Before the virus crisis, the 2020 federal budget looked like this:

BUDGET PROJECTIONS FOR FY 2020

(As of  )

OUTLAYS

$4.6 Trillion

REVENUES

$3.6 Trillion

DEFICIT

$1.0 Trillion

DEBT HELD BY THE PUBLIC (End of Fiscal Year)

$17.9 Trillion

We were here:

Trump says coronavirus is ‘under control’ despite warnings from health officials of ‘severe’ disruptions
Courtney Subramanian, John Fritze USA TODAY 2/25/2020

NEW DELHI – President Donald Trump and White House officials downplayed coronavirus concerns Tuesday, describing the epidemic as “very well under control in our country” despite a sharp increase in cases globally and warnings of “severe” disruptions.

Speaking to reporters in India, where he was taking part in a state visit, Trump noted that few people have been diagnosed with the virus in the U.S. and claimed that the “whole situation will start working out.”

But markets tumbled hours later as health officials warned of a more extensive impact in the United States.

“Disruption to everyday life may be severe,” said Nancy Messonnier, director of the Centers for Disease Control and Prevention’s National Center for Immunization and Respiratory Diseases. Schools could be closed, public gatherings suspended and employees forced to work remotely, she said.

And here:

Schumer counters Trump, announces $8.5-billion proposal for emergency coronavirus funding
Nicholas Wu, 2/26/20 USA TODAY
WASHINGTON — Senate Minority Leader Chuck Schumer, D-N.Y., released an $8.5 billion counter-proposal to the Trump administration’s request for emergency coronavirus funding.

“This proposal brings desperately-needed resources to the global fight against coronavirus,” Schumer said in a statement. “Americans need to know that their government is prepared to handle the situation before coronavirus spreads to our communities. I urge the Congress to move quickly on this proposal. Time is of the essence.”

The Trump administration requested $2.5 billion Monday to tackle the virus, an amount Democrats deemed insufficient. According to Schumer’s office, Congress appropriated $6 billion for the 2006 avian flu, and $7 billion for the H1N1 flu in 2009.

Testifying before a subcommittee of the House Appropriations Committee on Wednesday, Health and Human Services Secretary Alex Azar defended the administration’s request, saying the amount was “appropriate, and if not, if it doesn’t fund it enough, we’ll come back to you and work with you.”

Now, we are here:

Trump’s coronavirus rescue package could approach a trillion dollars
PA Media: World News
By Lisa Mascaro and Zeke Miller, Associated Press
PA Media: World News, 18 March 2020

Donald Trump has asked Congress to speed emergency cheques to Americans, enlisted the military for hospitals and implored ordinary people to do their part by staying home to stop the spread of the coronavirus.

In a massive federal effort, the president’s proposed economic package alone could approach a trillion dollars, a rescue initiative not seen since the Great Recession.

He wants cheques sent to the public within two weeks and is urging Congress to pass the stimulus package in a matter of days.

As analysts warn the country is entering a recession, the government is grappling with an enormous political undertaking with echoes of the 2008 financial crisis.

At the Capitol on Tuesday, Senate majority leader Mitch McConnell vowed the Senate would not adjourn until the work was done.

“Obviously, we need to act,” he said. “We’re not leaving town until we have constructed and passed another bill.”

He said the Senate will vote on a House-passed package of sick pay, emergency food and free testing, putting it back on track for Mr Trump’s signature — despite Republican objections.

Overnight, the White House sent legislators a 46 billion dollar emergency funding request to boost medical care for military service members and veterans, fund production of vaccines and medicines, build 13 quarantine centres at the southern border for migrants and make federal buildings safer, among other measures.

The Trump request also reverses cuts to the Centres for Disease Control and National Institutes of Health that Trump proposed in his February budget for next year and would create a 3 billion dollar fund for unanticipated needs.

Bigger than the 700 billion dollar 2008 bank bailout or the nearly 800 billion dollar 2009 recovery act, the White House proposal aims to provide a massive tax cut for wage-earners, 50 billion dollars for the airline industry and 250 billion dollars for small businesses.

“This is a very unique situation,” said Treasury secretary Steve Mnuchin, exiting a private briefing of Senate Republicans. “We’ve put a proposal on that table that would attract a trillion dollars into the economy.”

And it still is nowhere near enough.

Consider just Steps 2. and 3. of the Ten Steps to Prosperity.

Step 2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone. Sanders’ “Medicare for all” proposal has been estimated to cost $1.38 trillion per year. Other health policy experts have put the single-payer health plan price tag much higher, with price tags ranging from $2.4 trillion a year to $2.8 trillion a year.

Step 3. The cost of Social Security for all would depend on how many people receive it, and how much each person receives. Current SS costs about $1 trillion which is doled out to about 61 million people. There are about 212 million people over 21 in the U.S., so giving all of them the same SS amount would require about $3.5 trillion.

Then add in the remaining Steps and the total easily could exceed $7 trillion. Yet, the 10 Steps are needed to prevent/cure recessions and depressions while improving the lives of Americans. In “Trumpese,” the 10 Steps can “make America great, again.”

Two questions:

  1. Can the federal government afford the Ten Steps?
  2. Would implementation cause inflation?

1. Can the Monetarily Sovereign federal government afford $3 trillion – $7 trillion to give Americans prosperity?

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.”

Perhaps, the real question should be: Can the private sector (you and me) afford to continue paying trillions, and still not receive what the Ten Steps could offer?

Today, the private sector pays or does without. That is how these services are funded. The federal government, being Monetarily Sovereign, has unlimited financial resources. The private sector does not. Question answered.

2. Would it cause inflation? Contrary to popular wisdom, federal deficit spending does not, and has not, caused inflation. Inflation is caused by shortages, usually shortages of food and/or energy. See: Only 450 words answer the question, “Does printing money cause inflation?”

Why then doesn’t Congress budget spending the money?

I suspect the primary answer is: They want to add just enough dollars to prevent a depression, which would tempt voters to throw them out of their cushy jobs — but still stick the public with a mild recession. In short, Gap Psychology rules.

(Gap Psychology is the desire to distance oneself from those considered “below” you in any socioeconomic ranking, and to come closer to those above.)

The richer do not want the less rich to prosper. They resent aid to poorer people who are felt to be “lazy takers.” It is Gap Psychology that demands those receiving aid to seek employment, though there is no financial reason for this.

In Summary: We are in a perilous situation that can lead to many deaths and a financial disaster, perhaps a full-fledged, long-lasting depression.

Both the health and the financial problems can be cured with ample inputs of money, which the federal government can provide at no cost to anyone.

Which political party will be remembered as the “too-little, too-late party”?

For no good reasons, the government drags its feet. With every passing day of inaction or inadequate action, more people will suffer. Who is at fault?

Only the rich will thrive. And that seems to be the point.

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

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THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

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