OMG! I never thought I would be forced to say this, but the Editorial Board of the Washington Post may even be more ignorant and/or dishonest than the leaders of Fox News.
We’ve published some excerpts from an article that ran today, October 7, 2023, in the Washington Post. It was written by the Post’s “Editorial Board.”
First, here is what the Post says about its Editorial Board:
David Shipley
The Post’s View | About the Editorial BoardEditorials represent the views of The Post as an institution, as determined through discussion among members of the Editorial Board, based in the Opinions section and separate from the newsroom.
Members of the Editorial Board: Opinion Editor David Shipley, Deputy Opinion Editor Charles Lane, and Deputy Opinion Editor Stephen Stromberg, as well as writers Mary Duenwald, Shadi Hamid, David E. Hoffman, James Hohmann, Heather Long, Mili Mitra, Keith B. Richburg, and Molly Roberts.
Now that you know who is responsible, here comes the epitome of misinformation, or dare I say, disinformation.
Opinion Higher interest rates mean greater danger for U.S. debtBy the Editorial BoardOctober 7, 2023, at 7:00 a.m. EDT
Borrowing is expensive again, as anyone who has tried to buy a car or home lately can tell you. The interest rate on 10-year Treasury bonds, the benchmark for home loans, is hovering around 4.75 percent, a nearly two-decade high.
This will significantly add to the federal government’s expenses and raise the urgency to lower the deficit.
Immediately, you see the incredibly ignorant (intentional or otherwise) parallel between personal and federal government finances.
This is Economics 101, folks. You and I are “monetarily non-sovereign. We didn’t create a sovereign currency. We use the currency created by the Monetarily Sovereign U.S. government.
Get it? They are the creators; we are just the users. Huge difference.
As the Monetarily Sovereign creator of the U.S. dollar, the federal government cannot unintentionally run short of dollars.
Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency. There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody. The United States can pay any debtit has because we can always print the money to do that.”
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.”
Quote from former Fed Chairman Ben Bernanke when he was on 60 Minutes: Scott Pelley: Is that tax money that the Fed is spending? Ben Bernanke: It’s not tax money… We simply use the computer to mark up the size of the (checking) account.
Statement from the St. Louis Fed: “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.”
This is true of all major currencies created by a Monetarily Sovereign entity like Japan, China, England, the European Union, etc.:
Press Conference: Mario Draghi, President of the ECB, 9 January 2014 Question: I am wondering: can the ECB ever run out of money? Mario Draghi: Technically, no. We cannot run out of money.
The abovementioned Washington Post Editorial Board geniuses presumably have not taken Economics 101; if they took it, they flunked.
Despite its being able to “pay any debt” denominated in dollars, “produce as many dollars as it wishes.” and “simply using the computer to mark up its accounts, the U.S. government’s ability to pay the interest on its T-securities is questioned by the Post editors.
I am stunned by their ignorance, real or feigned.
Interest costs are already the fastest-growing part of the budget. Net interest costs — a nonnegotiable expense — nearly doubled as a share of federal outlays between 2020 and 2023, going from $345 billion, or 5 percent, to $660 billion, or 10 percent. (Defense, by comparison, cost $815 billion, or 13 percent of spending in 2023.)
The higher rates partly reflect the Federal Reserve’s necessary campaign against inflation, but they also mean that the miracle of compounding is now working against the country’s fiscal stability.
The country’s fiscal stability is infinite. If faced with a billion-dollar, a trillion-dollar, or a thousand trillion-dollar invoice, the U.S. federal government could simply “use the computer to mark up the size of the (checking) account” and pay the invoice.
Thus, interest rates do not mean greater danger for U.S. “debt.”
Barring policy changes, recent interest rate increases could add $3 trillion over the next decade to interest costs, according to Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget.
If the government pays $3 trillion in interest to U.S. security owners over the next decade, that means the government will add $3 trillion growth dollars to Gross Domestic Product.
If some of those dollars go to foreign security holders, that will simply increase foreign citizens’ ability to buy U.S. products.
And all of this will not cost American federal taxpayers one cent. The federal government creates new dollars, ad hoc, every time it makes an interest payment.
It is beyond my belief that the Washington Post’s editors do not understand this fundamental fact about federal finances.
The Department of Health and Human Services announced more than $103 million in funding to address the maternal health crisis.
The money will boost access to mental health services, help states train more maternal health providers, and bolster nurse midwifery programs.
The $103 million will circulate through the U.S. economy, further adding to economic growth.
The doctors, nurses, hospitals, and other health workers will buy products, enriching their sources. Then, those companies that supply doctors, nurses, and hospitals will spend the dollars to enrich their sources.
These initiatives are an encouraging step toward tackling significant maternal health and well-being gaps. In August, the Editorial Board wrote about how the United States can address its maternal mortality crisis.
In addition to financial danger, there’s irony here: While millions of Americans bought or refinanced homes at mortgage rates below 4 percent in recent years and locked those cheap rates for 30 years, the U.S. government failed to do so.
