–The needless Medicaid dilemma, and how to solve it Saturday, Feb 4 2012 

Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Most people do not understand the differences between Monetarily Sovereign (the U.S. federal government) and monetarily non-sovereign (you and me, the states, counties and cities). Spending by us people is limited to the dollars we have or are receiving. So, by intuition, most people feel the U.S. government is monetarily non-sovereign, i.e. like us, should spend no more than it collects in taxes.

Thus, we hear all those misguided concerns about federal deficits and debt, when in fact, deficits are necessary for economic growth and debt could be eliminated tomorrow.

I frequently criticize the editors of the Chicago Tribune for their ignorance of Monetary Sovereignty, and their tacit belief the U.S. is monetarily non-sovereign. In this, they are little different from the vast majority of media writers, politicians and even economists in America. We as a nation, suffer for their ignorance.

But while the Tribune is clueless about federal financing, they can be equally clueless as regards state and local financing, where they really should know better. This is what they wrote about Medicaid, a program largely funded by the states to benefit the poorest among us:

Editorial: Chicago Tribune: Time to move on Medicaid spending
February 4, 2012

When Gov. Pat Quinn spoke Wednesday about the state of the state, he gave a brief nod to the groaning cost of Illinois’ single biggest operating expense: Medicaid.

The state expects to have about $1.7 billion in unpaid Medicaid bills on hand at the end of fiscal 2012. That backlog will balloon to $21 billion in just five years if the state doesn’t overhaul Medicaid spending.

As you read this, ask yourself, “Why are states, which have limited finances, forced to pay? Why doesn’t the federal government, which has the unlimited ability to service any bills of any size, pay for Medicaid?”

That will be a diaster for the 2.7 million Illinoisans who depend on Medicaid, for taxpayers and for medical providers. More doctors are likely to stop accepting Medicaid patients because they won’t get paid remotely close to on time.

Quinn’s budget address is Feb. 22. That’s when we should learn the details of how he proposes to curb Medicaid spending. Here’s what he needs to do:

Speed the switch to managed care. Managed care generally means patients are assigned a “medical home” — a doctor (it could be an HMO-style clinic) who oversees their care. Doctor and hospital fees are geared to delivering better health care, not just more of it.

• Accelerate the move of residents from obsolete and expensive institutions for the developmentally disabled to community-based care.

End Illinois Cares Rx. That’s a prescription drug program that supplements coverage for (poor) seniors. But the feds don’t help pay for it. Eliminating it will save $54 million.

According to the Illinois Cares Rx web site: “Illinois Cares Rx provides prescription drug assistance to low-income seniors and disabled persons. For participants enrolled in Medicare Part D, Illinois Cares Rx helps lower the participants’ copayments and cost-sharing. Illinois Cares Rx provides direct prescription drug coverage for participants who are not eligible for Medicare.”

So eliminating this service will stick the poorest, elderly Illinoisans with $54 million in expenses they can afford even less than can Illinois. The whole notion, of forcing poor people to bail out the state, is an anathema to me. The Trib is dead wrong on this one.

Illinois Department of Healthcare and Family Services director Julie Hamos is expected to deliver a wide-ranging list of Medicaid cost-cutting options to a bipartisan committee of state lawmakers later this month. The goal: Save as much as $2.7 billion in the $14 billion Medicaid budget.

If the “wide-ranging list” includes only efficiencies, I’m all for it. But if it merely transfers expenses from the state to the poorest people, it will be a disgrace.

“Everything has to be on the table to keep the program solvent,” Illinois Sen. Heather Steans, D-Chicago, tells us. Nothing’s final yet. But we like what we’re hearing.

The state could save big, for instance, by capping how much it will pay per patient for so-called “optional services.” That includes dental work and prescription drugs. The idea: Patients should be allowed to choose from those services, but the state would set a cap on how much it will spend for each patient.

If the state will save big, who will pay? Doctors? Dentists? The poor patients? Or will this all come down to greater efficiency? (I doubt it.) Making doctors and dentists pay is stupid. Forcing the poor to pay is ridiculous and heartless.

