The Democrats have a great plan. They want to expand Medicare to cover everyone, which could be accomplished very simply by lowering the eligibility age of the current Medicare plan from 65 to 0.

The hard work already has been done. The process has been created. The government, the hospitals, and the doctors all know how to handle the paperwork. Everything is in place.

Just lower the eligibility age, cover everyone, and go.

No need for Medicaid, ACA, Medigap or Parts A, B, C, etc., etc. No deductibles. Just one simple plan for every man, woman, and child in America.

And certainly no need to tell everyone they will be forced to give up their current plans. Simply offer Medicare to everyone, and let nature take its course.

But no. The Democrats get all hung up trying to answer one simple question, “How will you pay for it?”

The correct answer, the honest answer, would be: “Federal deficit spending.”

1. Federal financing is not like state and local government financing. The federal government, unlike state and local governments, is Monetarily Sovereign. It has the unlimited ability to create its own sovereign currency, the U.S. dollar.

The federal government never can run short of dollars. It could fund any Medicare for All plan with the push of a computer key.

2. Unlike state and local government deficits, the federal deficit and federal debt are not a burden on anyone. They do not burden the federal government; they do not burden taxpayers.

Unlike state and local taxes, which fund state and local government spending, federal taxes do not fund federal spending.

3. Contrary to a popular myth, federal deficit spending does not, and never has, caused inflation. Inflation, a general increase in prices, is not caused by too much money. Inflation is caused by shortages of food and/or fuel.

Those historical photos showing people carrying paper money certificates in wheelbarrows, fail to show the actual cause of the inflation: Food and fuel shortages. The printing of those certificates was an ineffectual response to inflation, not the cause.

One of the surest cures for any inflation is government deficit spending to acquire and distribute the scarce food and fuel.

Sadly, those Democrats who know all this to be true, are too cowardly to explain it to the public. Instead, they go along with ridiculous articles like the following:

The Democratic plan for a 42% national sales tax
Rick Newman, Senior Columnist, Yahoo Finance — October 28, 2019

If you’re a Democrat who supports “Medicare for All,” pick your poison.

You can ruin your political career and immolate your party by imposing a ruinous new sales tax, a gargantuan income tax hike or a surtax on corporate income that would wreck thousands of businesses.

This is the cost of bold plans.

Or better yet, you can tell the truth about federal financing, and tell everyone who will listen that Medicare for All will be financed the same way as “Military for All,” as well as Congress, the Supreme Court, and the White House.

They all are funded by federal deficit spending.

There is no FICA tax supposedly paying for the Military, the Congress, the Supreme Court, or the White House. There is no tax supposedly paying for Congressional health care, Congressional travel, and Congressional lunches.

The reason why there is no FICA tax, or any other tax, dedicated to paying for these expenses is very simple. Federal taxes pay for nothing. Those dollars deducted from your paycheck, and those dollars you “voluntarily” send to the U.S. Treasury are not needed or used for anything.

They do not fund Medicare. They do not fund Social Security. They do not fund the military, or the Congress, or the Supreme Court, or the White House, or any other of the myriad federal initiatives.

Federal taxes are destroyed upon receipt.

Here is the A-Z Index of U.S. Government Departments and Agencies. You don’t pay for any of them. Even if all federal tax collections totaled $0, the federal government could fund all these activities.

Supporters of Medicare for All, the huge, single-payer government health plan backed by Bernie Sanders, Elizabeth Warren and several other Democratic presidential candidates, say it’s time to think big and move to a health plan that covers everyone.

Getting there is a bit tricky, however. A variety of analyses estimate that Medicare for All would require at least $3 trillion in new spending.

That’s about as much tax revenue as the government brings in now. So if paid for through new taxes, federal taxation would have to roughly double.

Right. IF (big “if”) Medicare for All was paid for through new taxes, federal taxation would have to double.

That is exactly why Medicare for All should not be paid for by taxing people.

It should be paid for via federal deficit spending, which would cost you nothing. Yes, for a Monetarily Sovereign government, lunch really can be free.

Oh, are you worried that the so-called federal “debt” would be an unsustainable “ticking time bomb”? If so, you’re in bad company, for that is exactly what phony “experts” said way back in 1940, and they’ve been saying it every year thereafter.

In 1940, the federal debt was only $40 Billion, and it was a “ticking time bomb,” according to Robert M. Hanes, president of the American Bankers Association.

Today, the federal debt exceeds $22 Trillion, a gigantic 55,000% increase, and that time bomb still is ticking. And the country still is here. And the government still is sustaining.

The Committee for a Responsible Federal Budget (CRFB) spelled out what kinds of new taxes it would take to come up with that much money.

A 42% national sales tax (known as a valued-added tax) would generate about $3 trillion in revenue. But it would destroy the consumer spending that’s the backbone of the U.S. economy.

A tax of that magnitude would be like 42% inflation, wrecking consumer budgets and the many companies that depend on them.

Other options include a 32% payroll tax split between employers and workers or a 25% income surtax on everybody.

Or, the government could cut 80% of spending on everything but health care, which would include highways, airports and the Pentagon.

Or here’s a good one: Just borrow the money and quadruple Washington’s annual deficits.

Or do none of the above, and simply create the money by federal spending, just as the federal government has been doing since 1940, the year Robert M. Hanes had his meltdown.

We’ve written about the CRFB several times before. They are mouthpieces for the very rich, who, because of Gap Psychology, do not want the middle class to receive federal benefits.

The CRFB comes up with all sorts of scare tactics to make you believe federal financing is like state and local financing or personal financing. So they print big deficit numbers and say, in effect, “Oooohh. Look at these big numbers. Aren’t they big?

The best idea might be charging every enrollee in the new program $7,500 per year, so they’d be paying directly for the coverage they’re getting.

Some people pay more than that now for health care, by purchasing insurance outright or sacrificing pay raises in exchange for employer coverage.

It would still be a nifty trick to propose that to voters.

If by “best idea,” Mr. Newman means “another bad idea,” I’d agree. So would the voters.

It’s possible that Medicare for All would cover health care for more people at a lower total cost than we spend now, meaning the average cost per person would go down.

Yes, the cost would be lower, especially if the people are asked to pay nothing for health care, and it all was provided free by the government — and especially if we eliminated the useless, harmful FICA tax, the single, worst, most regressive, pays-for-nothing tax in America.

The problem is transitioning from what we have now to whatever Medicare for all would be.

And it’s a giant problem, like crossing the Mississippi River without a bridge or a boat. The other side might look great but you’ll die before you get there.

The author, Mr. Newman, wants you to believe that having created the entire Medicare program, now simply cutting the eligibility age from 65 to 0 is an insurmountable problem.

That’s like saying that after having built from scratch, a 5,000 square foot house, changing the knob on the front door is ” . . . a giant problem, like crossing the Mississippi River without a bridge or a boat.” Pulleeze.

Warren, Sanders and others tout the virtues of this magical health care program without explaining what it would cost.

Sanders has at least suggested some possible ways to pay for it, including premiums paid by enrollees, a wealth tax on millionaires and income tax rates as high as 52%.

Warren has been cagier, saying only that under her plan “costs” would go down for middle-class families. Under pressure to explain, Warren has pledged to come up with a financing plan soon.

Now, maybe she doesn’t have to.

So again I ask, why are Warren, Sanders, and the rest of the Democrats so cowardly? When all other options lead to failure, why not simply tell the truth?

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

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The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

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 Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

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 the rest.