What is the phony “financial danger”? Unlike monetarily non-sovereign state and local governments, the federal government cannot run out of money.
Even if the government did not collect a single penny in taxes, it could continue spending forever.
Top Democratic economists such as Janet L. Yellen and Lawrence H. Summers urged a government borrowing spree during a period of seemingly permanent low-interest rates before 2020.
They argued it was wise to borrow long-term and invest in productivity-enhancing infrastructure, education, and the green transition.
The government borrowed massively in 2020 to keep businesses and consumers solvent during the pandemic.
Think about it. The federal government has the infinite ability to create dollarsby “simply using the computer.” So why would it borrow dollars? It makes no sense at all.
And indeed, the U.S. government never borrows dollars. Never, ever, never.
People borrow to obtain spending or investing money. However, the federal government is “not dependent on credit markets to remain operational.”
Federal T-bills, T-notes, and T-bonds are nothing like private sector notes, bills, and bonds. When you buy a T-security, you are not lending to the federal government. The government does not spend those dollars.
Instead, your dollars go into your account at the Federal Reserve. There, they stay, with interest additions, until maturity, when the federal government returns the balance to you.
There never is a time when the government uses your dollars to pay its bills.
The Biden administration and Congress have subsequently made investments but could not lock in low rates for decades.
There is no reason for the federal government to “lock in low rates.” The more it spends, the healthier the U.S. economy.
That fact is proven by the formula for Gross Domestic Product:
GDP = Federal Spending+ Non-federal Spending + Net Exports
The more the federal government spends, the greater GDP growth is. Locking in low rates would mean the government would pump fewer growth dollars into the economy, the economy would grow more slowly or even shrink, and the federal government would be no healthier than it already is.
The average maturity in the federal debt portfolio is about six years, meaning a huge chunk of government debt must soon be refinanced at high rates.
If the government offers T-securities at high rates, that is good for economic growth (though high interest rates hurt private sector business.)
Consider the three-month Treasury bill. The yield on that was almost zero in 2021. Now, it’s over 5 percent.
That means the government will pump much more growth dollars into the economy. The downside is that businesses and consumers also will pay more interest, so prices will rise.
The irony is that the Federal Reserve increases interest rates to fight inflation, while high-interest costs increase the prices of everything.
Inflation is caused by shortages of vital goods and services and by high-interest rates.
To show you how high-interest rates cause inflation, here is a comparison between two mortgages:
Your house costs you $200,000, so you take out a $100,000, 30-year mortgage. Here are your payments if interest payments are at 1% (left) or if they are at 6% (right.)
With a 1% mortgage, your $100,000 house costs you $115,790. With a 6% mortgage, the same house costs you 215 838.
Now, Chairman Powell, tell me again how your interest rate increases to fight inflation without being recessionary.
Inflation is caused by shortages.The way to fight inflation is for the government to spend more to obtain and distribute the scarce goods and services.
Today’s inflation is caused by shortages of oil, food, computer chips, metals, lumber, labor and other assets. The way to fight this inflation is not to raise interest rates but for Congress to spend more money to obtain and distribute oil, food, computer chips, metals, lumber, labor, and other assets.
There was already a critical need for Congress and President Biden to start addressing the long-term fiscal situation through higher taxes, moderate expense cuts, and adjustments to Social Security and Medicare.
You have just read the most ignorant sentence you will ever encounter.
All three of those suggestions will take dollars out of the economy (which needs a continual flow of dollars for growth or maintenance) while giving those dollars to the federal government, which has infinite dollars.
Higher taxes take dollars out of your pocket, the same effect as inflation has. Federal expense (i.e., spending) cuts cause recessions, taking dollars out of your pocket. And don’t get me started on what cuts to Social Security and Medicare do to your pocket.
Has the Washington Post now become Breitbart?
The Washington Post wants to cut GDP so that the Monetarily Sovereign government won’t run short of the dollars it has the infinite ability to create.
And they want to cut Social Security and Medicare, which should be expanded, not cut. Have they now become a right-wing newspaper akin to Breitbart?
Cutting federal spending to grow the economy is like applying leeches to cure anemia.
We laid out a plan earlier this year to stabilize the debt.
Mathematically, when the so-called debt is stabilized (i.e., doesn’t grow), the economy can’t grow.
The esteemed editors of the Washington Post are calling for a recession, the definition of which is a lack of GDP growth.
The sobering new interest-rate reality makes it even more pressing. Indeed, the infamous crowding-out effect from large federal debts might start making a comeback.
The so-called “crowding-out” effect does not exist. The theory is that if you invest in T-securities, you won’t have enough dollars to invest in private debt.
This never ever has happened in the history of the universe,but economists repeatedly bring it up.
Increases in so-called federal “debt” are caused by increased federal deficit spending, whichputs dollars into your pocket. So, you have more dollars for investing and spending, not fewer.
