Mitchell’s laws:
●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor, which leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
●Everything in economics devolves to motivation.
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Last November, we published the post titled, “Sorry to say this: Obama really is a liar and a traitor to the middle class. But Romney would have been worse.” If you’ve not read it, you might wish to. It’s a prelude to today’s article.
I saw the following in the Washington Post:
Obama, in State of the Union, makes case that middle class is job one
By Scott Wilson, Published: February 12, 2013
President Obama challenged Congress on Tuesday night to assist an American middle class squeezed by rising costs and stagnant wages, making clear that he will devote much of his second term to closing the income gap between rich and poor.
This is the same President Obama who just increased FICA, costing the average working American, $1,000 every year (plus interest). For someone like Mitt Romney, earning $1 million a year from investments, that’s a cost of $0. Yes, zero. And this is how President Obama closes the income gap.
Obama’s proposal to raise the minimum wage from $7.25 to $9 an hour over the next three years was among several new proposals that his advisers said were designed to close the income gap.
Those additional dollars won’t come from the federal government, so they have to come from the private sector. Increasing the minimum wage either:
1. Reduces corporate profits, and/or
2. Reduces employment, and/or
3. Reduces Net Exports and
4. Definitely will increase income tax and FICA collections, both of which will reduce the domestic money supply, impoverishing the economy.
None of the above will do anything to reduce the gap or to stimulate the economy. If anything, they will increase the gap and slow the economy.
Obama also announced that he will bring 34,000 American troops home from Afghanistan over the next year.
Morally, it’s the right thing to do, but economically it adds 34,000 souls to the ranks of the unemployed. How that will help the middle class is yet to be explained.
He called for “bipartisan, comprehensive tax reform” and emphasized that his proposals would not add to the $854 billion deficit, only reallocate money already in the budget to finance them.
“Reallocate money already in the budget” means: Take dollars from some expenditures helping the middle class to fund other expenditures that may or may not help the middle class. Moving dollars from the middle class’s left pocket to their right pocket doesn’t close the income gap.
Then he said:
“But let’s be clear: Deficit reduction alone is not an economic plan,” Obama said. “A growing economy that creates good, middle-class jobs — that must be the North Star that guides our efforts.”
See that sneak word, “alone”? Had he not used that word, he would have been right on track: Deficit reduction is not an economic plan. But he means to reduce the deficit, which requires tax increases and spending cuts, both of which are proven to widen the gap between the rich and the middle.
His State of the Union address included a few other immortal lines:
“Over the last few years, both parties have worked together to reduce the deficit by more than $2.5 trillion, mostly through spending cuts, but also by raising tax rates on the wealthiest 1 percent of Americans. As a result, we are more than halfway towards the goal of $4 trillion in deficit reduction that economists say we need to stabilize our finances.”
Nearly all of those spending cuts hurt the middle class, not the rich. He raised the highest tax rates on the rich, who seldom pay the highest rates, but he forgot to mention the FICA tax increase, which hurt the middle class. Just a slip of memory, perhaps.
As for, “$4 trillion in deficit reduction that economists say we need to stabilize our finances,” what the hell does “stabilize our finances” mean? Is our Monetarily Sovereign nation about to run out of the dollars it has the unlimited ability to create?
“In 2011, Congress passed a law saying that if both parties couldn’t agree on a plan to reach our deficit goal, about a trillion dollars’ worth of budget cuts would automatically go into effect this year.
These sudden, harsh, arbitrary cuts would jeopardize our military readiness, they’d devastate priorities like education and energy and medical research. They would certainly slow our recovery and cost us hundreds of thousands of jobs.”
It isn’t the “suddenness” or the “harshness” (huh?) of the spending cuts that will “devastate” our economy, it’s the cuts themselves. Cut even one dollar from the deficit and you “slow our recovery.” Cut enough more dollars and you destroy our economy.
“The biggest driver of our long-term debt is the rising cost of health care for an aging population. And those of us who care deeply about programs like Medicare must embrace the need for modest reforms. Otherwise, our retirement programs will crowd out the investments we need for our children and jeopardize the promise of a secure retirement for future generations. But we can’t ask senior citizens and working families to shoulder the entire burden of deficit reduction while asking nothing more from the wealthiest and the most powerful.
Lots of clever little words. For instance, “reforms” means nothing more than “cuts.” And senior citizens and working families will not shoulder the “entire” burden of deficit reduction — just the vast majority.
