–President Obama’s “American Jobs Act.” What he said; what it means.

Mitchell’s laws: To survive, a monetarily non-sovereign government must have a positive balance of payments. Economic austerity causes civil disorder. Reduced money growth cannot increase economic growth. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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President Obama’s “American Jobs Act.” What he said; what it means. He said:

It will create more jobs for construction workers, more jobs for teachers, more jobs for veterans, and more jobs for the long-term unemployed. It will provide a tax break for companies who hire new workers, and it will cut payroll taxes in half for every working American and every small business.

Pass this jobs bill, and starting tomorrow, small businesses will get a tax cut if they hire new workers or raise workers’ wages.

This is backwards. Companies don’t hire new workers and give raises to get tax cuts. They hire workers if business improves and they need workers. Another example of the government trying to run businesses rather than helping consumers consume, which would improve business naturally.

And in hiring new workers to get the tax cut, will companies fire old workers? This whole concept is foolish.

Pass this jobs bill, and all small business owners will also see their payroll taxes cut in half next year. If you have 50 employees making an average salary, that’s an $80,000 tax cut.

Excellent, though in typical Obama style, it is too little. There are at least ten reasons FICA should be eliminated — not cut, but eliminated.

And all businesses will be able to continue writing off the investments they make in 2012.

Good. Too little, too late – but good.

Everyone here knows that we have badly decaying roads and bridges all over this country. Our highways are clogged with traffic. Our skies are the most congested in the world. This is inexcusable. Building a world-class transportation system is part of what made us an economic superpower.

Agreed.

And there are schools throughout this country that desperately need renovating. How can we expect our kids to do their best in places that are literally falling apart? This is America. Every child deserves a great school – and we can give it to them, if we act now.

The American Jobs Act will repair and modernize at least 35,000 schools. It will put people to work right now fixing roofs and windows; installing science labs and high-speed internet in classrooms all across this country. It will rehabilitate homes and businesses in communities hit hardest by foreclosures.

Sounds great.

Pass this jobs bill, and companies will get extra tax credits if they hire America’s veterans.

More silly government meddling. So if companies hire veterans, will they also fire, or fail to hire, non-veterans?

Pass this jobs bill, and companies will get a $4,000 tax credit if they hire anyone who has spent more than six months looking for a job.

Even more silly government meddling. So companies get nothing for hiring someone who has been out of a job for “only” five months? How about: Fire an employee and hire another employee to get the $4,000? Truly foolish.

This jobs plan builds on a program in Georgia that several Republican leaders have highlighted, where people who collect unemployment insurance participate in temporary work as a way to build their skills while they look for a permanent job.

WPA can work. It pumps money into the economy, whether or not people actually “build their skills.”

The plan also extends unemployment insurance for another year. If the millions of unemployed Americans stopped getting this insurance, and stopped using that money for basic necessities, it would be a devastating blow to this economy.

Excellent. And no, it does not encourage sloth. That is a myth. What it does is add dollars to the economy, thus stimulating business, which then will hire more people.

Pass this jobs bill, and the typical working family will get a fifteen hundred dollar tax cut next year.

Sounds good, depending on what a “typical working family” means. It would be far better merely to give actual dollars to every man, woman and child in America, rather than helping only “working families.”

And to help responsible homeowners, we’re going to work with Federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4% — a step that can put more than $2,000 a year in a family’s pocket, and give a lift to an economy still burdened by the drop in housing prices.

The last time this was tried it was an abysmal failure, because the banks were given no incentive to do it. So people wasted years (literally), filling out endless forms, and waiting on endless phone lines, while the banks did nothing. It proved to be a serious negative for the economy.

Better include big incentives for the banks, or it will fail again.

A week from Monday, I’ll be releasing a more ambitious deficit plan – a plan that will not only cover the cost of this jobs bill, but stabilize our debt in the long run . . . it’s a balanced plan that would reduce the deficit by making additional spending cuts; by making modest adjustments to health care programs like Medicare and Medicaid; and by reforming our tax code in a way that asks the wealthiest Americans and biggest corporations to pay their fair share.

What’s more, the spending cuts wouldn’t happen so abruptly that they’d be a drag on our economy, or prevent us from helping small business and middle-class families get back on their feet right away.