Instead of providing capital to invest in private business, directly or through the stock market, people with extra cash are likely to choose to earn high rates on less risky government debt.
Again, look at the stock market and tell me whether this has happened. The economists who disseminate the “crowding-out” BS must not own stocks.
This could hurt U.S. growth. One sign that investor caution, and not just Fed policy, is at work: Interest rates on government debt have continued to rise well after the Fed’s last hike, which occurred in July.
The federal government is not market-constrained. It pays whatever interest rates it wishes.
It doesn’t need to sell T-securities. It doesn’t need to set attractive prices for interest rates. As the St. Louis Fed said, the government easily could operate without offering any T-securities.
The purposes of T-securities are:
To stabilize the dollar by providing a safe, interest-paying place to put unused dollars and
To help the Fed control interest rates.
T-securities do not provide the federal government with operating funds. The government never touches the dollars in T-security accounts.
Those accounts are owned by depositors, not by the government. Think of T-security accounts as being like bank-safe deposit boxes. Depositors own the contents of those boxes. The bank never touches them.
With the House of Representatives in chaos, the best hope is for a bipartisan group of senators to launch a debt commission to generate a plan. It might not get taken seriously for a while with the 2024 election looming.
But if interest costs remain high, so will the risks of inaction.
We can only pray that the “bipartisan group of senators” understands economics better than the Editorial Board of the Washington Post.
The Debt Crisis Is Getting Real Rising bond yields mean the national debt will be much more expensive in the next few years, and we keep adding to it. ERIC BOEHM | 10.4.2023
There is no “debt crisis.”
The fact that the so-called, misnamed “national debt” will be more expensive is a good thing. As is usual for Eric Boehm, he confuses federal bills, notes, and bonds with private debt. They are not at all alike.
His confusion stems from the words “bills, notes, and bonds,” meaning something entirely different for the federal government vs. the private sector.
For private borrowers, higher interest rates are a burden (though a benefit for lenders). The situation is different for the Monetarily Sovereign federal government.
It isn’t “national,” which would include federal, state, local, and private debt. The term, as used, refers to the federal government.
It isn’t “debt.” It’s dollars deposited into T-security accounts wholly owned by the depositors. The federal government never touches — never takes ownership of — those dollars. They forever remain the property of the depositors.
The federal government merely provides a safe place to store the dollars, stabilizing the U.S. dollar’s value. Upon maturity, the government returns whatever dollars are in the accounts. Think of a safe deposit box. A bank does not owe a depositor the contents of the box.
The federal government, which has the infinite ability to create dollars by pressing computer keys, never borrows dollars. Those T-bills, T-notes, and T-bonds do not represent borrowing. They represent the acceptance of deposits into accounts owned by depositors.
The federal government pays interest on the deposits. If the depositor is an American, those interest dollars go into the U.S. private sector, where they grow the U.S. economy. The higher the interest rate, the more growth dollars are added to the economy.
Paying interest does not burden the federal government or U.S. taxpayers. The government creates interest dollars by pressing computer keys. Taxpayer dollars do not fund federal interest payments.
Interest rates are not forced on the government. The Federal Reserve creates interest rates by fiat.
The government does not need to set rates high enough to sell T-securities. Not needing or taking possession of the dollars, the government doesn’t need to sell T-securities, and if ever the government wished to sell more T-securities, the Fed has the infinite ability to buy them, regardless of interest rates.
Writing at Vox in June 2016, liberal commentator Matt Yglesias argued that low interest rates meant governments were practically obligated to borrow more and run bigger deficits.
Wrong. The federal government is not obligated to borrow, and it never does borrow.
Running deficits is necessary to grow the economy. Whenever the federal government fails to run sufficient deficits — i.e., fails to pump enough money into the economy — the U.S. goes into a recession.
The red line represents quarterly changes in the federal deficits. When deficits are too small, the economy falls into recession (gray bars). The recessions are cured by increases in deficits.
“The right course of action is really pretty obvious: If the international financial community wants to lend money this cheaply, governments should borrow money and put it to good use,” he wrote.
The above statement would be true of monetarily non-sovereign entities: States, counties, cities, businesses, euro nations, and individuals. It is not valid for Monetarily Sovereignentities: The U.S., Canada, Japan, China, etc. They have the infinite ability to create their sovereign currencies, so do not borrow their currencies.
The basic interest rate on Federal T-securities is not market-determined. It is determined by the Fed.
“Good use” could mean different things to different political factions, he acknowledged. Yglesias favored more infrastructure spending, but he also suggested that taking on more debt could be used to finance a broad-based tax cut.
Yglesias demonstrates he lacks an understanding of federal finance. Not only does the government not “take on debt,” but at any time it wished, it could end all federal taxation and still continue spending as always.
Unlike state and local governments, the Monetarily Sovereign federal government does not use tax dollars to fund its spending. The purposes of federal taxes are:
To control the economy by taxing what the government wishes to discourage and by giving tax breaks to what the government wishes to encourage.
