Sneak attacks: Cut Social Security. Increase the gas tax. Widen the Gap between the rich and the rest

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

Mitchell’s laws:
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The more federal budgets are cut and taxes increased, the weaker an economy becomes. .
Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
●Austerity is the government’s method for widening
the gap between rich and poor.
●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.
●Everything in economics devolves to motive,
and the motive is the Gap.

Most people understand that increasing taxes in not a successful way to grow an economy. Taking dollars from consumers’ pockets depresses an economy.

Similarly, net federal spending adds dollars to consumers’ pockets. And, increased consumer spending stimulates the economy.

Those are basic economic facts.

Yet, amazingly, there are people whose mentality does not allow them to connect those dots. They sneer at all federal spending as “socialism,” and claim that federal deficits (i.e. net federal spending) actually depress the economy.

They claim that taking money out of the economy (aka “austerity”), in some unknown way, is stimulative. They have been brainwashed by the rich.

Those people refuse to understand the differences between a Monetarily Sovereign government (the U.S., Canada, Australia, China et al) and a monetarily non-sovereign entity (Florida, Cook County, Chicago, General Motors, euro nations, you and me).

Seemingly, they cannot visualize why financial prudence for one are acts of financial imprudence for the other. So they fret and fuss about deficits and debts, which can be harmful for monetarily non-sovereign entities, but are necessary for Monetarily Sovereign governments.

Presumably, such people would believe that because vultures thrive on rotted meat, humans too, would thrive on rotted meat. In their world, differences of case are ignored.

Not understanding the simple facts of Monetary Sovereignty, those people vote for political representatives who are paid by the rich is to take money from the pockets of the poor and middle-income groups, thus widening the Gap. between the rich and the rest.

Then, of course, after having voted for criminals, they complain about political criminality.

For example:

On Day One, the new Congress launches an attack on Social Security
Michael Hiltzik, LOS ANGELES TIMES

Well, that didn’t take long.

As one of its first orders of business upon convening Tuesday, the Republican House of Representatives approved a rule that will seriously undermine efforts to keep all of Social Security solvent.

(Before we continue, you should understand that the author is ignorant of Monetary Sovereignty, so he discusses Social Security “solvency,” when in fact, it is impossible for an agency of a Monetarily Sovereign government to become insolvent — unless the government wants it. Nevertheless, he understands the harm caused by austerity.)

The procedural rule enacted by the House Republican caucus (requires that) “benefit cuts or tax increases improve the solvency of the combined trust funds.”

In practical terms, it mandates either benefit cuts across the board, which aren’t politically palatable, or a payroll tax increase, which isn’t palatable to the GOP.

“It is hard to believe that there is any purpose to this unprecedented change to House rules other than to cut benefits for Americans who have worked hard all their lives.” – Max Richtman, Committee to Preserve Social Security and Medicare

The rule change reflects the burgeoning demonization of disability recipients, a trend we’ve reported on in the past. it’s been fomented by conservative Republicans and abetted by sloppy reporting by institutions such as NPR and “60 Minutes.”

This obeys the popular Republican meme that anyone (except big corporations) who receives money from the government, is a lazy slacker, trying to game the system. That includes the disabled, the sick, the unemployed and the poor — all lazy, criminals according to the right wing.

Disability recipients are easily caricatured as malingering layabouts by politicians, academics and journalists. They’ll say disability benefits are so lavish they discourage work, and convenient substitutes for welfare payments. None of that is true.

As I reported in 2013, Social Security’s disability standards are stringent. To be eligible you must have worked at least one-fourth of your adult life, and been employed in at least five of the previous 10 years.

Workers younger than 31 have to show employment in half the years since they turned 22.

You have to be too impaired to earn even $1,040 a month on your own. Just over a quarter of all applicants are approved initially, though an additional 13% or so win benefits on appeal. All in all, only 41% of all applicants end up with checks. Sound easy to you?

And here’s where the politicians, on the payroll of the rich and powerful, rely on the ignorance of the voting public:

The new rules drafters say it’s necessary to protect the Old-Age and Survivors Insurance (OASI) Trust Fund from diversion of its funds to finance a broken Disability Insurance system.”

But, disability isn’t “broken.” Its rolls have grown because of a number of well-understood factors, including the aging of the American population, the entry of more women into the workforce (and thus their eligibility for benefits), and the increase in Social Security’s full retirement age above 65.

