It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders
People 65 and older had a supplemental poverty rate of 13.7 percent, equating to 6.5 million people in poverty. Excluding Social Security from income would more than triple the poverty rate for this group, resulting in a poverty rate of 49.7 percent.
THE BIG LIE:
U.S. News & World Report, Nov 18, 2015: “Our system of taxing the young to pay for the old needs reform to reflect 21st century realities.
“America’s principal health and retirement programs for the elderly, Social Security and Medicare, are placing a massive fiscal burden on its youngest generations and crippling the country with debts that cannot be paid.”
First, Social Security places no fiscal burden on anyone. Contrary to popular myth, FICA does not pay for Social Security benefits. Even if FICA collections were zero, the federal government could continue paying SS benefits, forever.
Second, the country cannot be “crippled by debts that cannot be paid.” Federal financing is not like personal financing. The federal government, being Monetarily Sovereign, cannot ever run short of its own sovereign currency, the dollar. It can pay any size debt instantly.
THE BIG LIE:
While the official national debt sits at a staggering $18 trillion, taking future entitlement spending obligations into account pushes the number beyond the conceivable: $200 trillion.
That $18 trillion is a phony number, designed to impress you. It includes internal debt; the left pocket owes the right pocket.
But more importantly, the so-called “federal debt” actually is nothing more than the total of deposits in T-security accounts at the Federal Reserve Bank.
When you “lend” to the government — i.e. purchase a T-security — you actually open a T-security account at the FRB. You then transfer dollars from your checking account to that T-security account.
To pay off its “debt” to you, the government simply transfers your dollars from your T-security account back to your checking account, similar to transferring dollars from your savings account to your checking account. No new dollars needed.
The “debt,” no matter how large, never is a burden on the federal government, and it’s a safe investment for you.
THE BIG LIE:
The Social Security trust fund is projected to reach insolvency in 19 years, and Medicare will be unable to meet its projected obligations in 15 years.
The federal government, being Monetarily sovereign, and therefore unlike state and local governments, cannot be insolvent, nor can any agency of the federal government.
Congress, the White House, the Supreme Court, the Army, Social Security, Medicare and all other thousand agencies of the federal government cannot become insolvent unless Congress and the President wish it.
For that reason, there is no Social Security “trust fund.” It is a bookkeeping fiction. The federal government does not keep funds in trust; it pays its bills by creating brand new dollars, ad hoc, which it can do endlessly by clicking computer keys.
The purpose of the fictional trust fund is not to save for Social Security benefits. The sole purpose of the fictional trust fund is to make the populace believe (falsely) that benefits must be limited.
Notice there is no trust fund for Congress or the White House. The politicians don’t want limits on themselves.
THE BIG LIE:
Young Americans are stuck paying into programs that, absent reform, will only partially be there for their retirements – if they’re around at all.
This is a scare tactic by the politicians and the media who are bribed by the rich. The purpose is to frighten you into unnecessarily accepting lower benefits and higher taxes.
THE BIG LIE:
To cover the ballooning costs of these programs, workers in 2050 would have to pay nearly a third of their hard-earned income just to cover payroll tax obligations – over twice the rate paid today.
This and other taxes would make it impossible for many workers to save for their own retirements.
Contrary to popular belief, FICA actually pays for nothing. Your tax payments to the federal government are destroyed upon receipt. They instantly cease to be part of the money supply.
The article is correct, however, when it says, “This and other taxes would make it impossible for many workers to save for their own retirements.” That is happening now.
THE BIG LIE:
Some seniors believe that they are entitled to their Social Security and Medicare benefits since they paid into these programs throughout their working careers.
FICA does not fund Social Security. All it does is take dollars from your salary.
The federal government pays for Social Security benefits the same way it pays for the President’s salary, an Army tank, or a Supreme Court justice’s robe: The government creates brand new dollars, ad hoc. Tax collections have nothing to do with the bill-paying process.
Seniors, indeed all Americans, have been lied to for 80 years.
THE BIG LIE:
Due to a series of unfunded promises, current Social Security payments do not have the chance to accrue interest, as they are immediately paid out to retirees – our payments are simply too generous.
This is one of the most nonsensical statements among a litany of nonsensical statements.
Social Security payments (FICA) cannot accrue interest Not only are they destroyed upon receipt, but even it they weren’t, who would pay the government interest on its receipts?
And, only the rich think Social Security payments are “too generous.” The elderly, who have no other source of income, and are forced to live on Social Security, will tell you otherwise.
The statement reveals the true goal of the Big Lie: To widen the Gap by starving the “99%.”
THE BIG LIE:
These entitlement programs function not only as wealth transfers from the young to the old, but from the poor to the wealthy.
It is true that Social Security accounts for the majority of cash income for 65 percent of seniors, but this claim ignores the reality that today’s seniors have an average of 47 times the wealth of households headed by adults under the age of 35.
This was a tacit admission that FICA should be eliminated. It serves no purpose. One might as well tell workers to set 6.2% of their wages on fire.
Wealth is not being transferred. It is being destroyed by FICA.
Your leaders want you to believe that the elderly are rich, are taking money from the young, and don’t really need Social Security. In this way, they hope to trick the young into voting for reduced benefits — sort of a “divide and conquer” scheme.