Yikes!! Stupid beyond all comprehension. First he lists the money the government will pump into the economy, to revive business. As usual, the plan is too little, too late, but at least it’s a step in the right direction.

But then, he talks about pulling money out of the economy. Hmm, let’s see. If pumping money into the economy stimulates business, what will pulling money out of the economy do? Duh.

Finally, he acknowledges that spending cuts are “a drag on our economy,” so he delays them to some time in the future, when presumably a drag on the economy will be a good thing!? This part of the speech earns four dunce caps.

Millions of Americans rely on Medicare in their retirement. And millions more will do so in the future. They pay for this benefit during their working years. They earn it. But with an aging population and rising health care costs, we are spending too fast to sustain the program.

Nonsense. A Monetarily Sovereign nation can “sustain” any program. Have you heard of any federal checks bouncing. This “sustainability” lie is a relic of the gold standard days, which ended in 1971. Total crap. Where the hell are the honest economists who will reveal this lie for what it is? The fact that so few economists speak up demonstrates the bankruptcy and illegitimacy of mainstream economics.

Ask yourselves – where would we be right now if the people who sat here before us decided not to build our highways and our bridges; our dams and our airports? What would this country be like if we had chosen not to spend money on public high schools, or research universities, or community colleges? Millions of returning heroes, including my grandfather, had the opportunity to go to school because of the GI Bill. Where would we be if they hadn’t had that
chance.

How many jobs would it have cost us if past Congresses decided not to support the basic research that led to the Internet and the computer chip? What kind of country would this be if this Chamber had voted down Social Security or Medicare just because it violated some rigid idea about what government could or could not do? How many Americans would have suffered as a result?

Amen, brother. If the Tea/Republicans had existed 100 years ago, America would be a third-rate country, somewhere below Russia. No roads, no schools, no research, no medical care, no medicines, no consumer protections, no safe food – and no money.

Anyway, if what he proposes actually happens, it will help a bit. My fear is that it is just the first step in what will be another “Obama compromise” – give the other guy everything he demands and claim it was a compromise.

And the other guy – the Tea/Republicans – will complain it increases the deficit. Why will they complain? Because they know pumping money into the economy will improve America before the 2012 election, and improving America is the last thing these “patriots” want.

All in all, it was a pretty good speech by a politician who knows nothing of economics — better than I thought it might be. Though again, the proposals are way too little and far too late, we’ll see what actually gets passed.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

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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. The key equation in economics: Federal Deficits – Net Imports = Net Private Savings

MONETARY SOVEREIGNTY

The Chicago Tribune’s “confidence game” editorial earns 3 dunce caps.

The Chicago Tribune editors, who refuse to learn economics, but continue to pontificate about economics, did it again. Here are some excerpts from their 9/8/11 editorial titled, “The confidence game.”

What if (President Obama) told the American people that returning to prosperity inevitably will be a long rugged path. That government can’t “fix” the economic malaise by creating jobs.

Actually, returning to prosperity needn’t be a “long rugged path” if the government will forget about cutting the deficit, and focus on stimulation. And the government can “fix’ the economic malaise by creating jobs, simply by buying more goods and services — roads, bridges, education, food and rents for the poor, police, disaster recovery, Social Security, Medicare for all, and the million other beneficial things the government has the power to do. And by eliminating some taxes, (first FICA), and reducing others (first increase the standard income tax deduction).

His signature policy — the $787 billion fiscal stimulus of 2009–failed to deliver the job growth he promised. It plunged the nation deeper into debt.

Yes, the stimulus, being too little, to late, didn’t provide job growth, but it did prevent further job losses. Had it been about five times as large, there would have been job growth. The starving patient needs more than one spoonful of porridge to return to health.

And what the Tribune refuses to learn: Federal debt could be eliminated, tomorrow, simply by crediting the checking accounts of T-security holders, and debiting their T-security accounts — a push of a button.

It will take years to climb out of the hole. If the U.S. government piles on regulation . .

Depends on the regulation. Clearly, better regulation of the financial institutions is needed. I’m surprised the Tribune hasn’t learned that. Well, O.K., I’m not surprised.

. . .Misallocates resources with temporary spending schemes . . .

In Tribune-speak, a “spending scheme” is any spending to stimulate the economy.

