Here are a few excerpts from a recent article in Reason.org:

Reforming the U.S. Military Pension and Retiree Health Care Benefit Systems
In absolute numbers, US military faces $50 billion in unfunded pension liabilities plus $70 billion in unfunded liabilities for retiree health care.
By Evgenia Sidorova, December 30, 2019

Given the challenges that state and local governments are having with unfunded pensions, it’s important that Congress look at similar, even if less severe, issues at the federal level.

Since 2007, the US military has lost over $69 billion. As a result, the military hasn’t contributed to its health fund since 2012, according to its latest financial statement.

In choosing a reform strategy for the pension and retiree health care benefit systems for the US military, Congress should follow best practices for pension solvency, such as prioritizing paying off debt, setting realistic assumed rates of return, and requiring the military to fully make its required contributions.

What??! The US military has lost over $69 billion, its pension plans are insolvent, and it needs to pay off debt??! Can this be true?

Image result for postal worker

No federal agency can be insolvent — not the military, nor Social Security, nor Medicare, nor the postal service.

Nah. Actually, the article was not talking about the US military. It was talking about a different agency of the federal government, the US Postal Service.

Replace the word “military” with the words, “postal service” and you see the actual excerpts. I was making a point.

For reasons that make absolutely no sense today, the USPS is the one federal agency that is treated like a privately-held business: It is expected to pay its own way by extracting money from America’s private sector.

Consider this line from the article: “Given the challenges that state and local governments are having with unfunded pensions, it’s important that Congress look at similar, even if less severe, issues at the federal level.

The federal government financially is nothing at all like state and local governments, but it treats the USPS as though it were.

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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.”

Unlike state and local governments, the federal government is Monetarily Sovereign.

It never unintentionally can run short of its own sovereign currency, the US dollar.

It has the financial power to fund any size pension program, without collecting a penny in taxes.

The USPS is, in true effect, a giant tax-collection machine, whose net income dollars would have the same effect as do federal taxes: They would be recessionary in that they would remove dollars from the private sector.

We say “would” because fortunately, the post office loses money every year, so at least those dollars you spend on stamps and other services are returned to the private sector.

But:

FedSmith.com
Postal Service Now Going on 12 Years of Losses 
It reported a net loss for the year of $3.9 billion, $1.2 billion more than its loss in the previous year. It also lost money in each quarter in FY 2018.

The mounting financial losses are starting to weigh on the Postal Service and draw warnings from government watchdogs.

The Government Accountability Office recently said in a report that the Postal Service will have to make some tough financial decisions in the near future because of the state of its finances.

And yet another GAO report said that health benefits of Postal retirees are currently on an “unsustainable path,” warning that the Retiree Health Benefits fund will be depleted by 2030 if no other payments are made into the fund.

What sort of “tough financial decisions”? Cut payroll? Cut services? Either one punishes the American people and the American economy.

One certainly could make the argument that the postal service is as important to the future of America as is the military.

But for good reason, you seldom hear about military budgets being “unsustainable,” or about the military needing to make a profit or break even.

The USPS is required to deliver mail — including advertising literature — to everyone and everywhere. Like virtually all federal agencies, it loses money, which is exactly what all federal agencies should do.

Why should all federal agencies lose money? Because when a federal agency spends more into the private sector than it receives from the private sector, that economic surplus stimulates economic growth.

No federal agency should make a profit or even try to make a profit. Instead, the sole focus of any federal agency should be on to provide the best possible service to the public, regardless of cost.

The US federal government should fund the best possible postal service, aiming for a system in which all letters are delivered instantly and all packages are delivered the same day, and everything is delivered free. That, not the illusion of monetary self-sufficiency, should be the goal.

The current system is illogical, unproductive and arguably unpatriotic.

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.

MONETARY SOVEREIGNTY