THE BIG LIE:
It should be celebrated that seniors are living longer and accruing more wealth, but a country cannot sustain such a system when only three workers support each retiree, a support that will fail if nothing is done.
The federal government can “sustain” any amount of spending. Workers do not support retirees; the government does.
And this support cannot “fail” unless Congress and the President make it fail (which they might do, if the rich bribe them enough).
THE BIG LIE:
Our entitlement programs, due to demographic changes, have morphed into massive, unfunded promises. It is time for politicians and retirees to stop placing massive fiscal obligations on young Americans.
Old-age health and retirement benefit reform is no longer an option – it is a necessity.
Anytime a politician talks about “reform,” hang on to your wallet, unless you are rich. “Reform” always seems to mean: Take from the poor and give to the rich.
All federal spending is “massively unfunded,” in that the payment dollars do not exist in advance. This is how the federal government runs deficits (which actually benefit the economy by adding dollars).
The federal government creates dollars by the very process of paying bills.
To pay Social Security benefits, the federal government sends to your bank instructions (not dollars), in the form of a check or a wire, instructing your bank to click a few computer keys to increase the balance in your checking account.
Only when your bank does as instructed are the dollars created to pay your benefits.
Why do the media, the politicians, and economists like Laurence Kotlikoff, an economics professor at Boston University, continually tell the BIG LIE?
They all are paid by the rich to lie. The primary goal of the rich is to widen the Gap between the rich and the rest. It is the Gap that makes them rich. Without the Gap, no one would be rich, and the wider the Gap, the richer they are.
(Is a person having $1,000 rich? Yes, if everyone else has only $1.)
So the rich bribe the media (via advertising and ownership), the politicians (via campaign contributions and promises of lucrative employment), and the university economists (via contributions to the universities), to tell you THE BIG LIE, which briefly is this: Federal taxes fund federal spending.)
To quote Professor Kotlikoff: “Social Security is a big insurance company which has been engaged in fraudulent accounting. They have problems paying people.”
That is 100% false. The federal government is nothing like an insurance company. An insurance company is a monetarily NON-sovereign, private, FOR-profit entity, which does not have the unlimited ability to create dollars.
Contrary to Kotlikoff, the federal government has no “problems paying people,” none at all. Never has. Never will (unless Congress wills it).
THE BIG LIE:
Here is Kotlikoff’s Social Security plan:
Freeze the system in place. Pay off everything the system owes over time to the people who are in it. It would pay off all their accrued benefits, but no one would accrue any [new] benefits under the old system.
Under (my) proposal, everyone would put 8 percent of their pay into a personal account.
The government would match contributions of low earners, to make things progressive.
And then all these contributions would be invested in a global market weighted index of stocks and bonds and real estate.
So it’s going to be done by a computer, so Wall Street doesn’t touch the money or get a penny out of this system.
“No one would accrue any [new] benefits.” Instead, you will give the government a gigantic 8% of your paycheck. Then the government will invest all those trillions into some “weighted index.”
Which one? Who knows? Sounds great?
Currently, you unnecessarily pay 6.2%, and you receive a guaranteed, recession-proof payout when you retire.
With the Kitlikoff, “make-the-rich-richer-and-everyone-else-poorer” plan, you pay more into a fund that is guaranteed by nothing and relies on the vagaries of the stock and bond market, so it could tank at any time — just the kind of thing you don’t want for your retirement.
Not so good for you, but it’s a great plan for the rich, who already hold tons of securities. Imagine what will happen to those securities on the day the bill is passed and trillions of dollars flood into the markets.
Then, when the rich sell, and the market drops, you’ll be stuck with the losses.
One only can wonder how much the rich pay Kotlikoff for that bit of advice.
AND NOW A FEW QUESTIONS FOR YOU INTELLIGENT READERS:
Have you ever wondered why:
- FICA is collected only on salaries, not on other forms of income?
- FICA is collected only on the first hundred thousand dollars of those salaries?
- The tax rate for salaries is at the highest level, while long term capital gains are taxed much lower?
- There are so many tax loopholes available to the rich that are unavailable to the rest?
- Social Security benefits are taxed at all?
- For tax purposes, borrowing is not considered income, but interest is tax deductible?
- Travel to a job is not tax deductible, but travel for a job is?
Those are just a few examples of the rich bribing the politicians to widen the Gap by benefitting the rich while punishing the rest. The tax code was written by the rich.
And, why would anyone choose to believe the lie that Social Security (and Medicare) are running short of dollars — a lie that is harmful to the non-rich who accept it — when the facts show the beneficial truth that the federal government can pay for these programs, forever?
Why would any intelligent person prefer to believe those stories promulgated by the rich, that the sky is falling, the government is collapsing, and horrible things are about to happen to Social Security, when the evidence proves the opposite?
Not only could the government pay for Social Security without FICA, but it could pay higher benefits that begin at a younger age.
Are there people so pessimistic about life, they prefer to believe bad news rather than accepting the truth of good news?
Remember this: It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders
Rodger Malcolm Mitchell
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
The single most important problems in economics involve 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 can afford better health care than can 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 benefitting 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.