The fairness issue of federal spending.

Situation #1: I am a wealthy man. From my own pocket, I unexpectedly hand you $10,000, with no strings attached. Would you be pleased or angry? Would that gift be fair?

Situation #2: I am a wealthy man. From my own pocket, I unexpectedly hand you $10,000, with no strings attached. I also give some people $20,000 and to others, I give $0. Would you be pleased or angry? Would that gift be fair?

Situation #3. I am a wealthy, new charity called “Student Help And Payment of Expenses” (SHAPE). You and millions of others give to SHAPE, which provides aid to many people for many purposes. This year SHAPE has begun to offer financial assistance to college students based on their income, grades, and other criteria.

You qualify based on one criterion, so SHAPE gives you $10,000. SHAPE gives people who qualify on two criteria $20,000, and to those who do not qualify on any criteria, it gives $0. Would you be pleased or angry? Would that gift be fair?

Think about your answers before reading further.

Granderson was the 2009 winner of the GLAAD Award for online journalism and was nominated for the award again in 2010. He received a GLAAD Award in 2022 for his ABC News podcast, Life Out Loud with LZ Granderson

Is Biden’s student debt forgiveness plan fair?
LZ Granderson, Los Angeles Times 8/30/2022

What is fair?

That is the question of the hour, as politicians and everyday Americans on both sides of the aisle debate the pros and cons of President Joe Biden’s plan to forgive student loan debt.

Is it fair to those who didn’t go to college? Is it fair to those who “did the right thing’ and paid off their loans? In short: Is it fair to me?

Take this short “fairness perception” test. Each question has two answers.

One answer is your opinion about “fair” or “unfair.” The other answer is whether you are angry about it. For example, you might feel something is unfair, but it doesn’t anger you.

Yes or no, is it fair or unfair, and in either case, does it anger you that:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FAIR               ANGERS ME

  1. You pay more federal tax than Donald Trump?
  2. You pay less tax than some people who are poorer than you?
  3. You do not receive food stamps?
  4. You do not receive rent assistance?
  5. You drive a more expensive car than do some other people?
  6. You can afford a less expensive house than can some other people?
  7. You have more money than some people? (Yours was inherited.)
  8. You have less money than some people who inherited money?
  9. Older people receive Social Security, but though many people pay FICA taxes, most do not yet qualify”?
  10. The qualifying age for Medicare has been raised?
  11. Medicare doesn’t pay for some medicines and procedures?
  12. You paid for your college education, but some people receive scholarships?

Depending on your financial situation, your compassion, and your personal standards, your answers will be individual to you.

I personally find the answers to questions #1, 9, 10, and 11, to be anger-provoking and unfair. How about you?

Why?

My anger mostly comes from the fact that federal taxes do not pay for federal benefits, and the federal government has infinite money but lies about it.

[Your taxes are paid from the M1 money supply measure–bank checking accounts. When the federal government receives those dollars, they no longer are counted in any money supply measure, because the government has infinite dollars. Effectively, your federal tax dollars are destroyed.

By contrast, your state/local tax dollars go into private sector banks and remain in the M1 money supply measure. They are not destroyed.]

The White House says the average cost is $24 billion a year.

Considering we’re already nearly $31 trillion in debt and Jerome Powell, the Federal Reserve chairman, recently indicated that efforts to reduce inflation could bring “some pain to households and businesses,” asking how are we going to pay for this is a pressing question.

As readers of this blog know, “we” don’t pay for federal spending, although “we” do pay for state/local government spending and for private charity spending.

The difference is the federal government is Monetarily Sovereign while state/local governments are monetarily non-sovereign.

The federal government collects taxes but does not spend them; it destroys them. The state/local governments collect taxes and spend them.

But to me, the most important question is actually who is going to pay for this? As in, who pays for what society needs to remain whole and healthy and who pays when it falls short?

Anyway, my buddy Neil never had any children but for more than 40 years he has had a portion of his tax dollars pay for services he does not use, like public schools.

Now, is that fair to Neil and other taxpayers without children? Or is paying for education for the next generation necessary to be part of a healthy society?

A society where someone in Arizona can see Kentuckians struggling in the wake of devastating floods and be thankful the Federal Emergency Management Agency is there to help those people — as opposed to being resentful that no disaster requires FEMA aid in Arizona?

Those are good questions, though the author demonstrates he does not understand the differences between monetarily non-sovereign state/local financing (the public school question) vs. federal financing (the FEMA question).

Taxpayers fund the former but do not fund the latter.

The answer to “who is going to pay for this?” is always “we are” — whether on the front end by addressing issues as a society or paying for the more expensive fallout from ignoring our problems.

