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As readers of this blog know, the Big Lie is this: Federal taxes fund federal spending.

Unlike state and local governments, and even unlike euro nation governments, the U.S. government is Monetarily Sovereign.  That means it neither needs nor uses tax dollars. It creates dollars ad hoc, by paying invoices.

Even if all federal tax collections fell to $0, the federal government could continue spending, forever.

The Big Lie is expressed in many ways, by the left and by the right. Here is one example:

Brownback eager to see Trump repeat Kansas’ mistakes
12/27/16 10:11 AM, By Steve Benen

Arthur Laffer, the architect of Kansas’ failed far-right economic experiment, is certain that if Donald Trump adopts similar policies at the national level, it will “lead to economic ‘nirvana’ in the U.S.”

The last chief executive to listen to Laffer’s advice, Kansas Gov. Sam Brownback (R), is thinking along the same lines. The Wall Street Journal reported over the holiday weekend:

Sam Brownback, the Kansas governor whose tax cuts brought him political turmoil, recurring budget holes and sparse evidence of economic success, has a message for President-elect Donald Trump: Do what I did.

In 2013, Mr. Brownback set out to create a lean, business-friendly government in his state that other Republicans could replicate. He now faces a $350 million deficit when the Kansas legislature convenes in January and projections of a larger one in 2018. The state’s economy is flat and his party is fractured.

Still, Mr. Brownback views his signature idea – eliminating the 4.6% state individual income tax for partnerships, limited liability corporations and similar businesses – as a national model.

He’s not alone. In 2012, Senate Majority Leader Mitch McConnell (R-Ky.) said of Brownback’s radical economic experiment, “This is exactly the sort of thing we want to do here, in Washington.”

This is an unbelievably crazy idea.

As regular readers know, it’s been about six years since Brownback announced his plan to conduct “a real-live experiment” with his state’s economy.

The far-right Kansan, working with a GOP-led legislature, cut taxes far beyond what the state could afford, slashed public investments, and waited for prosperity to flourish across every corner of the state.

None of that has happened. Not only have Kansas’ job growth and economic growth rates lagged behind neighboring states, the state’s budget is in shambles, and Kansas’ debt rating has been downgraded multiple times.

Given these results, common sense suggests the governor and his allies might re-think some of their economic assumptions.

Instead, Brownback and his cohorts are convinced their failures are actually successes, and Republicans at the national level would be wise to repeat Kansas’ missteps.

Clearly, Mr. Benen, the author of the above article, does not understand the differences between a monetarily NON-sovereign government (Kansas) and a Monetarily Sovereign government (the U.S.).

Kansas uses the U.S. dollar, a currency over which it is not sovereign. It, and all other states, counties, and cities, can run short of dollars, so they need continual infusions of dollars to fund their spending.

These dollars can come from taxes, tourism, or exports.  Reducing taxes requires that more dollars come from tourism or exports, or the state will face insolvency.

By contrast, the federal government cannot run short of its own sovereign currency. The U.S. could, and indeed should, reduce taxes, as Kansas did, an act that would leave more dollars in the economy and increase economic growth.

In fact, just the elimination of FICA (see Step #1 in the Ten Steps to Prosperity, below) would provide a powerful stimulus to the U.S. economy.

Unfortunately, Mr. Brownback, being Republican, also “slashed public investments” which invariably translates into cutting programs that benefit poor and middle-income people.

The Big Lie, whether spoken by the right or by the left, leads to one result: It widens the Gap between the rich and the rest.

And, the Big Lie, whether spoken by the right or the left, has one of two causes: Ignorance or intent. Either Mr. Benen is ignorant of Monetary Sovereignty, or he intends to help widen the Gap between the rich and the rest.

Readers of Mr. Benen’s articles might conclude he has a progressive bent, and he would be among the last commentators to opt for widening the Gap.

However, the same readers might conclude he is intelligent, well-read, and understands the truths of Monetary Sovereignty.

Which is the real Steve Benen?  I cannot say. What I can say is his article damages America by spreading the Big Lie, whether intentionally or not.

The bottom line to all of the above is that state finances are different from federal finances, monetary non-sovereignty is different from Monetary Sovereignty,  and tax cuts that were disastrous for Kansas could work quite well for the U.S.

Ignorance has its penalties, and the public, not understanding the above differences, pays dearly for its ignorance.

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.