Ignorance has its costs. If you don’t understand Monetary Sovereignty and the federal government’s infinite ability to pay for anything, you pay the price. Here is one of many examples.
Nutrition programs for older adults facing service cutsJessie Hellmann, CQ-Roll Call
WASHINGTON — Programs that feed older, homebound adults are instituting waiting lists amid budget crunches, rising costs of food, growing demand for their services and funding cuts from the government.
There is no financial reason for “funding cuts from the federal government.” It has the infinite ability to create dollars. The following is a disgrace, akin to a billionaire walking blithely past a starving family, ignoring their plight.
Combined with the end of COVID-19 era aid, local groups are finding that they can no longer serve the same number of people, resulting in difficult decisions about next steps.
“This is a huge challenge for our network,” said Josh Protas, chief advocacy and policy officer at Meals on Wheels America, a national organization that supports local organizations delivering meals to homebound individuals, mainly older adults.
The Federal Government says, “YOU CAN’T HAVE ANY. WE’RE ALL OUT.”
Meals on Wheels is among the groups pushing for funding increases through the appropriations process for programs funded under the Older Americans Act, a decades-old law first signed by President Lyndon Johnson to support adults as they age in their communities.
One in three Meals on Wheels programs has a wait list, with an average wait time of three months.
“The vast majority of them recognize that there are more seniors in need in their communities that they’re not able to serve, in large part because of a lack of adequate federal funding,” Protas said.
Why is there a lack of federal funding?
Higher demandThe population is getting older. Over the next decade, people 65 and older will represent 22 percent of the population, compared to 17 percent in 2022.
They are at a unique risk for going hungry because of fixed incomes, social isolation, lack of access to transportation and health conditions that make it difficult to cook or shop for groceries.
Almost 7 million seniors were “food insecure” — or didn’t have enough to eat — in 2022, and more than 9 million could be by 2050, according to Feeding America.
Meals on Wheels or similar programs are almost ubiquitous. Many have been around for more than 50 years, providing a source of nutrition and social contact to people who can’t leave their homes and helping them age in place. Programs served 206 million home-delivered meals and 55 million congregate meals in fiscal 2021.
But the demand has outpaced the ability of programs to serve people in their communities.
“We have 12,000 people every day who are turning 60, and as a society, we haven’t really reckoned with the changes that are necessary to address those needs,” Protas said.
Former Federal Reserve Chairman Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”
The Federal Government says, “YES, WE HAVE INFINITE MONEY, BUT WE DON’T FEED THE STARVING. INSTEAD, WE PAY CONGRESS, SCOTUS, AND THE WHITE HOUSE.
Current legislationCongress has recognized the need for more funding for the programs. But budget pressures have made that difficult.
The Senate Health, Education, Labor and Pensions Committee — on a bipartisan basis — approved in July a reauthorization of the Older Americans Act, recommending to appropriators an increase of 20 percent each for the home-delivered and congregate meal programs.
Still, the Senate Labor-HHS funding bill, advanced by the Senate Appropriations Committee in August, would level-fund those programs in fiscal 2025. Meanwhile, the House appropriations bill would cut the nutrition programs by 1.6 percent.
Former Federal Reserve Chairman Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
The Older Americans Act funds several different programs intended to help older adults age in place, but its most well-known ones are related to food services: one for home-delivered meals, another for meals served in congregate settings, like senior centers, and the Nutrition Services Incentive Program, which allows programs to purchase fresh, local produce, dairy or proteins for meals.
Alan Greenspan: “There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody.”
While home-delivered meals and congregate settings received increases in fiscal 2024, the nutrition services incentive program received a cut, surprising advocates.
The program is intended to incentivize states to serve more meals because the amount of money it gets is based on how many meals it served the previous year.
“If you’re discouraging incentives, you’re actually lowering meal counts at the end of the day,” said Robert Blancato, president of the National Association of Nutrition and Aging Services Programs.
Overall, funding to the nutrition programs was cut by 0.8 percent in fiscal 2024and states received about $10 million less in appropriations from the federal government in fiscal 2024 than in fiscal 2023.
Ben Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account.
That cut, plus growing demand for services, cuts to state budgets, the end of COVID-19 aid and inflation has put pressure on local service providers and the people who count on them.
The 2021 COVID-19 rescue package alone nearly doubled the amount the government typically spends on home and congregate meals, allowing organizations to reach people they couldn’t before.
