In our previous discussions, we’ve introduced you to Gap Psychology, a concept that fuels the desire to widen the income/wealth/power Gap below and to narrow the Gap above.
This psychological phenomenon not only perpetuates social disparities but also has dire implications for our environment.
The very rich want wide Gaps because, without Gaps, no one would be rich. We all would be the same. The wider the Gaps, the richer the rich, and the poorer the poor, i.e., “inequality.”
The rich are a major cause of global warming.
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 our lives.
The rich bribe our thought leaders to tell us wide Gaps are just and necessary, a result of innate superiority and hard work — that the rich and the poor have earned their places.
The rich bribe the media through ownership and advertising dollars.
They bribe economists through university endowments and jobs in think tanks. They bribe politicians through campaign contributions and promises of jobs in the industry.
The rich try to convince us that federal benefits are unaffordable and unsustainable, but we have the power to demand these benefits and make a significant change in narrowing the Gap and protecting the environment.
It’s part of the Big Lie that taxpayers fund such benefits as Medicare, Social Security, poverty aids, college loan forgiveness, and other benefits to the middle- and lower-income groups. (No mention is made of taxpayers funding tax breaks for the rich.)
But in a Monetarily Sovereign government like ours, taxpayers fund nothing. (Taxpayers do fund monetarily non-sovereign state and local government spending.)
All federal spending is funded by federal government money creation, ad hoc. Federal tax dollars, unlike state/local government tax dollars, are destroyed upon receipt.
The sole purposes of federal taxes are:
To control the economy by taxing what the government wishes to discourage and by giving tax breaks to what the government wishes to reward.
To assure demand for the U.S. dollar by requiring taxes be paid in dollars.
Here are excerpts from a NewScientist Magazine article describing another problem caused by the Gap, aka “inequality”:
Inequality is a major obstacle to sustainability. The super-rich are an environmental horror story that we can’t ignore. By Graham Lawton
According to the United Nations Environment Programme, the average greenhouse gas emissions of someone in the richest 10 per cent of global society are around 20 times the average of someone in the poorest 50 per cent.
Research by Oxfam and the Stockholm Environment Institute found the world’s richest 1 per cent collectively emit the same as the poorest two-thirds.
A new book by Ingrid Robeyns puts this in stark personal terms. In Limitarianism: The case against extreme wealth, she calculates that to get to net zero, the average per capita carbon footprint needs to be 2 tonnes a year. The European average is 8 tonnes.
The top 1 per cent emit over 100 tonnes, with billionaires emitting a mind-blowing 8000 tonnes, mostly through the use of private jets and superyachts.
There are very few billionaires, but their consumption is only part of the equation. Huge inequality is bad for everyone – and the planet.
In a recent webinar about the book, Pickett said: “What The Spirit Level showed was that economic inequality, specifically income inequality, was related to a whole range of different problems: health problems, issues to do with human capital development, such as educational attainment and social mobility, and everything to do with relationships.
The crucial point is that inequality seems to affect almost all of society.” In the years since 2009, the evidence for this has only grown stronger.
As for the environment, inequality isn’t just bad for the obvious reasons.
A recent paper in Nature Climate Change makes a compelling case that inequality is a major obstacle to sustainability, because people at the lower end of the income spectrum don’t have the resources – money and time – to make the necessary lifestyle changes.
Not only does inequality limit people’s opportunities to make sustainable choices, it also drives unsustainable consumption at lower income levels.
Humans are hardwired for “social evaluative threat” – anxiety about how we are seen by others.
This threat induces a type of stress called status anxiety. Subconsciously, we are all evaluating where we stand in the economic pecking order and trying to climb to the next rung, or at least not slide down.
One of the easiest ways to alleviate status anxiety is conspicuous consumption.
The cause for “status anxiety” is “Gap Psychology.” You can read more about Gap Psychology here, here, here, and many places elsewhere in this blog.
In any society, the poorest people have the highest levels of status anxiety and the richest the least. But here’s the rub: in more unequal societies, status anxiety is higher across the board.
One study found that in the most equal societies, the poorest have a status anxiety score of 2.2 out of 5, as judged by their degree of agreement with questions such as “others look down on me because of my job situation or income”.
