If you had read the following, which was published in the New York Times, what would you have thought about the imminent future of America?
New York Times: Deficit Financing is Hit by Hanes: “. . . unless an end is put to deficit financing, to profligate spending and to indifference as to the nature and extent of governmental borrowing, the nation will surely take the road to dictatorship,” Robert M. Hanes, president of the American Bankers Association asserted today.
He said, “insolvency is the time-bomb which can eventually destroy the American system . . . the Federal debt . . . threatens the solvency of the entire economy.”
These comments were made by the respected president of the American Bankers Association on Sept 26, 1940, at which time the Federal debt was $40 billion.
Similar “time bomb” comments were being made continually, until 20 years later, on Feb 11, 1960, we read in the New York Times:
The enormous cost of various Federal programs is a time bomb, threatening the country’s fiscal future, Secretary of Commerce, Frederick H. Mueller warned here today “. . . the accrued liability is a ticking time bomb. Some day someone will have to pay.”
When Secretary of Commerce Mueller made his dire prediction, the federal debt had risen to $236 billion.
The “time bomb” predictions continued, and by Oct 26, 1983, Fred Napolitano, former president of the National Association of Home Builders , jumped into the act:
“ . . . home-building officials called for a commission to propose ways to trim the $200 billion federal deficit. The deficit is a ‘ticking time bomb‘ that probably will explode in the third quarter of 1984,’
By then, the federal debt “time bomb” had exploded to $1.3 trillion, and though Armageddon didn’t come, the predictions continued:
January 12, 1985, Lexington Herald-Leader (KY): The federal deficit is “a ticking time bomb, and it’s about to blow up,” U.S. Sen. Mitch McConnell, a Louisville Republican, said yesterday.
Honest Mitch McConnell, remember him?
Feb 17, 1985, Los Angeles Times: We labeled the deficit a `ticking time bomb‘ that threatens to permanently undermine the strength and vitality of the American economy.”
Jan 5, 1987, Richmond Times – Dispatch – Richmond, VA: 100TH CONGRESS FACING U.S. DEFICIT ‘TIME BOMB‘
Fiscal “time bomb” never explodes.
November 28, 1987, The Dallas Morning News: THE TICKING TIME BOMB OF LONG-TERM HEALTH CARE COSTS A fiscal time bomb is slowly ticking that, if not defused, could explode into a financial crisis within the next few years for the federal government and our nation’s elderly.
The ticking bomb is the growing cost of long-term care, which the federal government easily could fund, if it chose to.
October 23, 1989, FORTUNE Magazine: A TIME BOMB FOR U.S. TAXPAYERS The government guarantees millions of mortgages, bonds, deposits, and student loans. These liabilities, now twice the national debt, are growing fast.
Never mind that neither taxpayers nor the federal government are financially burdened by government guarantees. The taxpayer never will pay, and the government easily could pay — no burden on either.
May 1, 1992, The Pantagraph – Bloomington, Illinois: I have seen where politicians in Washington have expressed little or no concern about this ticking time bomb they have helped to create, that being the enormous federal budget deficit, approaching $4 trillion and growing now at an annual rate of $400 billion per year.
The budget deficit is an economic surplus, good for the economy.
October 28, 1992: Ross Perot: “Our great nation is sitting right on top of a ticking time bomb. We have a national debt of $4 trillion. Seventy-five percent of this debt is due and payable in the next five years.
This is a bomb that’s set to go off and devastate our economy and destroy thousands of jobs.
Ross Perot, remember him? Not much of a forecaster, is he?
Dec 3, 1995, Kansas City Star: Deficit is sapping America’s strength. Concerned citizens. . . regard the national debt as a ticking time bomb poised to explode with devastating consequences at some future date.
No one knows how the deficit, which adds dollars to the economy, saps America’s strength. An no one ever explains what those “devastating consequences” are.
April 14, 2003: Porter Stansberry, for the Daily Reckoning: The baby boomers are heading into retirement with no savings and no productive companies to support them in old age. Generation debt is a ticking time bomb…with about ten years left on the clock.
The ten years have expired.
October 1, 2004, Bradenton Herald: A NATION AT RISK: TWIN DEFICIT A TICKING TIME BOMB: Lawmakers approved Bush’s request without cutting federal spending by a penny, thereby fattening the country’s projected record deficit of $422 billion by another $145 billion next year.
May 31, 2005, Providence Journal, Defusing the Medicare time bomb, Some lawmakers see the Medicare drug benefit for what it is: a ticking time bomb, set to wreak havoc on the budget and shoot future tax rates sky-high.
Well, I guess that didn’t happen.
April 5, 2006, NewsMax.com, “We have to worry about the deficit . . . when we combine it with the trade deficit we have a real ticking time bomb in our economy,” said Mrs. Clinton.
