Donald Trump will give you . . . Lyme disease??

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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We cannot ignore our President’s astounding number of failings, for these failings deeply affect us, our children and indeed our entire nation.

As you undoubtedly know, scientifically illiterate Donald Trump has decided he and the Breitbart disinformation machine know far more about science than do the vast majority of scientists.

As a result, our President has become the vaccine-denier in chief. The degree to which he will sicken and/or kill you, your children and America is only a matter of time and luck.

Here are excerpts from an article in the April 1, New Scientist Magazine, which presumably President Trump never has heard of, much less read.

New Scientist Magazine
Lyme disease is set to explode and we still don’t have a vaccine
A new prediction says 2017 and 2018 will see major Lyme disease outbreaks in new areas. This could lead to lifelong health consequences, so where’s the vaccine?

Lyme disease is the most common infection following an insect bite in the US: the Centers for Disease Control estimates that 300,000 Americans contract Lyme disease each year, calling it “a major US public health problem”.

Not everyone gets the classic “bullseye” rash that is supposed to tip you off.

The flu-like symptoms that follow are also easy to misdiagnose. And because antibodies to Lyme disease take a few weeks to develop, early tests can miss it.

That’s when you get late-stage, untreated, supremely problematic Lyme disease.

The best approach would be to vaccinate people at risk. We used to have (a vaccine, but thanks to anti-vaccination activists, that is no longer the case.

In December 1998, the US Food and Drug Administration approved the release of Lymerix, developed by SmithKline Beecham, now GSK.

The company voluntarily withdrew the drug after only four years.

This followed a series of lawsuits influenced by now-discredited research purporting to show a link between the MMR vaccine and autism.

Thomas Lingelbach, CEO at Valneva, a biotech company that has a vaccine in early human trials, (says) it will act against all five strains of the disease instead of just the one most common in the US, and it will be suitable for children.

“It will be hard to convince anti-vax lobbyists,” he says. Any public roll-out is at least six years away.

What makes this wait especially galling for some is that there is a vaccine for your pet. “It’s ironic that you can vaccinate your animal and you can’t vaccinate yourself,” Plotkin says.

We tend to shake our heads at the medical quackery of previous centuries, yet it remains with us, even today. In large measure, the success of quackery relies on public ignorance.

And surely there can be no greater ignorance than the belief that vaccination is more harmful than beneficial.

When I was young, we all were terrorized by polio and diphtheria. And we all suffered unnecessarily from measles, mumps, and chickenpox, so-called “childhood” diseases that sometimes had quite serious outcomes.

Thanks to vaccination, such scourges of human existence as chickenpox, diphtheria, hepatitis, papillomavirus, influenza, measles, mumps, pertussis, pneumonia, polio, rabies, rubella, shingles, tetanus, are uncommon in America, and in the instance of smallpox, eliminated worldwide.

Frighteningly, quackery has gained entrance to the White House:

Washington Post
Trump energizes the anti-vaccine movement in Texas

President Trump’s embrace of discredited theories linking vaccines to autism has energized the anti-vaccine movement.

Public health experts warn this growing movement is threatening one of the most successful medical innovations of modern times.

Globally, vaccines prevent the deaths of about 2.5 million children every year, but deadly diseases such as measles and whooping cough still circulate in populations where enough people are unvaccinated.

Vaccination protects not only the vaccinated, but also benefits the population by what is called “herd immunity.”

Herd Immunity And Measles: Why We Should Aim For 100% Vaccination Coverage

The basic idea is: The “herd” can avoid exposure to a disease by ensuring that enough people are immune so that no sustained chains of transmission can be established. This protects an entire population, especially those who are too young or too sick to be vaccinated.

However, as long as there are communities that harbor strong negative views about vaccination, there will be outbreaks of vaccine-preventable diseases in those communities. These outbreaks will happen even if the population as a whole has achieved the vaccination coverage considered sufficient for herd immunity.

Even if we achieve the 90%-95% vaccination rate often considered necessary to create herd immunity, some of us still will suffer from the disease and pass it on to others.

