Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. Until the 99% understand the need for deficits, the 1% will rule. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty 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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“Bathos” is the sudden, unexpected transition from tragedy to humor. You decide. Does this article meet the criteria for bathos? Here are a few excerpts from the article frighteningly titled:

Social Security disability trust fund projected to run out of cash by 2016
By Brian Faler, Wednesday, May 30, 6:08 AM

A government entitlement program is headed for insolvency in four years, and it’s not the one members of Congress are talking about most.

The Social Security disability program’s trust fund is projected to run out of cash far sooner than the better-known Social Security retirement plan or Medicare. That will trigger a 21 percent cut in benefits to 11 million Americans — people with disabilities, plus their spouses and children — many of whom rely on the program to stay out of poverty.

Wow! In only four years, the U.S. government will be forced to cut benefits to all those disabled people and their families. Why? Because the Monetarily Sovereign U.S. government — the government that because it is Monetarily Sovereign has the unlimited ability to create dollars — has run out of dollars!!!!

Tragic or hilarious?

“It’s really striking how rapidly this is growing, how big it’s become and how D.C. is just afraid of it,” said Mark Duggan, a University of Pennsylvania economist and adviser to the Social Security Administration.

Duggan said the disability plan has been running on autopilot for decades and lawmakers could find savings to help avoid the scheduled cuts.

Mark Duggan is an economist and an adviser to the Social Security Administration. He thinks “savings” are necessary to avoid cuts.

Tragic or hilarious?

The growing costs are also a result of the economy’s troubles. When people can’t find work and run through their jobless benefits, many turn to disability benefits for assistance.

“They’re desperate,” said Ken Nibali, a retired associate commissioner of the program. “Some who are marginal and struggling to have a low-paying job now literally have no options.” So, he said, “they figure, ‘I do have trouble working, and I’m going to apply and see if I’m eligible.’ ”

Sen. Tom Coburn (R-Okla.), said he has tried to interest fellow lawmakers in the issue, without much luck. “Nobody wants to touch things where they can be criticized,” Coburn said, adding, “the fund is going bankrupt” and “then what are we going to do?”

Sen. Coburn thinks a federal fund can go bankrupt and Congress won’t do anything about it.

Coburn and the rest of Congress: Tragic or hilarious?

Social Security is made up of two programs: the retirement plan supporting 40 million senior citizens and 6 million survivors, and the disability insurance program created during the Eisenhower administration.

The disability program pays benefits averaging $1,111 a month, with the money coming from the Social Security payroll tax.

No, the money doesn’t come from the payroll tax. Our Monetarily Sovereign government creates dollars by spending. It has no need for, nor use of, taxes. All federal tax dollars are destroyed upon receipt.

The author, Brian Faler joins the “bathos” club.

The program cost $132 billion last year, more than the combined annual budgets of the departments of Agriculture, Homeland Security, Commerce, Labor, Interior and Justice. That doesn’t include an additional $80 billion spent because disability beneficiaries become eligible for Medicare, regardless of their age, after a two-year waiting period.

The disability program is projected to exhaust its trust fund in 2016, according to a Social Security trustees report released last month. Once it runs through its reserve, incoming payroll-tax revenue will cover only 79 percent of benefits, according to the trustees. Because the plan is barred from running a deficit, aid would have to be cut to match revenue.

Our Monetarily Sovereign federal government has the unlimited ability to create its sovereign currency, the dollar. The disablity program is about to run out of dollars. Hmmm . . . What to do? What to do? Help! Can anyone think of a solution?

Congress can: Cut benefits to the disabled.

Tragic or hilarious?

. . . once people enter the program . . . fewer than 1 percent rejoin the workforce. Many worked “menial” jobs that didn’t offer health insurance, and the program gives them an opportunity to join Medicare long before they might otherwise qualify, Nibali said.

In Nine steps to prosperity; a short message to #Occupy Wall Street, the 2nd of the nine steps was, “Medicare — parts A, B & D — for everyone.”