The 2021 COVID-19 rescue package demonstrates what the government can do merely by voting. There are no limits.
Local programsNow that the money is gone, groups have to make difficult decisions about who to remove from their programs or dropping the number of meals people receive per day, or creating wait lists.
The Federal Government says, “WE CAN FEED ONLY ONE OF YOU. WHO WILL IT BE?”
“During the pandemic, the demand definitely shot up, and so did government funding… but then that funding went away, and the demand didn’t,” said Adam Porter, director of Sound Generations Meals on Wheels based in Seattle.
The organization has had a wait list since February 2023. It currently has 1,423 people on it, more than the number receiving meals through the program.
Food costs have also increased by 25 percent from 2018 to 2023, according to the Bureau of Labor Statistics.
“It continues to go up and funding isn’t, so we’re reducing the number of meals we can serve,” Porter said.
Federal Reserve Chairman Jerome Powell stated: As a central bank, we have the ability to create money digitally.
In Pennsylvania, the Monroe County Area Agency on Aging, which is responsible for doling out Older Americans Act funding to local partners, has had a freeze on new clients entering the program since July 2023.
Its primary partner — Monroe County Meals on Wheels — had to seek out a grant to avoid instituting a waitlist after the state passed flat funding for senior services programs.
The organization enrolled people on the waiting list into its private pay program, which is based on a sliding fee scale, to ensure people weren’t going without needed meals. It received a grant to cover the costs of the meals for people who can’t afford it.
“We’ve been dependent on community support and grant funding to try to fill that gap because the alternative is a waiting list of our own,” Alyssa Koeck, executive director of Monroe County Meals on Wheels in Pennsylvania.
“We’re working very, very hard to make sure that we do our best to prevent that from happening because we know, especially with the cost of living, that having nutritious, affordable meals is so critical to our clients.”
So, it’s a rather easy question. Should the federal government, which has the infinite ability to create dollars, adequately fund efforts to feed the hungry? And if not, why not? Ask your Senator and Congressperson. (And no, it won’t cause inflation or raise your taxes).
I’ve researched the question, “What are the reasons against Universal Basic Income (UBI).” I call it “Social Security for All.”
Here is a summary of the anti-UBI claims:
1. Cost and Feasibility: One of the primary concerns is the high cost of UBI. For example, in the United States, a UBI of $12,000 per year for every adult would cost over $3 trillion annually/
2. Inflation: UBI could lead to inflation. If everyone has more money to spend, demand for goods and services might increase, driving up prices and potentially negating the benefits of the additional income.
3. Work Incentive: UBI might reduce the incentive to work. If people receive a guaranteed income regardless of employment, some may choose not to work, potentially leading to a decrease in the labor force and economic productivity.
4. Misuse of Funds: Recipients might misuse the funds, spending them on non-essential items rather than necessities. This could undermine the goal of reducing poverty and improving living standards.
5. Impact on Existing Welfare Programs: Implementing UBI might require cutting or restructuring existing welfare programs. This could harm those who rely on targeted support for specific needs, such as healthcare or housing.
6. Political and Social Challenges: Gaining political and public support for UBI can be difficult. Many people are skeptical of unconditional transfer programs and prefer welfare systems tied to employment or specific conditions.
Before I address #s 1 through 6, I’ll give you the real one:
7. It would narrow the income/wealth/power Gap between the rich and the rest. The Gap is what makes the rich rich. Without the Gap no one would be rich; we all would be the same.
The wider the Gap, the richer are the rich. The easiest way for the rich to remain rich is to make sure the Gap doesn’t narrow, so using their political and informational power, the rich invent and promulgate false reasons why UBI won’t work.
Now, let us address each of the reasons given for objecting to UBI.
1. Cost and Feasibility:
We already have a form of UBI, except it isn’t “U” (Universal). We call it “Social Security,” and it covers old and/or disabled people. All the ideas opposing UBI were put forth in the 1930s when Social Security first was proposed.
Contrary to popular myth, Social Security (as well as Medicare, the military, SCOTUS salaries, White House salaries, Congress’s salaries, and every other federal expenditure) are not funded by FICA or any other federal taxes.
A. When any federal government agency approves an invoice for payment, it sends instructions (not dollars) to the creditor’s bank, instructing the bank to increase the balance in the creditor’s checking account. The instructions are in the form of a check or a wire.