. . .and allows a crazy-quilt tax code to go ever-crazier, it will be a longer climb.

I’d agree, except for one detail. Every proposal at “tax simplification,” has been regressive, involving more taxes on the lower classes. Even Obama, the great defender of the poor, talks about “broadening the base,” which is code for sticking it to all those people who have so little income, they currently pay no taxes.

There have been suggestions to institute a value added tax, which would be regressive in that poorer people spend more of their income on goods and services. I discuss various tax schemes at Which Taxes are Fairest

. . . the nation will do better if Obama can inspire the private sector to have more trust that government won’t impose more obstacles.

To accomplish that, Obama must commit to a deliberate course of action that will lower the cost of doing business over time. he must avoid introducing more of the dizzying uncertainties that his presidency to date has delivered en masse. He has to resist “stimulus” ideas that will pile on more federal debt.

Yes, we certainly wouldn’t want stimulus ideas. And of course, the federal debt is so big, the government is unable to pay its bills. Right? All those federal checks bouncing prove the government is “broke” (according to John Boehmer). Where is the Tribune fact-checker when we need her?

In the most certain terms he can muster, he needs to convince the risk-takers, doers and makers of things — the jo-creators — that he has their interests at heart. Let them know that at long last he’s on their side. They need the confidence to take a risk, do something new, make something useful — put someone to work.

What lovely words, so much sound and fury signifying nothing. It’s the apt title of the Tribune editorial, “The confidence game.” The “confidence myth” goes like this: If magically you give business confidence, then they will create jobs and lift the economy by its bootstraps. How to do that never is spelled out, so let me assist:

Business gains confidence and hires people when people begin to buy goods and service. People buy when they have jobs and money. It’s a circle. So unless the government puts money into people’s pockets, by lowering taxes and/or increased spending — i.e. by increasing the deficit — we’ll just play ring around the rosie, and keep sinking.

For this editorial, I award the Chicago Tribune editors three dunce caps.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

MONETARY SOVEREIGNTY

–You never will know what you have lost

The long-standing, though currently Tea/Republican inspired, desire to reduce federal spending and deficits, is based on the erroneous beliefs that:

1. Federal taxes pay for federal spending so that by cutting spending, we can cut taxes. Fact: This was true before 1971, when we were on a gold standard. Today, there is no financial relationship between federal taxes and spending. Were taxes to fall to $0 or rise to $100 trillion, our Monetarily Sovereign federal government could pay any bill of any size.

2. Big government burdens our individual freedoms. Fact: A big nation needs a big government to provide the myriad benefits its big and diverse population desires. Federal laws can be burdensome, but federal spending is not. It is a gift of a Monetarily Sovereign government, the most brilliant form of government financing ever created.

That said, there is something insidious, essentially invisible, that happens when federal spending is reduced. The absence of benefits sneaks up on us, like the butterfly killer that leaves no clue, until one day there are no butterflies. You never will know how your life and America’s future will be affected by:

1. Reduced federal support for education. What child genius will not grow to invent the cancer cure or the unlimited, pollution-free fuel or the food that does not require farming? How many great scientists and artists and builders will not be created? You never will know.

2. Reduced federal support for health services. How many future leaders will not live to fulfill their potential? How much suffering will result? Which of your own relatives will die prematurely or live nonproductive lives? What preventable “black death” next will scourge the human race? You never will know.

3. Reduced police/military support. How many soldiers will die from inadequate equipment? How many civilians will be murdered for the lack of a cop-on-the-beat? How many investors will be cheated because federal agencies did not have the funds for proper supervision? You never will know.

4. Reduced aid to the poor. How many children will poverty turn to crime? How many great minds will be dulled by starvation before making their contribution to America and the world? How much of America’s potential will be lost to homelessness or to the struggle for bare existence? You never will know.

The list goes on and on: The lame who might have walked. The blind who might have seen. The children who might have given to America. The tornados and hurricanes and earthquakes that might have been foreseen. The money that investors might have saved. The inventions never invented. The recessions and depressions that might have been avoided. The wars that might have been won or prevented. The life-saving drugs that might have been developed. The people who might not have died too soon. The beauty never created. The ideas lost. The better world that might have been. You never will know.