The richest score about 1.8. In the most unequal societies, the scores are 2.7 and 2.1. In other words, the richest people in very unequal societies have roughly the same level of status anxiety as the poorest in more equal ones.
How do people respond to status anxiety? In part by consuming high-status goods.
Multiple research projects have found that people living in highly unequal parts of the US tend to spend more on swanky cars and designer clothes, which have a very large carbon footprint.
“Status competition driving consumerism upward is a huge obstacle to moving towards sustainability,” said Wilkinson in the webinar with Pickett.
Many Western societies are still tolerating, or even encouraging, eye-watering levels of inequality.
But they also underestimate the obscene wealth held by a few people who emit more than just greenhouse gases. It is a tough argument to make, but it has to be made.
Louboutin shoes: Affordable. Saving the world: Unaffordable.
As Wilkinson said: “We cannot solve the environmental crisis without solving the inequality crisis.”
Gap Psychology dictates that the last thing the rich want is to solve the inequality crisis. It’s what makes them rich.
That is why they bribe the media, politicians, and the economists to tell you various forms of the Big Lie in economics, including such lies as:
Social Security and Medicare will run short of money because fewer workers are supporting more older people.
To prevent Social Security and Medicare from running short of money, FICA must be increased and/or benefits must be reduced.
The federal deficit and debt are unaffordable and unsustainable.
Taxpayers pay for federal spending.
Comprehensive, no-deductible Medicare for All, Social Security for All, increased poverty aids, free college for all who want it, and other benefits for the middle- and lower-income groups are unaffordable.
All of the above are untrue. They could not exist without the active counter messaging by your information sources.
They want you to believe the Big Lie that the finances of our Monetarily Sovereign government are the same as your personal finances.
The federal government not only can afford to fund all of the benefits to you, while also funding the efforts to counter global warming.
The rich want you to believe that either global warming doesn’t exist, or if it exists, the costs to end it are too great for the government to fund, or for taxpayers to fund. All lies.
The government has the infinite ability to fund anything, without collecting a penny in taxes. To admit that, your information sources also would have to admit paying for your benefits also are affordable.
But that would narrow the Gap and make the rich less rich.
The sole benefits the rich allow are the tax breaks that only they can access. Those supposedly are “affordable” and “sustainable.”
Meanwhile, life on earth is threatened as the climate becomes less survivable. Eventually, the rich will discover that they need to support more equality for them to remain rich.
But that may be too late to save the world.
There’s still time to contact your Congressperson, tell them you are quite aware that the federal government can create infinite money without taxing or borrowing, and can provide far more benefits than it currently does.
Tell them the Gap is not sustainable, and the rich may have the money, but not the votes. Demand federal benefits for those who are not rich.
The U.S. federal government is Monetarily Sovereign (See: Monetary Sovereignty.) It created the first U.S. dollars from thin air, and it retains the unlimited ability to create more U.S. dollars. The government never unintentionally can run short of U.S. dollars. Even if all federal tax collections ended, the federal government could continue spending forever.
State and local governments are monetarily non-sovereign. They can and often do run short of dollars.
Because the U.S. government cannot run short of dollars, it has no need for tax dollars. In fact, it destroys all tax dollars upon receipt at the Treasury. (See: “Does the Federal Government Really Destroy Your Tax Dollars?“) Taxes are paid with dollars from the M2 money supply, and when they reach the Treasury, they cease to exist in any money supply measure. Thus, the federal government does not spend taxpayers’ dollars.
By contrast, state/local governments do need and spend taxpayers’ dollars.
Contrary to popular wisdom, federal spending does not cause inflation. Inflation always is caused by shortages of critical goods and services, usually oil, food, and labor. (See: “Cause of Inflation.”) Inflations can be cured by additional government spending to cure shortages.
Keep those facts in mind as you read excerpts from the following article:
The Commonwealth Fund Health Care Affordability Survey, fielded for the first time in 2023, asked U.S. adults with health insurance, and those without, about their ability to afford their health care — whether costs prevented them from getting care, whether provider bills left them with medical debt, and how these problems affected their lives.
Many Americans have inadequate coverage that’s led to delayed or forgone care, significant medical debt, and worsening health problems.
