–Budget cuts coming: Great news for us rich people

Mitchell’s laws:
●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor, which leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
●Everything in economics devolves to motivation.
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As readers of this blog have learned, we of the upper .1% income group – we mega rich – we bribe the politicians (via campaign contributions and promises of lucrative employment later) to reduce the so-called federal “deficit,” also known as creating “austerity.” You wouldn’t believe how much politicians love to be bribed.

Because the vast majority of deficit spending benefits you in the lower and middle income classes, deficit reduction widens the gap between us rich people and you middle class folks, and it is the gap that we upper 1%ers really care about. Without the gap, none of us would be rich, and the wider the gap, the more power we have over you. Power is what life is all about. You should get some.

Under the title, Budget cut warnings may prove harsher than reality, Alan Fram of the Associated Press, discusses what austerity will do to you middle class nobodies and for us mega-rich.

—Defense: A $3 billion cut in the military’s Tricare health care system could diminish elective care for military families and retirees.

This won’t affect us in the upper .1% income group. None of us are soldiers and anyway, we have our own “cadillac” health insurance.

—Health: The National Institutes of Health would lose $1.6 billion, trimming cancer research and drying up funds for hundreds of other research projects. Health departments would give 424,000 fewer tests for the AIDS virus. More than 373,000 people may not receive mental health services.

Cancer research, AIDS, mental health – who cares? What’s important is to cut the deficit. Why? No one knows, but you believe it. We in the .1% don’t get AIDS. That’s for poor folks. And we buy our own psychiatrists.

—Food and agriculture: About 600,000 low-income pregnant women and new mothers would lose food aid and nutrition education. Meat inspectors could be furloughed up to 15 days, shutting meatpacking plants intermittently and costing up to $10 billion in production losses.

I don’t know any low-income pregnant women, do you? And if those low-paid workers in meatpacking plants lose some of their income, well I don’t know any of them, either.

—Homeland Security: Fewer border agents and facilities for detained illegal immigrants. Reduced Coast Guard air and sea operations, furloughed Secret Service agents and weakened efforts against cyberthreats to computer networks. The Federal Emergency Management Agency’s disaster relief fund would lose more than $1 billion.

So we fire a few border agents and a few in the Coast Guard. None of us in the .1% work those kinds of menial jobs. And as for FEMA, really who cares? My rich friends and I don’t receive disaster relief.

—Education: Seventy thousand Head Start pupils would be removed from the pre-kindergarten program. Layoffs of 10,000 teachers and thousands of other staffers because of cuts in federal dollars that state and local governments use for schools. Cuts for programs for disabled and other special-needs students.

Some teachers lose their jobs – big deal. I can hire private tutors. Anyway, my kids go to expensive private schools. Don’t yours?

—Transportation: Most of the Federal Aviation Administration’s 47,000 employees would face furloughs, including air traffic controllers, for an average of 11 days.

So 47,000 people each lose 11 days of pay – is that something I’m supposed to care about? Let ‘em eat cake.

—State Department: Slow security improvements at overseas facilities.

So a couple more ambassadors get killed. Not my worry. Just blame Hillary.

—Internal Revenue Service: Furloughed workers would reduce the IRS’ ability to review returns, detect fraud and answer taxpayers’ questions.

This is great. Mitt and I hate those guys nosing into our offshore bank accounts.

—FBI: Furloughs and a hiring freeze would have the equivalent impact of cutting 2,285 employees, including 775 agents. Every FBI employee would be furloughed 14 workdays.

More unemployment for the middle class. Perfect. Just widens the income gap between us and you. By the way, what does the FBI do?

—Interior Department: Hours and service would be trimmed at all 398 national parks, and up to 128 wildlife refuges could be shuttered.

If I want to see wildlife, I’ll fly my private jet to Africa. You should, too.

—Labor: More than 3.8 million people jobless for six months or longer could see their unemployment benefits reduced by as much as 9.4 percent. Fewer Occupational Safety and Health Administration inspectors could mean 1,200 fewer visits to work sites. One million fewer people would get help finding or preparing for new jobs.

This is the best news yet. Increase unemployment while decreasing jobless benefits – the perfect combination for widening the gap between me and you.