With each vaccination denier, who allows himself and his children to go unvaccinated, the chain of transmission is strengthened.

In short, if you have a vaccination denier as a friend, know this: He is endangering you and your family.

Increasing numbers of Texas parents are choosing not to immunize their children because of “personal beliefs.” Measles was eliminated in the United States more than 15 years ago, but the highly contagious disease has made a return in recent years, including in Texas, in part because of parents refusing to vaccinate their children.

In Texas, the number of school-age children who are not vaccinated has soared since 2003, when the state expanded its exemption criteria to include reasons of conscience.

Personal-belief exemptions increased from 2,314 in the 2003-2004 school year to 44,716 in 2015-2016.

A leading conspiracy theorist, Andrew Wakefield, is author of the (discredited) 1998 study that needlessly triggered the first fears. Trump has met with Wakefield, who attended an inaugural ball and told supporters afterward that he had received “tremendous support” for his efforts and hoped to have more meetings with the president.

(One wonders how such as Wakefield was invited to an inaugural ball.)

The Texans who don’t vaccinate their children claim they are exercising their freedom of choice. They and their children will pay the penalties for their ignorance.

And what of you who are not ignorant, but whose children are too young to vaccinate? Like many contagious diseases, ignorance can penalize even the wise and the innocent.

As for Lyme disease, it currently can be cured with antibiotics, though that may change as antibiotics lose their effectiveness, and you still may have months of fatigue, pain, or joint and muscle aches.

You may not have voted for Trump, but you are paying for his ignorance and for the ignorance of his backers, every day, in many ways.

Rodger Malcolm Mitchell
Monetary Sovereignty

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THE RULES

•Ignorance is not benign. There are penalties for ignorance.

•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.

•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money no matter how much it taxes its citizens.

•The more federal budgets are cut and taxes increased, the weaker an economy becomes..

•No nation can tax itself into prosperity, nor grow without money growth.

•Cutting federal deficits to grow the economy is like applying leeches to cure anemia.

•A growing economy requires a growing supply of money (GDP = Federal Spending + Non-federal Spending + Net Exports)

•Deficit spending grows the supply of money

•The limit to federal deficit spending is an inflation that cannot be cured with interest rate control. The limit to non-federal deficit spending is the ability to borrow.

•Until the 99% understand the need for federal deficits, the upper 1% will rule.

•Progressives think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.

•The single most important problem in economics is the Gap between the rich and the rest.

•Austerity is the government’s method for widening the Gap between the rich and the rest.

•Until the 99% understand the need for federal deficits, the upper 1% will rule.

•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..

MONETARY SOVEREIGNTY

Does the U.S. Treasury really destroy your tax dollars? The Monopoly® answer.

One thing that confuses those who are not familiar with Monetary Sovereignty, is the fact that federal tax dollars, rather than being used to fund spending, are destroyed upon receipt.

It may be hard for you to imagine those dollars you work so hard to obtain, are of no use to the federal government and so, are destroyed.

The Treasury either does or does not destroy your tax dollars, and both statements are true, and it doesn’t make any difference.

Now that I’ve confused you, let me try to clarify.

In earlier posts, I’ve compared the federal government to the Bank in the board game, Monopoly®.

Monopoly generally involves four players plus a “Bank.” The Bank, like the federal government, is Monetarily Sovereign. That is, by rule, it never needs to run short of dollars.

To play the game, participants buy and sell Monopoly real estate and charge rent on the properties they buy. The player gaining the most Monopoly dollars wins. Image result for four column chart

The purpose of the Bank is to provide the money for the game and to sell the real estate properties to the players. Consider the Bank a corollary to the U.S. Treasury.

Imagine that you and three friends wish to play Monopoly, but when you open the box you discover the board, some game tokens, and some instruction cards, but no Monopoly dollars inside.

No problem. You simply take a sheet of paper and draw four columns, one for each player. The Bank then provides each player with a given amount of Monopoly money, say 5,000 Monopoly dollars, by writing the number “5000” at the top of each column.