While having health insurance is always better than not having it, the survey findings challenge the implicit assumption that health insurance in the United States buys affordable access to care.
Difficulties affording care are experienced by people in employer, marketplace, and individual market plans, as well as people enrolled in Medicaid and Medicare.
Private insurance is burdened by the profit motive, which restricts the number and amount of benefits offered. However the federal government has no profit motive and has the unlimited ability to create dollars. So why is Medicare inadequate?
For the survey, our analysis focuses on 6,121 working-age respondents, those 19 to 64.
Survey Highlights
Large shares of insured working-age adults surveyed said it was very or somewhat difficult to afford their health care: 43 percent of those with employer coverage, 57 percent with marketplace or individual-market plans, 45 percent with Medicaid, and 51 percent with Medicare.
Many insured adults said they or a family member had delayed or skipped needed health care or prescription drugs because they couldn’t afford it in the past 12 months: 29 percent of those with employer coverage, 37 percent covered by marketplace or individual-market plans, 39 percent enrolled in Medicaid, and 42 percent with Medicare.
Cost-driven delays in getting care or missed care made people sicker. Fifty-four percent of people with employer coverage who reported delaying or forgoing care because of costs said a health problem of theirs or a family member got worse because of it, as did 61 percent in marketplace or individual-market plans, 60 percent with Medicaid, and 63 percent with Medicare.
Insurance coverage didn’t prevent people from incurring medical debt.Thirty percent of adults with employer coverage were paying off debt from medical or dental care, as were 33 percent of those in marketplace or individual-market plans, 21 percent with Medicaid, and 33 percent with Medicare.
Medical debt leads many people to delay or avoid getting care or filling prescriptions: more than one-third (34%) of people with medical debt are in employer plans, 39 percent in the marketplace or individual-market plans, 31 percent in Medicaid, and 32 percent in Medicare.
Healthcare insurance, whether private or government-funded, is inadequate. Given the fact that the federal government has infinite dollars, why are so many Americans suffering with too-costly-but-inadequate insurance?
Medicare, for instance, is far less than comprehensive. Why does Medicare have Part A, Part B, Part C, and Part D, each with different options and costs? Why not simply a Medicare that covers everything for everyone at no cost?
Why, if the federal government has infinite money, are these expenses not covered, and why are there deductibles and added costs to complete coverages?
You have been told, falsely, that the federal government is like state/local governments, business, you and me, in being monetarily non-sovereign. You have been told falsely, that the federal government spends taxpayers’ dollars and can run short of dollars.
You have been told, falsely, that to provide benefits, the federal government must levy taxes and spend taxpayers’ money.
It’s all a lie.
Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency. There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody. The United States can pay any debt it has because we can always print the money to do that.”
Quote from former Fed Chairman Ben Bernanke when he was on 60 Minutes:
Scott Pelley: Is that tax money that the Fed is spending?
Ben Bernanke: “It’s not tax money… We simply use the computer to mark up the size of the account. The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
Statement from the St. Louis Fed: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.”
The U.S. government is not the only Monetarily Sovereign entity. For example:
Press Conference: Mario Draghi, President of the ECB, 9 January 2014
Question: I am wondering: can the ECB ever run out of money?
Mario Draghi: Technically, no. We cannot run out of money.
Given its infinite money supply, why does the federal government not provide free, comprehensive, no-deductible insurance to every man, woman, and child in America? Why must you, as an American, risk bankruptcy, sickness, and death because your insurance is inadequate?
What is the Big Lie? The Big Lie is the claim that federal taxes fund federal spending.To pay its bills, the federal government creates new dollars ad hoc by tapping computer keys. Whenever you read an article claiming the federal government is “spending taxpayers’ dollars; it is a lie.
State and local governments spend taxpayers’ dollars; the federal government does not.
Why are you being lied to, and where are the lies coming from?
The lies are coming from the healthcare insurance industry, the media, the economists, and the politicians.
It’s easy to understand why the insurance industry lies about the federal government’s not funding healthcare insurance: The profit motive. The insurance industry does not want to lose the huge profits in selling healthcare coverage.
But why do the media, economists, and politicians lie?