B. When the bank does as instructed ( by pressing a few computer keys), dollars are created by being added to the creditor’s checking account and to the money supply measure known as “M2.”
C. The bank then balances its books by clearing the payment through the Federal Reserve, which has the infinite power to approve all federal checks and wires.
So long as the federal government has the infinite power to pass laws and to issue instructions, it has the infinite power to pay any invoices it receives. The U.S. federal government, being the original creator of dollars from thin air, never unintentionally can run short of dollars.
You often have been told that Medicare, Social Security and/or their trust funds are running out of money. It is a false claim. Unlike state/local governments, the U.S. government is Monetarily Sovereign. With the infinite ability to create dollars, it could create the above-mentioned $3 trillion at the touch of a computer key.
The sole purpose of federal taxes (unlike state/local taxes) is notto provide the government with spending money. The dual purposes are to:
Control the economy by taxing what the government wishes to discourage and by giving tax breaks to what the government wishes to reward and
Assure demand for the dollar by requiring taxes to be paid in dollars.
Even if the federal government didn’t collect a single dollar in taxes, it could continue spending, forever.
Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency. There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody. The United States can pay any debt it has because we can always print the money to do that.”
Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. It’s not tax money… We simply use the computer to mark up the size of the account.”
Statement from the St. Louis Fed: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.”
Mario Draghi, President of the Monetarily Sovereign European Central Bank: “We cannot run out of money.”
Further, UBI would grow the economy. It’s a mathematical certainty because the size of the economy is determined by this formula:
Gross Domestic Product (GDP) = Federal Spending + Nonfederal Spending + Net Exports.
By simple algebra, UBI would grow the economy because it would increase Federal Spending and, as a result, increase Nonfederal Spending, too.
When faced with the undeniable facts that UBI is affordable for the federal government and would grow the economy, those influenced by wealthy propaganda resort to excuse #2.;
2. Inflation: The common yet erroneous belief is that “excessive” fedeal spending causes inflation. This belief is wrong on several fronts.
First, no one knows what “excessive” means. The rich always claim federal spending is excessive (see: Historical claims the Federal Debt is a “ticking time bomb.” From Sept. 26, 1940, to July 22, 2024) because most federal spending goes to the poor. It narrows the Gap, a situation the rich despise.
By contrast, the rich favor tax deductions for the wealthy, which are not part of “spending” but widen the Gap just as federal spending does.
Economics is a pseudoscience loaded with hypotheses and flush with data— and ne’er the twain shall meet.
Some economists make this arguement based on intuition, but not on fact: They claim that people earn income by selling their labor on the labor market as a contribution to the production of goods and services for the economy. Income increases that aren’t directly related to correlating increases in production tend to result in higher prices.
It’s nonsense.
Which of these can claim their income is “directly related to correlatingincreases in production?” Taxi driver? School teacher? Musician? Flight attendant? Doctor? How about Elon Musk? If he made “just $100 million instead of a few billion, would that “directly relate to a correlating decrease in production”?
Pay has little to do with production and more with labor scarcity, politics, heredity, and other social factors. Queen Elizabeth’s pay had little to do with her output. I am retired, and my income has nothing to do with my production. Raising hotel workers’ skimpy pay or decreasing mortgage brokers’ high pay would not “directly relate to their production.”
The hypothesis is something that only an economics professor in a well-endowed think tank could dream up.
Inflation is not caused by federal spending. Inflation is caused by scarcities,most often scarcities of oil and food:
The peaks and valleys of inflation(red) do not match up with the peaks and valleys of federal spending (blue).
The peaks and valleys of inflation do match up with the peaks and valleys of oil prices, which are dictated by oil supply and demand.
Today, the federal government is spending more than ever, yet inflation is drifting down. The most recent inflation was COVID-related, not spending-related.It was caused by shortages of oil, food, computer chips, metal, lumber, shipping, and labor.
Raising everyone’s income by giving them money would not cause inflation. Scarcities of crucial items cause inflation.
Federal spending to cure scarcities cures inflation. The “federal spending causes inflation” meme is a fever dream promulgated by the rich to maintain the income/wealth/power Gap.
3. Work Incentive: Critics argue that UBI might reduce the incentive to work, decreasing the labor force and economic productivity. This is a favorite of the rich, who love to portray lower-income people as lazy slugs who, if given money, will simply loll about doing nothing.
