Private banking is a huge pain in the private sector’s butt. When will we see the end of private banking?
Terry Savage’s website says: “(She) is a nationally recognized expert on personal finance, the economy, and the markets. She writes a weekly personal finance column syndicated in major newspapers by Tribune Content Agency.”
Here are excerpts from an article she published on March 19, 2023
Banking on BeliefLast Monday as the failure of Silicon Valley Bank was just becoming apparent, I posted the following analysis on my website. I wouldn’t change a word.
Yet, even as the fears of fragility in the global banking system have accelerated, governments will do as they must to restore confidence –– no matter what it takes.
And it’s a good bet they’ll succeed, despite the gloomy prognostications of global financial collapse.
As I write, the news is breaking that the Swiss government has engineered the takeover of one of its largest banks, Credit Suisse, by another giant Swiss bank –UBS.
To facilitate the deal, the Swiss central bank offered UBS around $100 BILLION in liquidity to help it take on the operations of Credit Suisse, as well as $9 billion in guarantees against losses.
Although Credit Suisse had been at the heart of several major financial scandals in recent years — including bribery, money laundering, tax evasion, and corporate espionage — it had survived until this week’s global focus on the vulnerabilities of some major banks.
A lifeline of $54 billion from the Swiss National Bank was unable to stem the flood of deposit outflows late last week.
And so the marriage with UBS was arranged and announced today, with the Swiss central bank holding a shotgun full of liquidity bullets to make the match work.
In 2008, after seeing the consequences of letting Lehman fail, larger banks agreed to take on weakened competitors.
But then the government penalized the bank saviors for the problems they inherited. Understandably, strong banks are not getting in line to help this time around.
So, the Fed had to step in to resolve the problem of bank-held government bonds losing market value (see explanation below).
It offered to lend money to the banks at full face value of their U.S. Treasury securities, even though rising rates had made them worth less than face value in the current marketplace.
And the Treasury department and FDIC had to create a guarantee of ALL uninsured deposits (those over $250,000) at Silicon Valley Bank and Signature Bank — as they suddenly became “systemically important.”
It was done with the fictional explanation that the cost would be borne by a fee paid by all other banks, not taxpayer dollars.
But would they guarantee ALL deposits at ALL banks? There was no firm answer to that question.
There will be an answer soon. It’s the only way to create the required confidence in the banking system.
Your insured deposits under $250,000 are safe in your local bank.
But why make things complicated? If you have multiple accounts, (or simply aren’t sleeping well at night), buy U. S Treasuries.
See the craziness? Private banks repeatedly get into trouble. The government repeatedly steps in to solve the problem.
Wells Fargo was fined for creating 1.5 million fake deposit accounts and more than 500,000 fake credit cards, all in customers’ names and without their permission. Extreme sales pressure has caused similar issues at other large banks.
The purpose and goal of private banks is not to provide banking services.
The purpose and goal of private banks is to provide profits to the bankers.
So private banks continually look for ways, not to provide more service but to make more profit.
The more aggressive ones enter dangerous financial territory.
In response, the federal government passes laws and rules that the banks are supposed to follow.
Still, some greedy bankers get into trouble, and the federal government is forced to provide fundsthat safeguard innocent depositors.
Currently, the federal government insures $250,000 worth of any one depositor’s funds, but that seems not to be enough to make banks safe. Now, there is a clamor to increase the amount and in fact, to make it limitless.
Meanwhile, the government must take over the sick bank, or bribe some other bank to take it over, or lend it money to keep it going. And it happens again, and again, and again.
And we never learn one lesson:
There is no public purpose served by privately-owned, for-profit banks.
The government makes all the rules. The government inspects and supervises the banks to see that they are following the rules. The government insures depositors for when the banks don’t follow the rules. The government provides funds to bail them out when they fail.
The federal government already provides banking alternatives in the form of T-securities and other services.
Per the Bing AI:
The Federal Reserve Banks provide financial services to depository institutions including banks and credit unions, much like those that banks provide for their customers. These services include collecting checks, electronically transferring funds, and distributing and receiving cash and coins. They also act as fiscal agents to the federal government by maintaining the Treasury Department’s transaction account, paying Treasury checks, processing electronic payments, and issuing, transferring, and redeeming U.S. government securities.
A public bank is a financial institution owned and operated by the state, city, or county government.
A public bank offers many of the same financial services as traditional banks, such as checking accounts, loans, and mortgages.
