GOP: Cut spending? Add spending? Cut deficits? Add deficits? Increase debt? Cut debt? All of the above. None of the above.

Image result for the truth will set you free
It takes only two things to keep people in chains:
The ignorance of the oppressed and the treachery of their leaders.


Which of the following do you believe the federal government should do? Think carefully before you answer.Image result for many choices

  1. Reduce federal spending?
  2. Increase federal spending?
  3. Reduce federal deficits?
  4. Increase federal deficits?
  5. Increase the federal debt?
  6. Reduce the federal debt?
  7. All of the above?
  8. None of the above?

Members of the GOP seem to believe very strongly in all of these options. Many individuals actually believe in two or more opposing directions.

No kidding:

Tax cuts quiet once-deafening GOP call for fiscal discipline
ANDREW TAYLOR, Associated Press, September 16, 2017

When Democrat Barack Obama was president, conservatives demanded financial discipline and deep spending cuts in the face of the country’s fast-growing debt.

With Republican President Donald Trump pressing for politically popular tax cuts and billions more for the military, few in the GOP are complaining about the nation’s soaring debt.

Tax cuts in the works could add hundreds of billions of dollars to the debt while bipartisan pressure for more money for defense, infrastructure and domestic agencies could mean almost $100 billion in additional spending next year alone.

The bottom line: The $20 trillion national debt promises to spiral ever higher with Republicans controlling both Congress and the White House.

In short, the GOP has become fiscally (though not socially) more progressive than was Barack Obama.  And that is a good thing for America. Here is why:

Gross Domestic Product = Federal Spending + Non-federal Spending + Net Exports.

All three terms, Federal Spending, Non-federal Spending, and Net Exports show that a growing GDP, i.e. a growing economy, requires a growing supply of money.

    • Federal Spending grows the money supply because the federal government creates dollars, ad hoc, every time it pays a bill.
    • Tax cuts, which allow more dollars to remain in the economy, increase Non-federal Spending.
    • Finally, Net Exports increase the money supply by bring dollars into the U.S. economy.

“Republicans gave up on caring about deficits long ago,” bemoaned Republican Sen. Rand Paul of Kentucky, who was elected in the 2010 tea party class.

One might say the Republicans finally have recognized the fact that a growing economy requires a growing money supply.

By formula, it mathematically is impossible for GDP to grow, unless Federal Spending, and/or Non-federal Spending, and/or Net Exports grow.

And since Federal Deficit Spending stimulates Non-federal Spending, by adding net dollars to consumers’ pockets, the fundamental stimulus for economic growth is federal deficit spending, i.e spending increases and tax decreases.

But if “Republicans gave up on caring about deficits long ago,” as Rand Paul claims, why all the discussion of the debt ceiling?

It’s a far cry from the Newt Gingrich-led GOP revolution that stormed Washington two decades ago with a mandate to balance the budget and cut taxes at the same time.

To balance the budget and cut taxes requires cutting the military (which the GOP always opposes) and/or cutting social benefits (which the Democrats and the American voters oppose).

Further, because the U.S. federal government (unlike state and local governments) is Monetarily Sovereign, it never can run short of its own sovereign currency. It can pay any bill of any size, instantly, simply by creating dollars.

The federal government’s method for creating new dollars is to spend dollars. In that sense, the federal government always spends dollars it doesn’t have. If you did that, you would be reckless, but the federal government’s finances are different from yours.

Even if federal taxes were $0 and spending tripled, the federal government could pay its bills, endlessly. So there is no purpose to a “balanced” federal budget.

Or even from Republicans of 2001, who enthusiastically cut taxes under President George W. Bush, but only at a moment when the government was flush with money.

The federal government never is short of dollars, nor is it ever “flush with money.”  The federal government has the unlimited power to create brand new dollars from thin air, every time it pays a creditor.

Now, Medicare and Social Security are drawing closer to insolvency.

Fiscal hawks and watchdogs like the Congressional Budget Office warn that the debt is eventually going to drag the economy down.

Neither the U.S. federal government, nor any of the thousand agencies of the federal government, ever can be insolvent. Such federal agencies as Congress, the White House, the Supreme Court, the CIA, the FBI, the NSA, Social Security, and Medicare, etc., etc, cannot go insolvent unless the Congress and the President want them to be insolvent.

Have you ever heard of the Navy being “insolvent”?  The Army? Name a single federal agency that ever has been insolvent.

The notion that Medicare or Social Security can become “insolvent,” ironically is based on a special tax, FICA, being collected supposedly to support them.

But FICA supports nothing and no, there is no “Social Security Trust Fund.” It is an accounting fiction designed to make you believe your Medicare and Social Security benefits must be limited.  It’s all a great big fat lie.

And as far as federal debt “eventually dragging the economy down,” this too is a lie, promulgated for the same purpose — to make you believe the federal government is unable to help you.