To assure demand for the U.S. dollar by requiring taxes to be paid in dollars.
To enrich the rich, who control America by widening the financial Gap between the rich and the rest. Tax laws are constructed so that the rich pay a lower percentage of their income than people with lower incomes.
The specifics might differ from place to place, but as long as there was cheap money to be had on the international bond markets, loading up on debt was a means to a positive end. “While it lasts, everyone could be enjoying a better life instead of pointless austerity,” he concluded.
Austerity is pointless, actually harmful, for Monetarily Sovereigngovernments. The U.S. government can afford to provide any benefit, no matter how costly, without collecting taxes.
Unlike state/local tax dollars, which remain in the economy at banks, federal taxes are destroyed upon receipt by the U.S. Treasury.
All taxes are paid with dollars from checking accounts that are part of the M1 money supply measure. When the dollars reach the Treasury, they cease to be part of any money supply measure because the Treasury has infinite dollars. Those federal tax dollars effectively are destroyed.
I don’t point this out to pick on Yglesias. He was—as he often has throughout a successful and productive career—serving as a sort of avatar for the liberal political consensus on an important issue.
With deficits falling and interest rates at all-time lows, borrowing seemed to make both fiscal and monetary sense on the political left—which was frustrated by the political constraints (that’s what Yglesias meant by “pointless austerity”) Republicans had placed on then-President Barack Obama’s second term.
Sure, the economy was doing pretty great in the mid-2010s, but cheap borrowing meant it could be doing even better.
Yes. Cheap borrowing does help the economy. It doesn’t help the federal government one way or another. The federal government never borrows.
Conservatives didn’t share this rhetorical perspective in 2016, but soon enough, they would reveal that they more-or-less agreed. On the campaign trail, Donald Trump promised, unbelievably, to pay off the entire national debt within eight years.
Had Trump kept his promise, history shows we would have fallen into a depression. Fortunately for America, Trump is not one who keeps promises.
U.S. depressions tend to come on the heels of federal surpluses.
1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.
Once in office, however, he set about adding to it—with the gleeful agreement of Republicans in Congress, who hiked spending, cut taxes, and let additional borrowing fill the gap.
The federal government “hiked spending and cut taxes,” but there was no borrowing. The government merely pressed computer keys to create the spending dollars.
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.”
Quote from former Fed Chairman Ben Bernanke when he was on 60 Minutes: Scott Pelley: Is that tax money that the Fed is spending? Ben Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account.
During Trump’s four years in office, the national debt grew by nearly $8 trillion, and you can only blame the COVID-19 pandemic’s emergency spending for about the last $3 trillion of that total.
Boehm fails to mention that the federal deficit spending grew the economy. When COVID shutdowns caused a recession, additional deficit spending quickly cured it.
“One of the reasons I do feel comfortable with us spending all this money is because interest rates are very low,” then-Treasury Secretary Steve Mnuchin said in 2020. “And we’re taking advantage of long-term rates.”
Either Mnuchin was ignorant or lying. The Monetarily Sovereign federal government does not “take advantage of” low rates. It creates all the dollars it needs by tapping computer keys.
A year later, President Joe Biden took over and cranked the spending spigot open even wider, requiring even more borrowing.
False. There was no borrowing by the federal government.
When Yglesias wrote that column for Vox in 2016, the federal government owed about $19 trillion. Today, it owes more than $33 trillion, and we just added another $2 trillion in a fiscal year with no major national emergencies.
The federal government does not owe $33 trillion. It pays all its bills on time. Those $trillion are dollars deposited into T-security accounts. If it wished, the government could pay them all off today simply by returning those dollars to their owners. This would be no financial burden on the government.
In short, the federal government followed Yglesias’ advice. But it might be more accurate to say it went along with what was clearly a bipartisan consensus formed in the mid-2010s: that borrowing was cheap, debt was easy to afford, and deficit spending allowed everyone to enjoy “a better life” with none of the downsides of austerity.
Again, total ignorance of Monetarily Sovereign finance is demonstrated.
Unfortunately, the downsides have arrived.
The yields on U.S. Treasury bonds are now hitting levels not seen in decades. The 10-year Treasury bond is nearing 5 percent, while the 20-year bond has already crossed that threshold—and some analysts expect higher yields to be coming, CNBC reported Tuesday.
Why does that matter? “We took out a mortgage thinking we’d be paying 2%, but now we’re paying 5%,” Marc Goldwein, director of policy at the Committee for a Responsible Federal Budget (CRFB), wrote on X (formerly known as Twitter) on Tuesday.
The CRFB is notorious for confusing personal finance with federal finance. Interest rates are not high because of federal deficits.
Interest rates are high because the Federal Reserve, in its misguided “solution” to inflation, intentionally, unnecessarily, and harmfully has raised them. Deficits do not cause interest rates. The Fed causes interest rates.
(Sadly, the Fed’s interest rate hikes actually exacerbate inflation by raising the prices of everything.)
