Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity breeds austerity and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Once again, Congressional ignorance of Monetary Sovereignty rears its ugly head. This is what happens when people, who have zero understanding of economics, vote on our futures.

Payroll tax break: Extension proposals from both parties fail in Senate

WASHINGTON POST: By Lori Montgomery and Felicia Sonmez, Published: December 1

The Senate late Thursday rejected competing partisan visions for extending a temporary tax break that benefits virtually every American worker, clearing the way for more serious negotiations over how to cover the cost of the tax cut.

All but a handful of Democrats voted in favor of their party’s proposal, but in a surprising turn, more Republicans voted against the GOP plan than in favor of it. Senate Minority Leader Mitch McConnell (R-Ky.) predicted this week that a majority of his conference would vote for the party’s plan to extend the payroll tax cut.
[…]
Congressional leaders in both parties agree that the tax break should be extended to avoid harming the fragile economic recovery, but they are arguing over how to replace the lost revenue and avoid increasing the federal budget deficit.

Note that phrase “replace lost revenue”? Those who do not wish to understand Monetary Sovereignty tell us the federal government, which has the unlimited ability to create dollars, should instead take dollars out of the economy, i.e. “replace lost revenue.” (Attention, debt hawks: This is where you display your ignorance by warning about a Weimar Republic or Zimbabwe hyper-inflation.)

Democrats proposed a 3.25 percent tax on income over $1 million, which would raise sufficient cash to increase the tax cut to 3.1 percent and expand it to cover employers, as Obama has proposed. But that idea failed late Thursday to muster the 60 votes needed to overcome a GOP filibuster threat, with 51 senators supporting it and 49 opposed.

It should have failed, as it is a stupid idea – something like trying to fill a bath tub by pouring water into the north end with water taken from the south end.

Some Democrats voted against the measure, in part because the tax cut eats into the dedicated financing stream for Social Security, forcing the program to rely on congressional appropriations to cover the cost of benefits.

They wrongly believe FICA pays for Social Security. But if FICA pays for Social Security, what pays for Congress, the White House, the Supreme Court, the military and all other 1000+ agencies and departments in the government, none of which are “supported” by a dedicated tax? Answer that, Congress.

Republicans, for their part, offered a simple extension of the existing tax break paired with a proposal to freeze pay for federal employees through 2015, trim 10 percent from the federal workforce . . . Those provisions would generate enough savings to pay for the tax cut and reduce deficits over the next decade by more than $110 billion.

What a great idea to cure the recession: Increase unemployment while cutting the pay of those who still have jobs. You have to give Congress credit for creativity.

“This extension is yet another example of Washington’s benefit now, pay later mentality, and it moves us further away from solving our long-term spending and deficit problems,” Sen. Bob Corker (R-Tenn.) said in a statement.

He prefers, “Cut benefits now, not only for us but for our children and our grandchildren, then pay later with yet another recession or depression.”

I can’t end this without including a quote from by own Senator, Dick Durbin:

“If they’re nameless and faceless federal employees it’s one thing. But if it happens to be the FBI agent who’s in the midst of a very important investigation to keep this country safe, it’s another,” Sen. Richard J. Durbin (D-Ill.) said. “Those are the people whose jobs they would do away with for the payroll tax cut because they can’t bring themselves to raise taxes on the wealthiest people in America by one penny.”

“Nameless and faceless federal employees.” This perfectly demonstrates the revulsion with which Congress views Americans. We are nothing more than votes, “nameless and faceless,” not actual living human beings. He doesn’t want to fire people only because one might be an FBI agent.

Once again, Congressional and Presidential ignorance of Monetary Sovereignty is not just a theoretical problem. It is a real problem that affects the lives of real people and our descendants. God save us from the ignorant.

If only #OWS understood Monetary Sovereignty. But, like Congress, they too don’t seem to wish to learn.

I award Congress and the President three, very unfunny, clowns.

