It’s old news, fake news, and a lie — a “Big Lie.” But it demonstrates why the public is so confused and misinformed about federal financing.
This following came from the venerable and venerated New York Times, but the article is as accurate as an article in Breitbart, Fox News, or the National Enquirer.
Social Security and Medicare Funds Face Insolvency, Report Finds By Alan Rappeport, economic policy reporter, who covers the Treasury Department and writes about taxes, trade and fiscal matters, April 22, 2019
WASHINGTON — The financial outlook for Medicare and Social Security, two of the nation’s most important social safety net programs, remains precarious, threatening to diminish retirement payments and increase health care costs for Americans in old age, the Trump administration said on Monday.
An annual government report on the status of the programs painted a dire portrait of their solvency that will saddle the United States with more debt at a time when the economy is starting to cool and taxes have just been cut.
Let’s get this straight. The NY Times incredibly is being as honest as Breitbart, Fox News, and the National Enquirer.
But, the U.S. federal government cannot become insolvent. That is 100% impossible.
Who says so? How about:
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 to remain operational.
Since the U.S. federal government cannot become insolvent, no agency of the federal government can become insolvent, unless the federal government wishes it.
Social Security and Medicare are agencies of the federal government. Therefore, neither Social Security nor Medicare can become insolvent unless the federal government wishes it.
And as far as “saddling the United States with more debt,” the scare-mongers have been shoveling this manure for at least 80 years (See: “It is 2019, and the phony federal debt “time bomb” still is ticking.“)
Neither the United States nor U.S. taxpayers are “saddled” with even one cent of federal “debt.” The misnamed “debt” is nothing more than the total of deposits into Treasury security accounts. These accounts are paid off, not with federal tax dollars, but rather by simply returning the contents of those accounts to the account holders. No “saddle” there.
The NY Times editors surely know this. So why do they scare-monger a lie? Why did they publish the “Big Lie”? There is a reason, which we will discuss.
According to the report, the cost of Social Security, the federal retirement program, will exceed its income in 2020 for the first time since 1982. The program’s reserve fund is projected to be depleted in 16 years, at which time recipients will get smaller payments than they are scheduled to receive if Congress does not act.
Meanwhile, Medicare’s hospital insurance fund is expected to be depleted in 2026 — the same date that was projected a year ago. At that point, doctors, hospitals and nursing homes would not receive their full compensation from the program and patients could face more of the financial burden.
The so-called “reserve fund” is an accounting fiction. It is not a fund and it is not held in reserve. It merely is a record showing the difference between FICA and spending. It’s just a piece of information about the difference in two numbers; it does not reveal anything about the government’s ability to pay for things.
The U.S. government is Monetarily Sovereign, and so has the unlimited ability to create its own sovereign currency, the U.S. dollar. Even if all FICA collections totaled $0, the federal government could pay infinite Social Security benefits, forever.
An infinite account cannot be “depleted.”
The article continues:
“Lawmakers should address these financial challenges as soon as possible,” the trustees of the program wrote.
“Taking action sooner rather than later will permit consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare.”
There are no trustees because there is no trust. It is just an accounting record, that has none of the qualities of a trust. (See: Fake federal trust funds and fake concerns)
The above makes the naive and false assumption that federal (Monetarily Sovereign) financing is the same as personal (monetarily non-sovereign) financing.
For the federal government, there are no “financial challenges” that need “solutions.” And while the author of the article claims benefits will need to be cut or taxes increased, the public should not be prompted to “prepare” for those unnecessary changes.
It is all the “Big Lie.”
Some Republicans sought to take credit on Monday for the fact that the news was not worse while also calling for changes to the programs.
“Following historic reforms to America’s tax code, this strong economy has strengthened these important programs, but today’s reports remind us of a fact we have known for far too long: Medicare is going broke and Social Security is not solvent,” Representative Kevin Brady, Republican of Texas, said in a statement.
Either Rep. Brady either is incredibly ignorant about economics, or he is an incredible liar. Pick one. There are no other alternatives.
The United States will not become insolvent, and for the same reasons, neither Medicare nor Social Security will go broke, unless a bribed Congress forces that to happen.
Lawmakers have been struggling to come to grips with a solution for the country’s eroding entitlement programs, which have for years been at the center of a political tug of war between Republicans and Democrats.
No. Lawmakers have been struggling to find more ways to continue fooling the public. It’s been a struggle because arguing against plain facts always is difficult.
Mr. Trump was initially resistant to calling for cuts to the programs, but his budget proposal last month did just that. The request, which is being ignored by Congress, proposed shaving $818 billion from projected spending on Medicare over 10 years.