Unlike most mortgages, which have fixed interest rates, much of the U.S. government’s debt is tied up in short-term bonds, which periodically “roll over” into new bonds with updated interest rates.
As a result, higher interest rates mean higher interest payments—and those funds come directly out of the federal budget, leaving less revenue for everything else the government might aspire to do, whether funding welfare programs or buying more fighter jets.
The previous paragraph is misleading. The Monetarily Sovereign federal government has the infinite ability to create U.S. dollars. Paying high interest does not “leave less revenue for everything else.”
“That debt, borrowed at low rates, is now being rolled over into Treasuries paying interest rates between 4.5 and 5.6 percent,” the CRFB explained last month. “Though borrowing seemed cheap during those periods, policymakers failed to account for rollover risk, and we are now facing the cost.”
“We” are not facing the increased cost of federal interest payments. The federal government pays the interest by creating new dollars ad hoc. (It is true, however, that higher interest is a burden for non-sovereign state and local governments.)
Interest payments on the debt will be the fastest-growing part of the federal budget over the next three decades, according to the Congressional Budget Office’s (CBO) projections.
In the shorter term, interest payments are set to triple by 2033, when they will cost an estimated $1.4 trillion—a total that will only grow higher if more unplanned borrowing occurs before then or if interest rates rise higher than the CBO expects.
The dollars being paid for federal interest will grow the economy:
Gross Domestic Produce = Federal Spending + Non-federal Spending + Net Exports
That’s a huge bill for future taxpayers, and it’s one that won’t get them anything for their money in 2033. It’s simply paying for the things the government did in the past.
False. Federal taxpayers do not fund federal spending, though state/local taxpayers do fund state/local spending.
Among other things, the CBO warns that paying for all that debt will “slow economic growth” and “elevate the risk of a fiscal crisis.”
Federal “debt” (deposits) does not affect economic growth. Federal deficits do affect economic growth. The more deficit dollars entering the economy, the greater the growth. Simple mathematics.
In other words, all that borrowing didn’t ensure that people could enjoy “a better life.” It meant that things could be temporarily better but that the bill would eventually come due. As it always does.
No, there is no bill to come due. Federal taxes don’t pay for federal spending.
There was available evidence that rampant borrowing would not be costless—and even that growing deficits might push interest rates higher, creating the exact mess in which we now find ourselves.
Deficits don’t “push interest rates.” The Fed arbitrarily sets rates in its mistaken method for curing inflation, regardless of federal deficits.
In a 2014 paper, the CBO economist warned that higher debt loads, even when borrowed at low interest rates, would result in “lower [economic] output and lower national saving lead to a lower standard of living.”
Another CBO working paper published in 2019 found that every one-percentage-point increase in debt as a share of gross domestic product (GDP) would add more than 2 points to interest rates.
Wrong, from several standpoints. The anonymous “CBO economist” is talking about the misleading DEBT/GDP ratio. It is a nonsense ratio having zero meaning.
The numerator (“debt”) is a cumulative, multi-year measure. The denominator (GDP) is a one-year measure.
That ratio, so often mentioned, does not indicate anything. It does not indicate the financial health of a Monetarily Sovereign government. It doesn’t indicate the government’s ability to pay its bills.
It doesn’t indicate the financial healthof the economy. It doesn’t impact the size of your tax bill. It doesn’t predict anything. It doesn’t measure anything meaningful.
I’ll put this kindly: The Debt/GDP ratio is the biggest bullshit ratio in all of economics, and anyone who claims it means something is simply wrong.
Next time you see it as a warning, immediately discount everything the writer says.
Those potential consequences were ignored by the political class.
Two months after Yglesias argued for more borrowing in Vox, Paul Krugman made essentially the same point in The New York Times, writing that “these are the best of times for the world’s most ravenous borrower, the United States of America.”
Yes, the best of times. And now, the worst.
Paul Krugman, winner of the fake Nobel, is wrong again. The federal government doesn’t borrow dollars.
But at least Boehm didn’t call the federal “debt” a ticking time bomb,” as so many have been doing since 1940 when the “debt” was about $40 billion. Today, it’s nearly $30 TRILLION.
The U.S. Supreme Court has a sordid history, with only brief flashes of morality and honesty.
Following a sad tradition of supporting extremism, bigotry, and personal greed.
It has legalized slavery, counted blacks and women as less than human, denied the words “well-regulated militia” exist, approved civil asset forfeiture without due process, and approved forced sterilization of the mentally feeble.
SCOTUS legalized the internment of Japanese Americans, uninhibited use of eminent domain taking, approved Jim Crow laws, and recently, denied women control over their bodies.
SCOTUS ruled that money is speech, so those with the most money were given the constitutional right to the most speech.
And then, there was Bush v. Gore, a flat-out contradiction of the Constitution.
So yes, far too many crooked, immoral, greedy, and even stupid justices have populated many terrible Supreme Courts. The current one follows that sad tradition.