Dec 3, 2007, USA Today: US debt: $30,000 per American. WASHINGTON (AP): Like a ticking time bomb, the national debt is an explosion waiting to happen.
And waiting, and waiting, and waiting . . .
September 24, 2010, Email from the Reason Alert: ” . . . the time bomb that’s ticking under the federal budget like a Guy Fawkes’ powder keg.”
Nice, poetic phrasing . . . not true, but poetic.
And, as the Republicans are working to cut Medicare and Obamacare, this:
July 7, 2011, Washington Post, Lori Montgomery: ” . . . defuse the biggest budgetary time bombs that are set to explode as the cost of health care rises and the nation’s population ages.
By 2011, the federal debt had reached $10 trillion, a 25,000% increase from its “dire” level of 1940. Still, that debt time bomb refused to explode, and to Henny Penny’s dismay, the sky refused to fall.
Gross Domestic Product had risen from $43 Billion to $15.5 Trillion, but that massive economic growth did not dissuade the fear mongers. The “Big Lie” continued:
In 2014: CBN News: “The United States of Debt: A Ticking Time Bomb.” The vast majority of Americans feel in their gut that the economy is headed in the wrong direction, in no small part because of this debt time bomb.
On Jun 18, 2015: The ticking economic time bomb that presidential candidates are ignoring: Fortune Magazine, Shawn Tully,
On January 23, 2017: Trump’s ‘Debt Bomb’: Deficit May Grow, Defense Budget May Not, By Sydney J. Freedberg, Jr.
On April 28, 2017: Debt in the U.S. Fuel for Growth or Ticking Time Bomb?, American Institute for Economic Research, by Max Gulker, PhD – Senior Research Fellow, Theodore Cangero
The federal “debt” has grown massively, as has the economy. No sign of the “time bomb.”
By 2017 the federal debt had grown to $14.7 trillion, and the slowest time bomb in history still kept ticking. And ticking.
Now we have arrived in 2018. The debt still is growing; the economy still is growing. So these are good things, right?
Not if you read the news of the day:
Trump’s Tax Cuts Are ‘A Ticking Time Bomb,’ Says Former Treasury Secretary January 2, 2018. (Bloomberg) Former U.S. Treasury Secretary Jacob J. Lew said the Trump administration’s decision to add a significant amount of debt through last year’s tax legislation is leaving the country broke.
“It’s a ticking time bomb in terms of the debt,” Lew said in a Bloomberg Radio interview with Tom Keene and Jonathan Ferro. “You cannot run a fiscal policy by spending trillions of dollars you don’t have at a time that the economy is doing well.”
Mr. Lew is well aware that the federal government always spends dollars it doesn’t have, simply because, being Monetarily Sovereign, it creates dollars, ad hoc, by spending dollars. Spending, or more specifically, paying bills is the federal government’s money-creation method.
(Anyone who believes the government spends dollars it has, is welcome to tell me how many dollars the U.S. Treasury has. You might be surprised at not being able to find an answer. But why would a government need to have dollars, if it can create dollars, endlessly?)
We’ll end this explosion, not of time bombs that never explode, but ratherthe explosion of lies, with something from just a few days ago:
REASON.COM What About the Debt? Trump’s State of the Union Ignores a $20 Trillion Time Bomb If a Republican president can’t address a Republican-controlled Congress without paying lip service to the idea of cutting spending, what good are Republicans?
Eric Boehm|Jan. 31, 2018 9:31 am
The tax bill will also add an estimated $1.5 trillion to the national debt over the next 10 years.
Republicans can pat themselves on the back for cutting taxes, but unless spending is reduced all they’ve really done is postpone the payment of taxes for 10 years or so.
Has Mr. Boehm noticed that taxes have not paid for past federal debts? Does he realize that taxes have nothing whatever to do with federal debt? (Even if all federal tax collections fell to $0, our Monetarily Sovereign federal government could pay off all its debts, with no difficulty. That is what “Monetary Sovereignty” means.)
For manyyears, pundits consistently have been wrong about the debt. If that doesn’t convince America federal debt is not a problem, what will?
What will it take for the American public to understand that the federal debt is nothing more than deposits in T-security accounts? These accounts are quite similar to bank savings accounts, that easily are paid off simply by returning the dollars residing in those T-security accounts.
What will it take for Americans (and citizens of other Monetarily Sovereign nations) to understand what “Monetary Sovereignty” means?
What will it take for the public to understand that a federal deficit is income for the economy, and the greater the deficit the more income benefits the economy?
What will it take for the public to understand that the lack of deficit spending leads to recessions and depressions and increased deficit spending cures recessions and depressions?