—NASA: Nearly $900 million in cuts, including funds to help private companies build capsules to send astronauts to the International Space Station.

Science, who needs it? Really, what good is it?

—Housing: The Department of Housing and Urban Development said about 125,000 poor households could lose benefits from the agency’s Housing Choice Voucher program and risk becoming homeless.

All those lazy, homeless people wandering around. Thank goodness I built a big wall around my estate, so I don’t have to look at them.

In total, austerity is the greatest idea for us .1%ers. The more we cut federal spending, the wider that income gap. For a while, we thought only the Republicans were on our side, but now even the Democrats are starting to join in. They probably couldn’t resist the bribes.

Finally, I’d like to thank all you poor and middle-class slobs for demanding – yes, demanding – that the federal budget be cut, because you believe it’s “unsustainable” or will cause inflation or the government is “broke” or whatever other nonsense we’ve told you.

I know austerity causes you and your children great hardship, but remember, your sacrifices are for a good cause: To benefit us rich people.

Rodger Malcolm Mitchell
Monetary Sovereignty

[Confession: I’m not really part of the upper .1% income group, but it’s nice to dream, especially with the politicians being so cooperative.]

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Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99%

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

#MONETARY SOVEREIGNTY

–“Flip the Debt.” Will they learn from “Occupy’s” mistake?

Well, we have an new protest organization. It’s called “Flip the Debt.” Unfortunately, like the Occupy” movement, they don’t understand economics. So they think our problem is corporations and rich people not paying enough tax.

Here is their press release:

Flip The Debt and Us Uncut Honeywell Action Press Release
Posted by Emine Dilek on Sunday, February 10, 2013

Honeywell CEO David Cote and ‘Fix the Debt’ will host a public event on Monday.

Unfortunately for them, a coalition of groups including FLIP THE DEBT, the Alliance for Retired Americans, and US Uncut will hijack their party to elevate our message about the hypocrisy of corporate tax dodgers demanding cuts to social programs.

‘Fix the Debt’ claims to seek bi-partisan solutions to reduce the federal debt and deficit, but Fix the Debt is a CEO-led group whose real objective is huge corporate tax breaks and drastic cuts in Social Security, Medicare, and Medicaid.

The hypocrisy is stunning…

David Cote and his CEO friends receive a lot from government:
In 2011, the firm got $725 million in government deals, making it the 35th-largest federal contractor.

However, these companies contribute very little in taxes: Honeywell’s actual tax rate from 2008-2011 was 2 percent. They are not alone. Corporate taxes as a share of GDP are near record lows.

Perhaps even more galling is Cote’s demand for cuts to earned benefit programs. Cote has $78 million in his Honeywell retirement accounts, enough to qualify for monthly retirement checks of $428,000 starting at age 65. In contrast the average retiree receives just $1,237 a month from Social Security.

If you think it’s time we stand up against corporate tax dodgers, RSVP to the page NOW! Please RSVP ‘Going’ regardless of whether you can attend. This will help you stay connected with the action. Also, we encourage people to post news, info, and photos about corporate tax dodgers on this wall.

Flip the Debt made good on its promise of protest:

When Honeywell CEO David Cote arrived at Saint Anselm College, he had expected a warmer reception. As the host of Monday’s “Fix The Debt” campaign event, Cote, whose company has come under heavy scrutiny by corporate watchdogs and tax advocates for its use of offshore tax havens, spoke only for three minutes before activists from the “Flip The Debt” campaign interrupted him with a message of protest, before being escorted out by police.

“Offshore tax havens” are not the problem. Low corporate taxes are not the problem. (In fact, they are beneficial.) The problem is a too-wide income gap and a too-low deficit.

You could do Flip the Gap a favor by going to their site and suggesting they immerse themselves in Monetary Sovereignty and/or Modern Monetary Theory. The basics don’t take long to understand, and this will make their protests productive. (You may have to do it via tweets, as I was unable to find an Email address at their site, http://www.flipthedebt.org/)

Otherwise, they’ll just be another Occupy movement that failed to accomplish much, because it refused to learn the facts.