Because they are bribed.
The media are bribed by advertising dollars and by ownership. The economists are bribed by university contributions and by promises of lucrative jobs in “think tanks.” The politicians are bribed by campaign contributions and by promises of lucrative jobswith industry.
Who is doing the bribing? The very rich?
Why are the rich bribing? Gap psychology says people grow richer and more powerful by widening the Gap between them and those below them in any income/wealth/power measure. That is the primary way the rich make themselves more affluent.
How do the rich widen the Gap below them? They get more for themselves, but importantly, they make sure those below them get less. They use their influence to reduce the federal benefits paid to those less wealthy.
The rich disseminate the lie that Medicare and Social Security are running short of dollars, so benefits must be reduced, and taxes must be increased (See: “Starve the Poor.”)
What should be done?
First, the useless, harmful FICA tax should be eliminated. Like all federal taxes, it funds nothing. Worse, it punishes the low-income worker and widens the Gap between the rich and the rest.
Second, the federal government should pay for free, comprehensive Medicare for All, with no limits and no deductions. One free plan for everyone; no Part A, B, C, D. No Medicaid. No “Donut holes.” No Medicare Advantage plans.
The public must learn that federal spending is beneficial, and it costs nothing.The more the federal government spends on healthcare, the more the overall economy will grow and prosper.
Ignorance is the weapon used by the rich to dominate the rest. That is the reason medical services are unaffordable for so many Americans.
The dictionary definition of “Libertarian” is: An advocate or supporter of a political philosophy that advocates only minimal state intervention in the free market and the private lives of citizens.
The problem is that each self-proclaimed “Libertarian” invents his definition of “minimal.” So, the real, practical meaning is: “Libertarian is someone who decides how much state intervention he wants.” Period.
Thus, everyone is a Libertarian. Or not. If you want to increase Medicare availability but cut Social Security, you can claim to be a Libertarian. If you want to cut them both, you also can claim to be a Libertarian.
Do you want to eliminate all federal spending? You’re an extreme Libertarian. Want to stop all federal agencies? Extreme Libertarian. Want to cut federal spending by 99%, 75%, 25%, or 1%? You can do any of it under the guise of “Libertarianism.”
Thus, for this reason alone, Libertarianism is the all-purpose bullsh*t excuse for doing whatever you want.
But it worsens when we consider why Libertarians want to cut state intervention. There are two fundamental reasons:
Freedom from government control
Romina Boccia
Affordability of government spending
And self-proclaimed Libertarians vacillate between the two, depending on their mood.
1. Freedom: Every law reduces someone’s freedom. For absolute freedom, there would be no laws. Libertarians hate laws when their own freedom is reduced but accept laws that protect any of their freedoms.
A true Libertarian thinks people should be free to carry any weapon anywhere. Does that include machine guns, bazookas, flame throwers, drone bombs, poison gas?
Should people be freeto keep slaves, spread smallpox, steal, kill, and kidnap? Well, no, that’s too much freedom. So, how much freedom should people have? Ask two Libertarians, and you’ll get five opinions.
Thus, Libertarians claim their right to tell youhow much freedom you should have, and whatever they decide is based on their personal desires and their definition of Libertarianism.
2. Affordability: Because Libertarians feign ignorance about Monetary Sovereignty, they claim the thing called “federal debt” is like state/city debt, personal debt, monetarily non-sovereign debt, and business debt.
It isn’t. States, counties, cities, people, businesses, and euro nations can run short of whatever currency they use to pay their bills. The U.S. government cannot.
The finances of the Monetarily Sovereign U.S. government are unique. It alone can afford anything that can be purchased with U.S. dollars. Whether an obligation totals $1 or a hundred trillion dollars or any other number makes no difference to the federal government’s ability to pay for it.
The U.S. federal government pays for everything by creating U.S. dollars ad hoc. It never unintentionally can run short of dollars. Even if the government didn’t collect a penny in taxes, it could continue spending forever.
Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”
I suggest that Libertarian leaders are well aware of #1 and #2 above, and that there is a different reason for their objections to government spending.
I suggest that the Libertarian party is a proxy for the Republican partyin being tied to America’s richest 1%.