The truth is that poor labor is harder than rich labor unless one considers costly vacations, country clubs, and having servants do one’s work to be “labor.” Virtually everyone wants a better life, and that includes the poor. Given a stipend by the government, they will work to increase their standard of living, just as the rich do.
Similarly, the vast majority of the rich want to be richer. Almost no one is satisfied, and it is certainly not a low-income family that receives Social Security.
I trust this isn’t just a projection on my part, but I began collecting Social Security at age 65. I continued to work for a living until I was 73, not because I loved work, but because I wanted more money to feel secure. I had what some may consider a lot, but I still wanted more.
That said, what is wrong with a decrease in the labor force? What is wrong with a four-day work week or a five-hour day? Work usually is not a purpose unto itself. The primary purpose of most work is to improve one’s life, however one defines “improve.”
For households in every quintile of the income distribution, the share of income required to pay for their 2019 consumption decreased, on average, because income grew faster than prices did over that four-year period.
Households in the top income quintile had the largest decline, on average, in the share of income required to pay for their 2019 consumption.
Translation: The rich kept earning more spending money than the rest of us did. Even though they had plenty of money, they wanted more, and worked for it. Why would the average and below-average income people be less motivated? They wouldn’t, but that is what the rich claim.
Artificial intelligence (AI) and automation are making it more possible to do less and accomplish more. A solution to the possible unemployment caused by AI may be UBI.
4. Misuse of Funds: Some argue that recipients might misuse the funds, spending them on non-essential items rather than necessities. This is another one the rich love — the notion that the poor are ignorant money managers and that if you give them money they’ll waste it on drugs and lottery tickets.
The reality is quite the opposite. By necessity, the poor have learned to be good money managers. In any event, it is none of the government’s business whether or not someone “misuses” their income. The idea the the government knows better is repulsive and bigoted.
5. Impact on Existing Welfare Programs: Implementing UBI might require cutting or restructuring existing welfare programs. Critics worry that this could harm those who rely on targeted support for specific needs, such as healthcare or housing.
This is easily prevented. Just don’t do it. Don’t include UBI income as part of any welfare criterion.
The current system — requiring someone to be poor to receive financial aid — is self-defeating. It encourages the very thing the rich claim to fear: people not working. It also leads to dishonesty and to gaming the system by mischaracterizing income.
6. Political and Social Challenges: Gaining political and public support for UBI can be difficult. Many people are skeptical of unconditional transfer programs and prefer welfare systems tied to employment or specific conditions.
This is the old “If I had to work for my money, why should he get money for doing nothing?” The solution would be to give every man, woman and child in America the same amounts regardless of their other income or wealth.
The money would mean little to the rich and much to the poor, but it would overcome the resistance of those who hate to see others receive something.
7. It would narrow the Gap between the rich and the rest. The Gap is what makes the rich rich. Without the Gap no one would be rich; we all would be the same.
The wider the Gap, the richer are the rich. The easiest way for the rich to remain rich is to make sure the Gap doesn’t narrow, so using their political and informational power, the rich invent and promulgate false reasons why UBI won’t work.
This is the single biggest hurdle to cross. The first six objections easily are overcome and/or are based on incomplete information. This one is based on the intense emotions of America’s most influential people.
A rich man might be generous about charity for the poor, but he doesn’t want poverty to be eliminated altogether. He needs the poor. Having a mansion is not as attractive if everyone else has a mansion. It’s the Gap that makes him rich, and narrowing the Gap makes him less rich, an unappealing prospect.
If a neighbor wins the lottery or even gets a more lucrative job, how does the rest of the neighborhood feel? What does Mark Zuckerberg think about Elon Musk having more money?
The majority of us suffers from Gap Psychology, the desire to distance ourselves from those below us on the income/wealth/power scale and to come closer to those above us. The conflict arises because those above us don’t want us closer and those below us want us closer.
SUMMARY
There are no good reasons not to begin a UBI program and plenty of reasons to start.
I suggest the following monthly payments:
$1,000 to every adult (18+)
$500 to every child
Include undocumented adults and children.
