No, no, no, no, no, no, no, no! NO!
Ryan Cooper, a well-meaning, national correspondent at TheWeek.com, whose work has appeared in the Washington Monthly, The New Republic, and the Washington Post, wrote:
“. . . taxes are always a net cost by definition — something that is taken from the American citizenry and spent on government boondoggles or welfare for poor people.”
And, “. . . while Medicare-for-all would require some additional taxes on the middle class, those increases would be more than compensated for by zeroing out premiums, co-pays, and deductibles.”
And, “As economist Gabriel Zucman explains: ‘Note how Warren and Sanders actually cut taxes for the bottom 95%. That’s because they abolish mandatory private health insurance premiums, which are in effect a huge poll tax.'”
NO, Mr. Cooper, and NO, Mr. Zucman. NO. While state taxes fund state spending, and county taxes fund county spending, and city taxes fund city spending,
FEDERAL TAXES DO NOT FUND FEDERAL SPENDING.
The federal government may claim that FICA funds Social Security and Medicare. The federal government may claim that income taxes fund the military and the myriad other federal spending. But, it simply is not true.
There is zero relationship between federal spending and federal taxing. Federal taxes (unlike state and local taxes) are not “spent on” anything. They are destroyed upon receipt.
And, Medicare-for-all would not require some additional taxes. Medicare for all will be funded entirely by deficit spending, regardless of what tax schemes are implemented.
And, Warren and Sanders do not cut taxes for the bottom 95%, because they abolish mandatory private health insurance premiums. No, they will raise taxes unnecessarily, and also will cut premiums.
The tax increase and the premium decrease mathematically may or may not offset, but in either event, they have nothing to do with one another.
The federal government, being Monetarily Sovereign, creates brand new dollars every time it pays a creditor. It works like this:
When anyone — you, me, any business and any government agency — pays a creditor, it sends instructions to the creditor’s bank instructing the bank to increase the balance in the creditor’s checking account.
At that instant, brand new dollars are created. To pay for those new dollars, the checking accounts of the payors are debited.
But here is the huge difference: The checking accounts of the aforementioned you, me, any business and any government agency all are part of the money supply (mostly M1). So those checks contribute a net $0 to the money supply.
The only checking account that is not part of the money supply is the federal government’s account. So its checks add to the money supply.
Why are government checking accounts not part of the money supply? Because the federal government has the unlimited ability to add to its checking accounts any time it wishes. So whatever amounts are shown in the government’s checking accounts have no meaning.
The federal government dips into an infinite pond. There is no dollar answer to the question: “How much money does the federal government have?”
The answer is, “Infinite.”
Sadly, Mr. Cooper’s article continues:
“Bernie Sanders forthrightly admits that Medicare-for-all would require some additional taxation on the average citizen.”
gain, no. Sanders is not being “forthright.” He is being cowardly. He knows full well that additional taxes are not necessary. He had Professor Stephanie Kelton as his economic advisor, and she told him.
But, in typical politician fashion, he either didn’t understand it or more likely, was too afraid voters wouldn’t believe it.
Where does that leave us? Pretty much where we always have been, because Mr. Cooper’s article demonstrates the misinformation distributed by the public’s three main sources of knowledge: The politicians, the media, and the academics.
The politicians misinform you because they are bribed by the rich via campaign contributions and promises of future lucrative employment. The media misinform you because they are bribed via ownership and advertising dollars.
And most of the academics misinform you because they are bribed via university grants and think tank employment.
You understand this, but what of the rest of the public?
Driven by Gap Psychology (the desire to distance oneself from those “below” in any status measure), the rich want to keep the middle class from realizing that the Ten Steps to Prosperity (below) are easily provided, and without increasing taxes even one cent.
The rich wish to become ever richer, and that requires widening the Gap between them and those “below” them.
And that leads to the fourth main source of misinformation, the public itself. Having been brainwashed by the politicians, the media, and the academics, the public takes over spreading misinformation about federal financing until it becomes perceived as “common knowledge.”
It is “common knowledge” that one should live within one’s means, and that debt should be avoided, and that budgets should be balanced — except that “common knowledge” does not apply to Monetarily Sovereign governments.
Misinformation often may come from the well-meaning, but it remains misinformation, and even more harmful than misinformation from the ill-meaning.
Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell
Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”
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.”
St. Louis Federal Reserve: “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.
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The most important problems in economics involve:
- Monetary Sovereignty describes money creation and destruction.
- Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”
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 economics.
Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:
Ten Steps To Prosperity:
2. Federally funded Medicare — parts a, b & d, plus long-term care — for everyone
3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)
4. Free education (including post-grad) for everyone
5. Salary for attending school
6. Eliminate federal taxes on business
7. Increase the standard income tax deduction, annually.
8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
9. Federal ownership of all banks
10. Increase federal spending on the myriad initiatives that benefit America’s 99.9%
The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.
MONETARY SOVEREIGNTY
“Ignorance is the parent of fear.” Herman Melville
#Monetary Sovereignty - Mitchell 