“Rich” is a comparative, relying on the width of the Gaps between the top vs. the middle and bottom. Widening the income/wealth/power Gap between the richest and the rest of us makes the rich richer. Narrowing that Gap makes the rest of us richer.
You are rich if you have $1,000, while everyone else has $10. But you are poor if you have $1,000 while everyone else has $10,000. It is the Gap that determines how rich or poor you are. The wider the Gap below you and the narrower the Gap above you, the richer you are.
The Libertarians, as proxies for the Republicans, work to widen the Gap between the rich and you, making the rich richer. It is reflected in Gap Psychology, the desire to widen the Gap below you and to narrow the Gap above you.
Keep this in mind as we review excerpt from the following Libertarian article:
These programs primarily benefit those who are not rich. Therefore, they are fair game for the Libertarian budget-cutters, who seldom express concern about tax loopholes for the rich but constantly complain about benefits to the rest of us.
With the Senate and now the House reopening for business, Congress is resuming its negotiations over annual spending on discretionary programs. As Washington tinkers around the edges of the behemoth federal budget, members are steering clear of the biggest budget items—the ones sending U.S. debt to unprecedented heights.
Here are the facts:
The U.S. debt is not the dollars the U.S. government owes. It is the total of dollars deposited into T-security accounts. The so-called “debt” is not a debt of the government any more than your deposit into your safe deposit box is a debt of your bank.
When you open your T-security (T-bill, T-note, T-bond) account and deposit it, the dollars belong to you. The government never touches them other than periodically to add interest dollars.
When your T-security matures, those dollars are returned to you, just as the contents of your safe deposit box are returned to you.
Discretionary means that Congress hasn’t put these programs on autopilot, unlike so-called mandatory programs. Instead, Congress must vote to either continue or alter the spending. Otherwise, discretionary program funding expires.
While controlling discretionary spending is important for fiscal responsibility, for reducing government waste, and for negotiating the proper size and scope of federal activities, the current shutdown debate is largely symbolic.
To the Libertarians, “fiscal responsibility” and “government waste” refer to benefits received by the middle- and lower-income groups. Tax benefits that allow billionaires like Donald Trump to pay virtually $0 in taxes seldom concern Libertarians.
America’s biggest fiscal challenge lies in the unchecked growth of federal health care and old-age entitlement programs.
Oh, woe! Sick and elderly Americans, especially poor Americans, are receiving more money. To Libertarians, this is outrageous.
Never mind that the federal government has the infinite ability to create the dollars that fund these programs. The Libertarians’ concern is not affordability. The federal government can afford anything. The real concern is that the poor and middle classes receive dollars, narrowing the Gaps between the rich and the rest.
The rich hate that because it makes them less rich. And what the rich hate, the Libertarians and the Republicans also hate.
Alan Greenspan: “There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody.”
Repeated shutdown fights and a slew of temporary continuing resolutions have gotten us no closer to reforming Social Security and Medicare.
In the Libertarian world, “reforming” means “cutting.”
Those paying attention to the debt limit debate that ended in early June may be wondering what all the shutdown fuss is about, given that Congress and the White House agreed to new spending limits just a few months ago.
Those limits, specified in the Fiscal Responsibility Act, were a sham from the beginning. Secretive side deals undermined the stated goals of the bipartisan agreement before the ink was dry.
President Joe Biden has requested $40 billion in additional emergency supplemental spending, with the Senate adding several more billion to its appropriations bills, a glaring attempt to evade even modest fiscal restraints.
The federal government has infinite dollars. What, then, is the purpose of “modest fiscal restraints”? The sole purpose is to impoverish the great mass of people so that the rich can continue to rule.
Alan Greenspan: “The United States can pay any debt it has because we can always print the money to do that.”
The debt limit deal did succeed in allowing both Democrats and Republicans to claim political victory while suspending the debt limit for more than 18 months.
The losers are the American people, as excessive federal spending and unchecked entitlement growth drive up inflation and interest rates and undermine stronger economic growth.