Assume:
258 million adult (citizens) + 31 million adult (non-citizens) = 289 million total adults; Annual Cost: $289 billion * 12 = $3.468 trillion
73 million children (citizens) + 14 million children(non-citizens) = 87 million children; Annual Cost: $43.5 billion * 12 = $522 billion
Combined Annual Cost: $3.468 trillion (adults) + $522 billion (children) = $3.99 trillion per year
This compares to the most recent (2023) federal expenditure of about $6.3 trillion.
Poverty generally is worse in the states that tend to vote Republican, the party that wrongly opposes social benefits, saying they are “unaffordable” and “socialism” — which they are not.
(Socialism is government control of industry, not just government funding. All governments fund things, but relatively few of those things can be called “socialism.”)
Government spending has a multiplier effect on GDP. The multiplier effect measures how much economic activity is generated by an initial amount of the expenditure. Estimates for the fiscal multiplier vary, but a typical range is between 0.5 and 2.0.
With a conservative multiplier of 1.5, GDP would grow about $6 trillion on top of the most recent 28.65 trillion for a new value of $34.65 trillion.
Improve the infrastructure and help cut global warming
And improve the entire American nation’s quality of life by using the brainpower now hampered by a lack of funding
Do all this at no cost to anyone.
Think of it. The United States of America has the power to be the first large nation on earth to eliminate poverty. Millions of men, women, and children could begin to contribute to America’s success.
Too good to be true? No, too good only for those who don’t understand the power of human thought and desire, when funded by Monetary Sovereignty.
This post is dedicated to those who believe the U.S. government can run short of its sovereign currency, the dollar.
The Continental Congress met in New York in 1785, and on 6 July, the dollar was established as the official currency of the new United States of America.
Congress decided on a decimal system, i.e., 100 cents to a dollar. However, disagreements among the members of Congress meant that a mint wasn’t established in America until 1792.
It was another 70 years—1862, in the middle of the Civil War—before the US Treasury was able to print dollar bills—black on the front, green on the back, so colored because of the chemicals used to prevent counterfeiting.
And so the dollar (or greenback) as we know it today came into being.
Keep in mind that all of this was accomplished simply by passing laws, which are created from thin air. So long as the U.S. government has the infinite power to pass laws, it has the endless power to create U.S. dollars.
Former Federal Reserve Chairman Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency. There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody. The United States can pay any debt it has because we can always print the money to do that.”
Former Federal Reserve Chairman Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. It’s not tax money… We simply use the computer to mark up the size of the account.”
Fed Chairman Jerome Powell: “As a central bank, we have the ability to create money digitally.”
Statement from the St. Louis Federal Reserve Bank: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.”
All of the above statements rely on the fact that the U.S. government is Monetarily Sovereign; it is sovereign over the U.S. dollar.
The statements are true for all Monetary Sovereigns. For example, the European Union is sovereign over the euro. So long as the EU can pass laws, it can create euros.
Mario Draghi, President of the European Central Bank: “We cannot run out of money.”
As you read this post, keep in mind the U.S. government’s infinite ability to create dollars out of thin air.
The subhead was: “Medicare and Social Security are projected to run out of money by 2036. Mike Townsend discusses possible solutions to the shortfalls and the likelihood of each.”
The clock is ticking on two pillars of retirement planning.
Barring major overhauls, projections indicate that Medicare’s Hospital Insurance trust fund, which covers hospital benefits, will be unable to pay full benefits after 2036, and the Social Security trust fund, which covers retirees and their survivors, will be unable to pay full benefits after 2033.
We’ll pause here to remind you that Medicare’s Hospital Insurance trust fund and the Social Security trust fund are not real trust funds.
They are just bookkeeping line items 100% controlled by Congress and the President.
If Congress and the President decide to add a trillion dollars to each of the so-called “trust funds,” they will vote, and each “trust fund” line item instantly will be a trillion higher.
Strangely, Mike Townsend, the managing director of legislative and regulatory affairs at Schwab, doesn’t seem to understand Monetary Sovereignty and the federal government’s unique and infinite ability to create U.S. dollars.
Seemingly, Townsend equates the federal government with monetarily non-sovereign state and local governments, which do not have this infinite power.
We talked with Mike Townsend about the most likely solutions, whom they’ll affect, and when.
Q: Let’s start with Social Security. What potential fixes are on the table?
Mike: There’s a universe of possibilities, including extending the full retirement age, raising the payroll tax rate, and increasing the amount of income subject to the payroll tax.
But no one in elected office is enthusiastic about promoting any solutions that might prove politically unpopular.