It will be a shame to see their energy wasted.

Rodger Malcolm Mitchell
Monetary Sovereignty

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#MONETARY SOVEREIGNTY

–Where is the FDIC for insurance premium payers?

FDIC is an excellent program that protects bank depositors. Its limits are too low (in my opinion), but otherwise it does what it is supposed to do: Allow people to make deposits without the fear that these deposits will not exist when needed.

I, myself, have owned multi-year CDs in banks that closed several years prematurely, and in each case, I received my money, including interest, within a week.

Insurance companies have some resemblance to banks in that they accept “deposits” (premiums) and provide promises of specific, later payments. Like banks, insurance policies are supposed to provide risk-free investment with many (not all) of their policies. That is why they are called “insurance.” They insure against risk.

A fixed annuity resembles a CD in that it guarantees a specific payment, despite inflation, recession or any other economic uncertainty. And, similar to the situation with banks, the long-term, future finances of insurance companies are difficult, if not impossible, for the public to research or predict.

So where is the FDIC for insurance companies?

Accident victims are threatened with cuts in annuities
By Donna Gehrke-White, Sun Sentinel
February 13, 2013

Timothy Culhane was only 29 when he tripped on a high-rise conduit pipe and fell seven floors while working on a New York hotel construction site near the World Trade Center in 1980.

He survived, but since then he’s lived through decades of painkillers, surgery and physical therapy. Now totally disabled and living in Plantation, Culhane thought at least he had a regular check coming after he received a million-dollar settlement.

He wasn’t counting on a New York government agency going to court to liquidate an insurance firm that for decades has sent out his monthly checks.

Ironically, the agency that was supposed to protect Culhane has convinced a New York court that he and about 1,500 other annuity recipients must give up a substantial portion of their monthly income because the Executive Life Insurance Company of New York doesn’t have enough money to pay everyone. In fact, it is more than $1.5 billion short.

Last week, an appeals court upheld the cut in annuity payments.

The New York Superintendent of Financial Services is supposed to protect annuity beneficiaries and should help the victims keep what was promised them. The Superintendent’s office first took over Executive Life Insurance in 1991 when its California-based parent company couldn’t pay debts. The stressed ELNY was then given to the New York Liquidation Bureau to turn around.

But after more than two decades of overseeing, the liquidation bureau said that low interest rates and the 2008 stock market collapse had made matters worse and ELNY could no longer “support the payment of 100 percent of the benefits.”

If changes in interest rates and the stock market can affect the security of an insurance policy, it isn’t insurance. It’s speculation.

“I didn’t think that could happen,” Culhane said. He said had turned over his $1 million settlement from the accident in the 1980s to ELNY to ensure he would always have steady income.

“I still need surgeries,” he said.

In New York’s defense, it is a monetarily non-sovereign government. It does not have the unlimited ability to pay its bills. By contrast, the U.S. federal government is Monetarily Sovereign and never can run short of dollars.

Though FDIC arbitrarily limits the size of its guarantees, the federal government really could pay any claims of any amount. So the question is this:

Why does the federal government not guarantee fixed payout insurance, just as it guarantees my bank CDs?

The federal government already has demonstrated it will save large insurance companies and their highly paid executives and wealthy creditors, as AIG can testify.

So the question remains: “Where is the FDIC for insurance premium payers?”

Rodger Malcolm Mitchell
Monetary Sovereignty

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#MONETARY SOVEREIGNTY

–Obama wants to stabilize our finances. Has no idea what that means.

Last November, we published the post titled, “Sorry to say this: Obama really is a liar and a traitor to the middle class. But Romney would have been worse.” If you’ve not read it, you might wish to. It’s a prelude to today’s article.

I saw the following in the Washington Post:

Obama, in State of the Union, makes case that middle class is job one
By Scott Wilson, Published: February 12, 2013

President Obama challenged Congress on Tuesday night to assist an American middle class squeezed by rising costs and stagnant wages, making clear that he will devote much of his second term to closing the income gap between rich and poor.

This is the same President Obama who just increased FICA, costing the average working American, $1,000 every year (plus interest). For someone like Mitt Romney, earning $1 million a year from investments, that’s a cost of $0. Yes, zero. And this is how President Obama closes the income gap.