What will it take for the public to understand that the politicians, the media, and the economists have been paid by the rich to tell “The Big Lie,“ (that the federal government can run short of its own sovereign currency), so that social benefits like Social Security, Medicare, Medicaid, etc. can be cut?
How much evidence is necessary for the public finally to realize that the federal government has absolute control over the value of the dollar, so can cause or cure inflation at will?
The most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of The Ten Steps To Prosperity can narrow the Gaps:
Ten Steps To Prosperity: 1. ELIMINATE FICA (Ten Reasons to Eliminate FICA ) Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons: *FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and *The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare. 2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All ) This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:
Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap. 8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.
The Associated Press reported that the Environmental Protection Agency boasted: The number of Superfund sites had shrunk. It was, officials claimed, a major Trump administration accomplishment.
Except it wasn’t, really. The cleanup work on the Superfund sites in question was completed during the Obama administration. Trump World just wanted to take credit. (In fact, the AP found that work on Superfund sites slowed in 2017to a level lower than any year of the Obama or Bush eras.)
The Trump administration has released data showing a large increase in penalties against polluters, as well $20 billion in commitments from companies to correct problems that have caused environmental damage. […]
He brags about penalties for polluters, but hires Scott Pruitt, the most anti-environment guy in the land to run the E.P.A., a guy who has sued the E.P.A. many times.
The data from the E.P.A. represented activity during the government’s 2017 fiscal year, which ended on Sept. 30, meaning the totals included the final three and half months of the Obama administration, when some of the E.P.A.’s biggest cases were settled.
The data also reflected cases that were resolved during the Trump administration but had been initiated and largely handled under President Obama.
Cynthia Giles, who was the assistant administrator for the agency’s enforcement office during the Obama administration, explained, “Nearly all of the large cases included in E.P.A.’s annual enforcement report were essentially over before the new administration arrived at E.P.A.”
The New York Times found that Trump’s EPA sought significantly fewer civil penalties against alleged polluters than the preceding two administrations.
Ryan Zinke’s Interior Department published a “comprehensive list of accomplishments” in December, which included the Trump administration taking credit for a legal victory over mining near the Grand Canyon – “a legal fight that had already been argued in federal court a month before the Trump administration took office.”
The White House, probably embarrassed that Trump’s first-year job totals were the worst in seven years, has also begun taking credit for job creation that occurred in the months leading up to this president’s inauguration.
I suppose the broader question is, if Barack Obama’s tenure were as awful as Trump claims, why does the Republican president keep trying to take ownership of the Democratic president’s successes and accomplishments?
Federal deficit spending adds stimulus dollars to the economy.
But the even broader question yet is, for a guy who takes credit for the sun rising in the morning, why hasn’t Trump taken credit for something good his administration actually has accomplished, namely the increase in deficit spending that will add trillions of stimulus dollars to the economy.
In fact, out of ignorance or iniquity, Trump denies the best act of his otherwise meager Presidency:
WASHINGTON (AP) — President Donald Trump unveiled a $4.4 trillion budget for next year that heralds an era of $1 trillion-plus federal deficits and — unlike the plan he released last year — never comes close to promising a balanced ledger even after 10 years.
This means that every year, the U.S. federal government will add another $1 trillion+ to the world’s supply of dollars. Most of those dollars will go directly or indirectly to U.S. citizens, enriching us.
The rest will go to foreign nations and their citizens, enriching them and making them better customers for our products, so many of those dollars will come back to the U.S. — and it all won’t cost any of us a cent.
Because the U.S. federal government is Monetarily Sovereign, it does not spend tax dollars. Instead, it creates brand new dollars, ad hoc, every time it pays a creditor. (Your federal tax dollars disappear from the economy, and once received, no longer are part of any money supply measure. Effectively, they are destroyed.)
This new budget, with its multi-trillion dollar stimulus, absolutely guarantees strong GDP growth, something Trump will be able to brag about for the rest of his life.
Why then, isn’t Trump boasting?
This budget does not yet reflect last week’s two-year bipartisan $300 billion pact that wholly rejects Trump’s plans to slash domestic agencies.
The president’s budget proposes dramatic cuts to a wide range of domestic agenciesfrom the Departments of Labor and Interior to the Environmental Protection Agency and the National Science Foundation.
Unlike last year’s submission, the 2019 Trump plan would cut Medicare by $554 billion over the next 10 years, a 6 percent reduction from projected spending, including cuts in Medicare payments going to hospitals and rehabilitation centers.
Trump isn’t doing his usual bluster because he wants to cut anything that benefits the middle- and lower-income groups. He prefers to ship piles of money to businesses and the rich.
Much to Trump’s disappointment, the latest Congressional agreement actually leaves some money for the non-rich.
Presidential budgets are often declared dead-on-arrival in Congress where lawmakers have their own ideas about spending priorities. But the documents do represent the most detailed elaboration of an administration’s priorities.
