Tag: deficits

–More debt-hawk injuries to America

An alternative to popular faith

Here is yet another example of many such instances (See: DAMAGES) showing the continuing damage debt-hawks cause America and our poorest citizens:
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By Greg Hitt and Sara Murray, WASHINGTON, 6/25/10: “Spooked by concern about deficits, the Senate shelved a spending bill that included an extension of unemployment benefits, suddenly cutting off a federal cash spigot opened by President Barack Obama when he took office 18 months ago.

“The collapse of the wide-ranging legislation means that a total of 1.3 million unemployed Americans will have lost their assistance by the end of this week. It will also leave a number of states with large budget holes they had expected to full with federal cash to help with Medicaid costs.”
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What is the evidence large federal deficits harm America? There is none. Yet, based solely on mystical faith and unsupported belief, the debt hawks have managed to punish millions of our poorest Americans.

The debt-hawks have heads of stone. They have hearts of stone, too.

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

No nation can tax itself into prosperity

–I’m angry with the Chicago Tribune

An alternative to popular faith

I live in Chicago, and I’m angry with the Chicago Tribune. It continues to be clueless about economics. In a June 15th editorial, the Tribune said, “With 79 percent of Americans rating (the federal debt) ‘extremely serious’ or ‘very serious,” it tied with terrorism for the top (‘scariest threat’). So what does the Obama administration plan to do about it? It proposes to pile on more debt. . . . Americans have good reason to be so worried about the . . . that someone will have to repay.”

Does the term “exploding national debt” sound familiar. If you go back and read TICKING TIME BOMB , MORE BOMB NONSENSE and DEBT BOMB REDUX you will see that the Tribune and its media friends have been referring to the federal debt in explosive terms for the past seventy years! Think about it. For seventy years the media has told you a debt bomb is been ready to explode, and today we are no closer to any of those dire forecasts than we were in 1940.

Does daily failure of prediction stop the Tribune? Nope. Tribune readers keep following their prophet up the mountain to await the end of the world. When the world fails to end, do they ever begin to question their leader? No, they march back down, and sit mesmerized as their prophet repeats the same old predictions – for more than seventy, long years.

Here is what outrages the Chicago Tribune today: “$50 billion in emergency spending to help state and local governments . . . avert massive layoffs of teachers, police and firefighters . . . Block a 21 percent scheduled cut in reimbursements to doctors who treat Medicare patients.”

Yes, helping avert layoffs of teachers, police, firefighters and doctors truly is awful, especially when compared with the unsupported, unproven, patently wrong “risk” of a federal debt that in the Tribune’s misguided words, “someone will have to repay.”

If you read some of the posts on this blog, starting with SUMMARY you will see there is no “someone” who has to pay. Taxpayers neither owe nor service the federal debt. There is no relationship between federal income and federal spending. The so-called “debt” merely is a balance sheet calculation of net money created by the federal government, a calculation that neither inhibits, nor is inhibited by, federal spending.

A curse be upon the person who first labeled this balance sheet column “debt” rather than the correct, “net money created.” Incorrectly calling it “debt” has misled millions of otherwise intelligent people, and worse, has prevented important programs (See: CHILDREN & GRANDCHILDREN) of benefit to us all.

I’m angry with the Tribune, not because they are clueless. Each of us is clueless about many things. I’m angry with them because they have such power to make a positive difference in our economy, but instead they are too intellectually lazy to learn, preferring to parrot the popular myths of the day. What a waste.

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

No nation can tax itself into prosperity

–French bread French fried

An alternative to popular faith

Sun May 30, 10:20 am ET, PARIS (Reuters) – “France’s Budget Minister Francois Baroin said on Sunday the objective of keeping the country’s AAA rating was ‘a stretch’ and had an impact on economic policy decisions related to cutting the deficit.

“[…] talks are taking place on pension reform — a key part of the plan to cut the deficit — and France has frozen central government spending barring pensions and interest payments between 2011 and 2013. . . Talks are taking place on — a key part of the plan to cut the deficit — and France has frozen central government spending barring pensions and interest payments between 2011 and 2013. . . France is also considering introducing a constitutional amendment that would set binding budget deficit limits.