So because our Monetarily Sovereign government won’t take this sensible and compassionate step, the people find a way to do it for themselves.

Neither President Obama nor House Republicans in their proposed budgets has addressed the disability program’s shortfall.

“We’re not trying to fix every problem in America with this one document,” said House Budget Committee Chairman Paul Ryan (R-Wis.) of his budget plan. “We’re trying to prevent a debt crisis, and this is not a driver of our debt.”

Paul Ryan outdoes himself every time he opens his mouth. There is no debt crisis for a Monetarily Sovereign government, that can pay any debt, of any size, any time. This is just the Tea/Republican method for keeping down the 99%. (Hey, let the disabled fend for themselves. They aren’t part of our 1%.)

Kenneth Baer, a spokesman for the White House budget office, said in an e-mail. “The president remains willing to work with Congress on a bipartisan basis to strengthen Social Security and protect the millions of beneficiaries.”

He added that lawmakers didn’t fully fund the administration’s request for more money to screen beneficiaries.

Get it? President Obama will “strengthen Social Security and protect beneficiaries” by removing people from the program. You just can’t make this stuff up. Our dear leader is a right winger hiding in left wing clothing.

And now finally, the winner of the “bathos” prize, a tragic/hilarious paragraph buried way down at the very end of the article:

Senate Finance Committee Chairman Max Baucus (D-Mont.), whose committee sets Social Security policy, said the program’s finances are less dire than they may appear. Congress can funnel revenue from elsewhere in the government to cover the program’s shortfall, he said.

I award five clowns to all those mentioned in the article, as well as the author, and I thank them for the entertainment. This bathos brought tears to my eyes.

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
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

#MONETARY SOVEREIGNTY

Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. Until the 99% understand the need for deficits, the 1% will rule. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

At MMP Blog 50: MMT Without the JG? Conclusion you will find the last part of a discussion about Modern Monetary Theory’s (MMT) proposal for a Jobs Guarantee (JG)

Very briefly, JG would have the federal government guaranteeing a job to any person who wishes one. Here is what Professor Randall Wray (UMKC) said about JG:

(Disclosure: I know Professor Wray. At his invitation I spoke at his school, the University of Missouri, Kansas City [after he read my book, Free Money] and I agree with the vast majority of his MMT beliefs)

At the above link, you will see the following:

Let us move on to a conclusion of our discussion of the JG. The contentious issue is this: can one adopt MMT while rejecting the JG?

I had made the analogy between disease and unemployment: would any reasonable person who understands the cause of a disease oppose a cure? If you knew that a vaccination can prevent smallpox, would you oppose providing vaccinations (at least to those who want them—I do not want to get into a debate about forcing vaccinations as we have never advocating forcing jobs on those who do not want to work)?

Now I do realize this is not quite a fair comparison because it is possible that there are many cures for the disease of unemployment. MMTers advocate the JG cure. I am open to alternative cures. I just do not hear any coming from the critics.

In Professor Wray’s defense, he was not aware of my post, “Nine steps to prosperity,” where I listed these “cures,” not just for unemployment, but for many of the ills that beset our economy:

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

In the comments section of Professor Wray’s blog, I said,

“Unemployment is just a symptom of a deeper problem: A bad economy. It was the economic slump that caused the unemployment, not the other way around. Treating the symptom is a bad way to treat the disease.

“Another symptom: Homelessness. Shall we also have HG (Home Guarantee)? And then there’s the symptom: Hunger. Shall we also have FG (Food Guarantee)?

I suggest we treat the disease, not just the symptom, for a lasting cure.