(This bring us, to a total of 1356 clowns awarded. Tell Sen. Corker I have plenty clowns left for him — exactly as the federal government has plenty dollars left for Social Security.)

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

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No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
b>Gross Domestic Product = Federal Spending + Private Investment + Private Consumption + Net exports

MONETARY SOVEREIGNTY

Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity breeds austerity and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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One of my Senators, Dick Durbin, sent me a letter filled with economic ignorance, but the whole problem is expressed in one sentence.

Here is the letter. See if you can find the key sentence:

Dear Mr. Mitchell:

Thank you for contacting me about negotiations to raise our debt limit and to put us on a sustainable fiscal path. These are issues of utmost importance, and I appreciate hearing from you.

On August 2, 2011, I voted for and the Senate passed the Budget Control Act (S. 365). The President signed the bill into law later that day. S. 365 prevents a default on our nation’s debt and gives our economy the certainty it needs as it continues to recover from a historic recession. This deal is not perfect, nor is it the deal many of us would have made ourselves, but in the end and after weeks of partisan differences, both sides have come together and compromised to avoid an economic catastrophe. This agreement will begin the process of reducing our deficits and ensuring our long term recovery. Over the next weeks and months, we must do all that we can to make certain that a balanced and fair process that protects the most vulnerable in our society follows this first step.

We know how our enormous deficits began. In 2000, we had the largest budget surplus in history: $236 billion. The nonpartisan Congressional Budget Office was projecting surpluses of $5 trillion from 2001 through 2010. President Bush rejected President Clinton’s policies and set us on a new path paved with large deficits financed by foreign debt. Two huge tax cuts, two wars, and the Medicare prescription drug program – none of which was paid for – produced an enormous fiscal hole. This was compounded by the economic mismanagement in the financial sector which caused the recession.

To address this issue, President Obama created the Bipartisan Fiscal Commission, on which I was honored to serve. I spent much of that time listening to experts explain the risk that our growing debt poses to our national well-being. The results are alarming. The debt now exceeds $14 trillion and will explode to even more unsustainable levels in the future unless we act to reduce it now. If we do nothing to tackle our debt obligation, interest payments alone could exceed $1 trillion dollars in 2020.

In recent months, I have worked with a bipartisan group of my colleagues to craft a balanced plan for controlling our federal deficits. Throughout my service in Congress, I have supported a range of proposals to cut spending. Just as American families have had to cut back on spending, Congress, too, must make tough choices. There are only two honest ways to reduce our debt: cut spending and raise revenues. I am committed to pursuing proposals that do both. This is going to require sacrifice from both sides of the aisle. The debt is not a partisan problem, it is an American problem. The Budget Control Act will decrease our deficit by over $2 trillion in the next decade. It is a first step, not the final one.

I will continue to work to find commonsense solutions to rein in our ballooning debt without risking the economic recovery or breaking promises to senior citizens, working families, and future generations.

Thank you again for taking the time to contact me. I will keep your comments in mind as this debate continues.
Sincerely,
Richard J. Durbin
United States Senator

In my opinion, the key statement of economic ignorance is this: “Just as American families have had to cut back on spending, Congress, too, must make tough choices.“ He does not understand the difference between Monetarily Sovereign federal financing and personal, kitchen-table financing.

For over forty years, the U.S. has been Monetarily Sovereign, and Congress still doesn’t understand it.

Just one little clown — the 1353rd –for Senator Durbin. He already has one from a previous post, so while pile them on.

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

==========================================================================================================================================
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
b>Gross Domestic Product = Federal Spending + Private Investment + Private Consumption + Net exports

MONETARY SOVEREIGNTY

Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity breeds austerity and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

The euro nations, five of which are referred to as the PIIGS (Portugal, Italy, Ireland, Greece, Spain), are in deep financial trouble because years ago they voluntarily surrendered the single most valuable asset any nation can have — Monetary Sovereignty — and this problem is exacerbated by being net importers.