Thus, the total Monopoly “economy” would consist of 20,000 Monopoly dollars. Image result for monopoly go

As the game is played, the players periodically receive 200 Monopoly dollars from the Bank, for passing one square on the board, called “Go.”

Each time a player receives or pays money, that amount is added to his column.

Where does the Bank get the money? Where does it get the 20,000 start-up dollars, and where does it get the 200 dollars to pay the players for landing on “Go”?

Like the U.S. federal government, the Monopoly Bank creates Monopoly dollars out of thin air, simply by writing numbers into each player’s column. The Bank has no source of dollars other than the rules of the game.

The Bank needs neither to borrow nor to tax. It obtains dollars by creating dollars.

Now here comes the interesting part:

At various points in the game, the rules require players to pay money to the Bank, either for properties, for fines or for taxes.

Let’s say a player must pay a $100 tax to the Bank. In that case, 100 is deducted from that player’s column.

But where does the 100 go? The Bank has no column. The 100 simply disappears. In effect, those tax dollars have been destroyed.

Of course, if that bothers players who are accustomed to double-entry accounting, they simply could give the Bank a column of its own, and the 100 tax dollars could be added to the Bank’s column.

But it would make no difference whether of not the Bank has a column. The Bank is not part of the “economy.” And since the Bank has the unlimited ability to create Monopoly dollars from thin air, there is no way to determine how much money the Bank “has” at any moment in time. It has infinite dollars.

Whether or not the Bank has its own column, this would not have any effect on the Bank’s ability to pay players whatever it owes them.

No matter how many dollars are shown in The Bank’s column, The Bank can be said to have zero dollars or infinite dollars.

Thus, when a player sends tax dollars to the Bank, this does not affect how many dollars the Bank has available to spend. Taxes do not fund the Bank’s spending.

Similarly, the U.S. Treasury and the Federal Reserve are not part of the U.S. economy. Just like the Monopoly Bank, the Federal Reserve creates dollars at will by spending dollars into the economy.

Any U.S. dollars in the Treasury’s or Federal Reserve’s “column” are not part of the U.S. economy’s money supply. Only dollars in the economy are part of the money supply.

So, like the Monopoly Bank, the Treasury and Federal Reserve can be said to have zero dollars, or infinite dollars. Either way, the tax dollars you send to the Treasury have no effect on how many dollars the government has available to spend. Taxes do not fund federal spending.

Although the U.S. Treasury and the Federal Resereve do keep accounting records, these records do not measure an ability to pay bills. These records don’t measure what the federal government “has,” because what the government “has” is both irrelevant and unmeasurable.

So take your pick. The U.S. Treasury either does or does not destroy the tax dollars you send it, and in either case, these tax dollars affect nothing. Whether or not the Treasury receives tax dollars, the federal govenment can continue to pay its bills, forever.

If the Treasury’s balance sheet is irrelevant, and federal tax dollars don’t fund federal spending, why do we pay taxes?

Three reasons:

Historical: In the years when the U.S. was on a gold standard, it did not have the unlimited ability to create dollars from thin air. Its dollar creation was limited by its gold hoard. So, it needed to obtain dollars from taxes or from borrowing. Today, that reason no longer exists.
Control: Taking tax dollars from specific segments of the economy is one method Congress uses to control the economy. This approach has been perverted by business interests, that have bribed Congress to create tax loopholes.
Gap Psychology: The richest .1% own Congress. They pay Congress to widen the Gap between them and the rest of us. The tax code is designed to do this, as the vast majority of taxes are effectively regressive. At the behest of the rich, Congress levies taxes to widen the Gap and spends money to get votes.

In short, you pay tax dollars to the U.S. Treasury, which neither needs, nor uses those dollars. Though the government tracks dollars in balance sheets, the dollars do not affect the government’s ability to spend.

Think of it this way. When you pay taxes, you write a check. The dollars come out of what is called the M2 money supply measure.

But when the dollars reach the Treasury, they instantly disappear from the M2 money supply measure and are not found in any money supply measure.

In short, they disappear. They effectively are destroyed by joining the Treasury’s infinite money supply. Adding dollars to infinite dollars still yields infinite dollars.