My reading of the current Supreme Court is that it will continue to fail the morality/honesty test and will invent ever more twisted reasons to justify decisions reflecting the following concepts:
If something benefits the rich, the Court’s right-wing likes it.
If something benefits the rich at the expense of the poor, they love it.
If something benefits the rich, punishes the poor, and personally benefits certain members of the Court, they positively adore it.
Call me a pessimist if you will, but Moore vs. the United States will test the Court’s morality and honesty yet again, and I predict the Court will find a way to fail the test.
Excerpts:
Moore vs. the United States.The Roosevelt Institute and the ITEP report warned that the Supreme Court’s ruling could even affect social programs and the federal deficit.
The decision can affect social programs only if one wrongly believes federal taxes fund federal spending.
While state/local taxes fund spending by these monetarily non-sovereign entities, federal taxes do not fund spending by the Monetarily Sovereign U.S. government.
Even if all federal tax collections, including FICA, fell to $0, the federal government could continue its deficit spending forever.
“In Moore, the Roberts Court could decide with the stroke of a pen to simultaneously forgive big business decades of tax dues, increase the federal deficit over the long run, jeopardize future public revenue and essential social programs, escalate these multinational companies’ already sizable after-tax profits, and further enrich their shareholders,” the report authors wrote.
Contrary to popular wisdom, Social Security and Medicare are not funded by federal taxes. They are financed by dollars created ad hoc with the press of computer keys.
As for the federal deficit, it is necessary for economic growth. When the deficit fails to grow, we have recessions and depressions. The federal deficit is the private sector’s income. Concerns about the federal deficit are based on ignorance of federal finance.
Corporate profits create economic growth, and enriching shareholders is fine if the government also will spend to enrich the poor (via Social Security for All and Medicare for All).
The Supreme Court will hear the upcoming case, scheduled for December. It could potentially have far-reaching implications on the United States tax structure.
The case deals with whether the U.S. Constitution’s 16th Amendment authorizes Congress to tax unrealized sums without apportionment among the states.
Charles and Kathleen Moore are minority shareholders in an Indian farming firm, and they have disputed a provision in the Tax Cuts and Jobs Act passed by Congress in 2017 after the IRS presented them with a $15,000 bill for their investment.
The Moores argue the reparation tax is not on income and violates the 16th Amendment that requires direct federal taxes to be apportioned among the states. After losing a suit in the District Court in Washington state in 2022, the Moores’ dispute will be heard by the Supreme Court.
The Roosevelt Institute and the ITEP explained that before the Tax Cuts and Jobs Act, American individuals and corporations “owning stock in a foreign corporation were allowed to defer payment of U.S. tax on profits generated by the offshore company until those profits were ‘repatriated.'”
Because this is a tax benefit taken mainly by wealthy investors, one might expect the right-wing Supreme Court to rule in favor of the Moores.
If the high court sides with the plaintiffs, almost 400 multinational corporations could collectively receive $271 billion in tax relief.
The U.S. federal government, being Monetarily Sovereign, neither needs nor uses any form of income, including tax income. When this income originates with U.S. taxpayers, it represents a dollar reduction from the private sector and, therefore, is recessive.
On the other side of the coin is that most taxpayers will be among the rich, so the tax would help narrow the Gap between the rich and the rest.
So, we have a conundrum. Is stimulating economic growth or narrowing the Gap more economically beneficial?
The report noted Chief Justice John Roberts and Associate Justice Samuel Alito are said to own stock in 19 companies that could receive a combined $30 billion if the court strikes down the repatriation tax.
Aha. That would seem to be the closing argument. In the unlikely event that the SCOTUS justices have any remaining morality, Roberts and Alito would recuse.
I suspect Roberts still has a modicum of ethics. I doubt Alito has any. If they decide to recuse, it probably will be because Roberts embarrassed Alito into gritting his teeth and going along.
If they don’t recuse, Alito and the rest of the right-wing gang will have won the cage match race to the bottom.
The report also argues that depending on the scope of the decision, the Supreme Court could “supplant Congress as a major American tax policymaker, putting at legal jeopardy much of the architecture of laws that prevent corporations and individuals from avoiding taxes, and introducing great uncertainty about our democracy’s ability to tax large corporations and the most affluent.”
Laws that allow the rich to avoid taxes are like roast beef for starving SCOTUS justices. Who will take them on those free junkets if the rich get angry with them?
The federal government is not funded with tax dollars. It creates its own funding by pressing computer keys. Taxes control the economy by taxing what the government wishes to encourage and giving tax breaks to what the government wishes to reward.
Taxes also create demand for the dollar by requiring tax payments to be in dollars.
The actual function of federal taxes is to enrich the rich by widening the Gap between the rich and the rest.“Rich” is just a comparative, not an absolute term. The wider the Gap, the richer are the rich.
The rich pay a much smaller percentage of their income and wealth than the poor, so today’s tax law widens the Gap and makes the rich richer.