Three lies in just eleven words, a remarkable record:
Federal spending does not “drive up inflation.”All inflations are caused by shortages of critical goods and services, most often oil and food. Today’s COVID-induced inflation resulted from a scarcity of oil, food, transportation, metals, lumber, computer chips, labor, and other goods and services.Federal spending to cure these shortages, not interest rate increases, has been moderating inflation.
Federal spending does not “drive up interest rates.” Interest rates are up because the Federal Reserve falsely believes low interest rates lead to inflation, and high rates cure it. This is utter nonsense. Adding high interest to the cost of goods makes those goods more costly. The sole effect of high rates is to stagnate the economy by transferring dollars from borrowers to lenders. A stagnant economy is known as a “recession” or a “depression,” and neither recession nor depression is the opposite of inflation. Apparently, the Fed never heard of “stagflation,” the combination of inflation and a stagnant economy.
Stronger economic growth is defined as increased growth in Gross Domestic Product. (GDP). The formula for GDP is: GDP = Federal Spending + Nonfederal Spending+ Net Exports. Now I ask the Libertarian geniuses, given that formula, what can the federal government do to increase GDP growth? If you know basic algebra, your answer was “increase Federal Spending.” Seemingly, this is beyond the abilities of the Libertarians.
A more responsible way to raise the U.S. debt limit would have paired such an increase with a credible fiscal plan to stabilize the growth in the debt.
Hmm. “Raise the debt limit” by “stabilizing the debt growth.” If that makes sense to you, you are far wiser than me. By setting up a functional impossibility, the Libertarians make sure they always will have something to complain about.
Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
The longer Washington waits to fix autopilot spending, the more damage they’ll do. The Congressional Budget Office’s latest long-term budget outlook projects that U.S. government spending will consume nearly 30 percent of the economy by 2053—almost 40 percent higher than the historical average.
Look again at the formula for GDP. Federal spending does not “consume” part of the economy but adds to it. By simple, mathematical formula, increased Federal Spending increases GDP.
It also increases Non-federal Spending by adding dollars to the private sector.
Thus, IF one wishes to increase economic growth, the last thing would be to cut Federal Spending. The word “if” is accented because increasing economic growth is not a Libertarian goal.
They want to widen the Gap between the rich and the rest, a goal that often can be met by recessions or even by depressions.
Quote from former Fed Chairman Ben Bernanke when he was on 60 Minutes: Scott Pelley: Is that tax money that the Fed is spending? Ben Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account.
Recessions and depressions provide opportunities for the rich to become richer. At those times, the rich can snap up assets at bargain prices while forcing labor to slave at meager salaries.
Congress is expected to rack up more than $100 trillion in additional deficits over those 30 years—more than four times what the U.S. government has borrowed over its entire history. Who will lend the U.S. government such vast sums?
More lies from the Libertarians. The federal government, having the infinite ability to create U.S. dollars, never borrows. Never.
Statement from the St. Louis Fed: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.”
Thus, no one lends to the federal government. Those dollars spent on T-securities do not go to the federal government. They go into T-security accounts, which are owned by the depositors.
Those accounts provide a safe place to store unused dollars. This stabilizes the dollar. It does not give the federal government spending dollars, of which it already has infinite.
The main drivers of this increase are heightened interest costs and the growth in health care and Social Security spending.
With Medicare and Social Security responsible for 95 percent of long-term unfunded obligations, according to the Treasury Financial Report, there’s simply no way any serious fiscal reform effortcan leave these programs untouched.
Yet another lie. All financial obligations of the U.S. government are “unfunded” until the government funds them by creating new dollars ad hoc.
Federal taxes do not fund federal spending.Unlike state/local tax dollars, which remain in the private sector by being deposited into private banks, federal tax dollars are destroyed. When they reach the U.S. Treasury, they cease to exist in any money supply measure.
(No money supply measure includes federal dollars because the federal government has infinite dollars. Thus, your federal tax dollars cease to exist once received by the Treasury.)
The Libertarians define a “serious reform effort” as anything that takes dollars from the poor and the middle classes.
The most likely outcome from the current standoff is a continuing resolution into December, followed by a spending-laden Christmas tree bill before year’s end. This shutdown debate matters only so much, considering the huge fiscal challenge confronting the United States.
A “Christmas tree bill” is the Libertarian’s intentionally misleading description of anything that provides more money to the poor and middle classes.