Townsend doesn’t mention the real solution: Eliminate the fake trust funds and simply pay for Social Security and Medicare the same way we pay for Congress, the White House, the Supreme Court, all the branches of the military, and almost every other federal agency and federal project: by creating dollars ad hoc.
Q: What might raising the full retirement age look like?
Mike: During the last major Social Security overhaul, in 1983, the age at which you could collect full benefits was gradually increased, from 65 to 67. (You can collect reduced benefits as early as age 62.)
We’re seeing similar proposals now, with one pushing for a full retirement age of 70 for those born after 1977—the rationale being that people are generally living longer and therefore also working longer.
This is at or near the top of the list of proposals, and it’s likely that the full retirement age will go up at some point—though I expect it will include a long and slow phase-in when it does happen.
This solution, called the “work ’til you drop” idea, and other “solutions” Townsend mentions, involve taking dollars from the poor and middle classes, the very people for whom Social Security and Medicare were invented.
The rich receive most of their income from sources not subject to the FICA tax.
It truly is a disgrace the people who are paid to know better pretend the federal government needs to take dollars from those who rely on them most.
Q: Have there also been proposals to change the payroll tax that funds Social Security?
Mike: Currently, the payroll tax that funds retiree benefits is 12.4% of workers’ earnings, split evenly between employer and employee. There are many proposals to increase that amount, such as by a fraction of a percentage point annually over several years to lessen the impact on the average worker.
Townsend fails to tell you that in reality, all of the money comes from salaried employees.
Every business treats the payroll tax as a cost associated with employees’ pay. This cost is one of the considerations when determining how much to pay salaried employees.
That is why so many businesses prefer to classify workers as independent contractors rather than as employees. FICA is in reality, a head tax on businesses, paid for by salaried employees.
Q: How else could the payroll tax structure change to increase revenue?
Mike: For 2024, only the first $168,600 of income is subject to the Social Security payroll tax. One proposal suggests starting to collect the tax again for income over $400,000, while another suggests collecting above $250,000.
On the political left, that’s probably the most popular proposal, because it impacts higher earners; but on the right, it’s among the least popular proposals because conservatives generally oppose tax increases of any kind.
Q: Any other ideas floating around?
Mike: There’s a bipartisan group in the Senate trying to come up with alternatives. For example, Social Security funds are now 100% invested in U.S. Treasury bonds, which are very safe but offer a relatively low rate of return.
One idea is to put some portion of Social Security taxes into a newly created sovereign wealth fund that would invest in stocks and have the potential to earn a higher rate of return.
The above is an example of the federal government pretending it isn’t Monetarily Sovereign and is helpless to increase the balance in the “trust funds” or, better yet, to do away with them and simply pay for the costs.
Q: Let’s turn to Medicare. What can be done to sustain the Hospital Insurance trust fund?
Mike: The Medicare payroll tax of 2.9%, which is split equally between employers and workers, finances this fund. For wages above $200,000, there’s an additional Medicare tax of 0.9%. Raising the tax is one way to help shore up Medicare, so it’s definitely in the mix. But again, in a divided Congress the more conservative members are unlikely to vote for a tax increase.
Q: How does the Net Investment Income Tax factor into the equation?
Mike: Currently that tax is 3.8% on investment income for those making a total of more than $200,000 ($250,000 for married couples filing jointly).
Right now, that money goes into the general coffers rather than Medicare.
However, President Biden has proposed not only an expansion of the tax—to 5% above $400,000 in income ($450,000 for couples filing jointly)—but also to apply the money to the Hospital Insurance trust fund. That proposal is also going nowhere in a divided Congress, but it’s nevertheless on the table.
It’s all ridiculous hocus-pocus. There are no “general coffers.” The federal government creates all its payment funds ad hoc. It sends instructions to each creditor’s bank, instructing the bank to increase the balance in the creditor’s checking account.
What the bank does as instructed, new dollars are created and added to the M2 money supply measure.
Further, a tax increase is entirely useless. The federal government neither needs nor uses tax dollars. When you pay your taxes, you take M2 dollars from your bank account and send them to the U.S. Treasury.
When your dollars reach the Treasury, they cease to be part of any money supply measure because the Treasury has access to infinite dollars.
Mike: The closer the government gets to the insolvency deadlines, the less time it has to raise the necessary funds.