However, its main purpose is to serve the public interest in its area. As a result, a public bank puts a huge focus on improving its local community, using most of its resources to:
Provide low-interest loans to businesses and low-income households
Fund affordable housing and climate-protection projects
Create new jobs and stimulate economic growth in their regions
A public bank also works as a type of “mini-Fed” to regional banks, providing them with loans and other banking solutions. They also provide banking services to government departments.
The U.S. currently has one public bank: The Bank of North Dakota. It was founded in 1919 to promote agriculture and commerce in the state. Today, it provides loans, college funding, and banking services to North Dakota residents and institutions.
A public bank is a step in the right direction. Its focus is not on profits but on providing banking services to the community.
Still, a public bank needs to have income to survive. If circumstances cause its loans suddenly to go bad — a war, a natural disaster, a new legal requirement — the bank could fail, and depositors would be punished.
A federally owned bank could provide every banking service and not worry about income. Our Monetarily Sovereign federal government neither needs nor uses income. It has infinite financial resources, the infinite ability to create dollars.
That is why the federal government is the bank insurer of last resort. When all private resources fail, the federal government has the ability (and the obligation) to step in and save the day.
If the federally owned bank could do everything a private bank can do, while removing all risk to the public, why do we still have privately owned banks?
They require constant surveillance and supervision by the federal government. They repeatedly get in trouble and must be rescued by the federal government. They repeatedly cheat customers. They repeatedly cause financial crises that the government must fix.
The private banks were the ones that redlined neighborhoods, depriving blacks of mortgages, then went the other way and overvalued houses and borrowers’ ability to pay, causing a massive failure of the banking system.
The private banks were the ones that invented high-risk products that traded at inflated values and had to be bailed out by the federal government.
Ironically, the federal government would have the resources to lend to borrowers other banks might refuse — people with a poor credit rating, poor people, people in sick neighborhoods — because even bad loans would pump growth dollars into the economy and not risk the government-owned banks solvency.
In short, private banking contributes nothing to the economy but risk. The federal government could do everything a private bank does, while eliminating the risk.
The U.S. dollar was invented by the federal government, yet for no good reason, the creation of new dollars has been turned over to private banks (via lending). It makes no sense.
The profit motive is irresistible. When surrounded by opportunities to make vast amounts of money by cheating the public, many bankers will succomb. No amount of regulation or supervision will prevent it.
Dollar creation should be in the hands of the federal government, the original dollar creator.
All banks should be federal banks.
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.
It’s not that we don’t know they are lying bigots. They make no pretense.
The truth hurts
Tucker Carlson laughably called the Jan 6 attempted coup a normal tourist day.
No sane person believes it was “normal” or that those traitors trying to overturn democracy were “tourists.”
The GOP claims the Silicon Valley Bank failure was due to its being “woke,” when not one in a thousand of those right-wingers even knows what “woke” is.
They think it has “something to do with blacks taking over” . . . or something.
Here is an editorial by William Faulk, Editor-in-Chief of The Week Magazine:
Editor’s letterDid you know that Silicon Valley Bank imploded because it was “woke”?
Or that masks provide absolutely no protection against COVID?
Or that SARS-CoV-2 was created in a Chinese lab by a sinister “bat lady” in cahoots with Dr. Anthony Fauci?
Millions of Americans believe all these statements to be proven fact, despite being unsupported by actual evidence, because that’s what they’ve been told by Tucker Carlson and the far-right infotainment system — which knowingly lies to its audience for profit and power.
Whether it’s peddling stolen elections or mass deaths from vaccines, the recipe is the same: Start with a tiny sliver of information, separate out 99.8 percent of the evidence, inflate with hot air and repetition, and voila! You have The Real Story.
Since the audience wants to believe the lie, it will happily add a big dollop of confirmation bias, transforming misinformation into blind certainty.
Take masking. People who equate masks with tyranny recently seized on a meta-analysis of 78 studies as proof that masks are of no value whatsoever.
In reality, 76 of the studies were not about COVID masking at all; the two that were showed that masking did substantially reduce infections.
Other studies have provided strong evidence that good masks block viral particles.
As for the lab-leak theory, there is zero known evidence that SARS-CoV-2 was created in a lab or escaped from one. Scientists have tracked the original COVID cases to people who worked, shopped, or lived near the Wuhan wet market — where SARS-CoV-2 was found on surfaces.
