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•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.
•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.
•The single most important problem in economics is the Gap between rich and the rest..
•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.
•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..
WASHINGTON, DC – Maya MacGuineas, Executive Director of the Committee for a Responsible Federal Budget, released the following statement today in response to the Office of Management and Budget’s Mid-Session Review, which is now estimating a deficit of $445 billion.
“The good news is that the numbers moved in our favor. The bad news is that we still face a tremendously challenging situation.
“We cannot continue to allow this burden to multiply for our children and our children’s children.”
Hope as we might, we will not be able to grow our way out of the nation’s fiscal problems. “While improvements in the economy are always welcome, the higher receipts should not be viewed as license to spend more, but rather as an opportunity to take steps toward eliminating the deficit,” said MacGuineas.
Maya MacGuineas spoke of our “tremendously challenging situation” way back in 2004.
Then in 2007:
The New America Foundation co-hosted a forum entitled The Unavoidable Challenge: Confronting Our Nation’s Fiscal Crisis with the Heritage Foundation and the Public Policy Institute.
Maya MacGuineas, director of the Fiscal Policy Program at New America and president of the Committee for a Responsible Federal Budget, kicked off the conference by emphasizing the size and inevitability of the problem and asserting the need for specific solutions.
She pointed to three options:
1. Do nothing and watch the problem metastasize;
2. Increase revenues, but taxes are already above historical levels, and, assuming no cuts in spending, would have to grow to more than 30% of GDP to handle the coming growth in entitlements in the short term, which would cripple economic growth; or
3. Cut spending, which must include entitlements.
Sen. Lindsey Graham (R-SC) argued that time is running out, and that currently scheduled benefits are unsustainable.
Note how tax increases (which the rich hate) “would cripple economic growth,” but spending cuts (which have the same effect on the economy as tax increases, but punish the middle and poor) are recommended.
That was in 2007, when Maya MacGuineas’s “tremendously challenging situation” morphed to her “fiscal crisis.” Her solution: Cut benefits to the middle classes and the poor.
Graham used the favorite right-wing word, “unsustainable,” a word which never is explained. Why are federal “deficits” and “debt” “unsustainable”? No one knows. (They mean “bad,” but “unsustainable” sounds so much more perspicacious.)
Let’s jump ahead three years:
Mid-Session Review Shows Unsustainable Path
July 23, 2010
“A trillion-dollar-plus deficit is manageable this year if, and only if, there is a plan to bring the debt back down to a manageable level over the decade.
This, however, is a recipe for fiscal disaster,” said CRFB president Maya MacGuineas. “We have got to do something about the coming tide of red ink before our creditors force us to make changes under their terms, instead of under our own.
“How many more terrible budget projections do we need before we decide enough is enough?”
“Our creditors” are T-security account depositors at the Federal Reserve Bank. The FRB pays them off by the simple expedient of returning their existing dollars, exactly the same way your bank pays you your savings account deposited dollars. No problem at all.
Somehow we survived MacGuineas’s $445 billion “challenging situation” back in 2004, and we survived Graham’s “unsustainable fiscal crisis” of 2007, and now, in 2010, we are faced with a trillion-dollar-plus “fiscal disaster.”
Can we sustain? Let’s jump ahead to 2012:
Historically, debt held by the public has averaged less than 40 percent of GDP since 1970. Today’s debt is roughly 70 percent of GDP and rising fast, particularly due to the retirement</b. of the baby boom population and rapid health care cost growth.
The United States is currently at a crossroads, where fundamental but thoughtful changes can be made now, or else far more painful ones can be forced upon us down the road.
Well, years have passed and our “unsustainable fiscal crisis” still is “unsustainable,” and remains at “a crossroads” — a remarkably slow, unsustainable crossroads.
As always, the problem is “retirement” (Social Security) and “health care” (Medicare), and the solution, as usual, is to cut both programs — programs benefit the middle and lower income groups.
And now we arrive at 2015. The Committee for a Responsible Federal Budget (CRFB) continues its usual rant about federal (misnamed) “debt” and (misnamed) “deficits.”
More properly, the “federal debt” should be called “deposits” and “federal deficits” should be called “economic surpluses.”
The (misnamed) “federal debt,” actually is the total of interest-paying deposits in T-security accounts at the Federal Reserve Bank. Think: Savings accounts at your local bank.
The (misnamed) “deficits” are the surplus of federal dollars entering the economy via federal spending, vs. the dollars leaving the economy via federal taxes.
When was the last time your local bank’s debt increased? Answer: Every time someone like you made a deposit.
As you deposited dollars to your savings or checking account, did you say to yourself, “I’m putting my bank deeper into an unsustainable debt?”
That’s what the CRFB would say.
And when our federal government cuts taxes and/or increases spending, this is a surplus for our economy. That’s a good thing, folks, even though MacGuineas thinks it’s a deficit “crisis.”
It puts dollars into the pockets of “our children and our children’s children.”
Bottom line: For more than 10 years, MacGuineas and her accomplices, have told you the federal deficit and debt are unsustainable crises, with catastrophe imminent. The were wrong in 2004, still wrong in 2007, wrong again in 2010 and 2012 — and every year in between — and continue to be wrong today.
We continue to sustain, our economy grows and our children have not been asked to pay the government’s debt (a legally impossible request).
The right wing “solution” to this non-problem inevitably is to cut benefits to the middle and lower income groups, which is their real goal.
So the question is: Are they ignorant or dishonest and well-paid tools of the very rich?
Rodger Malcolm Mitchell
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 Click here
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.
THE RECESSION CLOCK
Recessions come only after the blue line drops below zero.
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.