Here are a few short excerpts from a much longer article that ran in the New York Times:
New York Times
Biden Team Preparing Up to $3 Trillion in New Spending for the Economy
WASHINGTON — President Biden’s economic advisers are preparing to recommend spending as much as $3 trillion on a sweeping set of efforts aimed at boosting the economy, reducing carbon emissions and narrowing economic inequality.
The scope of the proposal under consideration highlights the aggressive approach the Biden administration wants to take as it tries to harness the power of the federal government to narrow economic inequality, reduce the carbon emissions that drive climate change and improve American manufacturing and high-technology industries in an escalating battle with China and other foreign competitors.
It’s bold; it’s pitiful.
No. the proposed $3 trillion isn’t pitiful. It’s bold and wonderful.
And no, the individual spending plans aren’t pitiful. They comprise the boldness this nation really needs to keep its leadership position in the world, and to help keep the world a viable place for humanity to exist.
The pitiful parts of that New York Times article are the phrases shown below in bold italics:
- The plan begins beginning with a giant infrastructure plan that may be financed in part through tax increases on corporations and the rich.
- Whether it can muster Republican support will depend in large part on how the bill is paid for.
- Officials have discussed offsetting some or all of the infrastructure spending by raising taxes on corporations, including increasing the corporate income tax rate above the current 21 percent rate and a variety of measures to force multinational corporations to pay more tax in the United States on income they earn abroad.
- Officials have weighed financing that plan through initiatives that would reduce federal spending by as much as $700 billion over a decade, like allowing Medicare to negotiate prescription drug costs with pharmaceutical companies.
- The officials have discussed further offsetting the spending increases by raising taxes on high-earning individuals and households, like raising the top marginal income tax rate to 39.6 percent from 37 percent.
- They have debated whether to lower the income threshold for the top marginal rate, to tax all individual income above $400,000 at 39.6 percent, in order to raise more revenue for his spending plans.
- Mr. Biden’s broader economic agenda will face a more difficult road in Congress than his relief bill, which was financed entirely by federal borrowing.
If they were talking about a state or local government spending program, yes those phrases would be appropriate. Those governments are monetarily non-sovereign. They must pay for their spending through taxes and borrowing.
But the federal government, being Monetarily Sovereign, does not use tax money or borrowed money to pay for spending.
In truth, federal tax money is destroyed upon receipt, and the federal government does not borrow. That is a fundamental difference between federal finances and state/local government finances.
Dealing with each of the seven phrases, above:
- All federal spending is financed via money creation.To pay for anything, the federal government sends instructions to creditors banks, instructing the banks to increase the balances in creditors’ checking accounts.
When the banks do as instructed, new (M1) money is created and added to the money supply.
- The bill will be paid for by the federal government’s infinite ability to create its own sovereign currency, the U.S. dollar.
- Raising taxes on corporations hurts American business, just as cutting taxes on corporations stimulates business.
- Federal spending adds stimulus dollars to the private sector. Attempts to reduce federal spending reduce stimulus payments.
- Tax increases offset nothing, though there may be some Gap-closing benefitto taxing billionaires.
- The proposal to tax incomes of $400,000 plus is counterproductive, however, because those are the people building businesses for U.S. growth. Perhaps incomes of $1 million or more should see increased taxation.
- The federal government does not borrow. Having the unlimited ability to create dollars, why would it borrow? Those T-securities, sometimes referred to as “borrowing,” are nothing more than accepting deposits into T-security accounts. It’s like putting dollars into interest-paying safe deposit boxes.
To pay off the misnamed “debt” the government simply takes the dollars out of those “boxes” and sends them back to the account owners.
Biden is hoping to do a number of great things: Advance clean energy, modernize the infrastructure with the construction of roads, bridges, rail lines, and electric vehicle charging stations., tax cuts to fight poverty, the most aggressive spending yet by the United States to reduce carbon emissions and combat climate change.
He would aid the development of other “high-growth industries of the future” like 5G telecommunications. He would spend money for rural broadband, advanced training for millions of workers and 1 million affordable and energy-efficient housing units.
His proposal includes money for improvements to the electric grid and other parts of the power sector.
Documents suggest Biden will include nearly $1 trillion in spending alone on the construction of roads, bridges, rail lines, ports, electric vehicle charging stations and
There would be investments in the caregiving economy and in skills and training needed by our workers to compete and win the global economy of the future.”
Biden’s campaign predicted that Mr. Biden’s investments would create 5 million new jobs in manufacturing and advanced industries, on top of restoring all the jobs lost last year in the Covid-19 crisis.
The second plan under discussion is focused on students, workers and people left on the sidelines of the job market. It would spend heavily on education and on programs meant to increase the participation of women in the labor force, by helping them balance work and caregiving. It includes free community college, universal pre-K education, a national paid leave program and efforts to reduce child care costs.
That plan would also make permanent two temporary provisions of Mr. Biden’s recent relief bill: expanded subsidies for low- and middle-income Americans to buy health insurance and tax credits aimed at cutting poverty, particularly for children.
Doing all of the above, which the federal government easily could fund, and could do so without causing inflation, would truly advance the lives of Americans and the other people of the world. It would demonstrate America’s leadership, and its ability and willingness to do good, not only for America but for the world.
Donald Trump spoke boldly, but actually proposed narrow, mean-spirited, harmful little things like eliminating healthcare for the poor, walling-in America, preventing Muslims from entering, fostering hatred against Mexicans and the Chinese, denying and delaying prevention of COVID, and widening the wealth/income/power Gap between the rich and the poor.
Lacking compassion for the poor, people of color, foreigners, and any who did not worship him, Trump spread hatred and bile. He supported bigotry, white supremacists, and conspiracy theorists. Then ironically, he called it all, “Make America Great, Again.”
Not since Lyndon Johnson, and Franklin Roosevelt before him, has any President proposed a plan to help America become that “America the beautiful” we of which we can be proud.
And that is why Republicans are united in opposition to biden They oppose everything Biden proposes, especially plans that really would establish the greatness of America.
The very last thing the Trumper, FoxNews, QAnon, NewsMax GOP wants is a successful Biden administration. This is the greatest fear of the Republican party.
But Biden can succeed if he has the courage to tell the American public the truth about Monetary Sovereignty.
If only. If only.
Rodger Malcolm Mitchell
Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..
THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.
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:
- Eliminate FICA
- Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
- Social Security for all
- Free education (including post-grad) for everyone
- Salary for attending school
- Eliminate federal taxes on business
- Increase the standard income tax deduction, annually.
- Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
- Federal ownership of all banks
- 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.
2 thoughts on “Bold and Pitiful: The Biden budget proposal”
If the federal government can afford anything, doesn’t it follow that they should bail out the states, especially Illinois? Whose ox would be getting gored?
Yes, absolutely. From a financial perspective, there is no reason not to aid the states. And, it happens that Illinois is one of the states that sends the federal government more than it receives — a double reason why they should be helped.
But bottom line, all states should be helped.