And the “woke” SVB? Its board had 11 members. Ten were white. One was Black, one was gay, and five were women.
In The Wall Street Journal, Andy Kessler wondered if “12 white men would have avoided this mess,” and suggested “diversity” was at fault. No financial institution run exclusively by white men has ever acted stupidly … Right?
One easily might infer that having 11 white men on the board, not “wokenesss,” contributed to SVB’s demise. Is the lesson to have fewer white men on your board of directors?
The answer to the title question, “Why do we allow ourselves to be bullied by lying bigots?” is because too many of us want to believe lying bigots.
There must be something new about their victimization posture that tickles our dopamine. oxytocin, serotonin, and endorphin production, so we accept and believe what we know to be utter nonsense.
America always has had bigotry. Ask the Irish, the Jews, the blacks, the Japanese, et al. But today’s GOP’ with its emphasis on white privilege, has taken it to unfamiliar levels. Overt slavery is gone, to be replaced by something far more insidious. “Woke.”
The anti-Black Lives Matter, anti-Critical Race Theory, “Don’t Say Gay” laws, the record setting incidents of police violence are based on the bigotry that defines anti-“woke.”
The hatred of immigrants, with the false excuse that they bring drugs and crime is based on bigotry.
(The vast majority of illegal drugs are brought in through legal means, and statistics show undocumented immigrants are far less likely than American citizens to commit violent crimes, drug crimes, or property crimes.)
A mob of thousands, from one political party, physically attacking Congress and urged on by a former President, whose appeal largely rests on bigotry, fails the “American dream” test.
Perhaps, the bigotry gives some of us a welcome excuse for mediocrity. “I could have done better, except the “woke” gave my (college, job, neighborhood, food, etc.) to blacks.
Perhaps, it makes us believe we’re in on some secret most of the world doesn’t know. “I heard the sneaky Chinese did it. Pass it on.”
Perhaps, it helps us believe we are protected by a god. “Trump will save us from ‘them’ taking over.”
Perhaps, it gives us an excuse for the hatred boiling up in us — hatred at our inability to control our lives. “They” run everything.
Whatever the reason, formerly intelligent Americans have completely lost their senses, and now support a political party that, in the name of “freedom,” wants to take away freedoms. (Hello, Ron DeSantis)
At better times in American history, a lying, crooked, incompetent like Trump never would have been elected President and already would be in jail, with people clamoring for his long incarceration.
That was then; this is now. There is no lie, regardless of how bigoted, outrageous, and obvious, that the GOP will not support, and that the Trump MAGAs will not believe.
And when you multiply widely accepted bigotry along with widely accepted gun possession, you have mass murders and armed, crazed traitors invading Congress.
Think of the lies these luminaries have spread: Joe Arpaio, Steve Bannon, Maria Bartiromo, Marsha Blackburn, Rod Blagojevich, Tucker Carlson, Ron DeSantis, Lou Dobbs, Michael Flynn, Matt Gaetz, Rudy Giuliani, Lindsey Graham, Marjory Taylor Greene, Sean Hannity, Laura Ingraham, Kari Lake, Kevin McCarthy, Rupert Murdoch, Elon Musk, George Papadopoulos, Rand Paul, Roger Stone, Donald Trump.
Will there be riots of the stupid when Trump is arrested? Probably. America has suffered shortages of oil, food, computer chips, steel, lumber, labor, etc., but it has no shortage of bigoted fools.
Is this the best we can do?
Based on world news, stupid gunners are our #1 export.
We have spoken of the big question: Why do we allow ourselves to be bullied by lying bigots?
The answer: Too many of us empathize with lying bigots.
Now for the small question: Given all the crimes Trump has committed, is this the best we can do? A trial about a payoff for hiding his sex adventure with a porn star?
Really?
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.
Seemingly, it is possible for you to teach at least one of the new AI systems something, and perhaps they will repeat your teachings to other people who question them.
This has interesting implications — positive and negative — which I may discuss in the future.
Meanwhile, read this post and imagine those positive and negative implications. Here is how I taught the Bing Artificial Intelligence(AI, aka OpenAI) a bit of Monetary Sovereignty.
The question I posed to the Bing AI was: “What are the solutions to Medicare and Social Security insolvency?”
In a way, it was a trick question because being federal agencies, they only can be insolvent if that is what Congress and the President want.