While taxing businesses is anti-growth, taxing the rich (i.e., eliminating tax dodges) would narrow the Gap.
Common Dreams wrote about the report on Moore v. United States and said that while justices could take a narrower view on specific parts of the Moore case, a broader ruling could protect individuals from a wealth tax.
There are many problems with a wealth tax — what constitutes “wealth,” how is it measured, how would a home, a bank account, or company stock be measured for tax purposes. The biggest problem is that, as with current tax laws, the rich would influence (i.e., bribe) Congress to answer those questions in their favor.
The Manhattan Institute, one of eight conservative advocacy groups that filed amicus briefs urging the Supreme Court to hear the Moores’ case, argued in a filing that “the case presents the court with an ideal opportunity to clarify that taxes on unrealized gains, such as wealth taxes, are direct taxes that are unconstitutional if not apportioned among the states.”
On balance — and there are two strong sides to this — I will agree with the conservatives if they rule in favor of the Moores. While state and local taxes are necessary to fund state and local government spending, federal taxes don’t support anything.
In my view, the best federal tax is no tax.
SUMMARY
Remember the three points at the start of this post: If something benefits the rich, the Court’s right-wing likes it. If something benefits the rich at the expense of the poor, the right wing loves it. If something benefits the rich, punishes the poor, and secretly benefits certain members of the Court, they positively adore it.
See whether any justice recuses. Then, see the decision and who votes for what. That will demonstrate much about this SCOTUS.
My guesses:
The right wing will back Moore and the rich. Their obligations to the rich and powerful are too strong to break.
Roberts and Alito won’t recuse, though, for appearances, they might dump their stock shares (and repurchase them later.) Those posh vacations on yachts and private planes may be too much fun to give up.
And hey, they have lifetime jobs, so let the peons complain.
I’d like to be proven wrong on this. The only solution is term limits and a morals clause similar to what every other judge in America must follow.
Rodger Malcolm Mitchell
Monetary SovereigntyTwitter: @rodgermitchellSearch #monetarysovereigntyFacebook: Rodger Malcolm Mitchell
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The Sole Purpose of Government Is to Improve and Protect the Lives of the People.
1. The U.S. federal government is not like state/local governments.It is uniquely Monetarily Sovereign, meaning it cannot unintentionally run short of its sovereign currency, the U.S. dollar.
Unlike state/local governments, the federal government never spends “taxpayer money.” It creates new dollars ad hoc when it pays any bills. Even if the government collected $0 in taxes, it could continue spending forever.
Because federal taxes do not fund federal spending, what is their purpose? The first purpose of federal taxes is to control the economy by taxing what the government wishes to discourage and giving tax breaks to what the government wishes to reward.
The second purpose is to assure demand for the dollar by requiring taxes to be paid in dollars.
2. Federal deficit spending does not, has not, and will not cause inflation. All inflations in history have been caused by scarcities of key goods and services, most notably oil and food, but more recently, transportation, computer chips, metals, lumber, labor, and other goods.
Today’s inflation was COVID-induced by all of the above scarcities. The scarcities and inflation could be cured by more federal spending to acquire and distribute the scarce goods and services.
Recently, I read an article in THE WEEK Magazine that reflects Congress’s cruelty, ignorance, and or greed, primarily those of the right. Here are excerpts and comments:
A year after the rate hit a historic low of 5.2 percent, the percentage of impoverished children jumped to 12.4 percent.
The bureau pointed to the end of the pandemic-era expansion of child tax credits in late 2021 as a critical factor in the dramatic increases.
“This represents a return to child poverty levels before the pandemic,” Liana Fox, assistant division chief at the Census Bureau, said during a news conference, per the Associated Press. “We did see the child tax credit substantially decreased child poverty.”
Why was the program discontinued if the child tax credit was proven to work and no taxpayer dollars were involved? We’ll discuss that later in this post.
The increase was “part of a wider rise in poverty recorded by the Census,” Time noted, “some of which can be attributed to inflation.” However, child advocates said, “the leap was particularly stark for kids — and was avoidable,” the outlet added.
The federal government can cure inflation by using its infinite money-creation power to acquire scarce items and/or reduce business expenses.
How did the rate go from a record low to more than doubling in one year?During the pandemic, Congress expanded the child tax credit as a part of the American Rescue Plan, which helped families stay afloat alongside stimulus checks.
Families received up to $3,600 for kids under 6 and $3,000 for children aged 6 to seventeen.
Officials also made the tax credit refundable, meaning families who did not make enough money to owe income tax could still be eligible for the monthly payments. This allowed millions of low-income families to be qualified and helped drive the child poverty rate to its lowest level in years.
That progress was reversed when the pandemic relief lapsed, and Congress did not vote to extend the expanded child tax credit at the end of 2021. With the program ending, millions of families lost eligibility for the credit.
The child tax credit can sometimes be considered “an upside-down policy,”Sharon Parrott, president of the Center on Budget and Policy Priorities, told NPR. “That’s because the children who need it the most get the least, while higher income children get more.”
