In the previous post, “That Big Lie just keeps on rollin’ along,” and in many earlier posts, we discussed how the media, economists, and your politicians have been telling you “The Big Lie” which is:
Federal taxes fund federal spending.
In fact, federal taxes fund nothing, and knowing that, you either shrug your shoulders or you get angry and start phoning/writing your politicians.
I hope the latter.
Think of it this way. What if Amazon or some other retailer cheated you out of $1,000. Or someone picked your pocket.
How angry would you be? How many phone calls would you make and what letters would you write?
Then think of all those unnecessary tax dollars you send to the federal government. A lot more than $1,000 I assume.
Or what if your boss screwed you out of last month’s salary? Compare that to the screwing you are getting from Social Security, all because of The Big Lie.
Read excerpts from this article:
Social Security Changes That May Be Coming For 2023 by John Csiszar
The wage base is the amount of a worker’s earnings that are taxable for Social Security purposes.
The 6.2% Old Age, Survivors and Disability Insurance (OASDI) tax, which funds various Social Security programs, applies only to the first $147,000 of a worker’s earnings for 2022.
But this number is also tied to changes in inflation and is likely to go up significantly in 2023.
That 6,2% against $147,000 (if your salary is that high) comes to $9,114 taken from you that pays for nothing.
But it gets worse. When your company decides on salaries, it figures the total cost of employing you. Because your company also must pay $9,114, it deducts the money from what it is willing to pay you.
Trust me on this. I have owned several companies and that is exactly the way we decided how much we could afford to pay for employees.
So, immediately, you are paying up to $18 thousand for nothing to a government that has the infinite ability to create dollars and neither needs nor uses your dollars.
The wage base in 2021, for example, was $142,800, but the high rate of inflation in 2021 pushed that number 2.9% higher.
Workers should expect another bump up in 2023, meaning higher earners should expect to pay more in Social Security taxes.
The original and fundamental purpose of Social Security is to help people financially when they no longer work. So one would think that the less you have earned over the years, the more financial help you need.
But Social Security doesn’t work that way. It gives more help to the people who have been earning more all these years.
And, defying all logic, it pays more money to people who already have enough money to tide them past their “normal” retirement age.
Here is what the government says: “You can start receiving your Social Security retirement benefits as early as age 62. However, you are entitled to full benefits when you reach your full retirement age. If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase.”
Get it? If you have enough money not to need Social Security help when you are 62, you’ll be paid more for every year you wait.
That might make sense if the federal government was like a private insurance company, and had only a limited number of dollars available.
But the federal government has infinite dollars, so it makes no sense to pay wealthier people more.
Although no one wants to pay more taxes, the increase in the wage base has a silver lining for high earners.
While more of their income will be taxed, more of their earnings also will be credited to their future Social Security benefit.
Again, the richer are given more than the poorer.
The amount you earn in your working career is one of the most important factors in determining your ultimate payout — along with when you file for benefits.
The people who most need financial help are given less, and the people who need less are given more.
Although all of these potential changes for 2023 are notable, probably the biggest question about Social Security is what it will look like by the mid-2030s.
At that point, the SSA anticipates that the Social Security Trust Fund will be exhausted.
The government wants you to believe that Social Security is like private insurance, where you pay premiums, and your premiums pay for benefits.
But, if premiums are insufficient to pay promised benefits, the insurance company goes broke and you get nothing.
Social Security is not like that. You pay “Social Security taxes,” but those taxes do not pay for benefits.
As we saw in the previous post, the so-called “Trust Fund” is not in any way like a real trust fund. The SS “trust fund” merely is a ledger balance that the federal government can change at will.
Your taxes disappear into the Treasury, and the Monetarily Sovereign federal government pays you from its infinite supply of dollars.
There is no fiscal connection between your tax dollars and your benefits. Even if everyone paid $0 taxes, the federal government could pay your benefits, forever.
While Social Security will continue to pay benefits, thanks to payroll taxes on current workers, estimates see benefit levels dropping to 80% of current levels.