Another good idea: Require a co-payment from Medicaid recipients for emergency room visits that aren’t emergencies. That could save millions by cutting down on expensive visits to the ER.

People take non-emergencies to the emergency room, because they can’t afford health insurance. These people are poor. So to require co-pays merely will discourage them from seeking medical help. Their non-emergency situations will devolve to real emergencies, which will cost the state even more, not to mention the terrible human toll.

Providers also need to be in the savings mix. For Medicaid to thrive, hospitals need to reduce costly readmissions. Illinois has the highest rate of such readmissions in the nation, according to a 2010 study by the Center for Health Care Strategies Inc. The state should offer hospitals incentives to cut that rate, and penalize hospitals that fail.

The question this editorial doesn’t address is, “What causes readmissions?” Without examining the various causes, merely saying they “need to reduce readmissions” makes no sense.

Those are just some of the ways to save money while delivering quality care. There are many more.

There is very little in the editorial that discusses the preservation of quality. The focus is on transferring costs from the state to the poor.

Let’s also remember that the state’s Medicaid program will add up to 800,000 people beginning in 2014, when the federal health care overhaul kicks in. The feds will fully reimburse the state for those beneficiaries … for three years. Then Illinois will be stuck with a slice of that bill.

And therein lies the problem. If the feds “will fully reimburse the state” for three years, why don’t the feds continue to reimburse the state?

By what logic has medical care for the poor become an obligation of monetarily non-sovereign, financially strapped states, when the Monetarily Sovereign, federal government easily can and should pay the whole thing? The states’ only recourse is to shift the cost to the poor, who because they can’t afford it, simply will fail to receive medical services, until they are so sick, they are dragged to the emergency room, where costs are highest.

I wonder how many of the Tribune editors are on Medicaid.

Far better, it would be, if everyone could receive medical services early, before their conditions became more serious — better financially and better medically, and better humanely. The federal government can afford to do this.

Funny how all our economic problems seem to boil down to ignorance of Monetary Sovereignty.

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. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

#MONETARY SOVEREIGNTY

–Does this report from the Committee for a Responsible Federal Budget make you angry? Does it make you afraid? It should. Saturday, May 14 2011 

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create the dollars to pay its bills.

Does this report from the Committee for a Responsible Federal Budget make you angry? Does it make you afraid? It should.

Analysis of the 2011 Social Security Trustees Report, May 13, 2011

Today, the Social Security Trustees released their 2011 report on the financial status of both Social Security and Medicare. The reports make clear that both programs are on unsustainable paths, and reforms will be necessary to make them solvent. This analysis focuses on the financial status of Social Security.

The latest Trustees report shows Social Security’s position has deteriorated since last year. The Trustees estimate that the 75-year actuarial imbalance has now increased to 0.8 percent of GDP (2.22 percent of taxable payroll) compared to 0.7 percent of GDP (1.92 percent of taxable payroll) in last year’s report. Over the coming decade, the Trustees project cash-flow deficits of about $490 billion (including $131 billion in 2021 alone), compared to about $380 billion in last year’s report.

The Trustees now estimate that the program will exhaust its dedicated trust funds (one for old-age and the other for disability) in 2036, a year earlier than the 2037 date projected in last year’s report. At that time, absent changes in law, all current and future beneficiaries would experience an immediate 23 percent cut in benefits.

Even more pressing is the state of the Disability Insurance trust fund, which (if not allowed to borrow from the rest of Social Security) will run out of money by 2018, only seven years from now.

According to the Trustees, making Social Security sustainably solvent would take savings equal to 0.8 percent of GDP (2.22 percent of payroll) over 75 years and 1.5 percent (4.24 percent of payroll) in the 75th year.

Well, did that make you angry or afraid? It should have, because it is based on a lie – a government lie – and having the federal government lie makes all of us especially angry and afraid.

