own budgets cut. But, Bernanke’s “fiscal cliff” comment did not refer to specific budgets. It referred to deficit reduction – any deficit reduction.

These people still do not recognize that deficit reduction by any name (“balanced budget,” “living within our means,” “fiscal responsibility”) hurts the entire nation. A growing economy requires a growing money supply; deficits are the method by which the government adds dollars to the economy.

There is not one valid reason why deficits should be reduced; rather, they should be increased. The facts are there for all to see.

Lord, what will it take?

Rodger Malcolm Mitchell
Monetary Sovereignty

P.S. I award 2 dunce caps to the NDD for not recognizing their fundamental problem is deficit reduction, and instead proposing a “beggar thy neighbor” solution (Don’t cut us, but do cut someone else).


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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

#MONETARY SOVEREIGNTY

6 thoughts on “–Congress leads us lemmings over the fiscal cliff and we happily jump. Hey, who needs Jesse Jackson, Jr.?

  1. Daclhill,

    Good article. I may post parts of it. Seems that Iceland finally has discovered it is Monetarily Sovereign, so is giving money to the population.

    The debt hawks would have claimed this would cause unmanageable inflation. As usual, they are wrong.

    Like

    1. Writing off debt is fine for a small country in an economic crisis especially if the equal debt asset loss is picked up by investors in other countries.

      Is it right for bad / unlucky investors in a large country. I don’t think so. Why should taxpayers or pension funds etc be forced to pick up the loss of investors or spenders who willingly took on their debt liability.

      We need more Govt debt that will help everyone including the cautious not just help careless investors, unlucky house purchasers and careless spenders etc.

      Like

      1. Thanks Rodger. That was my take about Iceland. If it is working there I don’t see why it should not work here. I believe that we need regulations to help protec us from this or other similar scenarios ever happening again.

        Like

  2. Lord, what will it take?

    Education.

    And your excellent easy to understand blog is a key part of this process. But it will take time.

    The key is to overturn the confusion about debt. People tend to focus on the debt liability side and completely forget about the equal valued debt asset (money bonds etc) held by another party.

    It’s a battle that can only be won one by one. The two key points are :-

    1 DEBT MUST INCREASE. Getting this message across when most think all debt is bad bad bad and more bad will take time.

    2 The other point is monetary sovereign Govt debt is completely and utterly different to all other debt.

    That’s it. The price of ignorance about these two points will be unnecessary hardship and suffering

    It’s a shame that MMT are hung up on pointless options like job guarantee schemes but even this can change. These are only options to increase debt levels. That can also be increased by tax cuts etc.

    Like

  3. RJ,

    You’ve got it. Count yourself as one of the few.

    One small point. In a Monetarily Sovereign government, taxpayers do not “pick up the loss of investors.” Taxpayers do not pay for any federal spending. The government doesn’t use taxes to fund spending.

    In a MS government (unlike a monetarily non-sovereign government), spending creates money. If U.S. federal taxes were $0, this would not reduce by even one dollar, the federal government’s ability to spend.

    Anytime you read an article in which the author bemoans the “fact” that taxpayers’ money was spent on some project, you should know that author doesn’t fully understand MS.

    Taxpayers’ money never is spent. It only is destroyed.

    Rodger Malcolm Mitchell

    Like

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