Charade: More cuts to Social Security and Medicare

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


Here are the players in the charade: The Republicans are the aggressive “Party of the Rich,” and the Democrats are the “go-along and just pretend to be the Party of the Poor.”

Here is the plot of the charade:

First Draft of the GOP’s Plan to Overhaul Social Security
The Fiscal Times, by Eric Pianin, December 11, 2016

A senior Republican House chairman has begun circulating a proposal that would make major cuts and changes to the Social Security system, a move to contravene in (sic) President-elect Donald Trump’s repeated vow to leave the retirement program for 61 million retirees and their families unscathed.

The comprehensive proposal — already generating Democratic outrage – would put in place a series of highly controversial measures long debated by the two parties.

Those measures include gradually raising the retirement age for receiving full benefits from 67 to 69 and adopting a less generous cost of living index than the current one.

The proposal would also inaugurate means testing by changing the benefits formula to reduce payments to wealthier retirees. It would also eliminate the annual COLA adjustments for wealthier individuals and their families.

The plan – drafted by veteran Rep. Sam Johnson (R-TX), chair of the House Ways and Means subcommittee on Social Security — includes some measures that might attract Democratic interest.

One would increase retirement benefits for lower-income workers and another would increase the minimum benefit for low-income earners who worked full careers.

However, Johnson’s call late last week for the start of a “fact-based conversation” about ways to fix Social Security and assure its long-term solvency drew immediate fire from House Democratic Leader Nancy Pelosi of California, who warned that Johnson’s approach, if adopted, would cut current benefits by a third or more.

“Slashing Social Security and ending Medicare are absolutely not what the American people voted for in November,” Pelosi said in a statement. “Democrats will not stand by while Republicans dismantle the promise of a healthy and dignified retirement for working people in America.”

The announcement was jarring to many Democrats coming on the heels of the Republicans vow to move swiftly next month to repeal the Affordable Care Act but without a replacement plan in hand.

House Speaker Paul Ryan (R-WI) and House Budget Committee Chair Tom Price (R-GA), have also signaled interest in pursuing major changes to Medicare and Medicaid.

Many fiscal conservatives and deficit hawks may applaud the Republicans coming to terms with major entitlement programs that will contribute to the long-term debt.

The Social Security trust fund — which spends about $918 billion a year in benefits to retirees and their families, as well as disabled workers – is not in any imminent danger. However, the Trustees Report in March warned that the fund will begin running out of money in 2034 when beneficiaries will begin to face a 21 percent benefit cut.

Democrats including presidential nominee Hillary Clinton and Sen. Bernie Sander of Vermont, meanwhile, advocated changes in the law that would greatly expand retirement benefits, especially for widows and others struggling to make ends meet, by raising the cap on the federal payroll tax that goes to fund Social Security.

Late last week, Rep. Tom Cole of Oklahoma, an influential House Republican, and Rep. John Delaney of Maryland, a moderate Democrat, renewed their support for a plan to create a bipartisan, 13-member panel to recommend to Congress ways to prevent the massive trust fund from running out of money and extending its solvency for another 75 years.

1. This entire article, together with the ongoing efforts of the Republicans and the tacit accommodation by the Democrats, is based on the Big Lie, the lie that federal taxes pay for federal spending.

The United States government, being Monetarily Sovereign, is the absolute ruler over its own sovereign currency, the dollar. The U.S. government never can run short of dollars. Even if all federal tax collections, including FICA, fell to $0, the U.S. could continue spending, forever.

And being sovereign over the dollar, it has absolute control over the dollar’s value (i.e inflation.) The U.S. government has the power to make one dollar equal to a pound of gold, a pound of lead or a pound of cabbage. That is the power of Monetary Sovereignty.

2. Therefore, the so-called “trust fund” cannot run short of dollars, any more than the “White House trust fund,” the “Supreme Court trust fund” or the “Congress trust fund”  could run short of dollars.

3. And in fact, there are no “federal trust funds.” They are accounting fictions designed for one purpose and one purpose only: To make you believe your benefits must be cut and your taxes increased.  Even without FICA, and even with benefit increases, Social Security and Medicare cannot become insolvent unless Congress wills it.

4. This is not a case of ignorance by either party.  Both understand full well, the facts of Monetary Sovereignty. Stephanie Kelton, who teaches Monetary Sovereignty at the University of Missouri, Kansas City, was on Bernie Sanders’ staff, and was the chief economist for the Senate Democrats.

Yet you do not hear Bernie Sanders, or any other Democrat, much less a Republican, admitting that all this concern about federal agency insolvency is a charade.

Interestingly, the people who know finances best, occasionally have admitted the truth:

From Ben Bernanke when, as Fed chief, when he was on 60 Minutes:
Scott Pelley: Is that tax money that the Fed is spending?
Ben Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account.

And here is a statement from the St. Louis Fed:
“As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.”

And Alan Greenspan:
“The United States can pay any debt it has, because it always can print more money.”

That last sentence about “credit markets” really means, “Not only does the government not depend on taxes; it doesn’t depend on borrowing.”

And here come the Democrats, the tacit accommodators.

How the Democratic and GOP Platforms Clash Over Social Security Reform
By Eric Pianin, July 27, 2016

The new Democratic national platform includes a substantial increase in the average benefits to seniors while requiring wealthier Americans to pay a much larger share of the overall cost.

The platform, heavily influenced by Sanders, who calls it the “most progressive” in the party’s history, in close collaboration with Hillary Clinton’s camp, rejects any notion that Social Security should be restructured to prevent a cash crisis or a federal debt crisis.