In a cynical ploy, direct from the book, “1984,” our “Big Brother” teaches that cutting your benefits “protects” your money — and black is white and war is peace.

Sadly, the author thinks its all a big misunderstanding:

Do House Republicans understand any of that? It’s doubtful. If they did, they’d understand that their actions Tuesday are nothing short of shameful.

It’s no misunderstanding at all. It’s an intentional effort to keep taking money from the 99%, so as to widen the Gap., between the rich and the rest — an effort funded by the rich via campaign contributions (thank you right-wing Supreme Court) and promises of lucrative employment later.

You can read more about this at: ’60 Minutes” shameful attack on the disabled, October 07, 2013|By Michael Hiltzik.

Meanwhile, the Gap-widening efforts continue:

Republicans for Raising the Gas Tax?
Peter Suderman|Jan. 6, 2015

With gas prices around the country at lows not seen for years, America’s political class smells an opportunity: It must be time to raise the gas tax.

Over the weekend, Sen. John Thune (R-SD) was asked about the possibility of raising the federal tax on gasoline. In response, he said, “but I think we have to look at all the options.”

There are two reasons why this issue is coming up now. The first is that there’s a perennial shortfall in the Highway Trust Fund, which funds federal roads projects. The trust is paid for by a fuel tax of 18.4 cents per gallon, which has been level since 1993. Estimates from last summer put the shortfall around $170 billion.

It’s currently being funded via an $11 billion stopgap measure that expires in May. The politicos who manage the fund are looking for ways to fill that pot.

According to the article, “Peter Suderman is a senior editor at Reason magazine and, where he writes regularly on health care, the federal budget, tech policy, and pop culture.” He also is a film critic.

So he knows a lot, but the one thing he doesn’t know is economics, because like the “man-in-the-street” he doesn’t understand the difference between Monetary Sovereignty and monetary non-sovereignty.

He thinks federal spending is paid for by federal taxes. And the public, which hears this nonsense day after day after day, has been thoroughly brainwashed.

That’s the policy reason. But as much as anything, this is about low gas prices, which, at least in theory, make it easier to raise federal gas taxes.

It’s a kind of tax hike opportunism: Consumers are saving money at the pump, so some of the savings ought to go to the federal government. Even Republicans, typically the anti-taxers in government, aren’t immune from the lure of easy tax hikes.

The real reason is that tax hikes on purchases affect the 99% far more than they affect the 1%, simply because the 99% uses a greater percentage of their income to buy things, while the 1% uses more of their money to invest.

The rich pay to spread the disinformation about federal taxing and spending, because they want the Gap to increase. It is the Gap that makes them rich, and the wider the Gap, the richer they are.

So by telling you The Big Lie (i.e. the federal government needs your tax dollars) they gain your approval to reduce spending that benefits you and raise taxes on yourself. That’s why FICA was increased, Social Security benefits decreased and Republican governors have refused to accept billions in Medicaid benefits to the poor.

Day after day, you experience yet another sneak attack by the rich on the rest. And the Gap grows wider.

Rodger Malcolm Mitchell
Monetary Sovereignty

Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually. (Refer to this.)
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)
9. Federal ownership of all banks (Click here and here)

10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)

The Ten Steps will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.

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.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.

Monetary Sovereignty

Monetary Sovereignty

Vertical gray bars mark recessions.

As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.


18 thoughts on “Sneak attacks: Cut Social Security. Increase the gas tax. Widen the Gap between the rich and the rest

  1. And all they have to do to make SS “solvent” is increase the interest rate on the special bonds that are in the trust fund spreadsheet.


    1. They can also do what Rodger does, just select, and add zeros until fund is positive. Man this is easy, why didn’t we think of this before?

      We could have been filthy rich all this time. Forget about raising minimum wage to a few dollars, increase it to $5,000 per hour. Minimum salary after this? $9.6 Million.

      Matt, Rodger – what’s missing here?


      1. Bum, I am not advocating adding 10 zeros to minimum wages etc… Deficits, and government spending do matter, and too much might create inflation that is too high (too high I define as say 5% or greater for 3 or more years), and/or currency devaluation relative to other currencies. But, we are nowhere near that state. Not even close.