Further on Professor Wray’s blog:

Some try bait and switch: Let’s give them BIG (Basic Income Guarantee) instead of jobs. That does not cure the disease of unemployment. It is like providing antibiotics instead of vaccinations to fight Polio. They then try to justify this on the argument that if we give people BIG, they can still choose to work if they want to. No, they cannot. There must be jobs. Certainly it is true that giving everyone antibiotics does not prevent them from seeking vaccinations. But the vaccinations need to be available. I’m not going to argue more about this—the argument is just too silly. Yes we can give people BIG but that does not give them jobs. If someone is involuntarily unemployed, she wants a job. BIG will not cure the unemployment disease.

After my comments about the recession being the disease and unemployment being the symptom, rather than the other way around, a reader treated me to a medical lesson on the definition of “disease.” That shows the problem with analogies. People start to argue about the analogies rather than about the case.

Anyway, a reader named Tom Hickey wrote this:

RMM, do you really think that economic policy is capable of permanently achieving full employment in the sense of (no involuntary unemployment) and price stability (no more than modest inflation that the central bank can live with) solely with stimulus, Rodger, i.e., exactly offsetting saving desire all the time?

To which I responded:
“Tom, I believe you’re missing the point — the same point MMT misses — when you ask whether monetary policy could achieve “no involuntary unemployment.”

“The goal of an economics program is not just to employ everyone who wants a job. All communist nations do that quite well. The goal is to solve the many problems in an economy, of which unemployment is but one.

“Randy asks, “If you knew that a vaccination can prevent smallpox, would you oppose providing vaccinations?” His analogy assumes unemployment is the disease.

“It is not. The disease is a weak economy, and one of the several symptoms is unemployment. Using Randy’s analogy, treating smallpox would involve giving aspirin for fever and aloe for the rash.

“I suggest that MMT makes a fatal error when it bases its cure on treating a symptom.

“There are other symptoms of a bad economy. Shall we treat those directly, too? How about homelessness? Shall we have HG (Homes Guarantee).

“How about the income gap between the 1% and the 99%? Isn’t that a big problem the JG doesn’t even approach? Shall we have a SITNTG (Sufficient Income To Narrow The Gap) guarantee?

“I say, treat the disease, which currently is a poor economy. Then, if there remains some unemployment, as well as other symptoms, determine what disease causes them, and treat those diseases, too.”

A reader named “Tyler” then wrote:

James Galbraith believes the disease is “unsupervised bankers and ambitious economists,” which he wrote in his letter to the Financial Times published May 2, 2012 as “Dr Summers performs a medical miracle.”

This made me recall Rodger’s blog post, “At long last, are we ready to end private banking?”

I wrote: “Given the question of whether unemployment caused the recession or whether the recession caused the unemployment, I think any honest person would agree on the later. Cure the recession and you cure the vast majority (but not all) the unemployment.

There still will remain some unemployment caused by other problems: A bad educational system? Young people needing to leave school to support their families? Previous history of incarceration? Different skill set needed? You name the cause, and that is what needs attention.

As for curing “accounting control fraud,” that might prevent some future recessions, but it probably will not cure this recession.

The very heart of communism was JG, and I believe that was one of its main weaknesses, too. The notion of solving a problem directly, rather than focusing on the underlying causes of the problem, is a naive strategy. If the causes remain, the problem will remain.

A reader named “Marley” asked:

What say you of an economy like Germany then, where you have very low unemployment but 20% of the jobs are these mini/midi jobs that pay extremely depressed wages since Germany has no minimum wage?

I responded: “Sounds like Germany has a form of JG. So tell me, exactly what wage will JG pay? Will it be minimum wage, which today is poverty level for most people? Will it be above minimum wage, so people will quit their minimum wage jobs and go to JG? Or will it be below minimum wage — really poverty level.

“The question of what wage JG will pay is nontrivial, and I know there has been much argument about this. But without an answer, what is left of JG?”

In the interest of space, I’ve left a great many of the arguments out. I suggest you go to the site, and read them. Interesting discussion. I’ll conclude my post with this. Tom Hickey said, in response to another commeter:

“Arguing the details prior to agreement on general principles is a waste of time.”

