●The more budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor, which leads to civil disorder.
●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.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
Here are excerpts from a letter sent by six of the senators who voted for sequestration – the process by which automatic cuts in the federal deficit are made, because of the popular, wrong-headed belief federal deficits hurt the economy.
Remember now, these guys voted FOR sequestration.
September 21, 2012
Dear Majority Leader Reid and Republican Leader McConnell:
We face a critical challenge in the next few months: balancing the need to reduce the deficit with the need to safeguard important priorities, particularly protecting our national security, vital domestic programs, and our economic recovery. We believe it is imperative to enact a bipartisan deficit reduction package to avoid the severe economic damage that would result from the implementation of sequestration.
Translation: “Cutting the deficit will damage the economy, so we need to cut the deficit.”
Yes, cutting the deficit will damage the economy, because deficit cuts require spending cuts and/or tax increases. But a basic equation in economics shows that: Federal Spending + Non-federal spending – Net Imports = Gross Domestic Product (GDP).
All federal spending cuts reduce the 1st term of the above equation and all tax increases reduce the 2nd term. So, deficit cuts reduce GDP. Simple mathematics. Even $1 in deficit reduction reduces GDP, and the greater the deficit reduction, the greater the GDP reduction.
With a growing population, even a perfectly balanced budget (federal spending = federal taxes) reduces per-capital GDP, so for the economy to grow, there must be significant deficit growth. And these guys are talking about deficit reduction? Yikes!
Any deficit reduction package should be long term and should provide as much certainty as possible for businesses and consumers.
No problem. The certainty is this: Cutting federal deficits will cause a recession if we are lucky or a depression if we are not. Clinton’s federal surplus, beginning in 1998, caused the recession of 2001.
The Congressional Budget Office has already warned sequestration in combination with the expiration of current tax policy could send our fragile economy back into a recession and raise unemployment above 9 percent, and the administration agrees that sequestration “would be deeply destructive to national security, domestic investments, and core government functions.”
Translation: “Reducing the deficit will kill the economy, so let’s reduce the deficit.”
Failure to act to address the debt would result in sequestration taking effect in January 2013 with significant detrimental impact on our fragile economic recovery. According to a report done for the Aerospace Industries Association, if sequestration is allowed to occur in January, the nation will lose approximately 1 million jobs because of defense budget cuts and 1 million jobs because of domestic cuts in 2013.
Translation: “Reducing the deficit will add 2 million to the unemployment rolls, so let’s reduce the deficit.”
Make no mistake about the devastating impact of sequestration. According to Defense Secretary Leon Panetta, sequestration would leave our nation with its smallest ground force since 1940, smallest number of ships since 1915, and smallest Air Force in its history, and “would inflict severe damage to our national defense for generations.” The indiscriminate across-the-board defense cuts scheduled to start this January would result in a 9.4 percent reduction to defense discretionary funding and a 10 percent reduction to defense mandatory spending programs.
The administration reports that “sequestration would result in a reduction in readiness of many non-deployed units, delays in investments in new equipment and facilities, cutbacks in equipment repairs, declines in military research and development efforts, and reductions in base services for military families.” Specifically, the Army would see a $7 billion reduction in operations and maintenance (O&M) funding, and the Navy and Air Force would lose another $4.3 billion each in their O&M accounts.
Translation: “Reducing the deficit will reduce our ability to defend ourselves, so lets reduce the deficit.”
In addition, sequestration’s impact will be felt beyond the Department of Defense. On the non-defense spending side, the administration reports that sequestration would “undermine investments vital to economic growth, threaten the safety and security of the American people, and cause severe harm to programs that benefit the middle-class, seniors and children.”
The National Institutes of Health would face a $2.5 billion cut and “would have to halt or curtail scientific research, including needed research into cancer and childhood diseases.”
The Centers for Disease Control and Prevention would see a $464 million cut, and states and local communities would lose billions in federal education funding for Title I, special education State grants, and other programs.
Translation: “Reducing the deficit will damage our investments, harm our security and damage our health and our children’s health, so let’s reduce the deficit.”
Based on this, we are committed to working together to help forge a balanced bipartisan deficit reduction package to avoid damage to our national security, important domestic priorities, and our economy.
Translation: “We need to reduce the deficit while not reducing the deficit.”
Sequestration will endanger the lives of America’s service members, threaten our national security, and impact vital domestic programs and services. Meeting this challenge will require real compromise, and we do not believe that Congress and the president can afford to wait until January to begin to develop a short term or long term sequestration alternative. All ideas should be put on the table and considered. Accordingly, we urge you to press between now and November the Congressional Budget Office and the Joint Committee on Taxation to score any bipartisan proposals forwarded to them so that Congress may evaluate these plans.
We believe it is important to send a strong signal of our bipartisan determination to avoid or delay sequestration and the resulting major damage to our national security, vital domestic priorities, and our economy.
Translation: “We voted for a monstrosity that will destroy America. Now someone else can do something about it. Maybe a bipartisan committee (to spread the blame) can figure out how to cut GDP, while simultaneously growing GDP. We want a little deficit reduction to reduce GDP a little, rather than a big deficit reduction, which will reduce GDP a lot. What’s wrong with that?”
Why does Congress, knowing that deficit reduction reduces GDP, want deficit reduction? Are they ignorant or evil?
Some are ignorant. But for the rest, the motive is simple evil: Reducing the deficit hurts the lower 99% income group far more than it hurts the upper 1%. In other words, it increases the gap between rich and the middle-to-low classes.
The rich don’t care how much money they have. They care how much MORE money they have than the lower income groups. Wealth is not an absolute; wealth is a comparative.
Because our politicians are puppets of the 1%, they pretend to believe the deficit is “unsustainable,” despite the fact that our Monetarily Sovereign nation can pay any bills of any size. They pretend a “fiscally prudent” government does not spend “more than it has,” despite the fact that “spending more than it has” is the only way to grow GDP.
People: You should know this: The politicians, in cahoots with the media and old-line economists, are lying to you. Reducing the federal deficit, even a balanced budget, will destroy the U.S. economy. Every depression and nearly every recession, has begun with deficit reduction.
The rich want to increase the income gap. They want to murder the middle and lower classes. That is the sole motivation and the only result of deficit reduction.
The rich want you to vote for your own murder.
And many of you will.
Rodger Malcolm Mitchell
Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99%
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 Imports
2 thoughts on “–How do they believe THIS if they believe THAT?”
It’s a good defense of OWS, though it may claim a bit too much. The terms “1%” and “99%” are great OWS inventions, since they add perspective and shorthand to the debate.
But OWS neither invented nor has facilitated the discussion of the income gap. I, for one, blogged about it at least a year before OWS began — https://rodgermmitchell.wordpress.com/2010/07/04/some-thoughts-on-closing-the-financial-gap/ — and it has been the subject of debate for many years.
I’m not sure OWS has brought the subject to the fore; they are far too diverse in their protests. If they really wanted to do something about the financial gap, they would learn Monetary Sovereignty, then focus their demands on ways to reduce the gap.
Actually, there is one, and only one, way to reduce the financial gap: Increase federal deficit spending. Until OWS understands, then demands, that solution, all the protests in the world will look like rowdy kids with nothing better to do.
The very people OWS wishes to help, don’t respect OWS. That’s a problem.
But, as the article says, OWS is young, and perhaps it will accomplish its goals, whatever they may be. Learning Monetary Sovereignty would be a good step.