These dollars, which are not spent and are not part of any money supply, no longer exist. They have they been destroyed.

Rodger Malcolm Mitchell
Monetary Sovereignty

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THE RULES

•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.

•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money no matter how much it taxes its citizens.

•The more federal budgets are cut and taxes increased, the weaker an economy becomes..

•No nation can tax itself into prosperity, nor grow without money growth.

•Cutting federal deficits to grow the economy is like applying leeches to cure anemia.

•A growing economy requires a growing supply of money (GDP = Federal Spending + Non-federal Spending + Net Exports)

•Deficit spending grows the supply of money

•The limit to federal deficit spending is an inflation that cannot be cured with interest rate control. The limit to non-federal deficit spending is the ability to borrow.

•Until the 99% understand the need for federal deficits, the upper 1% will rule.

•The single most important problem in economics is the Gap between the rich and the rest.

•Austerity is the government’s method for widening the Gap between the rich and the rest.

•Until the 99% understand the need for federal deficits, the upper 1% will rule.

•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..

MONETARY SOVEREIGNTY

Unintentional Brexit humor

Lest you believe financial writing is humorless, allow me to disabuse you of such thoughts. Here are excerpts from a site called “Business Insider.”

Britain’s refusal to pay a £50 billion Brexit divorce bill could have an unexpected negative impact on the EU
Will Martin

LONDON — Ratings agency Standard & Poor’s has warned that the European Union’s credit rating could be at risk of downgrades if the United Kingdom refuses to pay a Brexit divorce bill of up to €60 billion.

There’s your first bit of humor. Remember, it was Standard & Poor’s that in 2011, downgraded U.S. Treasury bonds from AAA to AA+.

S&P also was among the agencies that gave AAA ratings to worthless mortgage-related securities, leading to the “Great Recession.

The notion that anyone still takes such ratings seriously surely must be one of the biggest jokes in the financial world.

Ah, but it gets funnier:

“An S&P report cited by the Daily Telegraph says, ‘This is because our ratings on the EU are to a certain extent predicated on our expectation that the UK would honour its share of financial obligations to the EU.'”

Think about it. The UK is Monetarily Sovereign, meaning it has the unlimited ability to create British pounds. The UK never can run short of its own sovereign currency, the pound.

Not only can it pay any debt denominated in pounds, but because the pound is widely accepted worldwide, the UK could exchange pounds for euros, and thus also pay any debt denominated in euros.

Further, the EU also is Monetarily Sovereign meaning it has the unlimited ability to create euros from thin air.

This means the EU has no need to receive pounds or euros from the UK.

It comes down to this:

A nation with the unlimited ability to create money argues about paying money to an organization that also has the unlimited ability to create money.

And a credit agency thinks this is a serious argument.

Really, does it get any funnier than that?

[News item: The Atlantic Ocean refuses to hand over the cup of water it owes to the Pacific Ocean. S&P downgrades both oceans.]

The British government has said that it will pay a settlement to the 27-nation bloc, but believes the amount demanded by the EU is too high.

In March, leaked documents obtained by Dutch magazine De Volkskrant suggested that the EU would consider taking the UK to court if the two sides don’t agree on the bill.

UK: “Your honor, we have unlimited money. We create it at the touch of a computer key, and it would cost us nothing to pay them. But we won’t pay them, because . . .”

EU: “Your honor, we too have unlimited money, which we create at the touch of a computer key. Their money won’t benefit us. But we want them to pay us, because . . . ”

Currently, the EU has an AA credit rating, the second highest awarded by S&P. It previously sat in the highest AAA tranche, but was downgraded soon after Britain voted to leave the EU.

S&P: “Remember us, your honor? We are the ones who have given the United States a lower rating than Microsoft and Johnson & Johnson. We think the U.S. is more likely to run short of its own sovereign currency, the dollar, than are those two corporations.

“And people still believe us!”

A ratings downgrade would not merely be a symbolic gesture from S&P, but would also materially impact the EU’s ability to access financing. The lower a country’s credit rating is, the higher rates it must generally pay when accessing debt in the markets.