By ROMINA BOCCIA , the director of budget and entitlement policy at the Cato Institute.
The Cato Institute claims it promotes “individual liberty, limited government, free markets, and peace,an honest description of an organization that wants the rich to rule.
Nothing in that description is about reducing poverty, feeding the malnourished, educating the masses, narrowing the Gap, or being charitable. Quite the opposite.
“Individual liberty” means the rich do whatever they want, and the rest do whatever the rich want. “Limited government” and “free markets” mean there will be no laws to prevent the rich from cheating and enslaving the rest of us.
And as for “peace,” those angry protests by the poor can be messy. The Libertarians want the downtrodden to accept their lot in life, peacefully.
What a perfect society the Libertarians try to force on us.
Whoever wins the White House next year will quickly face a series of legislative deadlines with impossible price tags:
$3.6 trillion in tax cuts and $350 billion in Affordable Care Act subsidies are expiring. That’s after another debt-limit cliff.
Passing legislation that could be north of $4 trillion is “ridiculous when you already have debt that’s headed to record levels,” said Marc Goldwein, senior vice president and senior policy director at the CFRB.
The so-called “federal debt” is not debt, and it is not a financial problem. It is the total of deposits into Treasury Security accounts, which are easily paid off every day. The government simply returns the dollars in those accounts to the account owners.
No problem at all. No tax dollars are needed or involved.
Why it matters: The deadlines could force political horse-trading of epic proportions. Alternatively, gridlock or alarm over the nation’s debt may lead to Americans seeing higher taxes and fewer benefits.
There is no reason for alarm. There is no reason for higher taxes. There is no reason for fewer benefits. This all is a con to make you think federal benefits to you are unaffordable.
The big picture: The 2024 election could very well be a rematch between the same two presidents who signed each measure into law.
Republicans’ 2017 tax law, and the enhanced Affordable Care Act subsidies that Democrats first passed in 2021, are signature policy accomplishments for each party. They’re also both extremely polarizing and became law under party-line votes.
In the past, the coinciding expiration dates may have been fodder for a grand bargain in which both sides etched out wins — and still could be.
But the recent debt-limit fight showed that these days, even a crisis can barely force Democrats and Republicans to agree.
Between the lines: Most Democrats would happily extend the ACA subsidies. But allowing taxes to rise may be a tough political sell — especially since the party increasingly represents wealthier parts of the country.
The above paragraphs show that Ms. Owens believes federal taxes are necessary to fund federal spending. They aren’t.
The federal government could, if it wished, pay a $10 trillion or a $100 trillion bill tomorrow merely by pressing a computer key.
Former Federal Reserve Chairman Alan Greenspan: “There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody.”
Former Federal Reserve Chairman Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
The debt-limit fight, mentioned by Ms. Owens, was a charade for the benefit of the public. The sole purpose of a debt limit is to convince the populace not to ask for federal benefits.
Behind the scenes, the very rich, who control Washington, want the Gapbetween the rich and the rest to widen. The wider the Gap, the richer are the rich. (It’s called Gap Psychology) — the desire of the rich to become richer by widening the income/wealth/power Gap below them.)
Federal benefits narrow the Gap, and the rich don’t want that.
Reality check: Budget hawks warn that the nation’s finances are on a disastrous path. Letting at least some of these policies expire — or finding a way to pay for extensions — would be the responsible course of action.
Reality check: The extensions could be paid for merely by passing a law that pays for the extension. That is how all federal debts are financed. Congress and the President simply pass laws.
Political horse-trading could increase the cost of a deal — if the limit on the state and local tax deduction is eliminated, for instance.
Increasing the deal’s cost would benefit America by pumping growth dollars into the economy. Gross Domestic Product = Federal Spending + Nonfederal Spending + Net Exports.
Mathematically, the more the federal government spends, the more GDP grows.
Even one-party control of Congress and the White House wouldn’t necessarily make the process headache-free.
The nation’s debt level will only rise over the next two years, forcing Republicans to choose between raising taxes and dropping another $3.6 trillion onto the balance sheet, according to an analysis by the Committee for a Responsible Federal Budget.
