GOP says, “Deficit spending grows the economy, so cut deficit spending.” Huh?

Image result for escaping the prison
It takes only two things to keep people in chains:
The ignorance of the oppressed
and the treachery of their leaders.


The GOP is telling you, “Deficit spending grows the economy, so cut deficit spending.” Huh?

No, really. That is exactly what they are saying.

And not only that, but they also are telling you, “While we’re cutting deficit spending and destroying economic growth, let’s also cut Medicare, cut Medicaid, and gut other social spending.

“And as the cherry on top of that, the Republicans want you to accept the idea, “We’re going to make more poor people pay more tax, and more rich people pay less tax.

I kid you not. This is what President Trump and the GOP are trying to sell to you, the American public. Sadly, some of the public might buy it.

‘Deficit’ no longer a dirty word for the GOP: Trump’s tax plan adds more than $2 trillion in red ink
By: Lisa Mascaro, Los Angeles Times, October 8, 2017

Not long ago, Paul D. Ryan stood before charts and graphs as the House Budget Committee chairman like a new Ross Perot, promoting an austerity plan that slashed taxes and spending, and warning of the dangers of deficits.

“The facts are very, very clear: The United States is heading toward a debt crisis,” he said then.

“We face a crushing burden of debt which will take down our economy — which will lower our living standards.”

As you who understand the realities of Monetary Sovereignty know, there is not, nor ever has been, a “debt crisis.” Nor is there a “crushing burden of debt,” and federal debt will not “take down our economy,” and it surely will not “lower our living standards.”

It is all part of the Big Lie, that federal finances are like personal finances, where debt actually can be a problem.

For the federal government and for federal taxpayers, federal debt is no problem at all.

The reasons you seldom are told:

1. Federal “debt” actually is nothing more than the total of deposits in T-security accounts, very much like bank savings accounts. The government could pay off the entire “debt” (deposits) tomorrow, simply by transferring the dollars that exist in those accounts, back to the checking accounts of the T-security holders. No new dollars or taxes needed.

Paying off the federal debt would be a simple money transfer, exactly like your bank transferring dollars from your savings account to your checking account.

2. The federal “debt” results from federal deficit spending, which in itself grows the economy, because: GDP = Federal Spending + Non-federal Spending + Net Exports. 

Thus, it is mathematically impossible for the economy to grow without federal deficits.

And not just deficits, but increased deficit growth leads to economic growth. The graph shows deficit growth. Even declining deficit growth leads to recessions (vertical gray bars),  and increased deficit growth cures recessions.

In fact, increased deficit growth is the method by which the federal government brings us out of recessions.

It cured the “Great Recession” of 2008, just as deficit spending for WWII cured the Great Depression.

U.S. depressions tend to come on the heels of federal surpluses.
1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.

Now as House speaker, the Wisconsin Republican is undergoing a role reversal, championing President Trump’s tax plan, which promises massive tax cuts for corporations and to some extent individuals — and which experts say will add some $2 trillion to the nation’s red ink over the next decade.

It’s a sizable shift for Ryan, and he’s hardly the only one. The Republican majority, which swept to power just a few years ago in part by warning of then-President Obama’s run-up of debt, now plays down concern over deficits.

Economic growth must take priority, many Republicans say, and will ultimately take care of worries about red ink.

Get it? Even the GOP admits that deficit spending causes economic growth.

Let this be a lesson to the pusillanimous Democrats, who didn’t have the courage to support Bernie Sanders’s  “Medicare for All” because it would have added to the deficit.

You have to hand it to the GOP. They have the guts to push something they have campaigned against, solely to reward the rich with tax breaks.

Asked recently whether he had gone to the “dark side,” Ryan offered a reply that sounded like something a Democrat might have said to justify spending more on repairing roads and bridges or putting additional resources into schools.

“If this results in giving us a faster economic growth, that will help us reduce our debt,” he said in a CBS interview.

“You have got to have tax reform to get faster economic growth,” he added. “Faster economic growth is necessary for us to get our debt under control.”

No, a Democrat would not have said it. At least no Democrat I know. The little snowflakes would have been hiding under their desks, mumbling something about increasing taxes on the rich.

And yes, deficit spending not only will provide “faster” economic growth; deficit spending is what provides virtually all economic growth.

And again, no. You do not want to debt “under control,” if that means reducing the debt. To grow the economy, you must have deficit spending. Period.

The nation’s debt load has topped the eye-popping level of $20 trillion.

More misdirection by the debt liars. They say $20 trillion, to make it sound more terrifying. But $6 trillion of that is money the government owes itself. The right pocket owes the left pocket.

So on top of lying about the effects of federal debt, the debt liars lie about the amount of the debt.

For Trump, who routinely leveraged borrowing to expand his real estate empire and declared on the campaign trail that he loved debt, a tax plan that expands the government’s deficit may be no problem.

It actually was worse for Trump personally, because personal finances are not like federal finances. Trump could (and did) run short of dollars to service his debt (at least four times).

But the federal government never has, and indeed cannot, run short of dollars.  Never.

During a recent White House meeting, Trump boasted to lawmakers from the tax-writing House Ways and Means Committee that the country’s economic growth could hit 4%, 5%, even 6% under his tax plan, which administration officials say would more than cover lost revenue and even reduce the deficit.

