THE WEEK Magazine is an outstanding, left-leaning publication that might be expected to opt for more social spending. Sadly, they too are caught up in the traditionally right-wing Big Lie.
The Big Lie is: Federal finances are similar to personal, state government, and local government finances, so the federal government needs tax income in order to spend.
State and local government spending is funded by state and local taxes. Federal spending is not.
While you and your local governments require income in order to spend, the federal government creates its own income. It has no need for taxes.
The Big Lie is disseminated by the very rich, who are motivated by Gap Psychology, the common motivation to distance oneself from those below, and to approach those above. The rich wish to widen the income/wealth/power Gap between them and the rest of the populace.
The easiest way to accomplish this: Cut federal benefits to the non-rich.
The very rich disseminate the Big Lie by influencing our primary, trusted information sources: The media, politicians, and university economists.
The media are influenced via advertising dollars and media ownership.
The politicians are influenced via campaign contributions and promises of future lucrative employment.
The university economists are influenced via university contributions and jobs in think tanks.
Here is a classic example of a medium, THE WEEK Magazine, doing the bidding of the very rich:
Why is 2030 significant? (August 18, 2019)
It’s the year when America’s so-called dependency ratio — or the percentage of nonworking citizens who rely on those who are employed — will exceed 70 percent.
“Nonworking citizens do rely on those who are employed,” but only if we are talking about state and local government assistance, not federal assistance.
The reason: State and local taxes do fund various social services; federal taxes do not.
The federal government, being Monetarily Sovereign, has the unlimited ability to create its own sovereign currency, the U.S. dollar.
Even if all tax collections totaled $0, the federal government could continue spending, forever.
The federal government does not need or use tax dollars for anything, and indeed, destroys tax dollars upon receipt. Federal taxpayers do not support nonworking citizens. Federal deficit spending fends Social Security.
The article continues:
This will have profound consequences for Social Security and Medicare, the former of which is now projected to exhaust its $2.9 trillion reserve by 2035.
(At that point, unless Congress increases taxes or cuts benefits, only payroll taxes from a shrinking workforce would finance the program, and benefits would likely be reduced by 20 percent.)
To widen the Gap between the rich and the rest, the rich focus on the two biggest social benefits, Social Security and Medicare, by making the false claim that these two programs are funded by payroll taxes (FICA).
They are not. They are funded by federal deficit spending.
Congress does not need to “increase taxes or cut benefits.” To fund unlimited Social Security and Medicare for All, Congress and the President merely need to agree to spend what is needed — which the government has the unlimited ability to do.
For example, the Tax Relief Act of 2010 gave a two-percentage-point payroll/self-employment tax holiday for employees and those self-employed. The purpose was to help the economy recover from the “Great Recession” of 2008.
Social Security benefits were not reduced, which made it obvious that the federal government has the unlimited ability to fund Social Security, or indeed any expenditure, without collecting taxes.
The article continues:
Will this affect the economy?
As the percentage of Americans with full-time jobs drops, so, too, will GDP.
Researchers from Harvard’s Medical School and the RAND Corp. recently compared the growth rates of states that are aging at different paces. Their findings were startling. For every 10 percent jump in the portion of a population over 60, economic growth fell 5.5 percent.
Nationally, the group estimated, the aging of America’s workforce has already lopped 1.2 percent off Gross Domestic Proeduct (GDP) this decade; this may explain why the average rate of growth has been a meager 2.3 percent since 2009.
Another vexing question is how well America’s consumer-driven economy will hold up when so many of us are living frugally on fixed incomes.
The article, accidentally or intentionally, omits one key mathematical fact. The equation for GDP is:
GDP = Federal Spending + Non-federal Spending + Net Exports
To instantly increase GDP, Congress needs only to increase one term in the equation — Federal Spending — which Congress has the unlimited ability to do.
Not only would a federal spending increase, in of itself, immediately increase GDP, but the downstream effects of a federal spending increase also would be to increase non-federal spending (by putting more dollars into consumers’ pockets).
And there is no fundamental need for fixed-income Americans to live frugally. The federal government could solve that problem with the stroke of a pen and the press of a computer key.
Merely enact the Ten Steps to Prosperity (At the end of this post).
Former Federal Reserve Chairman, 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.”
The article continues:
How about health care?
American spending on health care is expected to rise from about $4 trillion a year to $6 trillion, or 19.4 percent of GDP, by 2027.
By 2025, U.S. health-care providers believe they will face a collective shortage of about 500,000 home health aides, 100,000 nursing assistants, and 29,000 nurse practitioners. Some are also bracing for a shortage of up to 122,000 doctors by 2032.
This problem was complicated by Congress capping Medicare reimbursement to teaching hospitals for each resident in 1997, when there was talk of a doctor glut.
The problem could be solved by uncapping Medicare reimbursements and by enacting Steps #2, #4, and #5 of the Ten Steps to Prosperity.
What other problems are ahead?
Cities will need to adjust their infrastructure for older people: Crosswalk timers will have to be reset to give them more time to get across the street, and far more curb cutouts for walkers and wheelchairs will need to be installed.
The problem, ironically, will be worse in the sidewalk-less, car-oriented suburbs America created to make Baby Boomer childhoods so utopian.
What happens to tens of millions of suburban residents when they’re 85 and unable to drive or walk to stores, community centers, or doctors?
All of the above problems, and many not even mentioned, can be solved with money, of which the federal government has an unlimited supply.
Former Federal Reserve Chairman, Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”
When THE WEEK Magazine writes about a non-working citizens problem, a retirement problem, a Social Security problem, a health care problem, a GDP problem, an infrastructure problem et al, what the publication really is writing about is a money problem.
Given an unlimited supply of dollars — which Congress has available to it — all these problems can be prevented and solved.
The very rich do not want you to understand that simple fact, because they wish to widen the Gap between them and you.
It truly is sad that even a liberal-leaning publication promulgates the Big Lie, that federal taxes fund federal spending.
By failing to differentiate between federal government finances vs. state/local government finances and personal finances, THE WEEK Magazine reinforces the myths that make the rich richer and the rest poorer.
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:
2. Federally funded Medicare — parts a, b & d, plus long-term care — for everyone
3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)
4. Free education (including post-grad) for everyone
5. Salary for attending school
6. Eliminate federal taxes on business
7. Increase the standard income tax deduction, annually.
8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
9. Federal ownership of all banks
10. Increase federal spending on the myriad initiatives that benefit America’s 99.9%
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.
2 thoughts on “THE WEEK Magazine spreads the Big Lie”
BINGO. Very well-said as usual, Rodger. Just like the “debt time bomb” doomsayers, these so-called “demographic winter” doomsayers that keep rearing their ugly heads really don’t seem to get the concept of Monetary Sovereignty, or perhaps they are being intellectually dishonest. Or both perhaps.
Further evidence that FICA does not fund Social Security or Medicare:
NO cuts to benefits.