“I think there will be a faction of the Republican party who would not want to go into a debate, even with significant tax cuts, if it would blow a hole” in the deficit,” Campbell said.
Again, Ms. Owens repeats the false trope that federal finances are like personal finances, where the “balance sheet” should be minimized.
She gets this from that fountain of lies, the Committee for a Responsible Federal Budget (CRFB), an organization devoted to convincing you the federal government should spend less and tax the not-rich folks more.
It’s called “austerity,” a formula for economic disaster. Ask any Euro nation how that has gone.
And while most Democrats would happily extend the ACA subsidies, and nearly all of them have criticized the Trump tax cuts as handouts to the wealthy, allowing taxes to rise may be a tough political sell — especially as the party increasingly represents wealthier parts of the country.
Raising federal taxes should be a hard sell because it’s unnecessary. The sole purposes of federal taxes are:
To control the economy by taxing what the government wishes to discourage and by giving tax breaks to what the government hopes to encourage
To create demand for the U.S. dollar by requiring dollars to be used for tax payments
Federal taxes do not fund federal spending.
“It could potentially be a really good deal for Democrats if they were to agree to extend the tax cuts and extend the ACA subsidies. Then they don’t get blamed for raising people’s taxes, and they get the subsidies,” former House Budget Committee Chairman John Yarmuth, a Democrat, told Axios.
It also would be a good deal for the economy because both steps would leave more growth dollars in the economy.
Yes, but: Budget hawks warn that the nation’s finances are on a disastrous path, and letting at least some of these policies expire or finding a way to pay for extensions would be the responsible course of action.
That is a bunch of BS. America’s finances are not on a disastrous path. Increased federal spending is absolutely necessary for economic growth. Here’s what happens when the federal government cuts spending to run a surplus.
U.S. depressions tend to come on the heels of federal surpluses.
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.
1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.
There are also scenarios where political horse-trading could even increase the cost of a deal— like if the limit on the state and local tax deduction is eliminated or if Democrats successfully demand more of their preferred policies to more closely match the cost of extending the tax cuts.
Increasing “the cost of the deal” would add growth dollars to the economy. Remember that GDP = Federal Spending + Nonfederal Spending + Net Exports formula. Increase federal spending and mathematically, you increase GDP because two terms in the formula (Federal Spending and Nonfederal Spending) will increase.
What we’re watching: One of the simplest ways to bring down the price tag of any of this would be to just pass temporary extensions.
There is no reason to bring down the price tag. None at all.
“I can’t imagine that any Congress is going to pass a bill that costs $4 trillion,” Yarmuth said. “My guess is if they did something, it would be a much shorter duration.”
But limiting the price tag by extending the measures for only a couple of years is “a horrible way to do tax policy,” Goldwein said.
“There are other ways to have a deal that would be fairer to both sides that don’t involve sticking the bill to our grandkids,” he added.
And so, the article ends with the oft-stated but totally BS notion that federal spending would be paid for by “our grandkids.” Anyone making that claim is demonstrating ignorance of federal finances or being intentionally deceptive.
Federal spending is paid for by federal new money creation. The federal debt is paid for by returning T-security account deposits. Federal taxes pay for nothing. They are destroyed upon receipt.
IN SUMMARY
The nations finances are on a “disastrous path” only if one believes federal finances are like personal finances, which they are not.
Federal taxes don’t fund federal spending; they remove growth dollars from the economy. So tax cuts are inherently good for the economy and for you.
Unfortunately, the Trump tax cuts mostly were gifts to the rich; they widened the income/wealth/power Gap between the rich and the rest.
The Affordable Care acts (ironically called “Obamacare,” though Obama did virtually nothing to enable its passage), has benefitted millions of Americans. The rich hate it because it narrows the Gap between the rich and the rest.
Ignorance of federal financing is costly to those who currently benefit, or would benefit, from more federal spending, namely everyone in America, and most of the world’s population.
Ms. Owens would serve her readers better if she learned the facts of Monetary Sovereignty and the diferences between federal financing and personal financing.
Her misstatements, and the mistatements of those who agree with her, cost you money. They widen the Gap between the very rich and the rest.
#Monetary Sovereignty - Mitchell 