Obama’s proposal to raise the minimum wage from $7.25 to $9 an hour over the next three years was among several new proposals that his advisers said were designed to close the income gap.

Those additional dollars won’t come from the federal government, so they have to come from the private sector. Increasing the minimum wage either:
1. Reduces corporate profits, and/or
2. Reduces employment, and/or
3. Reduces Net Exports and
4. Definitely will increase income tax and FICA collections, both of which will reduce the domestic money supply, impoverishing the economy.

None of the above will do anything to reduce the gap or to stimulate the economy. If anything, they will increase the gap and slow the economy.

Obama also announced that he will bring 34,000 American troops home from Afghanistan over the next year.

Morally, it’s the right thing to do, but economically it adds 34,000 souls to the ranks of the unemployed. How that will help the middle class is yet to be explained.

He called for “bipartisan, comprehensive tax reform” and emphasized that his proposals would not add to the $854 billion deficit, only reallocate money already in the budget to finance them.

“Reallocate money already in the budget” means: Take dollars from some expenditures helping the middle class to fund other expenditures that may or may not help the middle class. Moving dollars from the middle class’s left pocket to their right pocket doesn’t close the income gap.

Then he said:

“But let’s be clear: Deficit reduction alone is not an economic plan,” Obama said. “A growing economy that creates good, middle-class jobs — that must be the North Star that guides our efforts.”

See that sneak word, “alone”? Had he not used that word, he would have been right on track: Deficit reduction is not an economic plan. But he means to reduce the deficit, which requires tax increases and spending cuts, both of which are proven to widen the gap between the rich and the middle.

His State of the Union address included a few other immortal lines:

“Over the last few years, both parties have worked together to reduce the deficit by more than $2.5 trillion, mostly through spending cuts, but also by raising tax rates on the wealthiest 1 percent of Americans. As a result, we are more than halfway towards the goal of $4 trillion in deficit reduction that economists say we need to stabilize our finances.”

Nearly all of those spending cuts hurt the middle class, not the rich. He raised the highest tax rates on the rich, who seldom pay the highest rates, but he forgot to mention the FICA tax increase, which hurt the middle class. Just a slip of memory, perhaps.

As for, “$4 trillion in deficit reduction that economists say we need to stabilize our finances,” what the hell does “stabilize our finances” mean? Is our Monetarily Sovereign nation about to run out of the dollars it has the unlimited ability to create?

“In 2011, Congress passed a law saying that if both parties couldn’t agree on a plan to reach our deficit goal, about a trillion dollars’ worth of budget cuts would automatically go into effect this year.

These sudden, harsh, arbitrary cuts would jeopardize our military readiness, they’d devastate priorities like education and energy and medical research. They would certainly slow our recovery and cost us hundreds of thousands of jobs.”

It isn’t the “suddenness” or the “harshness” (huh?) of the spending cuts that will “devastate” our economy, it’s the cuts themselves. Cut even one dollar from the deficit and you “slow our recovery.” Cut enough more dollars and you destroy our economy.

“The biggest driver of our long-term debt is the rising cost of health care for an aging population. And those of us who care deeply about programs like Medicare must embrace the need for modest reforms. Otherwise, our retirement programs will crowd out the investments we need for our children and jeopardize the promise of a secure retirement for future generations. But we can’t ask senior citizens and working families to shoulder the entire burden of deficit reduction while asking nothing more from the wealthiest and the most powerful.

Lots of clever little words. For instance, “reforms” means nothing more than “cuts.” And senior citizens and working families will not shoulder the “entire” burden of deficit reduction — just the vast majority.

And in a striking example of gobble-de-gook, he talks about Social Security “crowding out” investments for children and future generations. Will someone please explain how Social Security benefits, which put dollars into the bank accounts of senior citizens, “crowd out” their investments for children and future generations? Cutting benefits, as has been done by raising the qualifying age, is what really reduces those investments.

Then, there was this amazing statement:

“Most Americans understand that we can’t just cut our way to prosperity. They know that broad-based economic growth requires a balanced approach to deficit reduction, with spending cuts and revenue, and with everybody doing their fair share.”