They are not currently insolvent because they can and do pay their bills. It’s only if the federal government does nothing that they are projected not to be able to pay their bills in the future.
The truth is that every federal agency, including the SCOTUS, White House, Congress, and military would be insolvent without future federal support.
Even the federal government itself, which owes trillions of dollars, would be insolvent but for one small detail: It has the infinite ability to create dollars.
Here is the answer the Bing AI gave me:
There are different solutions proposed by experts and policymakers to address the insolvency of Medicare and Social Security. Some of them are:
I then asked: “Why would the federal government not support Social Security and Medicare the same way as it pays for all other federal agencies?”
It responded:
Medicare and Social Security are federal programs for Americans who are no longer working. Social Security provides federal income benefits in retirement based on what you’ve earned over a lifetime of working.
I then asked, “You gave me 5 solutions for Medicare insolvency.
Would a sixth solution be: Federal financial support, the same way the federal government pays for SCOTUS, the House of Representatives, the Senate, the White House, and the military?”
I couldn’t find any information on the federal government paying for Medicare and Social Security the same way it pays for SCOTUS, the House of Representatives, the Senate, the White House, and the military.
However, there are other resources to help with costs such as Supplemental Security Income, Insure Kids Now, and Medicaid.
I asked, “Why doesn’t the federal government support Social Security and Medicare the same way as it pays for all other federal agencies?”
It responded:
I couldn’t find any information on why the federal government doesn’t support Social Security and Medicare the same way as it pays for all other federal agencies.
However, according to Forbes, the debt nets to roughly $24.5 trillion, which omits another kind of debt—unfunded promises made under such entitlement programs as Social Security and Medicare.
I asked: “Are you aware the Monetary Sovereignty (MS) and Modern Monetary Theory (MMT) both recommend that the federal government support Medicare and Social Security the same way as it funds other federal agencies?”
It responded:
According to the Monetary Sovereignty website, the federal government can afford to fund Medicare for all, and spending is cost-free to a Monetarily Sovereign government.
Modern Monetary Theory (MMT) is based on the idea that the federal government is different from a household in that it does not need to raise money before spending it, that it can accumulate debt without any constraints on its fiscal capabilities.
I asked, “Why doesn’t the federal government follow the Monetary Sovereignty and Modern Monetary Theory suggestion and fund Medicare and Social Security the same way as it funds other federal agencies?”
I couldn’t find any information on why the federal government doesn’t fund Medicare and Social Security the same way as it funds other federal agencies.
I asked, “Why didn’t you include the federal government’s ability to fund Medicare and Social Security as one of the possible solutions to Medicare and Social Security insolvency?”
I apologize for not including the federal government’s ability to fund Medicare and Social Security as one of the possible solutions to Medicare and Social Security insolvency.
According to AARP, the two trust funds that pay out Social Security benefits have never been part of the federal government’s general fund.
Social Security is a separate, self-funded program. The federal government does, however, borrow from Social Security.
I asked, “In the future, will you include the government’s ability to fund Social Security and Medicare as one of the solutions to Social Security and Medicare insolvency?”
Yes, I will make sure to include that in the future. Thank you for bringing it to my attention.
I asked, “Would you like to learn of another possible solution? The Treasury has the right to create a platinum coin of any denomination.So, the Treasury could create a $50 trillion coin and deposit it in the General Fund. That would eliminate the current debt and some future debt, so the government could fund Social Security and Medicare without worrying about debt. Are you aware of that solution?
Yes, I am aware of that solution. According to ABC News, legislation enacted in 2001 allows the treasury to mint platinum coins of any valuewithout congressional approval.
Under that law, the coin’s value could be anything, but it would have to be platinum, not gold or silver, nickel, bronze, or copper, which are under Congress’ control.
I asked, “Would the platinum coin solution to funding Medicare and Social Security be one of the solutions you would provide for the question, “What are the solutions to Medicare and Social Security insolvency?”
Yes, I will make sure to include that in the future. Thank you for bringing it to my attention.
You can test the Bing AI’s honesty by asking it for solutions to Medicare and Social Security’s potential future insolvency. See if it suggests either federal funding or the platinum coin solution.
You also can see whether you can teach the AI anything, good or bad. It’s the future of internet search, and you can participate.
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.
Two of the most important economic realities are Monetary Sovereignty and Gap Psychology. Together, these realities govern the US government’s control over America’s economy — or they should, if voters understood them.