The lie, very simply is the implication federal spending relies on federal taxes. Social Security and Medicare are federal programs. FICA taxes paid to the government are less than benefits paid. Based on this, the Trustees say these federal programs will “run out of money.” A lie.

Were it true, the entire federal government already has “run out of money,” because federal taxes, with very few exceptions, have been less than federal spending, every year in our nation’s history. So beginning in 1776, America has been on what the Committee for a Responsible Federal Budget would call an “unsustainable” path and insolvent. Yet here we are, 235 years later, still “unsustainable,” still “insolvent” and still the most powerful nation on earth. Amazing, isn’t it?

Well, it would be amazing if you didn’t understand the federal government creates the dollars you use. It would be amazing if you believed federal taxes pay for federal spending and FICA pays for Social Security and Medicare. They don’t.

The U.S. is Monetarily Sovereign. If all federal taxes, including FICA, were reduced to $0 or increased to $100 trillion, neither event would affect by even one dollar, the solvency of any federal agency, including Social Security and Medicare. There is no functional relationship between federal taxes and federal spending. The federal government always pays its bills, regardless of taxes collected.

(The situation is different for states, counties and cities, which are not Monetarily Sovereignty, , so they do use tax money to pay their bills. The situation also is different for Greece, Ireland et al, which also are not Monetarily Sovereign. And the situation is different for you and me. We too, are not Monetarily Sovereign. For reasons I cannot explain, the federal government, the media, and even most economists, do not know the difference between Monetarily Sovereign and monetarily non-sovereign, and therein lies the problem.)

So yes, be afraid. Be very, very afraid, especially with both the Democrats and the Tea (formerly Republican) Parties believing our federal social programs must be cut. Your future and the futures of your children and grandchildren are in the hands of people who do not know what they are doing.

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


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No nation can tax itself into prosperity, nor grow without money growth. It’s been 40 years since the U.S. became Monetary Sovereign, , and neither Congress, nor the President, nor the Fed, nor the vast majority of economists and economics bloggers, nor the preponderance of the media, nor the most famous educational institutions, nor the Nobel committee, nor the International Monetary Fund have yet acquired even the slightest notion of what that means.

Remember that the next time you’re tempted to ask a dopey teenager, “What were you thinking?” He’s liable to respond, “Pretty much what your generation was thinking when it screwed up my future.”

MONETARY SOVEREIGNTY

–Psychologist wanted. Friday, May 13 2011 

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create the dollars to pay its bills.
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Although economics can be mind-spinningly complex, the essence of economics is rather simple, in that it boils down to a few facts, about which there can be no argument:

Fact 1. The U.S. federal government is different from you and me. It alone has the unlimited ability to create (“print”) dollars. If it wished to do so, the government could create a billion trillion dollars tomorrow, merely by pressing a computer key. It has had that power since 1971, the end of the gold standard, and that power is called Monetary Sovereignty.

Fact 2. Given such power, the federal government has the unlimited ability to spend dollars, and does not need to tax or borrow in order to spend. Were taxes and borrowing to fall to $0 or rise to $100 trillion, neither would affect by even one penny, the federal government’s ability to create and spend dollars and to “sustain” any size debt. In federal terms, taxes and borrowing do not fund spending.

Fact 3. Therefore, the only limitation on federal spending is not taxes or borrowing, but uncontrollable inflation.

I know of no economist, no columnist, no politician who disagrees with the above. Yet virtually all of them seem to agree that the federal debt and deficits are “unsustainable,” and should be reduced, despite the fact our massive deficits have brought us nowhere near uncontrollable inflation. (Only recently, we were worried about deflation.)

Logically, that makes no sense. How can a debt or deficit be a problem, if the government can create unlimited money and inflation is not a threat? It’s as though one part of the brain was not communicating with the other part. The psychologists call it “cognitive dissonance,” and since they have a name for it, perhaps they have an explanation, too.

So if you are a psychologist, and/or understand cognitive dissonance, I ask you; Why do otherwise intelligent people hold two, mutually exclusive ideas about our economy?