Time and time again, we are forced to face the reality that we are all in this together.

Certainly the expected cost of $300 billion for Biden’s loan forgiveness plan is significant. But what of the effect of having 45 million borrowers grappling with $1.6 trillion in student loan debt? What of the societal and fiscal cost of those millions of Americans stymied in their futures?

Because no taxpayer pays a penny for federal loan forgiveness, the cost is not the issue. The issue is fairness and the fact that we are all in this together and that America needs educated people.

The federal government, which costs you nothing, pays many different benefits to millions of different people. You personally receive only a tiny fraction of those benefits. Is that fair? Does it anger you?

But we don’t think like that, we don’t vote like that and we don’t govern like that.
That is why history is replete with billions spent on fixing problems that would have taken millions to prevent. Look no further than the homelessness crisis, which used to be “someone else’s problem” until it wasn’t.

Much has been made about the likes of Rep. Marjorie Taylor Greene, R-Ga., and the other Republicans who have rabidly denounced student loan cancellations.

The irony is that the GOP aids the rich while appealing to the angry envy of the poor, who are not informed enough to understand how the GOP cheats them.

Turns out, they had their own far larger Paycheck Protection Program loans forgiven.

We know they have no shame and their supporters are not deterred by their blatant hypocrisy. And that’s how it has always been.

But for people genuinely asking about fairness or economic impact, there are issues to consider. If postsecondary education is the route to the middle class, is not college debt a sign of someone trying to pull themselves up?

That is the real point. Education is vital for the success of America.

That is why our founders mandated free education for all children. Today, it is a given that all children be afforded grades K -12 (though some parents opt to pay for private schools or homeschooling).

But what once was considered an advanced education — a high school diploma — today, we believe college+ to be advanced.

Sure, we can find examples like Republican Texas Sen. Ted Cruz’s hypothetical slacker barista, who game the system, but we can also point to examples of businessmen who repeatedly file for bankruptcy and still get loans — but that doesn’t mean it’s the norm.

It also doesn’t mean that supporting college is unnecessary for America, especially since nations advance not by the high schoolers but by the college-educated. College is the accurate measure of a first-world country.

I was one of those individuals who graduated from college with student loan debt and went to bed hungry at times because of it. And when I was able to pay it off, I was happy.

And I’m happy a portion of my tax dollars may go to relieve someone of that burden.

Author Granderson, it should make you even happier to learn that not one penny of your tax dollars relieves anyone of anything. Although, that may make you angry that you are forced to pay tax dollars the Treasury destroys upon receipt.

Right now, millions of Americans, including the very poor, are drowning in student debt.

I see this very much like a FEMA moment, and I’m thankful government is stepping up to help. Call me crazy but isn’t assisting those in need a principle of fairness as well?
____
LZ Granderson is an Op-Ed columnist for the Los Angeles Times.

Mr. Granderson’s article is an excellent example of American patriotism. Unlike the flag-wavers who attacked Congress and the traitors who still defend it, Granderson is a true American.

He understands what “love-of-country” really means.

I only wish he understood Monetary Sovereignty.

Rodger Malcolm Mitchell
Monetary Sovereignty

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

MONETARY SOVEREIGNTY

6 thoughts on “The fairness issue of federal spending.

  1. Rodger – Good post. Granderson really has the right idea about fairness and equity. One of the best pieces I’ve seen on this topic.

    However, #10 confuses me. When did the qualifying age for Medicare increase?

    Reagan increased the Normal Retirement Age for Social Security, but not Medicare.

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      1. I’m sorry Rodger, but you still have it backwards. Medicare’s eligibility age can be *lowered* in certain circumstances, but I have never seen it higher than 65. In fact, I started receiving Social Security at 66, but I was on Medicare from 65 and had to pay the Part B premiums out-of-pocket.

        People on Social Security Disability are eligible for Medicare after two years and kidney dialysis patients are also eligible for Medicare regardless of their age. My first ex-wife has been on disability for about 9 years and has been on Medicare for about 7. She just turned 62.

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  2. Is the $12 minimum wage right now in Illinois unfair to those who only got $4.25 in 1992? When I made $4.75 as a 14 year old doing several weeks of agricultural work in the summer of 1997 I kind of thought I was slightly robbed when the minimum went up to $5.15 on September 1st.

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  3. If federal spending is going to help people and the future, then it’s good. The alternative would be not to give anyone money and let their struggle go on and on. Sooner or later the struggle produces people who cannot survive and end up giving in to crime, which affects everyone. It’s a big circle that will return to either reward or punish all of us.

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