As monetarily non-sovereign nations they are not able to create their sovereign currency (they don’t have a sovereign currency, in that the euro is not sovereign), and as net importers they see euros continuously drained from their economies. (Germany, a euro nation, prospers because it is a net exporter, thus draining euros from its neighbors).

Those two economic problems, monetary non-sovereignty exacerbated by net importing, are identical to the situation in which the American states, counties and cities find themselves. For the euro nations, there are two, and only two, long-term financial solutions:

1. Return to Monetary Sovereignty by re-adopting their sovereign currencies
or
2. The EU to give (not lend) euros to member nations as needed.

For the American states, counties and cities, the number of long-term solutions comes down to #2: The U.S. government to give, not lend, dollars as needed.

The Washington Post
States face bleak economic forecast, report says
By Michael A. Fletcher, Published: November 28

States are caught in a fiscal vise as weak economic growth, dwindling federal help and increasing appeals from hard-pressed local governments squeeze their budgets.
[…]
The Fiscal Survey of States says that even as states struggle with tepid revenue growth, they will be called on to spend more because of the economic distress caused by continued high unemployment.

“State budgets are certainly improving; however, growth is weak, and there is not enough money for all the bills coming in,” said NASBO Executive Director Scott Pattison. “State officials will still be cutting some programs, and increases in funding for any program except for health care will be rare.”

It is mathematically impossible for any monetarily non-sovereign governments — whether states, counties, cities or PIIGS — to survive long term, without money coming in from outside their borders.

Relying on internal taxes for support is a losing proposition. As inflation-adjusted dollars are drained from a state, either via imports or inflation, fewer tax dollars are available. This produces a downward helix of fewer dollars begetting greater needs, requiring even more tax dollars.

The counties and cities must have state support, while the states must receive federal support. However, the deficit-cutting frenzy in Washington makes federal support of the states difficult, if not impossible.

The report says that Medicaid, the combined federal-state health program for the poor and the disabled, will place the biggest budgetary burden on states. Because of increasing caseloads, declining federal help and spiraling health-care costs, state Medicaid spending is growing much faster than state revenue, crowding out funding for other priorities.

The federal government had provided extra Medicaid help to states as part of the stimulus program. But that help has ended, prompting states to increase their Medicaid spending by an average of 29 percent this fiscal year, according to the Kaiser Family Foundation.

Many states have streamlined their Medicaid programs in an effort to control costs. Still, officials in more than half of the states said in a recent survey that there is an even chance that their Medicaid programs will face a budget shortfall as enrollment continues to increase.

The monetarily non-sovereign states simply cannot afford to pay for Medicaid, nor should they. This program should be folded into Medicare and supported by our Monetarily Sovereign, U.S. government, which easily can afford to do so. Keep in mind that Medicare is not supported by FICA. No federal program is supported by taxes. That is one of the truths of Monetary Sovereignty. So for the federal government to assume all Medicaid payments would not require taxes to be increased by even one dollar.

States are also struggling to meet the needs of local governments. Many states cut aid to localities during the recession, and many of them want it restored.

Ultimately, our lives are local. We urgently feel the effects when our city or village is unable to maintain roads, sewers, water, police, fire protection, zoning and other local initiatives. These are the problems local governments should care for, not national problems like Medicaid and other unfunded federal mandates. There, in fact, should be no unfunded federal mandates.

In addition, states are bracing for further reductions in federal aid that are likely to come from Washington’s efforts to slow the growth of the deficit.

The fiscal pressure on states has become a drag on the job market; local and state governments are shedding jobs, even though the private-sector job market has shown signs of improvement.

State and local governments have cut 455,000 jobs since the beginning of 2010, and public-sector jobs account for the smallest share of the nation’s employment since the 2008 financial crisis, according to the Bureau of Labor Statistics.

The U.S. states, like the PIIGS, are in deep trouble, and for exactly the same reason: They are monetarily non-sovereign and are not receiving sufficient help from their sole Monetarily Sovereign source, the central government.