In remarks Monday, Trump focused on the spending increases he favors rather than the deficits he and other Republicans have pledged to reduce.
“We’re going to have the strongest military we’ve ever had, by far,” Trump said. “In this budget, we took care of the military like it’s never been taken care of before.”
Now that his alleged bone spurs have kept him safe from the military, Trump has begun to love the military.
He even wanted to spend on a big, military parade, where he could stand high on a dais, and frown down with Musolinni-like pride, upon the sweating soldiers and the admiring throng.
Fortunately, wiser heads seem to have prevailed, though in truth, spending for the parade would have added dollars to the economy, thus demonstrating that even federal waste is economically stimulative.
Also getting a boost would be border security. Trump’s budget includes money to start building 65 miles of border wall in south Texas as well as money to bring immigration jails up to a capacity of 47,000 and add 2,000 Immigration and Customs Enforcement employees and 750 Border Patrol agents.
Do you remember the Wall that Trump guaranteed Mexico would fund? Another broken promise. But who cares about promises when you can have slogans? MAGA!
Trump prefers spending to keep out Muslims, browns, and blacks from “shithole” countries. He wants to admit only Nordics, the master race of Ubermensch that white supremacists and KKK folks prefer.
Trump’s plan sees a 2019 deficit of $984 billion, though $1.2 trillion is more plausible after last week’s budget pact and $90 billion worth of disaster aid is tacked on.
That’s more than double the 2019 deficit the administration promised last year.
Yet another broken promise, but this addition of dollars to the economy is supposed to shock you. You are asked to prefer that dollars be taken from the economy, which always leads to recessions and depressions, rather than having dollars added to the economy which leads to economic growth.
Declines in federal deficit growth (blue line) lead to recessions (vertical gray bars). Increases in deficit growth cure recessions.
The repeated failures of austerity don’t sway our bribed leaders, whose paid-for purpose is to widen the Gap between the rich and the rest.
All told, the new budget sees accumulating deficits of $7.2 trillion over the coming decade; Trump’s plan last year projected a 10-year shortfall of $3.2 trillion.
“In one year of working together, we have laid the foundation for a new era of American greatness,” Trump said in the budget message accompanying his spending document. “America is back to winning again. A great spirit of optimism continues to sweep across our nation.”
The new budget, with its increased deficits, does indeed lay the foundation for economic growth, though Trump has no idea why.
“A lot of presidents’ budgets are ignored. But I would expect this one to be completely irrelevant and totally ignored,” said Jason Furman, a top economic adviser to President Barack Obama. “In fact, Congress passed a law last week that basically undid the budget before it was even submitted.”
They’re fired.
Trump, however, will take credit for any economic successes that result, and will blame Congress and the Fed for any economic failures.
Trump would reprise last year’s attempt to scuttle the “Obamacare” health law and sharply cut back the Medicaid program for the elderly, poor and disabled. His plan also reprises proposals from last year’s Trump budget to curb crop insurance costs, cut student loan subsidies, reduce pension benefits for federal workers and cut food stamps, among other proposals.
Strange, all those cuts to social benefits, but I didn’t see anything about cutting tax benefits to the rich. Trump, his family, and his closest associates are rich, so what could you expect?
At least we have the additional deficit spending, i.e. additional economic income, and that’s better than most politicians, media pundits, and economists want.
The most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of The Ten Steps To Prosperity can narrow the Gaps:
Ten Steps To Prosperity: 1. ELIMINATE FICA (Ten Reasons to Eliminate FICA ) Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons: *FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and *The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare. 2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All ) This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:
Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap. 8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.
The single most important problem in economics is the wide and growing Gap between the rich and the rest. Therefore, anything that narrows the Gap tends to get my positive attention. “Parental leave” is one of those things.
Parental leave would be an important benefit to middle-income groups, a vital benefit to low-income groups, and meaningless to the rich — exactly the kind of program I love, and exactly the kind of program the rich deplore.
There are infinite versions of parental leave, depending on the length and amount of the benefit. Fundamentally, it would recognize the fact that in today’s America, women of child-bearing age often are important money earners.
There are three times when these women and their families need financial help:
–During those pregnancy days when the women physically are unable to go to work
–At birth, and shortly thereafter, when again, the women are physically unable to work.
–During the months following childbirth, when the combination of physical weakness and the demands of infant care, impact family work ability
Every woman is different. True story: I know a young woman, who when pregnant, worked every day, then one day left the office to deliver her baby, and was back at work the next day. (Her mother took care of the infant.) That was exceptional, and not even advisable, but it was what she wanted and was able to do.
The purpose of this article is not to debate the amount or timing of the benefit, nor to determine whether it is “unfair” to families that don’t have children, or whether some women are malingerers who would take excessive and unneeded advantage.