Instead, the newly minted campaign document would extend the Social Security trust fund’s solvency 50 years or more by lifting a cap on the payroll tax to force wealthier Americans to assume a much larger share of the program’s cost.

It would also increase average monthly benefits to seniors and recast cost-of-living adjustments to make it more advantageous to seniors with substantial medical expenses.

Sounds great, right? Sounds fair. More benefits to seniors and the rich paying more.

Not so fast. A little trick is buried in there. Notice that the Democrats do not deny that Social Security (and by extension, Medicare) could become insolvent. No, they still subscribe to the the Big Lie. 

Well, O.K., but still they want the rich to pay more. That should count for something, shouldn’t it?  Yes . . . except the rich run America, so it’s not going to happen.

Remember all those speeches the Clintons give — those speeches for which they are paid upwards of $200,000 plus lodging, transportation, and dinner, for two hours of work. These speeches were not made in front of poor people who want rich people to pay more.

And as for all those millions upon millions of campaign contribution dollars, they came from rich people, who are accustomed to a healthy return on their investments.

So what is going on here? It’s simple.  Remember Obama’s hoped-for “Grand Bargain,” in which he wanted to give away the store to the Republicans — i.e., unnecessarily cut spending on Social Security and Medicare and cut the debt?

It was all part of a Grand Ploy, in which the Republicans ask to totally screw the middle class and poor, and the Democrats ask only partly to screw the middle-class and poor. Then they get together in a “bipartisan agreement.”

(“Bipartisan” is a popular Washington word meaning: “It must be great because we all agreed on the amount to screw you. Our Party takes the credit for the good parts and the other Party gets the blame for the bad parts.”)

In a “bipartisan” agreement both parties get together and (wink, wink) agree to put on a charade for the public. Then they produce the document their financial supporters, the rich, really want.

Every time you see or hear the word, “bipartisan,” know this: The poor and middle are about to be screwed.

“Democrats are proud to be the party that created Social Security, one of the nation’s most successful and effective programs. Without Social Security, nearly half of America’s seniors would be living in poverty,” the platform document states.

“We will fight every effort to cut, privatize, or weaken Social Security, including attempts to raise the retirement age, diminish benefits by cutting cost-of-living adjustments, or reducing earned benefits.”

Except that is exactly what the Democrat, Obama, tried to do with his Grand Bargain and all during his administration: Cut, privatize, or weaken Social Security, including attempts to raise the retirement age, diminish benefits by cutting cost-of-living adjustments, and/or reducing earned benefits.”

And lest you think the Big Lie is told only by elected politicians:

Medicare and Social Security Worse than They Look: Trustees
By Rob Garver, July 22, 2015

The Medicare and Social Security trust fund trustees reported on the long-term solvency of the country’s two largest entitlement programs on Wednesday, and as usual, provided projected insolvency dates for the various funds under their supervision.

Medicare, it turns out, has enough in its Hospital Insurance Trust Fund to continue paying benefits at current levels until 2030, when it will run dry.

After that, dedicated tax revenues under current law would allow the program to pay out only 86 percent of scheduled benefits.

Its other major funds, which cover Part B and Part D, are projected to remain solvent indefinitely because they are funded automatically, but they are becoming increasingly costly.

Note the little weasel words, “under current law.” Very simply, this means that current law requires Medicare (and Social Security) to spend no more than the tax dollars dedicated to Social Security and Medicare.

This does not mean FICA taxes pay for Social Security and Medicare. It merely means that someone adds up tax dollars received in one column, and SS  and Medicare dollars spent in another column, and compares the two columns.

If the 2nd column is bigger than the first, they are supposed to cut spending.

This arbitrary law has nothing to do with affordability or solvency. It is just an arbitrary column comparison that could be changed tomorrow.

It just as well could read that SS and Medicare are allowed to spend no more than double, or triple, or ten times the amount of taxes received. Congress and the President have total control over that law.

And what is that little thing about Part B and Part D are projected to remain solvent indefinitely because they are funded automatically”?

Here is what that includes:

1. Funds authorized by Congress
2. Premiums from people enrolled in Medicare Part B (Medical Insurance) and Medicare prescription drug coverage (Part D)
3. Other sources, like interest earned on the trust fund investments

Forget #’s 2 and 3. The important one is #1, Funds authorized by Congress. Congress has the unlimited power to authorize funds to support Medicare parts B and D, as well as Part A

As there are no limits to what Congress can authorize, the Big Lie is exposed for what it is: A great big lie.

Bottom line: The United States of America, being Monetarily Sovereign, never can run short of its own sovereign currency, the dollar. Thus, no agency of the USA can run short of dollars, unless Congress and the President wish it.

There is absolutely no honest reason why Medicare and Social Security benefits should be reduced and/or taxes increased.

In fact, Medicare and Social Security should be provided free to you and to every other man, woman, and child in America. (See Steps #2 and #3 in the Ten Steps to Prosperity, below).

Do this now, while you’re thinking about it.  Contact both of your Senators, your Representative, and the President, and tell them you know the truth. You know the U.S. cannot run short of dollars, and there is no reason to cut benefits or increase taxes.

Tell them that unless they admit this publicly, and make it part of their personal platform, you will vote for their opponent in the next election.

Don’t be like the people who fail to vote, and then complain about how things are run. Contact your politicians, now, and expose the charade.

Rodger Malcolm Mitchell
Monetary Sovereignty


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.
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.
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.
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.
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.


One thought on “Charade: More cuts to Social Security and Medicare

  1. Clearly Congress cannot see the writing on the wall. For them Brexit Trump etc are unrelated matters. Except they aren’t. Putting 2 term limits on reps is overdue. These dullards cannot see beyond their bank book.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s