That means when the pandemic relief ended, many families no longer reached the income requirement to qualify for the credit.
In contrast, families making six-figure incomes still get the full tax credit, Parrott explained. The child credit is income-based, so the more money you make, the more you earn per child.
Why did Congress favor giving more to the rich and less to the poor? Logically, it should be the other way around.
But the rich make bigger campaign contributions. It’s that simple.
The data highlights “that poverty in our country isn’t a personal failing, but rather a policy choice,” said Melissa Boteach, vice president of income security at the National Women’s Law Center, per Time.
Legislators could “lift millions of women and children out of poverty” if they “prioritize families over their wealthy donors,” Boteach added.
The rich have convinced the voting public that the poor are lazy takers whose poverty results from their sloth. “If only they worked harder like I do,” goes the mantra, “they wouldn’t be poor.”
It’s all a convenient lie to excuse cruelty and lack of compassion. If anything, the poor work harder than the rich. They are tasked with the most menial, least pleasant, most demeaning, least rewarding, back-breaking jobs our society offers.
More than any other fact, luck separates the poor from the rich. “There, but for the grace of God, go I.”
If the expanded tax credit was working, why wasn’t it extended?President Biden blamed congressional Republicans for not extending the expanded child tax credit, arguing that the rise reported by the Census was “no accident.”
But the push to expand the child tax credit reached a stalemate in Congress, with opposition from Democrats and Republicans. “One flash point was an insistence by some lawmakers that it should go only to families with working parents,” wrote The Washington Post editorial board.
That’s the WSJ expression of the “lazy takers” poverty theory. If someone doesn’t have a job, that “proves” they don’t deserve help.
It’s a disgusting lie promulgated to support cruelty and indifference. “I am a good person, but I don’t give to charity because (fill in the blank).
Others objected because they felt the money would discourage people from working and fuel inflation, which was already at a record high.
Think about it. Some 0f the financially fortunate in Congress felt that people receiving $3,600 to support a child for a year would not look for work. Only the clueless would believe such nonsense.
Others falsely claimed that increasing the federal deficit would exacerbate inflation. (They had no objections to the gigantic tax loopholes enjoyed by the rich, which further increased the deficit.)
When Donald Trump paid only $500 in total annual taxes for income that otherwise would have resulted in many millions of tax dollars, he alone increased the deficit by more than several thousand poor people receiving child tax credits.
Sen. Joe Manchin (D-W.Va.) reportedly suggested that parents would use the extra money on drugs, per Intelligencer, and he later opposed his party’s Build Back Better budget proposal, which included an extension to the child tax credit program.
Manchin’s disturbing suggestions were:. If you give anything to the poor, they’ll blow it on booze, cigarettes, and drugs rather than feeding their children.
If you’re one of the (mostly) right-wingers who like to make that claim, I genuinely feel sorry for the terrible job your parents did on you. They made you into a small, mean-spirited excuse for a person.
On a smaller scale, it’s “encouraging that 13 states have a version of the tax credit in place,” the Post editorial board reported. Most are blue states, but “there are also programs in conservative states such as Idaho and Oklahoma, where lawmakers understand how effectively it works,” the board noted.
The irony is that when states spend money, their taxpayers fund the dollars, unlike federal taxpayers, who fund nothing.
And here’s a cute switch by the increasingly right-wing extremist Wall Street Journal:
The temporary infusion of cash provided by the child tax credits and other pandemic stimulus programs contributed to “an inflation surge that gutted real incomes.”
Manchin was right to oppose a program that would have cost $1.2 trillion over the next decade.
The U.S. doesn’t need more inflationary spending that disproportionately “punishes lower-income Americans.”
Get it? The Wall Street Journal tells its gullible readers that helping the poor is bad for the economy and even bad for the poor! (As though that right-wing paper gives a fig about the well-being of the poor.)
In the lying words of the hate-mongers, giving to the poor encourages unemployment, drugs, inflation, and amazingly, even makes the poor and their children poorer. (Never mind that the child poverty rate more than doubled when the child tax credit ended.)
Perhaps the death of the WSJ’s owner, Rupert Murdoch, will help this paper come to some semblance of accuracy, though it has not yet improved the equally extremist Fox News.
SUMMARY
Giving money to the poor makes them less poor, doesn’t cause inflation, doesn’t increase illegal drug use, doesn’t increase unemployment, doesn’t threaten America’s solvency, and doesn’t cost taxpayers a thing.
In answer to the title question, “Is the problem cruelty, ignorance, or greed”? The answer, of course, is: All three.
And it applies to Washington and the voting public.
Rodger Malcolm Mitchell
Monetary SovereigntyTwitter: @rodgermitchellSearch #monetarysovereigntyFacebook: Rodger Malcolm Mitchell
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The Sole Purpose of Government Is to Improve and Protect the Lives of the People.
#Monetary Sovereignty - Mitchell 