It can also become more difficult to find entities willing to provide funding, although even if the EU were to be downgraded to an A rating, it would still be considered to have a “strong” ability and commitment to repay its debts.

Why would a large Monetarily Sovereign entity, having the unlimited ability to create its own sovereign currency — a currency widely accepted and traded all over the world –need to borrow?

It doesn’t — doesn’t need to borrow, and in fact, doesn’t borrow.

Bonds issued by such entities are nothing more than investment products, meant not to obtain money for the issuer, but rather to provide a safe harbor for investors.

Similarly, paying higher interest rates is no burden whatsoever on a Monetarily Sovereign entity. It merely creates the sovereign money necessary to pay any interest it is charged.

Why then, do the UK, the EU, and the credit agencies go through this charade?

The purpose is to give the illusion of money scarcity. The EU maintains power over its members (who are monetarily non-sovereign) by rationing euros. Similarly, the UK and the U.S. governments maintain power over the citizenry by rationing their sovereign currencies.

(Some degree of rationing also is necessary to give value to money, i.e. to prevent excessive inflation. But the major nations of the world ration far more strictly than is necessary for that purpose.)

The very rich run the financial world. The reasons for the above-described farce devolve to Gap Psychology, the desire of the richer, more powerful people to distance themselves from the rest.

They are the same reasons the politicians, the media, and the economists have been paid to tell you such falsehoods as: The U.S. “can’t afford” Medicare for All, and Social Security is “insolvent.”

The purpose is to keep you in your place, well below the rich economically, socially and with far less power.

Yes, the whole thing is hilarious — to the rich.

Not so funny for the rest of us.

Rodger Malcolm Mitchell
Monetary Sovereignty

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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

The Republican tax plan

For seven years the Republicans voted to get rid of Obamacare, without having a plan to replace it.

Image result for paul ryan with chart Finally, they offered the America Health Care Act (AHCA), a plan of such monumental idiocy — it denied 24 million people their health care — that only two people on earth supported it: President Donald Trump (who had no idea what was in it, but loved it) and House Speaker Paul Ryan (who knew what was in it, but cared nothing about those 24 million people).

Fresh from that victorious demonstration of incompetence, the Republicans now are developing a tax plan. Based on the right-wing’s history of governance, one only can pray it takes at least another 7 years — better yet, 70 years — to develop this plan (by which time Justice Neil Gorsuch will have led the court in denying all rights to females, non-whites, and anyone earning less than $1 billion a year).

Here are a few excerpts from an article in the March 27, 2017, TIME Magazine:

Will the BAT Be the Tax That Changes Everything?
Haley Sweetland Edwards

There are lots of reasons for California Representative Devin Nunes to be excited about his job these days. As chairman of the House Intelligence Committee, he is leading a classified investigation into Russian interference in U.S. elections, and as a member of President Trump’s transition team, he played a key role in staffing the new Administration.

Yes, that Devin Nunes, the guy who was supposed to lead an investigation of a possible Russia-Republican joint effort to elect Trump, but who instead worked with Trump and the Republicans to undercut the investigation.

He’s the one to trust with a tax plan.

Nunes is one of the most vocal champions of the central, mind-bending provision of the House Republican plan to overhaul the corporate tax code. It would lower the corporate tax rate to 20%, from 35%, eliminate levies on all U.S. exports and impose a 20% tax on imports.

Said another way, it is a system designed to cause a trade war between the United States and the rest of the world.

The combination of the import tax together with the retaliatory taxes other nations would apply, dramatically would raise the cost of all our imports, which amount to 13% of our entire Gross Domestic Product.

“Why,” you might ask, “would the Republicans offer yet another, blatantly wrong plan?”

It’s a mix that is expected to raise an estimated $1 trillion in federal revenue over a decade, according to the Tax Foundation, making it the linchpin for passing any comprehensive tax-reform bill this term.

“It’s a really, really big deal,” Nunes says of the proposal that House Republicans hope Trump will formally embrace in the coming weeks.

Yes, indeed, it is a “really, really big deal” to take $1 trillion out of our economy, for that is exactly what a $1 trillion increase in federal revenue does.

