It takes only two things to keep people in chains:
The ignorance of the oppressed
and the treachery of their leaders.
Every few days, I’m asked by Quora, to answer a question, usually about the federal debt. Today, I was asked one I found particularly interesting. Perhaps you will, too.
The question was:
With a new tax cut bill expected to add a trillion dollars to the national debt, how will Congress find the will to pass new spending measures for infrastructure projects, added border security, etc., as promised by Trump?
My answer was:
Great question, that is based on fiction and fact. The fiction is that the so-called “debt” is like personal debt, in that it is a burden on the debtor.
Federal “debt” is nothing like personal debt.
The fact is: The so-called national “debt” simply is the total of deposits in T-security accounts. It is no threat to anyone — not to the government, not to taxpayers, not to you, your children, or your grandchildren. No tax dollars are or will be involved at any time.
Those deposits, which are like savings account deposits, will be paid back by transferring the dollars in those accounts back to the checking accounts of the depositors — the same way your bank pays off your savings account by transferring the balance to your checking account.
The further fact is that Congress is well aware of this, but has been bribed by the rich to promulgate the fiction. Why? Because the fiction inevitably leads to the fake “need” to cut social spending, thereby widening the gap between the rich and the rest of us.
The gap is what makes the rich, rich. Without the gap, no one would be rich — we all would be the same — and the wider the gap, the richer they are.
So the rich bribe politicians (with campaign contributions and promises of lucrative employment later), the media (with ownership and advertising funds) and the economists (with university contributions and employment in “think tanks”) to widen the gap.
Now for your question: The size of the national “debt” (deposits) has nothing to do with Congressional “will.”
Congress always balances two constituencies: Big donors and voters.
No matter how large the “debt,” Congress and the President will do what the big donors want, unless there is enough voter anger against it. In that case, Congress still will attempt to satisfy big donors, but pretend to appease voters.
Today, the GOP Congress has caved 100% to big donors, and doesn’t care a fig what the voters want.
Even though 2/3 of the voters hate the newest tax change laws, the big donors love these gap-widening laws, so that is the way the GOP (aka “the party of the rich”) will vote.
Later, the GOP will use the excuse that the “debt” (deposits) has grown too large. They will try to eviscerate Social Security, Medicare, Medicaid, etc., to satisfy their big donors by widening the gap between the rich and the rest.
Bottom line: Congress has no “will.”
Its primary desire is to be elected, which requires money and the votes money buys.
Its secondary desire is to find lucrative employment after leaving Congress — employment the appreciative rich donors will provide.
Now you know everything you need to know about Congress and the so-called “debt.”
Clearly, the author of the question believes Congress is struggling with the size of the federal debt. There is no such struggle. Congress doesn’t care about the deposits in T-security accounts.
Congress cares about money and votes, in that order. Nothing more.
Rodger Malcolm Mitchell
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.
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 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.
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 FEDERAL TAXES ON BUSINESS
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.
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.
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.