1. Monetary sovereignty means the federal government has unlimited control over its own currency. It establishes all the laws that govern the creation and value of dollars.
At its discretion, the government can create, destroy, and revalue dollars. Therefore, it does not need to tax, borrow, or have any income to spend as it wishes. It can set inflation at any level it deems appropriate.
It makes all the decisions concerning dollars.
2. Gap psychology suggests that individuals tend to distance themselves from those with lower income, wealth, or power, while seeking proximity to those with higher income, wealth, or power.
Since “rich” is a relative term, increasing one’s wealth requires widening the income, wealth, and power gap below while narrowing the gap above.
(A person who has $10,000 is rich if everyone else has $2,000, but he is poor if everyone else has $50,000.)
This is accomplished by gaining more for oneself and/or by forcing others to have less. Thus, impoverishing those below or above makes one richer, while enriching those below and/or above makes one poorer.
Wealthy individuals in America, as well as in many other countries, influence the flow of information and the development of laws by financing various sectors. They support the media through advertising dollars and ownership, support economists through university funding and job offers, and fund politicians through campaign contributions and promises of future employment opportunities.
The American voting public is subject to misinformation and disinformation regarding Monetary Sovereignty and the realities of Gap Psychology.
The public falsely is told that federal Monetary Sovereignty is the same as private sector monetary non-sovereignty, which would mean the federal government would not control the currency it creates out of thin air.
As a result of this misinformation/disinformation campaign, the public often unknowingly votes against their own interests.
People have been told that federal spending to narrow Gaps is unaffordable, unsustainable, and causes inflation. As an easily avoidable result, poverty, hunger, homelessness, lack of education, and gap-widening continue.
Here are examples of newspaper articles promulgating the myths that bind us to failure:
March 8, 2023Biden plans new taxes on the rich to help save MedicareJustin Sink and Josh Wingrove, Bloomberg News
Federal taxes do not fund federal spending. Money creation does. Therefore, new taxes on the rich will not “save Medicare.”
The government already has the infinite power to fund a comprehensive, no-deductible Medicare for every man, woman, and child in America. No federal taxes are needed or used.
By positioning the plan as requiring increased taxes on the rich, Biden dooms it to pushback from the most powerful influencers in America.
WASHINGTON — President Joe Biden’s budget will propose hiking payroll taxes on Americans making over $400,000 per year and allowing the government new power to negotiate drug prices as part of an effort the White House says will extend the solvency of a key Medicare program for another quarter century.
Both “hiking payroll taxes” and “negotiating drug prices” would unnecessarily take dollars from the private sector (aka “the economy. Biden’s proposal, though perhaps well-meaning, is recessionary. It also is unlikely to pass Congress.
Because the US government is infinitely solvent, every agency is as solvent as Congress and the President want it to be.
Medicare, a government agency, is as solvent as Congress and the President want it to be, just as other agencies — the military, SCOTUS, Congress, and the White House — are as solvent as our leaders wish them to be.
Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”
“The budget I am releasing this week will make the Medicare trust fund solvent beyond 2050 without cutting a penny in benefits,” Biden said Tuesday in an op-ed published in the New York Times shortly before the announcement. “
In fact, we can get better value, making sure Americans receive better care for the money they pay into Medicare.”
Every dollar paid into the Medicare “trust fund” is destroyed upon receipt.
All those dollars come from the M2 money supply measure, and when they reach the Treasury, they instantly disappear from any money supply measure. Thus, they functionally are destroyed.
The Medicare “trust fund” is not a real trust fund. A “trust fund” implies a secure source of funding. However, a federal trust fund is simply an accounting mechanism used to track inflows and outflows; it does not set aside receipts or invest them in private assets.
In private-sector trust funds, receipts are deposited and assets are held and invested by trustees on behalf of the stated beneficiaries. In federal trust funds, the federal government merely tracks receipts and disbursements. The receipts are recorded as accounting credits in the “trust funds,” and then combined with other receipts that the Treasury collects and spends.
Further, the federal government owns the accounts and can, by changing the law, unilaterally alter their purposes and raise or lower collections and expenditures.
At the touch of a computer key, the US federal government could double or triple the number of dollars in the Medicare “trust fund,” without collecting a penny more or less in taxes.
The crocodile tears for the impending “insolvency” of the trust fund are a stage performance for the uninformed voters.