And in a striking example of gobble-de-gook, he talks about Social Security “crowding out” investments for children and future generations. Will someone please explain how Social Security benefits, which put dollars into the bank accounts of senior citizens, “crowd out” their investments for children and future generations? Cutting benefits, as has been done by raising the qualifying age, is what really reduces those investments.
Then, there was this amazing statement:
“Most Americans understand that we can’t just cut our way to prosperity. They know that broad-based economic growth requires a balanced approach to deficit reduction, with spending cuts and revenue, and with everybody doing their fair share.”
Where does one begin with this pack of lies and misdirection? No, we can’t just cut our way to prosperity. In fact, we can’t cut our way to prosperity at all. Forget the weasel word “just.”
Every “balanced approach to deficit reduction,” always, ALWAYS has a far greater impact on the middle than on the rich, not to mention that any deficit reduction slows the economy.
And puleeeze, don’t anyone try to define “fair share.”
“On Medicare, I’m prepared to enact reforms that will achieve the same amount of health care savings by the beginning of the next decade as the reforms proposed by the bipartisan Simpson-Bowles commission.”
The notorious Simpson-Bowles commission, whose recommendations were guaranteed to send us into a depression while widening the income gap — this is Obama’s model? And who will pay for those “health care savings”? Doctors? Hospitals? Pharmaceutical companies? Patients? How will any of these ‘savings” improve America’s health care? Or is our health care so good, we won’t mind having a bit less of it?
“To hit the rest of our deficit reduction target, we should . . . get rid of tax loopholes and deductions for the well-off and the well-connected.”
Translation: “To hit the rest of our money-supply reduction target, we should get rid of the mortgage interest deduction, the medical expense deduction, the business deduction for employee health care — and forget what I said about the well-off and well-connected. I owe my job to them.”
“The American people deserve a tax code that helps small businesses spend less time filling out complicated forms and more time expanding and hiring, a tax code that ensures billionaires with high- powered accountants can’t work the system and pay a lower rate than their hard-working secretaries, a tax code that lowers incentives to move jobs overseas and lowers tax rates for businesses and manufacturers that are creating jobs right here in the United States of America.
Translation: “We need tax simplification, which broadens the tax base. In other words, we need a flat tax, so that everyone pays the same rate.” (“Did I say it right, Mr. Buffett?”)
Every dollar we invested to map the human genome returned $140 to our economy. Every dollar.
Today, our scientists are mapping the human brain to unlock the answers to Alzheimer’s. We’re developing drugs to regenerate damaged organs, devising new materials to make batteries 10 times more powerful. Now is not the time to gut these job-creating investments in science and innovation. Now is the time to reach a level of research and development not seen since the height of the space race. We need to make those investments.
Er, ah, excuse me, Mr. President, but you’re the one who foolishly wants to cut deficit spending. So where will the dollars come from to do all this wonderful stuff?
“Today, no area holds more promise than our investments in American energy. We need to encourage that. That’s why my administration will keep cutting red tape and speeding up new oil and gas permits.”
Are you talking about that Keystone XL Pipeline Koch Brothers want so they save billions by shipping dirty oil from Canada to Texas, which already has lots of cleaner oil?
“Ask any CEO where they’d rather locate and hire, a country with deteriorating roads and bridges or one with high-speed rail and Internet, high-tech schools, self- healing power grids.
So, tonight, I propose a “Fix-It-First” program to put people to work as soon as possible on our most urgent repairs, like the nearly 70,000 structurally deficient bridges across the country.
And to make sure taxpayers don’t shoulder the whole burden, I’m also proposing a Partnership to Rebuild America that attracts private capital to upgrade what our businesses need most: modern ports to move our goods; modern pipelines to withstand a storm; modern schools worthy of our children.
I propose working with states to make high-quality preschool available to every single child in America.
Let’s put people back to work rebuilding vacant homes in rundown neighborhoods.
And this year, my administration will begin to partner with 20 of the hardest-hit towns in America to get these communities back on their feet. And we’ll work with local leaders to target resources at public safety and education and housing. We’ll give new tax credits to businesses that hire and invest.”
And we’re going to do all this wonderful stuff while cutting the deficit.
Yes, folks, we’ll go forward by going backward; we’ll go up by going down. We’ll reduce the gap by taking dollars from the poor and middle classes. We’ll grow the economy by taking dollars out of it. In short, we’ll cure anemia by applying leeches.
Do you believe in magic? I do. Hey, I became President, didn’t I?
Rodger Malcolm Mitchell
Monetary Sovereignty
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Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99%
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports
#MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 