It also called for $26 billion less on Social Security programs, including a $10 billion cut to Social Security Disability Insurance, which provides benefits to disabled workers.
Well, of course, Mr. Trump wanted to cut Social Security and Medicare, two programs that benefit the middle classes and the poor. Isn’t that what the GOP always wants to do?
And of course, the GOP Congress passed tax cuts that mostly benefitted the rich. Isn’t that also what the GOP always wants to do?
The problem is not that the GOP, the party of the rich, wants unnecessarily to gut programs that benefit the non-rich. The problem is that the Democrats, supposedly the party of the middle- and lower-income groups, go along with the fiction of federal insolvency.
“That fact that we now can’t guarantee full benefits to current retirees is completely unacceptable, and it should be cause enough for every policymaker to rally around solutions to restore solvency to those programs,” said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget.
“Certainly we should be focused on saving Social Security and Medicare before we start promising to expand these programs.”
She added that “now isn’t the time for partisan bickering — we need solutions.”
Just as Wayne LaPierre, of the National Rifle Association (NRA) is a mouthpiece for gun manufacturers, Maya MacGuineas, of the Committee for a Responsible Federal Budget (CRFB) is a mouthpiece for the very rich.
The rich in America, and all over the world, for that matter, never are satisfied. They want to become richer and richer. To become richer, you must widen the income/wealth/power Gap between you and those below you on any economic scale.
It isn’t sufficient that your income increases if the incomes of those below you increase even more. Without the Gap, no one would be rich; we all would be the same.
It is the Gap that makes you rich, and the wider the Gap, the richer you are.
This is known a “Gap Psychology,” the desire to distance yourself from those below and to approach those above.
So the rich bribe your three main economic information sources — the media, the politicians, and the economics professors — to tell you the Big Lie, that federal spending is funded by federal taxes rather than by money creation.
–The rich bribe the media via advertising dollars and media ownership.
–The rich bribe the politicians via political contributions and promises of lucrative employment after they leave office.
–The rich bribe the economics professors via contributions to universities and with jobs at think “tanks.”
The public accepts the Big Lie because it equates to personal experience, where personal spending is funded by personal income.
One day, perhaps within your lifetime, the general public will learn that federal taxes do not fund federal spending, that the federal government and its agencies cannot become insolvent, and that social programs can and should be funded for the benefit of all America.
It will have to begin with a moral billionaire, a moral politician, or a moral economist who has both the money and the influence to promulgate the truth, and to have it accepted.
Rodger Malcolm Mitchell
Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell
The most important problems in economics involve:
- Monetary Sovereignty describes money creation and destruction.
- 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:
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.
5 thoughts on “Social Security and Medicare Funds Face Insolvency, Report Finds”
Gee, Rodger, how often must you say all this before anyone believes it in the MSM and politics? Remarkable!
Apparently, as often as the “dark side” keeps repeating that federal taxes fund federal spending, that federal agencies can be insolvent, and that the federal debt is a “ticking time bomb.”
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yeah, We just have to keep at it. I see a lot of their arguments fail the test of accounting identity. They have budgets with revenue on both sides of the equation.! They have “Government Debt’ set up to pay[in theory] for debts already extinguished at the deficit spend /money creation moment.
They say budget surpluses put them “in the BlacK’ so ridiculous!!. it’s even worse than thinking they can spend a budget surplus when it is instead a debt ]. They say taxes pay for spending, well not in the federal sphere. In the Federal sphere we know spending has to precede taxing. How else are you going to know your tax liability? Idiots! That is not all but enough for the moment to show them up. Add a few more if you think of any.
“The rich bribe the politicians via political contributions and promises of lucrative employment after they leave office.”
So what’s up with Bernie? Hasn’t taken any bribes, (that we know of), yet persists in maintaining the fiction when he could have and SHOULD have started telling the truth about not only SS but economic reality in general, way back in 2011 when he appointed several MMT people to his econ advisory board, long before even his FIRST primary run. Seems to me the truth would make it a helluva lot easier to not only slice through all the bs chatter about “fixing” Social Security but would expose the real motives of those who perpetuate this economic madness. It makes me wonder what his real intentions are.
Telling the truth would be the REAL revolution. I guess he prefers political gamesmanship to actually informing people. I can’t respect that. I want a Galileo. But that’s just me.
I agree. Political cowardice is not often rewarded. I only can assume he has decided it is easier to lie than to tell the truth.
I pity Stephanie Kelton, who worked with him for many months, only to see him ignore what she was telling him. What a waste.