“Baroin added: ‘We must maintain our AAA rating, reduce our debt to avoid being too dependent on the markets, and we must do this for the long-term.’

“Fitch Ratings said on Friday the recently stepped-up dialogue in France was an important first step in addressing France’s fiscal deficit. France has forecast its deficit will come in at 8 percent of GDP this year, and aims to bring it down to within the European Union’s 3 percent limit by 2013.”

To summarize:
1. Since economic growth requires money growth, France’s economy will continue to be limited by EU rules, which restrict French money creation.
2. Worse yet, France’s economy will be sent into recession by a constitutional amendment further restricting money creation. This is quite serious. The EU has the ability to change its rules quickly, but constitutional amendments are slow to pass and slow to undo.
3. Thousands of people who depend on pensions, interest payments and other government cash will receive less spending money, a situation that not only will punish them, but will punish then entire French economy, leading to an economic disaster.

And this is the damage the debt hawk mythology can wreak.

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

No nation can tax itself into prosperity

–Committee For A Responsible Federal Budget

An alternative to popular faith

On May 19th, I received the following Email from the Committee For A Responsible Federal Budget:

“Dear friend, I am excited to share with you the latest CRFB initiative that I believe will quickly become a critical tool in educating the public regarding the fiscal outlook and motivating policymakers to take responsible action to put the country on a sustainable course. Today, we are publicly launching our “Stabilize the Debt” budget simulator (http://crfb.org/stabilizethedebt/).

“The ‘Stabilize the Debt’ challenge continues CRFB’s distinguished tradition of engaging policymakers, opinion leaders, the media, and the public in deliberating and discussing what it takes to be fiscally responsible. This new online endeavor is part of our long tradition of developing timely “Exercise in Hard Choices” exercises, and we are excited about our newest version.
[…]
“‘Stabilize the Debt’ challenges the user to think about reducing the debt in the longer term and maintaining it at a sustainable level, as opposed to simply balancing the budget for a single year. It promotes thinking about the need for both medium- and long-term term fiscal goals and how to attain them. It uses the goals from the Peterson-Pew Commission on Budget Reform from the Red Ink Rising report of stabilizing the debt at 60 percent of GDP by 2018 and keeping it low.

“I encourage you to take the challenge and share with all your friends. Since Congress appears unlikely to produce a budget this year and have the needed debate over fiscal priorities, this simulator can fill that void by enabling Americans to discover and discuss the difficult choices that must be made and engage in a nationwide dialogue on how best to put the country on a sound fiscal course. Sincerely, Maya MacGuineas, CRFB President

“For press inquiries, please contact Kate Brown at (202) 596-3365 or brown@newamerica.net.”
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Not having had Ms. MacGuineas’s Email address at the time, I wrote the following letter to Ms. Brown on May 19th. And again on May 20th. And May 24th. And May 27th. To date, no answer, which is normal for all debt hawk organizations. Knowing they have no data to support their claims, they simply ignore requests for data, even when, as you’ll see, I offered to promulgate their beliefs:

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“Ms. Brown,

If you can supply historical, statistical evidence that the U.S. federal debt and deficit need to be reduced or are not sustainable, or that the federal debt needs to be stabilized at “60 percent of GDP by 2018,” I would be glad to post this data on my web site, https://rodgermmitchell.wordpress.com. I also will mail this information to my list of 100+ economics professors, 50 newspaper and magazine columnists, and 30 newspaper and magazine editors around the country.

Rodger Malcolm Mitchell”
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Try it yourself. Write to any debt hawk organization or any debt hawk politician or economist, and ask for data to support the idea that the debt is too large. In the unlikely event you receive anything that constitutes evidence, please forward it to me.

Subsequently, I did find Maya MacGuineas’s Email address and wrote to her and Ms. Brown. For your interest, here is a calendar of my requests to supply evidence and my offer to send this evidence to economists and the media all over America:
May 19: Wrote to Ms. Brown
May 20: Wrote to Ms. Brown
May 24: Wrote to Ms. Brown
May 27: Wrote to Ms. Brown
May 28: Wrote to Ms. Brown & Ms. MacGuineas
June 1: Wrote to Ms. MacGuineas

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

No nation can tax itself into prosperity