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●The more federal 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 ultimately 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.
●The penalty for ignorance is slavery.
●Everything in economics devolves to motive.
You probably live in a state, county or city that is in financial trouble because of pension liabilities. Pension problems are everywhere:
Too often, you read about the need for pension “reform.” The word “reform” is a euphemism for “screw the retirees, screw the creditors and/or screw the taxpayers.” Whenever you read or hear the words, “pension reform,” you can be absolutely positive, someone will be screwed.
Here’s what the Chicago Tribune said in today’s editorial:
The legislative conference committee assigned to devise pension reforms will meet again Friday. As if on cue, Thursday brought three grim reminders of how urgent it is that this committee rapidly start the long process of rescuing Illinois.
Ladies, gentlemen, what further proof do all of us need that Illinois requires not just half-a-loaf pension “fixes” (same as “reform”), but reforms big enough to take pressure off of the state’s budget? That is, off the state’s taxpayers.
Read how are they propose to “take the pressure off the state’s taxpayers:
The best plan now on the table would eliminate Illinois’ $100 billion unfunded pension liability over 30 years, deliver still-generous benefits to retirees — and save taxpayers a projected $187 billion.
Get it? Cut pensions by $100 billion. According to my math that would cost Illinois taxpayers $100 billion, as it is the taxpayers who would see their pensions cut.
The city of Detroit filed for bankruptcy, in large part because of its retiree pension and health liabilities. The Wall Street Journal reports that, under the bankruptcy plan, retirees are set to get less than 10 percent of what they’re owed.
That’s how pension “reform” works. Everyone gets screwed.
Illinois is already insolvent, unable to pay bills as they come due. And every year Illinois pension costs devour so much revenue that education and other needs go unmet.
We hope the conference committee members absorb all of this and realize that a middling pension deal won’t do what many citizens want: not just save the pension system, but also take a big share of that pressure off the state’s annual budgets.
Chicago isn’t part of the state pension system, but none of us should be surprised if fixes at the state level become the template for a city fix as well. (Moody’s Cites Pension Problems as Reason for Downgrading Chicago’s Bond Rating)
Any plan projected to reduce pension costs by something less than $187 billion would force taxpayers to contribute extra billions. And it likely wouldn’t save enough future spending on pensions to ease the current strangulation of other budget priorities.
We’ll close not with a word of encouragement, but with two: Go big!
Ah, the Tribune’s favorite words: GO BIG! These are exactly the same words the Tribune used when describing their plan for federal deficit reduction (i.e. GO BIG!) Is this a masculinity thing with the Tribune editors?
The words were ridiculous then and they are ridiculous now, because they do not address the fundamental problem facing state and local pension plans:
Every state, every county, every city and village in America is monetarily non-sovereign. It is a rule in economics that any monetarily non-sovereign entity cannot long survive unless it has dollars coming in from outside its borders or sphere.
You, being monetarily non-sovereign, must have income to survive long term. The same is true of corporations, all of which are monetarily non-sovereign.
Each state, county and city must have dollars coming in from outside its borders. It cannot survive long term on taxpayers alone, for taxes merely recirculate internal dollars; it’s added dollars that are needed.
THE CRAZY SOLUTION:
No monetarily non-sovereign entity should be allowed to contract for future pension payments. The problems with pensions are quite simple:
1. They promise future payments, that when totaled, can exceed past deposits. If you live long enough, you will receive more money from your pension than has been deposited by you or for you.
2. To make up the difference, pension plans invest the deposits, and investments often lose money, or don’t return sufficient dollars.
I myself, already have received more from Social Security than I deposited, yet it is 100% impossible for Social Security to go bankrupt (despite what the lying politicians and newspapers tell you.) So how can the federal government keep paying benefits?
The U.S. government is Monetarily Sovereign. It creates dollars at will. It can pay any debt of any size at any time, regardless of tax income. That is what “Monetarily Sovereign” means.
SOCIAL SECURITY AS THE NATION’S SOLE PENSION
In the past, we have advocated Medicare for All, with the federal government underwriting full-pay Medicare for every man, woman and child in America.
Similarly, the U.S. should provide Social Security Pension for All (SSPA), and not the pittance-paying, approx. $15,000 per year Social Security we have now.
No, it should be a Social Security that provides enough money for a person or for a family to live decent lives during their retirement years — with benefits perhaps triple current benefits.
States, counties, cities and corporations should be precluded by law, from providing pensions to employees. If people want pensions exceeding SSPA, they simply should save the additional money. If they are unable to save money, SSPA will provide a living pension income.
No sudden tax increases. No surprises when your planned-on pension doesn’t materialize. Less chance creditors will demand more interest from taxpayer.
In addition ,u>we should eliminate FICA (thus benefiting employees and employers).
Social Security Pension for All, would greatly reduce state, county and city insolvency, reduce the need for taxes and tax increases, reduce the screwing of employees and creditors and allow states to spend their limited and precious dollars on things needed in the state.
The federal government, being Monetarily Sovereign, easily could and should finance Social Security Pension for All. The U.S. government is the sole entity in America that has the unlimited ability to support any initiative.
Question for the Chicago Tribune: Is Social Security Pension for All “GO BIG!” enough for you?
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. Click here
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%
10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt
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:
1. Federal Deficits – Net Imports = Net Private Savings
2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports