Social Security and Medicare Funds Face Insolvency, Report Finds

It’s old news, fake news, and a lie — a “Big Lie.” But it demonstrates why the public is so confused and misinformed about federal financing.

Image result for national enquirer fox newsThis following came from the venerable and venerated New York Times, but the article is as accurate as an article in Breitbart, Fox News, or the National Enquirer.

Social Security and Medicare Funds Face Insolvency, Report Finds By Alan Rappeport, economic policy reporter, who covers the Treasury Department and writes about taxes, trade and fiscal matters, April 22, 2019

WASHINGTON — The financial outlook for Medicare and Social Security, two of the nation’s most important social safety net programs, remains precarious, threatening to diminish retirement payments and increase health care costs for Americans in old age, the Trump administration said on Monday.

An annual government report on the status of the programs painted a dire portrait of their solvency that will saddle the United States with more debt at a time when the economy is starting to cool and taxes have just been cut.

Let’s get this straight. The NY Times incredibly is being as honest as Breitbart, Fox News,  and the National Enquirer.

But, the U.S. federal government cannot become insolvent. That is 100% impossible.

Who says so? How about:

Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”

Image result for greenspan
Greenspan

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.

Since the U.S. federal government cannot become insolvent, no agency of the federal government can become insolvent, unless the federal government wishes it.

Social Security and Medicare are agencies of the federal government. Therefore, neither Social Security nor Medicare can become insolvent unless the federal government wishes it.

And as far as “saddling the United States with more debt,” the scare-mongers have been shoveling this manure for at least 80 years (See: “It is 2019, and the phony federal debt “time bomb” still is ticking.“)

Neither the United States nor U.S. taxpayers are “saddled” with even one cent of federal “debt.” The misnamed “debt” is nothing more than the total of deposits into Treasury security accounts. These accounts are paid off, not with federal tax dollars, but rather by simply returning the contents of those accounts to the account holders. No “saddle” there.

The NY Times editors surely know this. So why do they scare-monger a lie? Why did they publish the “Big Lie”? There is a reason, which we will discuss.

According to the report, the cost of Social Security, the federal retirement program, will exceed its income in 2020 for the first time since 1982. The program’s reserve fund is projected to be depleted in 16 years, at which time recipients will get smaller payments than they are scheduled to receive if Congress does not act.

Meanwhile, Medicare’s hospital insurance fund is expected to be depleted in 2026 — the same date that was projected a year ago. At that point, doctors, hospitals and nursing homes would not receive their full compensation from the program and patients could face more of the financial burden.

The so-called “reserve fund” is an accounting fiction. It is not a fund and it is not held in reserve. It merely is a record showing the difference between FICA and spending. It’s just a piece of information about the difference in two numbers; it does not reveal anything about the government’s ability to pay for things.

The U.S. government is Monetarily Sovereign, and so has the unlimited ability to create its own sovereign currency, the U.S. dollar. Even if all FICA collections totaled $0, the federal government could pay infinite Social Security benefits, forever.

An infinite account cannot be “depleted.”

The article continues:

“Lawmakers should address these financial challenges as soon as possible,” the trustees of the program wrote.

“Taking action sooner rather than later will permit consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare.”

There are no trustees because there is no trust. It is just an accounting record, that has none of the qualities of a trust. (See: Fake federal trust funds and fake concerns)

The above makes the naive and false assumption that federal (Monetarily Sovereign) financing is the same as personal (monetarily non-sovereign) financing.

For the federal government, there are no “financial challenges” that need “solutions.” And while the author of the article claims benefits will need to be cut or taxes increased, the public should not be prompted to “prepare” for those unnecessary changes.

It is all the “Big Lie.

Some Republicans sought to take credit on Monday for the fact that the news was not worse while also calling for changes to the programs.

“Following historic reforms to America’s tax code, this strong economy has strengthened these important programs, but today’s reports remind us of a fact we have known for far too long: Medicare is going broke and Social Security is not solvent,” Representative Kevin Brady, Republican of Texas, said in a statement.

Either Rep. Brady either is incredibly ignorant about economics, or he is an incredible liar. Pick one. There are no other alternatives.

The United States will not become insolvent, and for the same reasons, neither Medicare nor Social Security will go broke, unless a bribed Congress forces that to happen. 

Lawmakers have been struggling to come to grips with a solution for the country’s eroding entitlement programs, which have for years been at the center of a political tug of war between Republicans and Democrats.

No. Lawmakers have been struggling to find more ways to continue fooling the public. It’s been a struggle because arguing against plain facts always is difficult.

Mr. Trump was initially resistant to calling for cuts to the programs, but his budget proposal last month did just that. The request, which is being ignored by Congress, proposed shaving $818 billion from projected spending on Medicare over 10 years.

Completely unnecessary.

It also called for $26 billion less on Social Security programs, including a $10 billion cut to Social Security Disability Insurance, which provides benefits to disabled workers.

Well, of course, Mr. Trump wanted to cut Social Security and Medicare, two programs that benefit the middle classes and the poor. Isn’t that what the GOP always wants to do?

And of course, the GOP Congress passed tax cuts that mostly benefitted the rich. Isn’t that also what the GOP always wants to do?

The problem is not that the GOP, the party of the rich, wants unnecessarily to gut programs that benefit the non-rich. The problem is that the Democrats, supposedly the party of the middle- and lower-income groups, go along with the fiction of federal insolvency. 

“That fact that we now can’t guarantee full benefits to current retirees is completely unacceptable, and it should be cause enough for every policymaker to rally around solutions to restore solvency to those programs,” said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget.

“Certainly we should be focused on saving Social Security and Medicare before we start promising to expand these programs.”

She added that “now isn’t the time for partisan bickering — we need solutions.”

Just as Wayne LaPierre, of the National Rifle Association (NRA) is a mouthpiece for gun manufacturers, Maya MacGuineas, of the Committee for a Responsible Federal Budget (CRFB) is a mouthpiece for the very rich.

The rich in America, and all over the world, for that matter, never are satisfied. They want to become richer and richer. To become richer, you must widen the income/wealth/power Gap between you and those below you on any economic scale.

It isn’t sufficient that your income increases if the incomes of those below you increase even more. Without the Gap, no one would be rich; we all would be the same.

It is the Gap that makes you rich, and the wider the Gap, the richer you are.

This is known a “Gap Psychology,” the desire to distance yourself from those below and to approach those above.

So the rich bribe your three main economic information sources — the media,  the politicians, and the economics professors — to tell you the Big Lie, that federal spending is funded by federal taxes rather than by money creation.

–The rich bribe the media via advertising dollars and media ownership.
–The rich bribe the politicians via political contributions and promises of lucrative employment after they leave office.
–The rich bribe the economics professors via contributions to universities and with jobs at think “tanks.”

The public accepts the Big Lie because it equates to personal experience, where personal spending is funded by personal income.

One day, perhaps within your lifetime, the general public will learn that federal taxes do not fund federal spending, that the federal government and its agencies cannot become insolvent, and that social programs can and should be funded for the benefit of all America.

It will have to begin with a moral billionaire, a moral politician, or a moral economist who has both the money and the influence to promulgate the truth, and to have it accepted.

Waiting.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

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The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. 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:

1. Eliminate FICA

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

How you can help protect Medicare and Social Security

.

It takes only two things to keep people in chains:

The ignorance of the oppressed
And the treachery of their leaders

============================================================================

You endlessly have been told that Medicare and Social Security Trust funds will, in the near future, run short of money unless benefits are decreased or taxes are increased.

In the post, Fake federal trust funds and fake concerns we debunk this false idea. Today, I’ll suggest what you can do to help protect your Medicare and Social Security.

First, as a quick refresher, here are excerpts from a very short article in THE WEEK Magazine, June 22, 2018:t

Nolan Finley: The annual report from the trustees of Social Security and Medicare shows that both programs “have accelerated their race toward the brick wall of insolvency.”

Social Security will spend more money this year than it takes in for the first time since 1983.

Finley and the trustees are wrong.

Social Security and Medicare are departments of the U.S. federal government. As such, they cannot become insolvent unless the U.S. becomes insolvent and/or Congress and the President want them to become insolvent.

The U.S., being Monetarily Sovereign, has the unlimited ability to create its own sovereign currency, the U.S. dollar.

It can pay any debt denominated in dollars. Because the federal government’s financial obligations are denominated in U.S. dollars, the U.S. government always can pay them. It even can pay any obligation denominated in a foreign currency, simply by exchanging dollars for that currency.

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.”

In short, the United States government cannot become insolvent. 

The notion that a department of the U.S. government can become insolvent is like saying the mail room of a large, infinitely wealthy corporation can become insolvent — an obvious impossibility unless the corporation were arbitrarily to decide not to pay the mail room’s expenses.

Further, Social Security does not “take in” money. Those FICA dollars extracted from your paycheck do not pay for Social Security. Upon receipt by the Treasury, they disappear from any measure of the U.S. money supply — M0, M1, M2, M3, L — or any other code.

Your tax dollars effectively are destroyed upon receipt.

If you ask, “How much money does the federal government have,” you will not find the answer. What the federal government does have is the unlimited ability to create dollars. It “has” infinite dollars.

(If your business owned an infinite dollar-creating machine, how many dollars would your business have?  And would any department of your business be in danger of insolvency?)

Nolan Finley continues: “Without drastic changes, the Social Security Trust Fund is now expected to be depleted within 16 years, going bust by 2034.

Things are even grimmer when it comes to Medicare’s Hospital Insurance Trust Fund — Medicare Part A — which is projected to run out of money by 2016.

At 63, I’ll probably still collect my benefits but, ‘I feel for the generations behind me. There seems no chance they’ll ever collect anything.'”

These latter three paragraphs voice ideas promulgated by the rich to make the rest of us accept unnecessary reductions in our benefits.

You’ll notice that Finley did not mention Medicare Part B (mostly doctors)  and Part D (prescriptions). Why? Because these two benefits are run through the bookkeeping ledgers of the Supplementary Medical Insurance (SMI) Trust Funds.

These mythical “trust funds” receive their bookkeeping credits from the federal government’s General Fund which never unintentionally can run short of its sovereign currency.

That is why no one ever talks about Medicare Part B and Part D becoming insolvent. They have access to an infinite number of dollars.

So, you might ask, why not fund Medicare Part A and Social Security the same way Parts B and D are funded — from the limitless General Fund?

The answer: The politicians, the media, and the economists are paid by the rich to keep you ignorant of the fact that Social Security and Medicare, Parts B & D have infinite access to money.

If you knew this, you might ask for increases in benefits, thereby narrowing the financial Gap between you and the rich — the very last thing the rich want.

In fact, there is a very good chance you didn’t know it until this very moment, and now you are sitting there thinking, “Is this really possible? They’ve been telling me Medicare can ‘go bust,’ but they only are talking about Part A, and they are lying about that, too.”

Yes, that is exactly what is happening. You are being lied to. And the cure for lies is the fresh air of truth.

I suggest you contact your Senators and your Representative, and rather than go through the entire argument about Monetary Sovereignty, simply say this:

“We repeatedly are told that Medicare will become insolvent unless there is a decrease in benefits or a tax increase.

“Were you aware that this applies only to Medicare Part A? Medicare Part B and Part D are paid out of the federal General Fund, which means they cannot become insolvent.

“So the question is: Why doesn’t Congress merely specify that Medicare Part A benefits be paid the same way as Medicare Part B and Part D?

“That would completely eliminate all the concerns about insolvency.

“(The same would be true for Social Security. It too should be paid from the General Fund.)”

A letter would be good. A phone call would be better. A letter + a phone call would be better yet. Repeated phone calls and letters would be the best.

If enough people do this, maybe, just maybe . . .

Anything is possible if enough people want it.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

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The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

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 The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Guaranteed Income)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.

MONETARY SOVEREIGNTY

Ten Steps to Prosperity: Step 6. Eliminate federal taxes on business

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

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It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders.

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This is the sixth in the series of posts describing each of the Ten Steps to Prosperity, the previously described Steps being:

Eliminate Fica (1)
Federally funded Medicare and long-term care for everyone (2)
Monthly economic bonus for everyone (3)
Free education for everyone (4)
Salary for attending school (5)

Are these the words you would use to describe a “healthy economy”?

  1. Business profits are high
  2. Sales of goods and services are strong
  3. Goods and services are plentiful and easily available
  4. Unemployment is low
  5. Salaries are high
  6. Poverty is low
  7. Homelessness is low
  8. Everyone has access to good health care
  9. The elderly and disabled are well cared for
  10. The gap between the rich and the rest is narrow
  11. Inflation is controlled
  12. The stock market is rising
  13. The infrastructure is well-maintained
  14. Taxes are low
  15. ________________________________

There may be other words you would use. If so, feel free to add them.

Now scroll down the list and tell me which items are positively affected by federal taxes on business.

Do federal business taxes help increase profits, sales, or the availability of goods and services? Of course not.

Do federal business taxes help reduce unemployment, increase salaries, or reduce poverty and homelessness? No way.

Do federal business taxes provide you with health care, protect the elderly, close the gap between the rich and the rest, control inflation or boost the stock market? Not in this world.

Do federal business taxes maintain the infrastructure or reduce other taxes? Certainly not.

So what the heck do federal business taxes accomplish?

The U.S. is Monetarily Sovereign.  It never runs short of its own sovereign currency. It neither needs nor uses tax dollars. Even if all federal tax collections fell to $0, the federal government could continue to spend, forever.

And surely, taking tax dollars from our businesses does not help them to be more competitive against foreign companies.

Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars).

Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.

So again, what the heck do federal business taxes accomplish?Image result for ball and chain

Clearly, federal business taxes act as a drag on economic growth.

We discussed the elimination of federal business taxes at New York Times parrots the same old myths about corporate taxes.  If you click the link you will see:

New York Times
Reform and Corporate Taxes

Published: February 22, 2012

The corporate tax system is a mess. The United States has one of the highest corporate tax rates in the world, but too many businesses still don’t contribute their fair share of revenue, in large part because of numerous loopholes, subsidies and other opportunities for tax avoidance.

The Times speaks of a “fair share” of taxes. Does the Times want you to believe that taking more dollars from businesses somehow would be “fair” — that if only businesses had fewer dollars to spend, the economy would thrive?

Or does the Times want you to believe that if you had fewer dollars to spend, that would help the economy to grow? Either point would be ridiculous.

Because federal business taxes pay for nothing and negatively affect the economy, eliminating them should be a no-brainer. But there are two problems:

Problem I. What is a business?

A business is not a “thing.” A business is a system of laws. Businesses already have been given substantial tax benefits, and if taxes on businesses were completely eliminated, most Americans would declare themselves a business as a tax-saving device.

Of course, the federal government could tweak its tax laws to require businesses to have real business purposes, or use other devices to prevent everyone from converting to business status.

But, why?  The federal government has no need for federal tax income. The federal government creates dollars ad hoc, every time it pays a bill. And when you pay your federal taxes, those dollars instantly disappear from the money supply. They effectively are destroyed.

The elimination or dramatic reduction of all federal taxes would be a very good thing for the U.S. economy. You would retain more money to spend and save, and businesses would retain more money to invest and to pay in salaries and dividends to shareholders. It would be a “win, win, win, win, win” for you and for the entire economy.

So why not? Here’s why:

Problem II. The Public Has Been Brainwashed by the Rich

The primary goal of the rich is to widen the Gap between them and the rest of us. The Gap is what makes them rich. Without the Gap, no one would be rich (We all would be the same), and the wider the Gap, the richer they are.

And the rich run America.

Most federal deficit spending benefits the non-rich. It narrows the Gap, so the rich promulgate the myth that federal finances are like personal finances, with income being necessary to pay for spending.

But, the federal government neither needs nor uses income. It is a money machine.

Nevertheless, the rich opt for taxes, but not any taxes. The rich want regressive taxes like income taxes, sales taxes and FICA, all of which punish the non-rich and so, widen the Gap.

One innocently might think that business taxes have more effect on the rich, but in fact, businesses provide the rich with many opportunities for tax deductions. (You can’t deduct for your meals, travel expenses, living expenses, educational expenses, etc., but business owners and executives can.)

Most importantly,  collecting business taxes supports the myth that federal taxes actually pay for something.  

They don’t.

The rich are concerned that if businesses didn’t pay taxes, you would complain that this isn’t “fair,” or worse yet, begin to realize that federal taxes are unnecessary. Then, you might demand that personal taxes be eliminated, too.

That would narrow the Gap, making the rich less rich, and depriving them of their large supply of underpaid servants. (Yes, sorry. That’s you.)

The rich pay propaganda organizations like the Committee for a Responsible Federal Budget (CRFB), pay the politicians, pay the media, and pay the university economists to promulgate such nonsense as “There is no such thing as a free lunch,” and federal deficits are “unsustainable,” and the federal debt is “a ticking time bomb,” and “money printing” will cause a hyperinflation like Zimbabwe” — none of which is true.

The idea is to convince you that federal taxes are necessary, in short, “the Big Lie,” so you will believe there isn’t enough money available for the social spending that benefits you. (That is why you will see fake scare articles telling you that Social Security and Medicare are insolvent.)

The rich want you to struggle day-to-day, worrying about how you will pay for your children and for your own old age, desperate and begging for any handouts from the rich. Meanwhile, the rich who own you, laugh all the way to the bank.

So yes, business taxes should be eliminated, and yes, it would greatly benefit you.

But the rich are afraid that will wake you up to the fact that all federal taxes could be eliminated, which would narrow the Gap — something the rich loathe.

Rodger Malcolm Mitchell
Monetary Sovereignty

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

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 The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Guaranteed Income)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and corporate taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.

MONETARY SOVEREIGNTY

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

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