We already have created Medicare for seniors. The hard work was accomplished years ago. And in those years since, we have accumulated excellent knowledge in how to run a Medicare program.
Now, to create Medicare for All, we need only to do three simple things:
Unlike state and local governments, the federal government never can run short of dollars. Even if all federal tax collections fell to $0, the federal government could continue spending and paying its bills, forever.
Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”
Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
St. Louis Federal Reserve: “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 (borrowing) to remain operational.”
Contrary to the popular myth, FICA does not fund Medicare. The dollars collected for FICA (and indeed, all federal tax dollars) are destroyed by the U.S. Treasury upon receipt.
The federal government creates brand new dollars, each time it pays a creditor.
And lest you believe increased deficit spending (necessitated by the elimination of FICA) would cause inflation, history says that is not so.
Most inflations and all hyperinflations have been caused by shortages, (usually shortages of food and/or energy), not by excess money. These shortages often are caused by insufficient federal deficit spending.
The “money-in-a-wheelbarrow” meme demonstrates a government’s response to inflation, not the cause of inflation.
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.
II. Expand Medicare to include all age groups. This does not require a fundamental change, but rather an expansion of the already existing program, so that it covers everyone.
III. Make it more inclusive by removing deductibles and covering long-term care. The theoretical purpose of deductibles is to dissuade people from over-using Medicare.
But because Medicare costs taxpayers nothing, even possible over-use would pump growth dollars into the economy — a benefit to all Americans.
Further, long-term care eventually is needed by a high percentage of people, but it is unaffordable for many. Having the federal government pay would remove a great burden from most American families.
I was reminded of the above by the following article that appeared in the 8/1/19 Chicago Tribune (excerpts follow).
Many in GOP-led Senate torn over pact to boost debt limit
By Andrew Taylor Associated Press
WASHINGTON — A hard-won, warts-and-all budget pact between House Speaker Nancy Pelosi and President Donald Trump is facing a key vote in the GOP-held Senate, with many conservatives torn between supporting the president and risking their political brand with an unpopular vote to add $2 trillion or more to the government’s credit card.
Credit cards are, for you and me, a method of short-term borrowing. But unlike you and me, and state/local governments, the federal government does not borrow.
Given its unlimited ability to create dollars, it has no reason to borrow dollars. What often and misleadingly is termed federal “borrowing,” actually is the acceptance of deposits into Treasury-security (T-bill, T-note, T-bond) accounts.
The federal government, being Monetarily Sovereign has no need for the dollars in those accounts, so does not touch them. Rather, the dollars remain in the accounts until maturity, at which time they, together with interest, are returned to the depositor.
The purposes of T-securities are to:
- Provide a safe depository for unused dollars, which stabilizes the dollar, and
- Assist the Fed in controlling interest rates.
They do not help the federal government pay its bills.
The Trump-supported legislation backed by the Democratic speaker would stave off a government shutdown and protect budget gains for the Pentagon and popular domestic programs.
It’s attached to a must-do measure to lift the so-called debt limit to permit the government to borrow freely to pay its bills.
The so-called debt limit is akin to burning your wallet to prevent you from paying your exisiting creditors. It is not “financial prudence,” as many politicians would have you believe.
The vote, expected Thursday, is a politically tough one for many Republicans.
The tea party-driven House GOP conference broke against it by a 2-1 ratio, but most pragmatists see the measure as preferable to an alternative fall landscape of high-wire deadlines and potential chaos.
The government otherwise would face a potential debt default, an Oct. 1 shutdown deadline, and the return in January of across-the-board spending cuts known as sequestration.
Hmmm . . . The choice is between high-wire deadlines, potential chaos, debt default, an Oct. 1 shutdown, and sequestration, vs. simply eliminating the useless debt ceiling.
For new arrivals to the Senate, particularly those who ran against a broken Washington culture, the sweeping measure represents a lot of what they ran against: unrestrained borrowing and trillion-dollar deficits, fueled by a bipartisan thirst for new spending.
“Unrestrained borrowing” does not exist, simply because the federal government (unlike state and local governments) does not borrow.
“Trillion-dollar deficits” add trillions of growth dollars to the economy.
“New spending” is the method by which the federal government benefits Americans via spending for the military, health-care, anti-poverty efforts, science and technology, education,, anti-global warming, medical advances, national parks, disaster recovery, and the myriad other benefits we Americans expect and rely upon.
“This budget process, if we can even call it a process, put taxpayers at the mercy of a House speaker who has no interest in prudent budgeting,” said freshman Sen. Josh Hawley, R-Mo.
State and local taxpayers fund state and local government spending. But, contrary to popular myth, federal taxpayers do not fund federal spending.
To cut federal growth spending is not “prudent.” It demonstrates ignorance of federal financing and national needs.
Rand Paul, R-Ky., said the deal “marks the death of the tea party movement in America.”
Good riddance to the tea party, the party of austerity and hatred of the poor and middle-classes.
The pact is a victory for pragmatists eager to avert chaos caused by a potential government shutdown, a possible debt crisis, or a freeze to agency budgets — including the massive Pentagon budget — at current levels.
The agreement lifts the limit on the government’s $22 trillion debt for two years and averts the risk of the Pentagon and domestic agencies from being hit with $125 billion in automatic spending cuts that are the last gasp of the 2011 Budget Control Act.
Every debt crisis ends the same way: After ignorant statements about faux “prudence,” and ignorantly equating federal finances to personal finances, and falsly claiming that federal taxpayers will foot the bill, Congress and the President agree on a temporary fix.
This assures that, having learned nothing and proved nothing, Congress will expose the public to the same ignorance and chaos a few more months down the line.
And these are the people to whom we trust our futures.
Rodger Malcolm Mitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell
The most important problems in economics involve the excessive income/wealth/power Gaps between the richer and the poorer.
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:
3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.