Rather, the purpose is to discuss how any parental benefit program would be financed.
Here is what an article in the Chicago Tribune said:
Social Security Can’t Be a Piggy Bank for Parental Leave
The U.S. retirement system isn’t strong enough to support a proposal to let new parents borrow against future benefits.
By Michael R. Strain, February 9, 2018, 8:00 AM EST
During the State of the Union address last month, when the president called for helping “working families by supporting paid family leave,” Speaker Paul Ryan and Vice President Mike Pence remained seated, unable to muster enthusiasm.
Republicans have traditionally opposed government-provided paid leave, but the Trump administration, led by first daughter Ivanka, is trying to change that.
The GOP, which more and more has become “the party of the rich,” tends to oppose anything that helps the so-called “99%.” Social Security, Medicare, Medicaid, school lunch programs, food stamps all repeatedly are under fire by conservatives, who make two claims, both false:
–The recipients are lazy slugs, who game the system and who should work harder to support themselves.
–The federal government can’t afford the program.
The State of the Union speech breathed new life into the idea, along with a compelling proposal to fund paid leave without — its advocates claim — burdening employers, reducing job opportunities for women or increasing taxes.
The idea is simple and elegant: Allow new parents to collect early Social Security benefits after the arrival of a child, provided that they are willing to delay collecting benefits when they begin their retirement decades into the future.
Embedded in the “simple and elegant” idea, are three beliefs, two of which are true and one of which is dead wrong:
Employers should not have to pay employees for not working. True. When companies bear this burden in any form — paid vacations, paid sick days, etc. — the cost simply becomes part of the salary consideration, so ultimately is paid by the employee.
Families of child-bearing age should not be punished in the job market. True. There was a time when prospective employers actually asked women whether they planned to get pregnant. That doesn’t happen as much anymore, but some employers still are reluctant to hire women between twenty and thirty years of age, especially to jobs that require a great deal of training and responsibility.
Federally-funded family leave programs would require federal tax increases. False. The U.S., being Monetarily Sovereign, creates brand new dollars, ad hoc, every time it pays an invoice, so has no need for tax dollars.
Consider a 26-year-old new mother with five years of work experience earning $31,100 per year. Under this plan, she could receive 12 weeks of paid leave, at a rate of close to $300 per week. In exchange, she would delay claiming retirement benefits by about six weeks.
This idea is gaining traction. Senator Marco Rubio, the Florida Republican, is working with Ivanka Trump on drafting a bill. Earlier this week, two other Republican senators, Joni Ernst of Iowa and Mike Lee of Utah, discussed the plan in a press call hosted by the Independent Women’s Forum, which first outlined the new approach.
Some prominent conservative intellectuals are also getting behind the idea.
A born-rich woman and a do-nothing Senator have created an idea that gives to the present and takes from the future, exactly what financial experts suggest one never should do.
If this reminds you of the disgraceful student loan program — in which young people are punished long-term by ongoing debt, you are correct.
Punishing families by taking money from future Social Security payments, is an idea one would expect from conservatives.
Helping the young by enslaving the old is a favorite GOP gambit, who simultaneously (and ironically) preach saving for the future.
To its designers’ credit, this is the best federal paid-leave proposal being discussed. My Bloomberg View colleague Ramesh Ponnuru agrees, writing that he hasn’t “seen a better plan.” Its underlying philosophy — that society should invest more in the young and less in retired individuals — is sound.
But it’s still a bad idea.
Yes, it’s a bad idea, especially since it does not ask “society” to invest more in the young” — it asks the elderly to invest more in the young — nor is there any merit to giving less to the elderly.
Spending on Social Security is projected to rise by 1.5 percentage points of annual economic output over the next three decades.
Policy should be focused on decreasing projected spending to preserve Social Security for future generations.
Social Security spending needs to be cut, not redirected.
This idea, being promulgated by the rich, tells you two lies:
Social Security benefits are so lucrative, they can be cut without punishing the elderly, who anyway, aren’t productive members of our society
Federal taxes pay for Social Security.
Lie #1 is ridiculous and disgraceful. Social Security benefits already are shamefully low, below poverty levels, and the notion that the elderly can be cast aside as no longer productive is beyond contempt.
Lie #2 is just that: A lie. The truth is that federal taxes — FICA, income taxes, any other taxes — do not pay for anything. They do not pay for Social Security. They do not pay for Medicare. They do not pay for the military, or for roads or for the White House, or for Congress. Not one dime of federal taxes is used for anything.
When you send your tax dollars to the U.S. Treasury, they instantly disappear from any measure of the money supply. They no longer exist in the economy. They effectively are destroyed.
By contrast, when you send your dollars to your state and local taxing authorities, those dollars are deposited in a private bank, where they remain in the nation’s money supply.