Some have speculated it’s merely the confusion between personal finances (which are not Monetarily Sovereign) and federal finances. But economists should not be confused about so simple a concept. Even the dullest economist should understand the difference between a personal bank account and the federal government’s money creation. There must be something more than mere confusion.

Perhaps, we hard-wired to believe the “no-free-lunch” idea that you can’t get something for noting. But can it really be so difficult to see that the federal government can “print” dollars?

I just don’t understand it. No one debates the underlying facts, which seem obvious and straightforward. The federal government can create infinite dollars, limited only by inflation, which we are nowhere near. Everyone agrees. Yet, after that there is a huge disconnect, leading to notions about needing tax increases and debt ceilings and the deficit being unsustainable. It’s beyond logic.

So because it is beyond logic, I am asking for assistance from psychologists to explain why the logical and obvious are invisible to people, who acknowledge the facts while simultaneously being blind to them.

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


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No nation can tax itself into prosperity, nor grow without money growth. It’s been 40 years since the U.S. became Monetary Sovereign, , and neither Congress, nor the President, nor the Fed, nor the vast majority of economists and economics bloggers, nor the preponderance of the media, nor the most famous educational institutions, nor the Nobel committee, nor the International Monetary Fund have yet acquired even the slightest notion of what that means.

Remember that the next time you’re tempted to ask a dopey teenager, “What were you thinking?” He’s liable to respond, “Pretty much what your generation was thinking when it screwed up my future.”

MONETARY SOVEREIGNTY

–The rise and fall of American greatness Thursday, May 12 2011 

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create the dollars to pay its bills.
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America is the greatest nation in the world, perhaps in the history of the world. Do you believe that? What does it mean for a nation to be great? There is no agreed-upon measure; it’s subjective. So I’ll give you my personal thoughts.

Is greatness military power? Perhaps. The U.S. is the greatest military power in history. But Russia has military power, and I do not consider them a great nation.

Is greatness population size? Perhaps. We have more than 300 million people. But China has even more, and I do not consider them a great nation.

Is it resources? Perhaps. We have coal, oil, many other minerals, as well as farms that grow massive amounts of food. But Saudi Arabia has resources, and I do not consider them a great nation.

It may be that greatness is measured not only by what a nation is or has, but also by what a nation does. Before we became a nation, our future citizens and their families dared to leave their homelands to travel the treacherous ocean in search of freedom. That was greatness.

We fought the most powerful nation on earth to defend our freedom. That was greatness. The most influential people in America voluntarily surrendered their powers to join together for the greater good. That was greatness.

We developed that glorious miracle, the Constitution, then amended it with another glorious miracle, the Bill of Rights, the thrust of which was to protect each of us from excessive personal and governmental power. That was greatness.

We also did things that were not greatness. We killed native Americans. We kept slaves. That was smallness. One of the many reasons for the Civil War was slavery. The South’s position was immoral and small. The North’s position on slavery was moral, and that war was greatness, as was the Emancipation Proclamation and the 13th Amendment. The Civil Rights Act of 1886 (passed over the veto of President Andrew Johnson), and the subsequent 14th Amendment, guaranteeing full citizenship to all those born in America, was greatness. The ongoing attempts by right-wing demagogs to overturn the “birthright” portion of the 14th Amendment is smallness.

Many of us countenanced bigotry against blacks, Jews, Catholics, gays and others. That was smallness. But as a great nation, we have tried to change that.

The WPA was greatness. The war against Hitler was greatness. The march across the Pacific to defeat Japan, was greatness. Helping to rebuild a defeated Germany and Japan, rather than plundering them, was even more greatness.

The invention of atomic energy was greatness, though the bomb itself, not so much. In a controversial way, the use of the atomic bomb, not on Tokyo or Kyoto, but on Hiroshima and Nagasaki, were greatness, in that they ended the war without destroying the moral, emotional and traditional center of Japan. The Marshall Plan was greatness.