It has the same effect as charging each man, woman, and child in America, an additional $3 thousand apiece in taxes.

The proposed plan would cost an average family of 4 and extra $12,000.

But the tax has also earned really, really big enemies, igniting something of a conservative civil war in Washington, with House Republican leadership lining up in favor and deep-pocketed activists and lobbyists vehemently opposed.

The BAT, opponents say, would force big-box stores out of business, drive up the cost of everything from baby formula to avocados and potentially spark a devastating trade war. “I think we need to be realistic about what a huge risk this is for our economy,” says David French, the top lobbyist for the National Retail Federation.

Sound familiar? Like the AHCA, here is yet another nutty Republican plan to reward the rich and screw the rest, so ill-conceived that even many Republicans can’t stomach it.

Proponents of the plan–which Trump hinted at in his address to Congress–say it is bold and revolutionary at a time when the country is clamoring for big changes that would curtail corporate taxes and encourage more U.S. manufacturing. The BAT is not just a new tax rate, after all. It would burn down the current tax code and replace it with something entirely new.

To Republicans, “bold and revolutionary” plans require that, for instance, instead of remodeling your house, you burn it down and build a — what? A shed? An outhouse? Apparently, it doesn’t matter, so long as the plan is “bold and revolutionary.”

Liberals, conservatives and every President from Bill Clinton to Donald Trump agree that the corporate tax is broken, ineffective and needs to be fixed.

The problem, in a nutshell, is that the 35% corporate tax rate is among the highest in the developed world. But because of loopholes, it produces less federal revenue, as a percentage of GDP, than most other countries’.

See the confusion? Which is the problem — a tax plan that collects too much because the rate is too high or one that collects too little because of loopholes? They are opposites.

So exactly what needs fixing? And why?

This is how it would work: if a company makes a T-shirt in Oklahoma and sells it in California, it deducts its capital and labor expenses, and then pays a 20% tax on what it made from that T-shirt.

If a company imports a T-shirt from China and sells it in California, then it doesn’t get to deduct the cost of the T-shirt, but it still pays 20% on what it makes selling it.

If a company makes a T-shirt in Oklahoma and sells it in France, it pays no U.S. corporate tax on its sales at all.

Read the above description again, then please tell me: What economic problem is this “plan” supposed to solve?

The whole thing boils down to an import tax. And who pays import taxes? You do.

The greater the percentage of your income spent on manufactured goods, the more your income is absorbed by taxes.

And who spends a greater percentage of income on goods, the rich or the rest? Right, the rest of us spend vastly more of our income on goods than do the rich.

Thus, this latest plan, like all Republican plans, is designed to tax the rich less and to tax the poor more.

On paper, it’s pretty clear to see why companies that are primarily exporters, like Boeing and Dow Chemical, stand to gain from the tax–and why companies that are primarily importers, such as Walmart and Target, are nervous.

Walmart and Target won’t pay the additional import tax. Customers of Walmart and Target will. And who are those customers who will pay higher prices? Mr. & Mrs. Middle America, not the Trumps, the Kushners, or Trump’s Goldman Sachs multi-millionaires.

John Connaughton, a University of North Carolina at Charlotte professor of financial economics, predicts that other countries will file legal challenges “out the wazoo” at the World Trade Organization, demanding that it declare the BAT a violation of international trade laws.

For Trump, who reportedly is involved in 3,500 lawsuits, the reputation of America may be of little concern.

In a normal year, with less mercurial politics and a more predictable White House, the BAT would be dead in the water. There are too many short-term losers, too much opposition from powerful industry actors and too little consensus among Republicans.

Who gets hurt doesn’t matter to Trump, so long as it isn’t Trump getting hurt.

As usual, whatever plan put forth will ignore Monetary Sovereignty (the absolute fact that federal taxes pay for nothing).

Looking for a good tax plan? How about this: Eliminate FICA.

In one quick stroke, Congress and the President could do more for the economy and for the middle classes, than anything that has been proposed so far.

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.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

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

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

MONETARY SOVEREIGNTY

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