Think about it. Increasing the debt will increase economic growth, so decreasing the debt will decrease economic growth.  Why would anyone want that?

But, the lawmakers asked, what if growth isn’t so strong — most mainstream economists doubt it will be — what’s Plan B for making up the deficit shortfall?

What exactly is a “deficit shortfall”? Anyone?

Central to the GOP plan are tax cuts that slash the corporate rate. Some deductions would be eliminated and the standard deduction would be doubled, in hopes of simplifying the code and broadening the base of taxpayers.

The term “broadening the base of taxpayers” is GOP code for, “make more poor people pay more taxes.” That is, and always has been, the Republican goal — to widen the Gap between the rich and the rest.

“Republicans spent years pretending to care about the deficit when it came to making cuts to middle-class priorities, but the minute it came to handing tax breaks to the rich, that all went out the window,” said Sen. Patty Murray (D-Wash.).

Well, the GOP is the party of the rich, after all.  What did you expect?

GOP Director of the Office of Management and Budget Mick Mulvaney said. “We need to have new deficits…. If we simply look at this as being deficit-neutral, you’re never going to get the type of tax reform and tax reductions that you need to get to sustain 3% economic growth.”

Read his comment carefully. Even Republican Mulvany admits that deficits (via tax reductions) are necessary for economic growth.

Treasury Secretary Steven T. Mnuchin has said growth from the tax cut would be as much as $2 trillion, enough to pay for the cuts and start paying down deficits.

It gets crazier and crazier. Mnuchin, like Mulvaney, admits that tax cuts (which create deficits) will cause economic growth, but as soon as we achieve that growth, we should eliminate the deficits that caused the growth.

Congress repeatedly has shown, even under Republican control, that it has been unable to impose the kind of draconian reductions to Medicare, Medicaid and other safety-net programs called for in Ryan’s budgets.

In other words, to eliminate the deficits that caused economic growth, we need “draconian reductions to Medicare, Medicaid, and other safety net programs.”

So, if the GOP budget succeeds, we’ll have a double disaster: Reduction in economic growth along with reductions in Medicare, Medicaid, etc.

At the same time, Republicans are under great pressure to deliver on taxes, to have something to show for their hold on Congress and the presidency.

Translation: “Pass something, no matter how stupid and damaging, to show we know how to govern.”

Does it get any more ridiculous than that?

Every year since 1940, the debt liars have referred to the debt as a “ticking time bomb.” Back in 1940, the federal debt was $40 Billion. Today, 77 years later, it is $14 Trillion — a 35,000% increase, and that so-called “time bomb” still is ticking — and the debt liars still are lying.

For how many years must a liar be wrong before the public understands that the liar is lying? Isn’t 77 years enough?

Bottom line: The GOP says, “Deficit spending grows the economy, so cut deficit spending, and while we’re at it, cut Medicare, cut Medicaid, cut other social spending, and make the poor pay more tax and the rich pay less.”

That’s the GOP plan, folks. Do you like it?

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


The 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.


8 thoughts on “GOP says, “Deficit spending grows the economy, so cut deficit spending.” Huh?

  1. Another Trump dumb-dumb:

    Chicago Tribune, 10/9/17: Trump administration: ‘The war on coal is over’
    EPA Administrator Scott Pruitt, above, says President Donald Trump “has tremendous courage” for pulling the U.S. out of the Paris Accord.
    By Adam Beam and Michael Biesecker Associated Press

    The head of the Environmental Protection Agency said Monday that he will sign a new rule overriding the Clean Power Plan, an Obama-era effort to limit carbon emissions from coal-fired power plants.

    The withdrawal of the Clean Power Plan is the latest in a series of moves by Trump and Pruitt to dismantle Obama’s legacy on fighting climate change, including the delay or roll back of rules limiting levels of toxic pollution in smokestack emissions and wastewater discharges from coal-burning power plants.

    Despite the rhetoric about saving coal, government statistics show that coal mines currently employ only about 52,000 workers nationally — a modest 1-percent uptick since Trump became president.

    Those numbers are dwarfed by the jobs created by building such clean power infrastructure as wind turbines and solar arrays.

    Dumb on pollution. Dumb on the economy. Dumb on health. Dumb, dumb, dumb in every way. I’m talking about Trump’s followers.


  2. Don’t believe what the GOP says. Just look at what they do.
    PS the Democrats are worse as they betray their base, The GOP doesn’t do that so much, although they are all traitors to the people they are Supposed to serve. It’s going to need a revolution to change all this dysfunction.

    And by the way, why are we not supposed to believe what they say?


    1. What they do? So far, with a Republican President and a Republican Congress, they have done nothing except spend 7 years screaming “Repeal & Replace” without a plan to replace. Aside from that Trump, nothing positive and lots negative.

      I rate Trump as possibly the worst President in American history. Ignorant, incompetent, bigoted, womanizer, illiterate, compulsive liar, lazy, hypocrite. Did I leave anything out?


      1. Bless the good ole USA,!!! Hopefully Churchill will be right again when he said “you can usually trust the USA to get things right, after the’ve tried everything else first!”


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