That is a fundamental difference between a Monetarily Sovereign government, like the U.S. government, and a monetarily non-sovereign government, like your state and local governments.
State and local governments need income in order to spend. The federal government neither needs nor uses income. It creates brand new dollars, ad hoc, by paying bills.
And one wonders what else Congress might want to finance using future Social Security benefits if a family-leave plan creates that possibility.
Depending on the party in power, the federal government always can afford that party’s favorite projects.
Currently, the favorites are the military and the “Wall.” They will be funded, even while taxes are reduced.
Social Security will soon pay out more to retirees than it receives in tax revenue and interest income, and its “trust fund” reserve is projected to be exhausted in 2034.
By the time today’s new parents reach retirement age, either benefits will have been reduced or taxes will have increased.
Social Security does not use tax revenue to pay benefits, and the so-called “trust fund” is a bookkeeping fiction. Of what purpose is a trust fund for a Monetarily Sovereign government that has the unlimited ability to create its own sovereign currency?
No Monopoly money? Make a table like this. No column needed for the Bank, which never can run short, even with no taxes.
If you ever have played the board game “Monopoly,” you know that the Bank never runs short of money. Players can use any item as asubstitute or keep a record of transactions. The Bank creates Monopoly dollars, ad hoc, every time it pays a bill.
The federal government operates the same way as the Monopoly Bank. If you can’t run short of money, why be concerned about running short of money?
Future lawmakers could decide that retirees shouldn’t be “penalized” with lower benefits because they took paid time off. Any policy where the benefits are enjoyed today and the costs aren’t realized for decades should be met with skepticism.
This was not a concern for the GOP Congress, who gave benefits to the rich in the form of tax cuts, and the “costs” never will be realized.
On balance, then, it’s best to think of the family-leave plan as another middle-class entitlement program. Given projected federal debt and deficits, another entitlement is something the U.S. does not need, however laudable the goal. (This is especially true in light of the fact that four out of 10 working women already report access to paid time off following the birth of a child.)
If there is anything the rich hate, it’s “entitlement programs,” specifically entitlement programs for the 99%.
Entitlement programs for the rich, such as special tax breaks for non-salary income, are just fine, however.
Apparently, the writer of the article, Mr. Strain, believes that if 40% of working women have access to some unknown amount of paid time for some unknown duration, under certain, unknown circumstances, the problem is solved.
Finally, advocates of the plan are quite wrong to suggest that it won’t burden employers. It’s true that it wouldn’t require employers to finance the leave taken by their workers, but it would impose other significant burdens.
Subsidizing time away from work through the Social Security system would increase both the number of parents who take long periods of leave and the weeks of leave new parents take.
The increased use of leave would materially disrupt business operations, particularly for smaller firms.
The poor are lazy.
This is under the theory that middle- and low-paid people are congentially lazy, and will look for ways to cheat the system. (Of course, rich people never do such things.)
Since women tend to be the main users of parental leave, businesses would probably respond to this disruption by hiring fewer less-educated women of child-bearing age, offering women fewer hours of work per week, and by promoting fewer women into management roles.
The costs of paid leave will disperse throughout the labor market, creating invisible victims whose employment opportunities are diminished.
“Hiring fewer less-educated women of child-bearing age, offering women fewer hours of work per week, and by promoting fewer women into management roles” is exactly what happens now.
The difference is that today families not only are punished because they might have children, but also are punished when they actually do have children. A federally-financed family leave program could remove the second punishment.
Paid leave has many benefits. But the costs of letting families borrow against Social Security to finance it are too high.
Michael R. Strain at mstrain4@bloomberg.net; To contact the editor responsible for this story: Jonathan Landman at jlandman4@bloomberg.net
Yes, paid leave has many benefits, especially if funded by the federal government, and isn’t another version of the awful student loan program, that gives today and punishes forever.
The most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of The Ten Steps To Prosperity can narrow the Gaps:
Ten Steps To Prosperity: 1. ELIMINATE FICA (Ten Reasons to Eliminate FICA ) Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons: *FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and *The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare. 2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All ) This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:
Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap. 8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.
Let us begin with some real truths, after which we can move on to the fake “truths” you have been hearing.
Real truths:
1. The U.S. federal government, being Monetarily Sovereign, never can run short of dollars. Even if tax collections fell to $0, the federal government could continue spending, forever. It creates dollars, ad hoc, by paying creditors. Federal taxes do not pay for federal spending; dollar creation pays for federal spending.
2. Federal spending stimulates Gross Domestic Product growth by adding dollars to the economy. (Federal Spending is part of the basic GDP formula: GDP=Federal Spending + Non-federal Spending + Net Exports).
3. The federal government has absolute control over the value of its own sovereign currency, which gives it control over inflation.