Unless Congress and the President come to their senses, and begin to understand the facts of Monetary Sovereignty, the states will suffer the same fate as the euro nations: Insolvency leading to chaos. The euro nations are more fortunate in that they have the alternative of leaving the EU. The U.S. states are stuck in that they don’t have the alternative of leaving the Union.

Or do they?

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

==========================================================================================================================================
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
b>Gross Domestic Product = Federal Spending + Private Investment + Private Consumption + Net exports

MONETARY SOVEREIGNTY

Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity breeds austerity and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

Is Newt Gingrich a closet Democrat?

In 2003, he founded the Center for Health Transformation (CHT), a collaboration of public and private sector leaders dedicated to the creation of a 21st Century Intelligent Health System that saves lives and saves money.

(See: Center for Health Transformation.)

His site further says:

Under his leadership, Congress passed transformational legislation including welfare reform, the first balanced budget in a generation, funding to strengthen our defense capabilities, and the first tax cuts in sixteen years.

Amazing! Newt Gingrich led Congress to balance the budget, while increasing defense spending and cutting taxes. Although balancing the budget is nothing to crow about, (It led to the 2001 recession — as budget cuts invariably do — cured only by the Bush deficits), I’m fascinated with the math that allows tax decreases plus spending increases to equal a balanced budget. Anyone think there may be some numbers missing from Newt’s self-written adulation?

But the most interesting part is what Gingrich says on the page titled “Insure All Americans,” a notion that must be anathema to those conservative, self-reliant Republicans. Here is a selection of his goals and solutions:

We agree in principle with the idea that it is good for all Americans to have health insurance – it encourages improved health and lowers costs within the system. However, this coverage should come via private sector and state mechanisms, and not as the result of a federal government mandate that forces every American to purchase health insurance.

Not sure what those “mechanisms are, but O.K., it sounds suitably right wing. Yet, just below that statement, one of Newt’s listed “solutions” is:

Require that anyone who earns more than $50,000 a year must purchase health insurance or post a bond.

Huh? That $50,000 is pretty inclusive. It digs deeply into the middle class. In fact, close to 40% of all Americans filing tax returns earned $50,000 or more – quite a departure from his right-wing, anti-mandate declaration. And with the implied, income-based evaluation, he sounds awfully much like one of those (ugh) liberal Democrats.

Another solution Gingrich puts forth:

Design insurance products to reward healthy lifestyles and wellness and penalize poor health.

“Penalize poor health”?? An insurance product that penalizes poor health? The sicker you are the more you are penalized? This is a solution? Think about that one for a bit.

And then there’s:

Make the management of chronic disease the priority of public programs such as Medicare and Medicaid.

I’m not sure how this “penalizes poor health,” but it’s a good idea – except that it seems to say all the persistent and long-lasting and expensive diseases (the definition of “chronic poor health”) – cancer, heart disease, birth defects, autoimmune diseases et al — would be covered by public Medicare and Medicaid, while little stuff like sniffles and rashes would be covered by private insurance.

Can such a system actually work? Doesn’t sound very private-industry, self-reliant, right-wing Republican to me. Sounds more like the public solution a Democrat might favor.

And then there’s:

Encourage the use of personal health records for portals to health education, cost and quality data, and personal health histories.

Wow, Newt! Talk about a Democrat, “big brother, big government” solution. The Tea/Republican, right-wing should have a fit. Again, it has the smell of the liberals hanging all over it.

But finally:

Enlist faith-based organizations to educate the value of personal responsibility, health, and wellness.

Ah, solidly right-wing Republican. Give money to religious organizations to do whatever, rather than have the government do them. Breach the wall between religion and government. One small step for religion; one giant step for theocracy.

So, I guess Newt is not a Democrat after all. He’s a right-wing, conservative, big-government liberal, walking both sides of the fence. You know what happens when you walk both sides of a fence? Visualize it.

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

==========================================================================================================================================
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
b>Gross Domestic Product = Federal Spending + Private Investment + Private Consumption + Net exports

MONETARY SOVEREIGNTY