        What we do NOT need is higher payroll taxes or SS benefit cuts. Both of those things will hurt you, as seniors will have less money to be able to buy your output, and we will continue to see deflation.

        So, there is nothing missing here. Government spending is needed to create the supply of financial instruments needed to facilitate growth. And there is a balancing act, and that is balancing in the wrong direction right now.


  2. Endlessly frustrating isn’t it! A ready solution at the fingertips yet not the wit to understand! Pollies and Journos,!
    Kingsley Amis said “Laziness has become the chief characteristic of journalism, displacing incompetence”


  3. 1] “…or a payroll tax increase, which isn’t palatable to the GOP.”

    Bullshit. GOP was more than fine with the FICA tax holiday ending Dec., 2012. Those sneaky little plucks (many Dems too nowadays) love any tax increase on the 99% or spending cuts affecting the 99%.

    What a pleasant way to open session with a very gutsy assault on some of the country’s most vulnerable. (Other than those “fake” disabled, of course. I suspect there’s probably less than 3% gaming the SSDI system anyhow, even with the various means tests. Why would that small amount matter anyway? For a contingent currency sovereign no effect other than stimulus as all recipients’ spending (and they spend it all, quickly) is someone’s else income.

    This is just the beginning. Lots of outcry, GOP will slightly retreat on certain initiatives, then begin the relentless chip, chip, chipping away with what’s left for the benefit of the 99%. Tactical policy I suppose. The GOP is in forced balance budget mode (which will include cuts to the 99% and simultaneously increase spending on the .01% heading toward fiscal 2016. Just watch.)

    2] “Day after day, you experience yet another sneak attack by the rich on the rest.”

    Yes, Rodger, it’s only beginning. As George Carlin once proclaimed: “They’re coming for your Social Security and there ain’t shit you can do about it.”

    3] Thanks Matt for that bit of reality. I hadn’t really considered that, although Golfer1 John may have said something similar on a past post.


  4. Rodger,

    I agree 100% in that taxes punish the poor and the middle class more than the wealthy. But let’s be honest here, the poor or the middle class do not pay any taxes. How did I figure that out?

    First off, let me ask you – how much do you pay in taxes every year? Remove what you receive in returns at the end of the year and you will see that you are pretty close to breaking even, if you are not in the green. Also, when was the last time you had a “tax increase”? 50 Years ago?

    Want proof? Go ask the CBO..

    Click to access 44604-AverageTaxRates.pdf

    Those making above 87,000 pay 100% of the taxes and there is the proof.

    So what is killing the middle class are NOT the taxes, it’s the devaluation of their incomes. I’ve said before, the poor actually get refunds for taxes they didn’t pay plus all the benefits through the year. The wealthy pay all the taxes but make it in profits, and the middle class gets to pay taxes while at the same time having the incomes decimated.


      1. Yes his comments are uniformly wrong. His “Those making above 87,000 pay 100% of the taxes and there is the proof” is hilarious.

        It’s difficult to admit, but true, that many (most?) Americans “think” (almost) as he does.


  5. With gas prices dropping, many writers have allured to the fact that drivers now have more disposable income. They write that this will give businesses more customers.

    In Rodger’s 10 steps to prosperity, #1 (Eliminate FICA) and #3 (Provide an Economic Bonus) do these things also. Yet these proposals are not even remotely being discussed.


    1. No one dares discuss Rodger’s proposals; they’re a threat to established scarcity thinking. The route being taken now is far more acceptable for getting money into the hands of the 99% and stimulating the U.S. economy. Don’t think for one minute this is all accidental. It isn’t. It’s orchestrated…and temporary.


    2. “They write that this will give businesses more customers.” Ian

      Businesses will get the same number of consumers – with the same amount of money. All that’s happening here is that instead of spending the money on gas, the money is spent somewhere else. Instead of a gas station getting the money, another business will. On a personal level, this is “disposable income” on an aggregate level (what matters), this is a shift in spending. This is not what makes an economy grow.

      Savings – on the other hand – do have a net positive impact on business and economic growth.