It’s a distraction. The argument is about macro theory and policy options that follow from it. After that policy formulations need to be developed for specific cases, such as the US and UK, where political systems and economic conditions are somewhat different, and strategies and tactics developed for implementation.

Arguing about tactics while the debate is at the theoretical and general policy level is silly.

To which I responded: “The general principle of addressing a symptom rather than the underlying problem is wrong. And the details (i.e., exactly what salary, exactly what jobs, exactly what locations, who supervises, etc., etc., etc.) are weak.

“I’ll be interested to see how all that is resolved. My concern however, is that JG has evolved from a solution to a problem, and now has a life of its own, to be defended, fixed, defended again, fixed again — rather than starting from the real problem: How to make the economy better for everyone.

“In this, JG reminds me of the euro, another “solution” that is defended, fixed, defended again and fixed again, that also has acquired a life of its own.”

Sad to say, some proponents of MMT have become so enamored with JG, they react quite badly to anyone who questions their beloved solution. It’s a shame, because I believe JG, and MMT’s refusal to see it clearly, detracts from MMT’s credibility.

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
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

#MONETARY SOVEREIGNTY

Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. Until the 99% understand the need for deficits, the 1% will rule. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

There are two major political parties in the U.S. The Democrats are “leftish” (actually, center right) and the Republicans are “rightish” (actually, extreme right).

The Tea party is kook right, but being crazy doesn’t mean they’re stupid. I’ll give these folks credit for being smart enough not to put forth their own presidential candidate.

Why smart? Because if there were a Tea Party candidate and a Republican candidate, the Tea candidate would draw votes from the Republican, and the Democrats would win in a walk.

I refer to that as the “Ralph Nader rule”. Ralph Nader was a leftish candidate, who drew votes from Al Gore, and thus elected George W. Bush. Feel better now, Ralph?

The Democrats, have proved to be the less politically intelligent party. They allowed the Republicans, who owned neither the Presidency nor one of the houses of Congress, to set the economic agenda for the nation.

And so it should come as no surprise that the leftish folks decided to form yet another party — The Green Party — a candidate from which will run for President of the United States. I know this because I have received communications on behalf of someone named “Dr. Jill Stein,” who says she wants to be President, and needs to be nominated by the Green Party.

There is an old joke is statistics that you have the same chance of winning a state lottery, whether or not you buy a ticket. Jill Stein may want to be President, but she has the same chance of winning, whether or not the Green Party nominates her.

I sympathize with many of her thoughts, which are:

*One hundred and forty-six million people – that’s nearly one in every two Americans – is now living below or near the poverty level.

*Last year, one million Americans lost their health insurance.

*Thirty million college students and recent graduates are trapped in the financial prison of student loan debt.

*Overall, nearly 25 million Americans are unemployed or unable to find full time work.

Over seven million are under “correctional supervision”, 10 times greater than in 1965, as incarcerating poor people – disproportionately of color – has become big business with the failed war on drugs.

*The gap between the very rich and the many poor has never been so great.

*And now, the political establishment in the White House, Congress, and state governments are making matters far worse, doing the opposite of what we need, by inflicting needless, harsh austerity policies on the country.

I’m in her corner. And here is what she wants to do:

First, we will guarantee the economic rights of all Americans, beginning with the right to a job at a living wage for every American willing and able to work.

Second, we will transition to a sustainable, green economy for the 21st century, by adopting green technologies and sustainable production.

Third, we will reboot and reprogram the financial sector so that it serves everyday people and our communities, and not the other way around.

Fourth, we will protect these gains by expanding and strengthening our democracy so that our government and our economy finally serve We the People.

O.K., she’s leaning in a praiseworthy direction. But every vote for Dr. Stein will be a vote for Romney (under the Ralph Nader rule). Surely she knows this, so apart from ego boosting, why is she running against President Obama?