Social Security can pay any benefits Congress and the President wants it to pay, regardless of payroll taxes.
Although some type of legislative solution is likely to crop up over the next decade, both current workers and retirees should keep an eye on ongoing developments.
Here, the author of the article, perhaps unknowingly, may admit that the benefits are totally under Congress’s control when he uses the term “legislative solution,” rather than a fiscal solution.
The legislative solution would be to eliminate the fake connection between taxes and benefits and simply pay benefits. After all, benefits are paid to Congress, SCOTUS, POTUS and almost every other federal agency, without reference to tax collections.
In summary, thousands of dollars are being taken from you under the false pretense that federal taxes fund federal spending.
The only time this will stop is when you get angry at having your pocket picked and express your anger, loudly and clearly.
Is it worth your time and effort?
Rodger Malcolm Mitchell
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.
6 thoughts on “Have you written to your Senator and Representative about this?”
I agree with this, 100%. I’ve been saying it for years. Economics is closer to a religion than a science. https://www.nakedcapitalism.com/2022/07/there-is-no-nobel-prize-in-economics.html
Cut-and-paste of something I saw on Substack:
According to economist Richard Werner, the correct theory of money and credit creation is rarely taught in economic textbooks today. “It should be repeated,” he writes, “that the credit creation theory does not feature in most contemporary economics, finance, or banking textbooks.”
Instead, he explains, banks are commonly understood as financial intermediaries that gather savings from one group to lend to another. This is true of brokerage firms, investment banks, insurance companies, mutual funds, and other investment organizations, but not commercial banks. Financial intermediaries do gather others’ savings and lend them in the capital markets, but this is not “bank lending.”
Bank lending does not recycle existing money. Every new bank loan creates new money.
Today’s erroneous view of banks contrasts with the views prevalent a century ago when economists and financial writers widely understood and accepted the credit creation theory. As Werner explains, this knowledge was essentially lost over most of the 20th Century due to the spread of erroneous theories by prominent economists, especially Paul Samuelson [Samuelson’s brother changed his surname to Summers and begat a nitwit son Larry], through his popular textbook, Economics.
One result of this prolonged ignorance is that the public’s knowledge of money creation is poor at best. Werner comments:
“That such important insights as bank credit creation could be made to disappear from the agenda and even knowledge of the majority of economists over the course of a century delivers a devastating verdict on the state of economics and finance today. As a result, the public understanding of money has deteriorated as well. Today, the vast majority of the public is not aware that most of the money supply is created by banks, that banks do not lend money, and that each bank creates new money when it extends a loan.”
So, is RMM in agreement about there having been a ‘lost century’ in economics? https://www.sciencedirect.com/science/article/pii/S1057521915001477
No, not a lost century. Economics remains lost. The fact these two false premises still exist is ample proof.
1. The federal government needs taxes to fund its spending.
2. Federal spending causes inflation.
These false premises lead to all sorts of idiocy, like worrying about federal “debt” and deficits, the creation of phony “trust funds,” to limit Social Security and Medicare, unnecessary poverty, FICA, — the list goes on and on.
So to speak of a lost century in economics is like talking about a lost century in the belief of an invisible man in the sky who knows everything and controls everything, but demands that you pray to him. It’s not a lost century. Economics has been lost since its inception.
I was meaning more do you agree with it in the context of the article: banking and the ‘credit creation theory’ from a century ago?
I’m sure you know what happens when writing to a politician. You get no answer or a form letter from the secretary.
Science investigates reality for the benefit of all. Economics invests for the benefit of the few while disrergarding reality. No matter how great an idea you have for wealth sharing, the rich and their representatives will never yield short of utter disaster. This why I feel it will take the threat of annihilation to move the needle. We don’t ssem to know any other way.
You’re right about what happens when a person writes to a politician, but it’s not what happens when a few thousand people write to a politician. Suddenly, they will get the message.
With the possibility of a right-wing House, a right-wing Senate, and a right-wing President, plus the reality of a right-wing Supreme Court, Americans who are not rich will suffer. My heart would go out to them but for one fact: They will have voted for their own pain.