Now, let us move to an article from 2/9/18 Chicago Tribune, an article typical of what you will see in your own local paper, and see on TV, and hear on the radio:
Budget deal would pour gas on an economy running hot
By Don Lee Washington Bureau
WASHINGTON — If the GOP’s $1.5 trillion tax-cut package powers the American economy like rocket fuel as President Donald Trump predicts, the new congressional budget deal could, if passed, become the extra boost that causes the engine to overheat.
“Overheat” means inflation. The prediction, very simply, is that deficit spending will cause inflation.
78 years and the fake bomb still is ticking.
That has been the concern for the past 78 years. In 1940, when the “Debt Held by the Public” was 40 Billion, it was called a “ticking time bomb.”Every year since, it has been termed some variation of “ticking time bomb.” Yet today, inflation is low and controlled.
Seventy-eight years of being wrong have not taught the economists and pundits humility.
The budget compromise that was struggling late Thursday to win passage provided a bipartisan answer to the latest fiscal crisis. But lawmakers did so by raising spending caps on military and non-defense programs that would add $300 billion to $400 billion to the deficit.
Coming on top of the tax cuts passed late last year, the increased spending caps — plus tens of billions of additional money for hurricane relief — would throw more fuel to an economy that is already perking up.
“Throw more fuel” means to grow the economy. Aside from inflation fears — the same false fears expressed for the past 78 years — why is growing the economy considered a bad thing? I’ll tell you later in this post.
Analysts say that raises the odds of higher inflation and interest rates, precisely the concerns that in recent days have stoked investor fears and stock market volatility.
The budget deal also means that the United States probably would be returning to trillion-dollar annual deficits next year — much sooner than expected and under a government controlled by Republicans who traditionally had identified themselves as the party of fiscal probity.
The fear is threefold:
That increased federal deficit is inflationary, and
In response, the Fed will raise interest rates to combat the inflation, and
Higher rates slow the economy, by making borrowing more difficult.
Let’s discuss each:
I. Is increased federal deficit spending inflationary?
The formula is Value = Demand/Supply. So if the Supply of money increases and/or the Demand for money decreases, the Value of money will be reduced, which means more money will be required to buy the same goods, i.e. inflation.
That is the formula. Here is the reality:
Blue line = inflation; Red line = deficit
For at least the last 45 years, there has been no relationship between our huge deficits and inflation, but why? Is something wrong with the formula?
Well, actually there is a relationship between deficits and inflation, but that relationship is overshadowed by a far more important relationship:
The price of oil affects the prices of nearly every product and service in the world.
That is why federal deficit spending has not caused inflation. Oil prices have, on average, gone down.
II. In response to inflation, will the Fed will raise interest rates?
Although we have shown that federal deficit spending has not caused inflation, even the suspicion of a coming inflation will cause the Fed to increase interest rates. Why?
Because of this formula: Demand = Reward/Risk.
To combat inflation, the Fed wants to make dollars more valuable, and one way to do this is to increase the Demand for dollars. The Reward for owning dollars is interest.
The higher the interest rate, the more people want to own interest paying forms of money — savings accounts, bonds, notes, and bills. The demand for money increases, which increases the value (aka, the “strength”) of the dollar, thus reducing inflation.
III. Do higher rates slow the economy, by making borrowing more difficult?
This is widely believed, and this belief alone is one of the reasons why the stock market falls when the Fed raises rates. Traders sell just because they expect a downturn.
The other reason the stock market falls: Raising rates makes bonds more attractive, so investors sell stocks to purchase bonds.
That’s how the stock market operates, but what about the economy? Do higher rates slow economic growth?
Green line = Gross Domestic Product growth; Purple line = Interest Rate
There seems to be either no relationship between interest rates and GDP growth, or there actually is a reverse effect, with higher rates coinciding with higher GDP growth.
How can that be?
Two reasons: Federal deficit spending causes the issuance of more Treasury securities, which increases the amount of interest the federal government pays into the economy. And this interest payment increase is compounded by higher interest rates.
All that additional federal deficit spending is stimulative. Therefore:
Far from being a danger or a burden, growing deficit spending grows the economy, and reduced deficit growth is deflationary.
For instance:
Recessions (vertical gray bars) are introduced by reduced deficit growth, while recessions are cured by increased deficit growth.
Recessions are introduced by reduced deficit growth, while recessions are cured by increased deficit growth.
Extreme reductions in deficit growth (i.e. federal surpluses) tend to cause extreme recessions (i.e. depressions):
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.
When Trump took office about a year ago, the Congressional Budget Office projected that the nation’s deficit would run between $500 billion and $700 billion annually for a few years, not breaching $1 trillion until 2022.