The development of the ENIAC computer and subsequent computers and programs, of which “Silicon Valley” became the leader, were signs of greatness.

Senator McCarthy was smallness, but censuring McCarthy was greatness..

The creation of Social Security, Medicare and Medicaid were signs of American greatness.

The civil rights movement and the Civil Rights Act of 1964 were profound signs of greatness. Roe v Wade, which protected not only vulnerable women, but prevented the suffering that is endured by unwanted children, was greatness. Failure to ratify the Equal Rights Amendment was smallness, though numerous court decisions may have made the Amendment unneeded

Eisenhower’s interstate highway initiative was greatness. The lack of an interstate, high speed passenger rail system is smallness.

Landing on the moon was a sign of greatness, as was the first mechanical exploration of Mars. The development of vaccines and medicines of all kinds, of which America is the leader – greatness. The Mosaic web browser, which in 1993, marked the true beginning of the World Wide Web, the mobile phone and the cordless phone were products of a great America.

Many, many more examples of greatness and smallness can be suggested, and you may disagree with, or add any, you wish. But in my eyes, there is a pattern. Though President Kennedy said, “ask not what your country can do for you – ask what you can do for your country, I believe the true measure of a nation’s greatness is what that nation’s government does for people, especially weaker, poorer, most vulnerable people. The Statue of Liberty poem expresses our greatness.

We never returned to the moon, nor have we landed people on Mars. This failure (I consider it a failure) resulted not from lack of scientific talent nor of human courage, but rather because of perceived lack of dollars.

Xenophobia has strengthened, with Arizona’s anti-immigrant laws and infamous sheriff being only the most prominent examples. These laws have their basis in money – the belief that immigrants take resources away from us – we who already have our citizenship, not by effort but by good fortune. The British expression for that is, “I’m all right, Jack.” We have become a nation of I’m all right, Jack.

I believe America’s greatness is waning, and I believe the decline began in 1981, with Ronald Reagan’s inaugural address, in which he said, “In this present crisis, government is not the solution to our problem; government is the problem. From time to time we’ve been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else? All of us together, in and out of government, must bear the burden.”

He may have been correct if he were talking about a small group, or perhaps even a tiny village. But the notion of 300+ million people, each “governing himself” not only is ludicrous, but
devolves to self-serving, selfish and mean-spirited, as it now has, as exemplified by the Tea (formerly Republican) Party. We, as individuals, are small and weak. But we together, as a nation, are powerful.

Yet, today, we are asked to decide how much to reduce Social Security, reduce Medicare, reduce Medicaid, reduce assistance to the arts and public radio, reduce funding for roads and bridges, reduce funding for scientific research and medical research, limit aid to states, limit aid to education, limit aid to the poor, the homeless, the helpless.

Reduce and limit; limit and reduce. These are the symptoms of a declining nation. Slip one step backward; then slip another; then another. One day, your children will look around and ask you, ‘What has become of us? What happened to our great nation?

Your answer will be: “Our greatness is lost, because we, your parents and grandparents, thought our government was the enemy, and began a process for limiting and reducing what our government could do. We didn’t understand, nor care to learn, how our government creates money, and why we need our government. We just believed all the misleading slogans. It all began with Ronald Reagan, but it accelerated in 2010, with the Tea (formerly Republican) Party. And I’m sorry children, but you must pay the price for our ignorance.”

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


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No nation can tax itself into prosperity, nor grow without money growth. It’s been 40 years since the U.S. became Monetary Sovereign, , and neither Congress, nor the President, nor the Fed, nor the vast majority of economists and economics bloggers, nor the preponderance of the media, nor the most famous educational institutions, nor the Nobel committee, nor the International Monetary Fund have yet acquired even the slightest notion of what that means.

Remember that the next time you’re tempted to ask a dopey teenager, “What were you thinking?” He’s liable to respond, “Pretty much what your generation was thinking when it screwed up my future.”

MONETARY SOVEREIGNTY

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