Where does one begin with this pack of lies and misdirection? No, we can’t just cut our way to prosperity. In fact, we can’t cut our way to prosperity at all. Forget the weasel word “just.”

Every “balanced approach to deficit reduction,” always, ALWAYS has a far greater impact on the middle than on the rich, not to mention that any deficit reduction slows the economy.

And puleeeze, don’t anyone try to define “fair share.”

“On Medicare, I’m prepared to enact reforms that will achieve the same amount of health care savings by the beginning of the next decade as the reforms proposed by the bipartisan Simpson-Bowles commission.”

The notorious Simpson-Bowles commission, whose recommendations were guaranteed to send us into a depression while widening the income gap — this is Obama’s model? And who will pay for those “health care savings”? Doctors? Hospitals? Pharmaceutical companies? Patients? How will any of these ‘savings” improve America’s health care? Or is our health care so good, we won’t mind having a bit less of it?

“To hit the rest of our deficit reduction target, we should . . . get rid of tax loopholes and deductions for the well-off and the well-connected.”

Translation: “To hit the rest of our money-supply reduction target, we should get rid of the mortgage interest deduction, the medical expense deduction, the business deduction for employee health care — and forget what I said about the well-off and well-connected. I owe my job to them.”

“The American people deserve a tax code that helps small businesses spend less time filling out complicated forms and more time expanding and hiring, a tax code that ensures billionaires with high- powered accountants can’t work the system and pay a lower rate than their hard-working secretaries, a tax code that lowers incentives to move jobs overseas and lowers tax rates for businesses and manufacturers that are creating jobs right here in the United States of America.

Translation: “We need tax simplification, which broadens the tax base. In other words, we need a flat tax, so that everyone pays the same rate.” (“Did I say it right, Mr. Buffett?”)

Every dollar we invested to map the human genome returned $140 to our economy. Every dollar.
Today, our scientists are mapping the human brain to unlock the answers to Alzheimer’s. We’re developing drugs to regenerate damaged organs, devising new materials to make batteries 10 times more powerful. Now is not the time to gut these job-creating investments in science and innovation. Now is the time to reach a level of research and development not seen since the height of the space race. We need to make those investments.

Er, ah, excuse me, Mr. President, but you’re the one who foolishly wants to cut deficit spending. So where will the dollars come from to do all this wonderful stuff?

“Today, no area holds more promise than our investments in American energy. We need to encourage that. That’s why my administration will keep cutting red tape and speeding up new oil and gas permits.”

Are you talking about that Keystone XL Pipeline Koch Brothers want so they save billions by shipping dirty oil from Canada to Texas, which already has lots of cleaner oil?

“Ask any CEO where they’d rather locate and hire, a country with deteriorating roads and bridges or one with high-speed rail and Internet, high-tech schools, self- healing power grids.

So, tonight, I propose a “Fix-It-First” program to put people to work as soon as possible on our most urgent repairs, like the nearly 70,000 structurally deficient bridges across the country.

And to make sure taxpayers don’t shoulder the whole burden, I’m also proposing a Partnership to Rebuild America that attracts private capital to upgrade what our businesses need most: modern ports to move our goods; modern pipelines to withstand a storm; modern schools worthy of our children.

I propose working with states to make high-quality preschool available to every single child in America.

Let’s put people back to work rebuilding vacant homes in rundown neighborhoods.
And this year, my administration will begin to partner with 20 of the hardest-hit towns in America to get these communities back on their feet. And we’ll work with local leaders to target resources at public safety and education and housing. We’ll give new tax credits to businesses that hire and invest.”

And we’re going to do all this wonderful stuff while cutting the deficit.

Yes, folks, we’ll go forward by going backward; we’ll go up by going down. We’ll reduce the gap by taking dollars from the poor and middle classes. We’ll grow the economy by taking dollars out of it. In short, we’ll cure anemia by applying leeches.

Do you believe in magic? I do. Hey, I became President, didn’t I?

Rodger Malcolm Mitchell
Monetary Sovereignty

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#MONETARY SOVEREIGNTY

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