With lower tax revenues expected and now additional spending and an accompanying agreement to lift the debt ceiling, some experts reckon the deficit would blow past $1 trillion in fiscal 2019 and keep rising.
Said another way:
“The Congressional Budget Office projected that the federal government would add between $500 billion and $700 billion in stimulus growth to the economy, annually for a few years, not breaching $1 trillion until 2022.
“With lower tax revenues expected and now additional spending and an accompanying agreement to lift the debt ceiling, some experts reckon the federal government will add a $1 trillion worth of economic growth in fiscal 2019 and keep adding growth dollars, thereafter.”
The complaint seems to be that growth is a bad thing, though as we have seen (above), economic growth does not cause inflation.
Treasury Secretary Steven Mnuchin has said that the president is concerned about the increasing debt. And on Thursday, deputy press secretary Raj Shah said the budget the White House plans to release Monday will show a “path” toward declining deficits.
A “path” toward declining deficits is a path toward more frequent recessions and depressions.
“Economic growth is essential to cutting deficits,” he said. “We are committed to fiscal discipline.”
The above is like saying, “Financial growth is essential to lower income,” completely senseless. “Fiscal discipline” means to reduce the income of the economy, also senseless.
The U.S. debt held by the public, including foreign investors, is currently about $15 trillion.
“We’ve already entered a period where we have these structural deficits, and to answer that with a new round of tax cuts that are unpaid for, and a new round of spending that’s unpaid for, is just adding insult to injury,” said Michael Peterson, president and chief executive of the Peter G. Peterson Foundation, a non-partisan organization focused on the country’s fiscal challenges.
First, to say that the Peter G. Peterson Foundation is “non-partisan” is like saying the GOP is non-partisan. It’s a right-wing foundation.
Second, the federal government does not use taxes to pay for spending; it uses money creation. Every time the federal government pays a creditor, it does so with newly created dollars, not with tax dollars.
Therefore, neither spending nor tax cuts can be “paid for.”
Some Republican lawmakers balked at the budget deal, calling it fiscally irresponsible.
No, “irresponsible” is to cut deficit spending and sink the nation into yet another unnecessary recession or depression.
The Great Recession severely shrank government revenues, and spending surged in 2009 as President Barack Obama and Congress responded with a huge economic stimulus package.
The federal deficit spiked to $1.5 trillion in 2009 and remained above $1 trillion for the next three years, then went back down to an average of around $575 billion a year in Obama’s second term through 2016, representing a little over the 3 percent share of gross domestic product that economists consider a maximum sustainable rate.
The politicians agree that deficit spending stimulates economic growth, but ignore that fact when we are between recessions.
The Republican tax cuts and new budget package amount to a similarly massive fiscal stimulus, but it is coming at a time when the economy is not faltering.
We have a recession every five years on average because the politicians drive the “economic car” by switching from gas to brake to gas to brake, forcing the economy to lurch forward in growth, then fall back in recession, again and again, and again.
Economists warn that the rising national debt will choke growth as more public money ends up going to support deficits instead of economically productive uses.
“You already have deficits growing too fast, you cut the (tax) revenue out from under us, you increase the spending, and on top of that you rule out making changes to entitlement programs,” said Marc Goldwein, senior policy director at the Committee for a Responsible Federal Budget (CRFB). “It ultimately spells fiscal disaster.”
The CRFB is the ultimate “Debt Henny Penny” organization, continually warning about debt-disaster, that never has come, and never will come. Instead, the disasters come when we cut deficit spending.
For 78 years we have been warned about that “ticking time bomb.” That fake bomb still is “ticking,” and the Henny Pennys still are warning. Wrong for all these years and still crying “Wolf!”
Why? Notice that phrase “entitlement programs” in the CRFB comment?
The Gap is what makes the rich, rich. Without the Gap, no one would be rich. (We all would be the same.) And the wider the Gap, the richer they are.
So the rich bribe the politicians (via campaign contributions and promises of lucrative employment later), the media (via ownership and advertising dollars), and the economists (via contributions to universities and lucrative “think tank” employment) to spread “The Big Lie” that federal financing is like personal financing.
But federal financing is unique. Debt is not a burden on the federal government or on federal taxpayers, and it does not force inflation on us.
Our opinion leaders are paid to make you believe that good is bad, and up is down, so they can keep you down and lift the rich up.
And that is what all the “ticking time bomb” lies are about.
The most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of The Ten Steps To Prosperity can narrow the Gaps:
Ten Steps To Prosperity: 1. ELIMINATE FICA (Ten Reasons to Eliminate FICA ) Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons: *FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and *The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare. 2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All ) This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:
Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap. 8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.
It takes only two things to keep people in chains:
It takes only two things to keep people in chains:
It takes only two things to keep people in chains:
It takes only two things to keep people in chains:
#Monetary Sovereignty - Mitchell 