The so-called debt actually is the total of deposits in T-security accounts.

If the federal government wished, it easily could pay off the entire “debt” today, simply by transferring existing dollars from those T-security accounts, back to the checking accounts of T-security holders. No new dollars needed.

There is no mechanism by which deposits in T-security accounts (aka “savings”) can drag down the U.S. economy.  Anyone who says otherwise is a great, big, fat liar.

But like Obama and Bush before him, Trump isn’t talking about deficits. Neither much are voters.

“Voters, frankly, after these huge deficits, are saying, ‘Well, how much do deficits really matter?’” said former Sen. Rick Santorum, R-Pa., a two-time presidential candidate. “We’re not Greece yet, right?”

Deficits do matter, but not in the way most people think.

Deficit growth reductions have led to recessions, and deficit growth increases have cured recessions.

Far from being a problem, federal deficits are absolutely necessary for economic growth.

And as for the U.S. ever being “Greece,” that unfortunate nation surrendered its most valuable asset, its Monetary Sovereignty, when it gave up the drachma and adopted the euro.

Chicago, Florida, General Motors, you, and me and Greece do not have a sovereign currency. None of the aforementioned has the unlimited ability to pay bills. All can become insolvent.

By contrast, the U.S. government has the unlimited ability to pay any bill, of any size, at any time, simply by creating dollars. There is no economic reason to cut deficits or debt.

Top Capitol Hill Republicans such as House Speaker Paul Ryan of Wisconsin and Senate Majority Leader Mitch McConnell of Kentucky had promised for months that a tax overhaul would not add to the deficit, with rate cuts financed by closing loopholes and other steps.

Instead, Republicans are talking about tax cuts whose costs to the debt — still under negotiation — would be justified by assumptions of greater economic growth.

Yes, tax cuts are justified by greater economic growth, but not in the way the GOP once has claimed.

Under President Reagan’s bogus “trickle-down” economic plan, tax rate reductions for the rich were supposed to “pay for themselves” by expanding the economy so much, tax collections actually would rise.

Not only didn’t this happen, but it wasn’t necessary. Tax cuts do stimulate the economy — especially tax cuts for consumers, i.e. the 99% (not tax cuts for the rich), because federal taxes (unlike state and local taxes) destroy dollars. And the federal government neither needs nor uses tax dollars.

Federal taxes no longer are part of any money supply measure, i.e. they effectively are destroyed upon receipt.

“We want pro-growth tax reform that will get the economy going, that will get people back to work, that will give middle-income taxpayers a tax cut and that will put American businesses in a better competitive playing field so that we keep American businesses in America,” Ryan said in an AP Newsmakers interview this past week. “That’s more important than anything else.”

He backed off months of promises that the Republicans’ tax plan won’t add to the nation’s ballooning deficit.

Ryan, the “new liberal Democrat,” is absolutely correct in what he says. Tax cuts for the middle- and lower-income groups, and for businesses, will grow the economy.

What the GOP does may be a different story, as their leaning always has been tax cuts for the rich and for “broadening the tax base” (tax increases for the poor).

Among the few deficit hawk holdouts is Sen. Bob Corker, R-Tenn., a key vote on the Senate Budget Committee, who says he doesn’t want to “let this just be party time that just takes us no place but massive deficits down the road.”

The real danger to America is that Corker, who has so much power on the Senate Budget Committee, completely misstates federal financial reality.

Image result for time bomb
Since 1940, the “time bomb” of federal debt has been ticking. Still ticking.

This deficit hawk cannot explain the simple fact that the federal debt in 1940 was $40 billion, and deficit hawks then were calling it a “ticking time bomb.

Today, after 77 years, the debt $14 Trillion debt has risen 35,000%  (yes, that’s 35 thousand percent), and here we are:

The federal government is not insolvent; no federal agency is insolvent; the “time bomb has not exploded, the sky has not fallen; and we are discussing tax reductions.

Trump’s election has GOP military hawks pressing to shovel enormous amounts of money into the Pentagon — about $90 billion over the stringent spending limits set by the hard-won 2011 deficit control effort.

Don’t call it “hard won.” Call it the “foolish, counter-productive, based-on-the-Big-Lie, deficit control effort. Call it “hard lost,” as it reduced GDP growth to its lowest level in many years.

Deficit growth cured every recession, but the “hard-won” deficit control effort of 2011, resulted in the lowest GDP growth we’ve had in many years. 

The unpopular leftover from the 2011 agreement are those spending limits, which if violated would be enforced by across-the-board spending cuts. Republicans want to scrap them, at least for military money.

“There’s so much pressure on our side for additional defense spending,” said Rep. Tom Cole, R-Okla. “Believe me there’s more defense hawks than budget hawks in the Republican conference right now.”

Republicans believe in spending reductions unless there’s something on which they want to spend. Then suddenly, spending reductions aren’t important any more.