I’d imagine she would claim that running for President is the best way she can get her message across. She may be right — or not. But, is getting the message across worth a few more Justices Scalia, Thomas, Roberts and Alito? Is getting the message across worth the reduction of Social Security and Medicare along with more growth in the gap between the 1% and the 99%?

Is getting the message across worth eight years of Tea/Republican craziness?

My advice to the Green Party: Take your lead from the Tea/Republican Party nuts. They know that in politics, it’s better to win as a soulless bastard than to lose as a kind, gentle soul.

Rather than putting up a separate candidate, the Tea Party published evaluations of the Republican candidates on the basis of following Tea Party beliefs. This clever approach forced the entire Republican Party to adopt Tea Party extremism — something like a crowd being steered by the one nut with a megaphone.

Green Party: Don’t run a separate Presidential candidate. Instead, try to sway the Democrats toward your goals. Publish rankings on Democrats’ “Greenness.” Back the most “Green” Democrat Congressional candidates. Fight to win for your beliefs, not for a person who cannot win.

If you compete with Obama, you will take votes from him. He will be forced to compete with you, thereby downgrading your message. It’s the dumbest possible thing you can do to accomplish your goals.

I know. I know. That old suicide urge has you in its spell.

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
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

#MONETARY SOVEREIGNTY

Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. Until the 99% understand the need for deficits, the 1% will rule. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

Sometimes things are better understood, or at least better respected, if they have a name. I always have been troubled by the right wing of the Supreme Court – most notably Justices Anton Scalia and Clarence Thomas – and their insistence on “originalism.”

My belief has been that any judge who prefers adhering to what he considers to be the letter of the law, is just a lazy thinker. He doesn’t need to go through the agony of considering the many ramifications of reality. He isn’t a thinker; he is just a translator.

Originalism is the belief that the original intent of an author should be adhered to in later interpretations of a work.

Several reasons are given for “originalism” in the Supreme Court:

1. Originalism reduces the likelihood the judiciary will create law, a duty of the legislative branch. [History shows that originalist judges can be as activist as non-originalist judges]

2. Non-originalism leads to judges using their own personal values as opposed to the law. [Yet, originalist judges apply their personal opinions about the intent of the framers.]

3. Originalism allows voters to amend their Constitution when necessary to change the law. [An extremely difficult, time consuming task, that forces the population to suffer bad law for an extended time]

4. Originalism strengthens the Constitution as a binding contract. [Circular thinking. It’s a binding contract only if the citizens agree on the original intent.]

5. Originalism forces lawmakers to avoid creating bad laws, rather than leaving them to the courts to amend. [Good hypothesis; bad reality. It has done no such thing.]

The correct name for originalism is ”The Historian’s Fallacy” – “a logical fallacy that occurs when one assumes decision makers of the past viewed events from the same perspective and having the same information as those subsequently analyzing the decision.” (Wikipedia)

Justices Scalia and Thomas assume:

– They know what the framers of the Constitution were thinking.
– The framers were able to anticipate all relevant events occurring in the two-plus centuries after the Constitution was written
– These events do not affect the law or the way the law is administered
– In writing the Constitution, the framers were not subject to political pressures, facts, beliefs and contingencies of the time
– Changing the Constitution is an appropriate and easily accomplished alternative to bad law

They are wrong on all counts. Scalia and Thomas are no different from the religious fundamentalists, who think the bible should be interpreted literally (Exodus 21:17 Anyone who curses their father or mother is to be put to death. Exodus 31:15 Whoever does any work on the Sabbath day is to be put to death.) Like religious fundamentalists, they believe nothing relevant has happened since pen was put to paper.

I suggest that the right wing, originalist branch of the Supreme Court has what we, as kids, called “stupid brains” – academically intelligent people, who when faced with the real world, make foolish decisions.

Sadly, most of the right-wing justices are young, which means we will live under the lash of 16th century justice for a long time.

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
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

#MONETARY SOVEREIGNTY