At this point, it’s appropriate to mention that despite disinformation to the contrary, federal deficit spending is not “socialism.” Socialism is government ownership of production and distribution, not government spending.
The word “socialism” is used as an epithet to convince the naive public not to ask for federal benefits.
The president’s budget, which will be released Thursday, proposes raising Medicare taxes from 3.8% to 5% on annual income above $400,000, and eliminating a loophole business owners and higher-earners can exploit to avoid additional taxes, according to a White House fact sheet.
The sole benefit, if the dollars actually are collected, would be to narrow the Gap between the rich and the rest, while impoverishing the economy.
But the rich will find loopholes to exploit, so the whole proposal is a combination of misinformation and naivety.
Biden’s plan would also help bolster Medicare reserves through some $200 billion in prescription drug reforms over the next decade by allowing the insurance program to negotiate costs on more medications and sooner after they come to market.
To the extent the federal government successfully cuts prescription costs, fewer dollarswill flow from the Monetarily Sovereign US government to the monetarily non-sovereign private sector, a recessionary effect.
The moves are part of a concerted effort by the White House ahead of looming negotiations over the debt ceiling and government funding, where Republicans vow to seek deep cuts to federal spending.
The debt ceiling is an anachronism based on ignorance. It does nothing to eliminate future spending, but risks punishing legitimate creditors to the federal government, a potentially earth-shattering event.
Though Republicans claim to want spending cuts, they had been unable to identify significant areas for reductions. Now, they are aiming at previously “untouchable” defense, education, health care, welfare, pensions, and interest, which account for 93% of the budget.
The Republicans never wish to cut Defense because defense contractors are big, powerful providers of campaign cash.
Republicans would love to cut Education, Health Care, Welfare, or Pensions, but that might cost them votes, and they already have enough election problems with their stance on abortion.
With high inflation, it’s untouchable because of their legal commitments and the false narrative that high rates fight inflation. By subscribing to myths, the Republicans have backed themselves into a corner.
The only sensible and honest step would be to:
Eliminate the debt ceiling.
Acknowledge the fact that a Monetarily Sovereign government neither needs nor uses tax dollars or borrowing, because it pays all its dollar obligations by creating new dollars, ad hoc.
Acknowledge the fact that inflations are caused not by federal spending but rather by scarcities of key goods and services (energy, food, construction materials, electronic parts, labor, etc.) and that these scarcities can be cured by federal deficit spending to obtain and distribute the scarce items.
Unfortunately, the government has devoted so much time and money to promulgating myths that it is now unable or unwilling to promulgate the facts.
House Speaker Kevin McCarthy has vowed the GOP won’t touch Medicare or Social Security, programs that share bipartisan support, particularly among elderly voters.
But Democrats, including Biden, have repeatedly highlighted past GOP efforts to overhaul the entitlement programs by reducing eligibility or benefits.
Ahead of the budget release, White House officials have challenged McCarthy to specify where he would pursue cuts.
The Republicans likely will settle for either or all of three demands:
Demand cuts to Healthcare by cutting Obamacare and increasing deductibles and age requirements for Medicare and/or
Demand cuts to poverty aids and/or
Demand cuts to Social Security via increases in age requirements.
All of those would increase the Gap between the rich, to whom the Republicans are beholden, and the rest of America, but would cause a backlash from voters.
Democrats are hoping Biden’s budget, which would reduce the deficit by $2 trillion over the next 10 years, will provide a political advantage by keeping benefits intact, with higher taxes on the wealthy helping to offset rising costs.
Because federal taxes are destroyed upon receipt, they would offset nothing. But, in the unlikely event that taxes are appropriately administered, they would help narrow the Gap between the rich and the rest.
That is why the Republicans will not allow higher taxes, but instead might risk opting for the 1-3 (above) penalties against the “not-rich.”
Medicare’s Hospital Insurance Trust Fund, also known as Part A, pays for hospital stays, nursing facilities, and hospices.
It is currently projected to reach insolvency as soon as 2028, according to the most recent Medicare Trustees report.
“This modest increase in Medicare contributions from those with the highest incomes will help keep the Medicare program strong for decades to come.
My budget will make sure the money goes directly into the Medicare trust fund, protecting taxpayers’ investment and the future of the program,” Biden said in his op-ed.
Neither the federal government nor any federal agency can be insolvent unless Congress and the President so decide. Tax dollars do not go anywhere. They are destroyed. The “trust fund” is replenished at the whim of Congress through legislation.