And we trade all this potential for the reality of a meaner, uglier, less elegant life, especially for the lower classes, who will be affected most by deficit reduction, though we all will be affected. What a waste, given the tools we’ve been given, that we intentionally should deprive ourselves and our children and our grandchildren of the benefits a society can offer, and instead retreat toward the days of hardscrabble anarchy.

What have we lost? What will we lose tomorrow? You never will know.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

MONETARY SOVEREIGNTY

–Another “Obama compromise”: The Tea/Republican version of the Postal Service

Excerpts from a Washington Post story, by Ed O’Keefe, dated 9/6/11:

The White House will include a financial rescue plan for the U.S. Postal Service as part of a broader $1.5 trillion deficit reduction package due to Congress in the coming weeks, it said Tuesday.

The White House will rescue the Postal Service, while reducing the deficit? How will they do that?

In advance of those recommendations, the Obama administration is asking lawmakers to give the Postal Service a 90-day extension to pay billons of dollars in mandatory annual retirement payments that are due at the end of its fiscal year Sept. 30.

Ah, you see, they will delay payments to retirees. As you know, these retired workers have more money than does the federal government, so they can support the Postal Service, while the federal government cannot.

The U.S. Postal Service wants to cut 120,000 jobs as it reports another loss in revenue.

And not just the retired workers. We need to save the federal government and help the nation’s unemployment problem by cutting 120,000 jobs.

The White House declined to detail what a postal rescue package might include, but one senior administration official said the plan would be “consistent with the Postal Service’s mission and its obligations to all of its stakeholders, including its workers.”

Let’s see: Its stakeholders are:
Users: But the plan is to cut service
Employees: But the plan is to cut employees.

Any other stakeholders you can think of? (Don’t say, “taxpayers.” Taxes don’t pay for federal spending.)

Sen. Joseph I. Lieberman (I-Conn.), who chaired Tuesday’s Homeland Security and Governmental Affairs Committee hearing on the issue, said his panel would draft legislation to address the concerns.

Two of the panel’s members, Sens. Thomas R. Carper (D-Del.) and Susan Collins (R-Maine), are pushing competing proposals, but both signaled Tuesday that they are willing to collaborate on a plan. Carper’s bill would give the Postal Service the flexibility to cut Saturday mail deliveries, close thousands of post offices and give USPS access to money it has overpaid for decades to federal retirement funds. Collins, who opposes curtailing mail deliveries because of potentially adverse effects on rural and far-flung areas, wants to overhaul the Postal Service’s payments to pre-fund future retiree benefits, which cost USPS about $5.5 billion annually.

Got it. Cut service; cut employees; cut pensions. Cut, cut, cut: The Tea Party mantra, via Obama.

The Postal Service is a self-funding entity drawing revenue from the sale of stamps and shipments . . .

Why is the U.S. Postal Service self-funding? The army isn’t. The Congress isn’t. The White House isn’t. The Department of Homeland Security isn’t. In fact, none of the thousand federal agencies are self funding. Why the Postal Service? Anyone?

In addition to structural reforms, Sen. Claire McCaskill (D-Mo.) suggested that USPS should mount a national advertising campaign promoting the value of printed mail.

“You cannot get money by text message,” McCaskill said. “I really think that there is a longing out there right now, especially in these uncertain times, for some of the things that have provided stability over the years.”

Donahoe said such a campaign is in the works. Aides said it will debut for the holiday shopping season.

Lieberman voiced his support, suggesting, “We should be writing more passionate letters to those we love.”

O.K., problem solved. Spend advertising money the Postal Service doesn’t have, to encourage people to write passionate letters.

Now let’s get real. Cutting service will beget reduced usage, which will force more service cuts, which will beget further reduced usage, until over time, we will be left with one letter carrier, working out of one post office, carrying one letter – a passionate love letter from Sen. Lieberman.

If America wishes to have a postal service, the federal government must support it, the same way the federal government supports every other vital service. This self-funding nonsense – a relic of the pony express – is a ticket to mail oblivion.

But then, how can a Monetarily Sovereign government, with the unlimited ability to pay any bills of any size at any time – a government that has no problem supporting troops all over the world, from South Korea to Germany and points in between, all without raising taxes – how can such a government not afford to support the U.S. Postal Service?

It’s just another “Obama compromise.”

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

MONETARY SOVEREIGNTY

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