As I sit here before my laptop, I wonder yet again, what does it take to convince people of such beneficial truths as:
*The federal “debt” is not “unsustainable,” nor is it owed by taxpayers
*Social Security and Medicare cannot run short of dollars unless Congress and the President will it.
*FICA and all other federal taxes do not fund federal spending. The federal government can spend forever, even without collecting taxes.
I just finished torturing myself with the latest absurdity from the Committee for a Responsible Federal Budget (CRFB), the self-proclaimed “nonpartisan” group composed primarily of rich, old, white, male, right-wingers.
Nonpartisan? Don’t you believe it.
They claim to be “an authoritative voice for fiscal responsibility and an educational resource for policymakers and the general public.” Yet, among their comments are:
“Unfortunately, neither (Presidential) candidate has a plan to make Social Security solvent.”
Fact: Social Security, being a federal agency, cannot be insolvent, any more than other federal agencies — the White House, Congress, the Supreme Court and the U.S. itself — can be insolvent.
CRFB “regularly meets with members of Congress and their staff, and offers practical solutions that can achieve bipartisan support and put the country on a sustainable fiscal course.
The U.S. is 240 years old. In all but a handful of those years, the country has run a deficit. Yet, we have sustained. What then is the meaning of “sustainable”? The CRFB never defines this term, because doing so would reveal the nonsense of it.
“The budget is increasingly being taken up by mandatory programs, crowding out investments in other areas of the budget. Lawmakers should enact both entitlement and tax reforms to return our nation to a fiscally sustainable path.”
“Entitlement and tax reforms” is a euphemism for: Cut Social Security, cut Medicare, cut Medicaid and cut poverty aids, while increasing FICA and other taxes.
The U.S., being Monetarily Sovereign, never can run short of its own sovereign currency, the dollar. Its ability to spend is unlimited, no matter what taxes are collected.
Therefore, federal spending cannot be “crowded out.”
Maya MacGuineas, president of CRFB: “We Can’t Borrow Our Way to Prosperity. Assuming our creditors continue to allow these (high) levels of debt, the CBO estimates that within three decades this will reduce average income by $4,000 per person compared to what it would be if debt were on a declining path. “
Think about it. Do you really believe the CBO (another similarly “nonpartisan” organization) can see 30 years in advance? Let’s get real, here.
See how MacGuinneas spreads the ignorance CBO provided:
- So-called federal “debt” actually is the total of deposits in T-security accounts at the Federal Reserve Bank, similar to savings account deposits. In short, bank deposits.
- Because the U.S. government, never runs short of its own sovereign currency, it neither needs nor uses these T-security deposits for anything.
- T-securities do not benefit the government. They are investments provided to the public. The government could stop selling T-securities (i.e. “borrowing”) tomorrow.
- All T-securities could be redeemed instantly, simply by transferring existing dollars from T-security accounts back to the checking accounts of owners. No new dollars needed.
- In any event, the Federal Reserve Bank has demonstrated its ability to buy all T-securities (via Quantitative Easing). Thus, there is no legitimate concern about “creditors continuing to allow these (high) levels of debt. The government does not need creditors.
Those are the facts. Now visualize this scenario:
You are a member of a sect. Your rich leader tells you to give her all your belongings and to climb the sacred mountain, to watch the world end at midnight.
So you give her your house, your clothing, and all your personal items, and you climb and wait. Midnight passes, and nothing happens, so you climb back down, naked and impoverished.
A year later, your leader tells you the same thing. You give her what you have left, and you climb again, and again nothing happens. So you climb down again, naked.
This repeats itself, year after year, for more than 75 years.
Think now. At what point in those 75 years will you finally figure out that your rich leader doesn’t know what she is talking about? Or more likely, that your rich leader is taking you for a sucker to steal all you own.
How many times will you allow yourself to be fooled?
We’ve published posts showing that since 1940, and surely earlier, the bribed politicians, media, and economists have been calling the debt and deficits “unsustainable,” a “ticking time bomb,” and a “death spiral.”
Yet, in those 76 years, despite all the false warnings, the debt and deficit have grown, and the economy has grown, and everything is “sustainable” and there is no death spiral, and that “time-bomb” still ticks.
But you have given away your belongings via unnecessary, regressive taxes and benefit cuts, that widen the Gap between the rich and you.
The graph shows that as recently as 1970, the federal “debt” (blue line) was $275 Billion. In just 46 years the debt has risen to $14 Trillion — a gigantic 50-fold increase.
And still, we’ve “sustained” that 50-fold increase. No “time-bomb” has exploded. And we aren’t in a death spiral. In fact, GDP has risen substantially.
So what does it take for the public to awaken?
Will the public continue to believe the rich sect leader, and continue to trudge up and down that mountain, year after year, waiting for the end of the world — meanwhile giving her what they own?
Will the people continue to grow angry at anyone who dares to tell them they are being taken for suckers by the rich?
People, listen: You can have fully funded Social Security and Medicare, while FICA can be eliminated. Student debt and hunger can be eliminated. Housing, medical research, the infrastructure and the ecology all can be improved, and taxes can be cut. The gap between you and the rich can be narrowed. (See the Ten Steps to Prosperity, below.)
Why would you prefer to believe otherwise? The rich rely on you being so beat down you will believe good news always is too good to be true for you.
Don’t let it happen. You deserve what our Monetarily Sovereign government can provide. The rich already take more than their share.
Rodger Malcolm Mitchell
The single most important problem in economics involves the excessive income/wealth/power Gaps between the rich and the rest.
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of The Ten Steps To Prosperity can narrow the Gaps:
Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich afford better health care than the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE AN ANNUAL ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA, AND/OR EVERY STATE, A PER CAPITA ECONOMIC BONUS (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:
Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012
Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONEFive reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefiting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE CORPORATE TAXES
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and corporate taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.