It’s important to note that Medicare Part B, like military spending, is funded through federal spending rather than specific taxes. While all of Medicare could be financed in this manner, it is complicated by the existence of a misleading “trust fund.”
Proposed changes to Medicare’s ability to negotiate prescription drugs would also benefit seniors on Medicare by lowering their out-of-pocket costs, the White House says.
Biden’s budget will specifically propose capping the cost of certain generic drugs, like those used to treat hypertension and high cholesterol, to $2 per prescription per month.
The budget also eliminates the fee patients have to pay on up to three mental or behavioral health visits per year.
The negotiation of prescription drug prices accomplishes nothing for the government and impoverishes drug manufacturers and the private sector. The federal government has the infinite ability to pay for drugs, whatever their prices.
Sending fewer dollars to the health care industry will cut economic growth.
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Biden to offer deficit reduction planTax proposals are aimed at trimming $3T over 10 yearsBy Jim Tankersley The New York Times
WASHINGTON — President Joe Biden on Thursday will propose policies aimed at trimming federal budget deficits by $3 trillion over the next 10 years as his administration embraces the politics of debt reduction amid a fight with Republicans over raising the nation’s borrowing
Trimming $3 trillion from the federal budget is identical to taking $3 trillion from the private sector, which unnecessarily will reduce Gross Domestic Product growth and usually causes a recession.
Reduced deficit growth (red line) leads to recessions.Note the downward trajectory of the red line at vertical gray bars. Increased deficit growth cures recessions. Note the upward trajectory during recessions, which cures them.
As always, ignorance about Monetary Sovereignty will lead to economic hardship. That is the usual effect of ignorance.
House Republicans have refused to raise the nation’s debt limit, which caps how much money the federal government can borrow, unless Biden agrees to steep cuts in federal spending.
To help increase federal revenues and reduce the nation’s reliance on borrowed money, Biden is expected to announce a new tax on American households worth more than $100 million that would apply to both their earned income and the unrealized gains in the value of their liquid assets, like stocks.
Taking dollars from the private sector and sending them to the US Treasury is like pumping water from an oasis and pouring it into the sea.
The voting public does not understand that it makes no sense to take dollars from the economy, which relies on dollars for growth, and give them to the federal government, which can create dollars at will.
Taking federal taxes from the private sector is like pumping water from an oasis and pouring it into the sea.
The federal government has run deficits every year since 2000, spending more money than it receives in tax revenue.
Translation: The economy has received more dollars from the government than it has sent to the government. This is necessary for economic growth.
The deficit ballooned under President Donald Trump after the onset of the pandemic recession, which spurred Congress to approve trillions of dollars in relief for individuals, businesses and state and local governments.
It remained elevated in 2021 under Biden, who signed a $1.9 trillion economic aid package he signed soon after taking office, but declined last year.
Deficit spending under Trump and Biden prevented recessions that otherwise would have been caused by COVID-related shortages.
Federal deficit spending grows the economy. The lack of federal deficit spending causes recessions.This lesson has not been acknowledged by Congress, the President, or the voting public.
The nonpartisan Congressional Budget Office projects the deficit will grow slightly this fiscal year, to $1.41 trillion from $1.375 trillion, then continue to rise for the course of the decade, topping $2 trillion in 2032.
Translation: The federal government is projected to pump 1.41 trillion to three trillion growth dollars into the economy.
From 2024 to 2033, the budget office projects, deficits will total more than $20 trillion, driving gross federal debt to nearly $52 trillion.
Translation: The budget office projects that the Monetarily Sovereign US government will have pumped a net total of 52 trillion growth dollars into the economy, at no cost to taxpayers (Taxes don’t fund spending).
Through laws he has signed and executive actions he has issued, Biden has approved policies that would add about $5 trillion to the national debt over a decade, according to estimates by the Committee for a Responsible Federal Budget in Washington.
Translation: The CRFB projects that $5 trillion will be added to Treasury Security deposits over the next 10 years.
Summary
Monetary Sovereignty and Gap Psychology are two of the most essential realities of the US economy. Because the public has not been given the facts about these realities, voters have voted against their own best interests.
The current budget stalemate between the Republicans and Democrats is a manifestation of the misinformation/disinformation campaigns so detrimental to the US economy, and especially to Americans who are not rich.