  6. I appreciate your posts, reading them usually reignites the anger, frustration, and resentment thats been coursing through my veins since the recession began. Before this damn economy went through the greatest upward redistribution of wealth in history, i too bought into the sh peal about federal budgets needing balancing and all the other illogical recipes entrenched as fiscal conservatism . I saw government as being way too inefficient, wastefully consuming,viewing most dollars coming from any fiscal stimulus as nothing more than cronyism. Then the bottom fell out, and the fix detailed crystal clearly the ability of our sovereign government to source any monies it needed to fund whatever it desired. Unfortunately its war and huge financial misappropriations of criminal speculating bankers.

    The Fed did its best to prime liquidity for the financial interest it serves, ultimately egregiously rewarding some pretty nasty corrupt bourgeois snakes. The executive branch and the legislators turned their backs on the masses they’re supposed to serve, meanwhile pleading for the public’s angst towards anything smelling of socialism to foam the pathway of regret. Almost eight years later and America is getting too damn used to this new norm of scarcer dollars , broken families, and impossible futures for most. The small highly visible celebrity culture and worshiped super athletes will continue to flourish and provide solace for the downtrodden, evidence for the attainability of the unobtainable.

    Peoples complacency astonishes me. The cultural pretexts of hard work bringing a notion of eventual success are as strong as ever, notwithstanding the new macro economic environment of hungry laborers, from a global work pool , willing to do things for much less , all the while still offering a huge market for scaled multinationals to increase their earnings per share. This rigged labor savings is compounded by ridiculously easy and cheap leverage for those privileged few at the top, capturing an ever greater percentage of wealth and eventually spreading it in even more of a concentrate.

    Understanding simple logical principles of monetary sovereignty opens up a large tool chest to fix the mistakes and redistribute downwards the trillions stolen from the middle classes. Sixteen trillion dollars evaporated from their home values and now resides in the equity assets of mostly wealthy individuals, and their corporations. Without government intervention, generations will pass before any leveling out happens , and thats hoping for serendipity to be favorable. . The left in our country vacated the system, now what remains of that element sits right of center. Why are people so willing to accept socialism for rich patrons, but writhe at the thought a disabled person possibly gamed the system and is somehow laughing all the way to the bank on their grand a month. Meanwhile executives at the large banks , along with their cohorts, received untold billions in subsidy’s, and whatever grievance was aired, not enough to cause much of a stir. That is just too good to be true, the same thing is going to happen again, and again.

    The only way to solve these issues is to go to the streets declaring civil disobedience, passive disruption of the money wheels would draw massive attention, something like large enough groups deciding to forfeit their credit card payments, students openly professing disengagement to their student loan contracts, and enough underwater home owners to refuse making their mortgage payments. Watch how fast the congress would respond.. The Arab Spring movements were able to topple Mubarick, scare the Saudis , Iran, and ax Quadafi . Checks overthrew their totalitarian dictator, and hosts of other countries did similar in that era. . So why cant we, the freest ,and supposedly most enlightened ,encourage similar political responses, especially with all the social networking technologies available today, or are we too engaged to our false suppositions of exceptional-ism , way too brainwashed, or maybe too comfortable with distractions, to ever attempt anything substantial enough to change the tides of corporatism and fascism hiding behind the great illusion of insufficient funds, successfully upholding the cruel assumptions that necessitate austerity. . HELP!, Just as Thomas Paine authored a pamphlet that motivated the revolution, why cant it happen again , especially in light of this frightening national security apparatus which one day could completely negate any chance for hopeful demonstration. .


  7. If you do NOT have a printing press (or magic wand) and a surplus of money is coming in, you’re doing good; no wolf knocking at your door.

    BUT if you have a printing press, you don’t need or want any money coming in; you can burn it and still the wolf will never be at your door.

    The wolf can only threaten you if you have no magic wand to create money.

    Or think of it like this: Does the Sun need light? Does the Earth need light?


  8. I learned that long ago and it is obsolete thinking. Money isn’t swept from demand accounts or else you’d be notified on your monthly statement. This where you’re conflicted by monetary sovereignty. A MS government like USA’s 1) can not go broke and 2) can always create currency out of thin electrons. This (1 and 2) is what both Bernanke and Greenspan have stated on national TV, Meet the Press and a CBS interview. You can google it.

    MS government need not tax or borrow. Money need not come from an existing account; it is created by keystrokes and sent out to participating banks and no banker will reject that electronic transfer of funds on moral or legal grounds.

    Debt and taxes don’t cause trouble in a MS environment; inflation is the only difficulty when capacity falls behind demand.


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