Congress can continue to kick the can down the road, but the math is only going to get more difficult. That said, there continues to be a lack of urgency on Capitol Hill, and it may be a few years before momentum for action builds.
The Monetarily Sovereign federal government doesn’t “raise” funds. It creates all the funds it needs and destroys all dollars coming in.
Congress can continue to kick the can down the road, but the math is only going to get more difficult. That said, there continues to be a lack of urgency on Capitol Hill, and it may be a few years before momentum for action builds.
From a beneficiary’s perspective, any proposed solution likely would be phased in over many years—and people approaching or already in retirement would almost certainly be exempt.
After all, many Americans have been planning their retirement with certain assumptions around Social Security in mind, and it would be unfair to upend those assumptions without adequate time to adjust.
Townsend does not seem to understand the fundamental differences between Monetary Sovereignty (i.e., the U.S. government) and monetary non-sovereignty (i.e., you, me, state/local governments, and businesses).
The astounding lack of factual information promulgated by one of America’s largest brokerages truly is sad.
If you ever have flown a foreign airline and compared it to an American airline, you noticed a marked difference.
Foreign air carriers like ANA, Japan Airlines, Singapore Airlines, Emirates, and Qatar Airways offer better food options, and more comfortable seating, better in-flight entertainment, and superior amenities.
Many foreign airlines operate newer and more modern aircraft with lie-flat seats in business class, advanced in-flight entertainment systems, and luxurious first-class suites.
Why the difference?
I ask because of a recent experience my daughter had flying United Airlines, first class, from Chicago to Denver.
It was a two-hour and 43-minute flight that took off at 11:02AM Central time and landed at 12:45PM Mountain time.
Here is a photo of the “meal” she was served in First Class during that 2 hours and 45 minutes (Coach got nothing):
This is United Airlines’s lunch in first class.
Yes, that’s right. In “First Class,” i.e. United Airlines version of “First Class,” this nearly three-hour flight warranted a 1 oz. bag of gummies for lunch.
The “explanation,” if you can call it that, was “We don’t offer meals on all our flights.”
I guess that sitting in a plane for nearly three hours during lunchtime doesn’t qualify for a meal on United Airlines, not even when you pay sky-high First Class rates.
And if that isn’t a disgusting enough example of United Airlines service, my daughter, who had a round-trip First Class ticket, was bumped from the return flight and had to take a later coach flight.
(Did I mention that my daughter is a transplant recipient who flies first class because her immune system is compromised, so she tries to keep whatever seating distance she can from other travelers?)
So, aside from the inconvenience of being bumped and the tighter seating,
Eventually she will get her $500+ refund for the difference between coach and First Class if she files paperwork, argues on the phone, and jumps through whatever other hoops United demands.
How does United Airlines get away with this awful service? Government restrictions on competition:
Once other air travelers have experienced the impressive service some foreign airlines offer, they often wonder: Why can’t they do business in the USA?
Of course, international airlines do operate in this country, but the government forbids them from flying point-to-point destinations domestically.
These laws, meant to protect American consumers and jobs, are having the exact opposite effect. Eliminating — or at least partially lifting — outdated restrictions could significantly increase competition and improve customer service.
Industry watchers say that banning foreign carriers from offering domestic flights might have made sense a generation ago when the American airline industry was tightly regulated by the federal government. But today, with only a few megacarriers remaining and the security concerns of the Cold War a distant memory, it’s harder to justify the laws.
“Foreign airline competition and capital investment in U.S. airlines could quickly improve passenger service, lower fares, result in new start-up airlines, and relieve overcrowding,” says Paul Hudson, president of FlyersRights.org.
When trying to protect U.S. businesses, the federal government has two alternatives: Supportthe domestic industry to provide better quality and service or punish and restrict the foreign business so it can’t provide better quality and service.
Emirates, Qatar Airways, and Singapore Airlines are examples of the former approach. These airlines benefit from significant state backing, enabling them to offer high-end services.
The result is a better overall flying experience for those who can access these airlines.
Our Monetarily Sovereign government could do the same.
Levying import duties and restricting foreign businesses are examples of the “punish-and-restrict” approach.
This results in higher prices and poorer quality of service for Americans.
Expressing fear of federal deficits and so-called “socialism.” the U.S. government invariably uses the “punish and restrict” foreigners, so Americans are the ones punished and restricted.