Conservatives demanding that spending cuts accompany any extension of the government’s borrowing ability were undercut by Trump, who agreed last week to add temporary borrowing approval to a must-pass Harvey relief bill.

See, it’s like this. Spending cuts help the economy except when spending increases help the Texas economy, which then helps the U.S. economy.  Got it?

Anger over Trump’s debt bargain, though, has conservatives vowing that issues of spending and deficits won’t be kicked to the curb for long.

“It’s not going to be shoved aside much longer because this (debt limit) deal last week … has got people all riled up, and justifiably so,” said longtime GOP Rep. Joe Barton of Texas. “We’ll be ready next time.”


“O.K., we’ll agree to increase the debt this time, because Texas needs the money, and I’m a Texan, and the government can afford anything. But next time, if it’s just the poor or the middle classes who need the money, we won’t give it to them, because the government can’t afford it.

“What? Oh, you say that Florida and Puerto also were hit by a hurricane, and they too need the money.  O.K., I guess we have to give it to them, but we’ll be ready to screw America NEXT time, because as you know, the government is running short of dollars it creates every day, from thin air.

Huh? There is another hurricane, this time threatening the northeastern states, a couple of which are ‘red’ states, so FEMA will have to help them, too? Well, so long as they’re red states, we’ll give them money, even though the federal government is totally destitute, although in the entire history of this nation, the government never has run out of dollars.

“Huh? The military also needs more money. Well, of course we can’t be without a military, and we might want to bomb North Korea, so give the military more money, too, even though the federal government doesn’t have any money at all. Not a penny, even though the government creates dollars by spending dollars.

“Oh, the President needs more money to build a wall that will protect us against drugs, even though drug dealers know how to avoid walls and don’t bring drugs across areas where we don’t have a wall. But if the President wants more money, we have to give more money, even though the government is so broke the sky is falling and Congress must live in poverty, which it never has.

But aside from that, the debt has been a ticking time bomb for 75 years, and even though we’ve had all kinds of wars, recessions, inflations, terrorism, and natural disasters, that time bomb hasn’t exploded. But it could. Soon. Any second now. The end is nigh. Here it comes. Hang on. Almost here. 

“And yes, there is zero evidence that the debt is “unsustainable” and that cutting the debt will grow GDP, but hey we’ve been telling the same lie for so many years, we can’t go back how, or we’ll look really stupid.


Right. Really stupid.

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


The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

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 A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) 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 EVERYONE Five 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.
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce 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 business 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.



9 thoughts on “GOP: Cut spending? Add spending? Cut deficits? Add deficits? Increase debt? Cut debt? All of the above. None of the above.

  1. They cannot see logic, Rodger. Mathematical certainties are ignored, since they can’t respond anyway, like growing the economy with reductions in federal spending, or saying taxes fund government spending, which is impossible when the government has to spend first, to give us the money we use to pay our taxes. That sort of thinking is rife across the whole of Congress.
    I don’t know what will change these mindsets, apart from a total world catastrophy


  2. The conservatives here in Australia do the same: tax cuts for big business, huge spending increases for submarines and national security but cuts to social welfare, public education and health. No tax cuts for the lower paid. “Lifters and leaners” was the mantra.

    The conservatives won government promising to cut the federal debt and “get back to surplus” but have instead increased the deficit (which progressives ignorant of monetary sovereignty criticise) but there is now very little talk of “budget emergency” or “debt and deficit disaster”).

    Sadly, voters still regard the conservatives as better economic managers though polling has been consistently pointing to a change of government come the next election.

    I do not see much evidence that the alternative Australian Labor Party understands monetary sovereignty though it may be that they are nervous about telling the truth as the paradigm of federal taxes are needed to fund federal spending is firmly entrenched and any deviation from that line will be scorned as “off the planet” or “dangerous”.

    Labor is more likely to embark on a “hit the rich” policy that will be depicted as “the politics of envy” and “socialist”.


    1. In America, the rich control the major sources of information.

      They control the politicians via campaign contributions and promises of lucrative employment, later.

      They control the media via ownership and advertising dollars.

      They control the economics professors via university contributions and employment in “think tanks.”

      Thus the public hears the same “Big Lie” from all sides.

      I assume it is the same in Australia.


  3. Yes its much the same here. We tend to follow the US in most aspects.Views such as yours struggle to get traction, much less acceptance as a consequence. However there are signs of alienation and discontent, eg with declining public services, wages close to stagnant and increasing inequality.


      1. I tried to find the web page for the New Democracy Party but only found a Facebook page. So far as I can tell, the party favors a Jobs Guarantee, which in the real world, is unworkable.

        I’ve written about the “Jobs Guarantee” many times, and why I consider it to be a pipe dream. Here and Here are two examples.

        Does NDP have a website that explains its purpose and goals?


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