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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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The Committee for a Responsible Federal Budget published an article containing a letter written by (or for) Leon Panetta, co-chair of the CRFB.

The title is: Leon Panetta and Other Former Defense Secretaries: Debt-Increasing Tax Bill Threatens National Security

Here are some excerpts, together with my comments:

November 15, 2017

Dear Leader McConnell, Leader Schumer, Speaker Ryan, Leader Pelosi, Chairman McCain, Ranking Member Reed, Chairman Thornberry, and Ranking Member Smith:

As former Secretaries of Defense, we have witnessed the negative impact of arbitrary budget cuts in defense, diplomacy and intelligence since the passage of the Budget Control Act of 2011.

In particular, we have seen military readiness erode as a result of deep sequester cuts in funding for training, maintenance, force structure, flight missions, procurement and other key programs.

The result is the growing danger of a “hollowed out” military force that lacks the ability to sustain the intensive deployment requirements of our global defense mission.

The Navy’s recent report on the causes of the two destroyer collisions with civilian cargo ships that took the lives of 17 seamen confirms the lack of adequate training.

Panetta makes the strange claim that the ships crashed because there wasn’t enough money to train their sailors.

Yesterday, a Navy aircrew left an obscene (penis) condensed air trail in the sky. We wonder whether Panetta will claim that too was due to limited budgets

Contributing to this crisis is a broken budget process in Congress that relies heavily on temporary, short-term continuing resolutions on spending.

The consequence is increasing deficits and a mounting national debt that threatens the resources needed for our national security.

At this stage, you properly might wonder how “increasing deficits and mounting national debt” — which imply increased national spending — could “threaten resources” and  “hollow out” the military.

It can’t. The opposite is true.

Panetta apparently hopes you won’t think about it too closely. He also hopes you will not try to figure out what “hollowed out” means for the largest military budget in the world.

I should warn you that nowhere in Panetta’s letter will you find any data showing how much has been, is being, or will be spent by the military.

All you will be told is that it isn’t enough, whatever it is.

So, for your interest, here is what Panetta is complaining about:

The U.S. 2017 military budget is larger than the military budgets of the next 8 nations, combined.

Here is another view:

See the big blue area at the bottom?  That’s the U.S. spending. All the other colored areas are the rest of the world. The U.S. spends on defense about 2/3 of what the entire rest of the world spends.

Is this is why our military is “hollowed out”??? Is this is why two of our ships crashed and why navy airmen drew a penis in the sky?

It is difficult, if not impossible, to properly plan for future budget contingencies when there is a lack of certainty as to what budget resources will be provided for defense and other national security requirements in the next year.

This much is true, not only for the military but for all groups that rely on federal money. The annual (daily?) budget revisions make long-term planning impossible.

Many military applications require years of planning and execution. Many efforts have had to be abandoned midstream, resulting in mountains of wasted time and effort left behind.

But none of the above will be cured by transferring dollars from Medicaid to the military.

Now added to all of this uncertainty is a tax bill under consideration by Congress that is estimated to add anywhere from $1.5 to $2 trillion dollars to the national deficit over the next decade.

In the absence of a comprehensive budget that provides essential fiscal discipline on entitlement spending, and enforces a tough “pay-go” requirement that pays for both additional spending and tax relief, the burden of increased future debt will fall – as it always does – on the discretionary accounts of the federal budget, with the largest being defense and national security.

Let’s summarize what Panetta (aka the CRFB) is saying

1. The debt and deficit are too high
2. Taxes should be cut
3. We need to spend more on the military

Now think about that. If the debt and deficit are too high, and taxes should be cut, the only way to reduce the debt and deficit would be to cut spending.

But the CRFB says we need to spend more on the military. So if we cut spending, from where will the additional military money come?

Panetta wants more spending for the military, but there should be “fiscal discipline on entitlement spending.” No “fiscal discipline” for the military, of course

We recognize the importance of providing tax relief to the American people. Our intent is not to criticize tax relief itself, but to raise the concern that tax relief without fiscal discipline will inevitably add to the national debt.

“Tax relief” = higher deficits.  “Fiscal discipline” = less spending. But Panetta says he wants lower deficits and more spending. 

That increase in the debt will, in the absence of a comprehensive budget that addresses both entitlements and revenues, force even deeper reductions in our national security capabilities.

Panetta wants to “address entitlements and revenues.” But tax cuts reduce revenues, so again, from where will the money come? And again, from “Entitlements.”

And what are “Entitlements”? Depending on various definitions, they may or may not include your Social Security, Medicare, Medicaid, aids to education, anti-poverty, housing aids, aids to education, and all the other things the government of “the greatest nation on earth” should do for its citizens.

In short, the CRFB, America’s leading debt Henny Pennys, tell you our sky is falling, and that the only way to save us is to spend more on the military and less on Americans.

And to top it all off, Panetta finishes with phony patriotism. While you read the next two paragraphs, be sure to play the Star Spangled Banner on your iPad:

We are proud of the men and women in uniform who bravely serve our nation and recognize the sacrifices that so many others have made for their country.

Our goal is to make sure that those who volunteer to serve in our military will never have to experience the consequences of a “hollowed out” national defense system.

No, Leon, your goal is to cut spending for the poor and middle-income people and to give the money to the voracious,  never-satisfied (but supposedly “hollowed out”) military, the largest military the world has ever known — and we aren’t even in a war.  

Imagine Panetta’s demands if the U.S. were in an actual shooting war.

For these reasons, we respectfully ask Congress to adopt a tax bill that will be paid for and will not further contribute to the uncertainty of future budgets.

Sincerely,

Secretary Leon Panetta, Secretary Ash Carter, Secretary Chuck Hagel

But it isn’t only the CRFB that wants to spend more on the military and less on social programs. It’s the party-of-the-rich, the GOP:

Here’s What’s In The House Republican Budget

The House budget plan would slash spending by $5.4 trillion over 10 years, including more than $4 trillion in cuts to mandatory spending like Medicaid and Medicare, while ramping up defense spending.

The House budget would bump up defense spending by around $929 billion over the next decade and save on non-defense discretionary spending by $1.3 trillion.

It slashes safety net programs. The House budget would slash Medicaid — it says that via Medicaid cuts plus changes to Obamacare, it would save $1.5 trillion.

And the House budget would also impose work requirements on Temporary Assistance for Needy Families (known as welfare) and the Supplemental Nutrition Assistance Program (known as food stamps).

It also cuts Medicare. The House bill would cut Medicare by $487 billion over 10 years, while the president’s budget, as proposed, barely touched it.

In the face of inflation, all social programs need to be increased, not cut. But then, those programs “only” benefit the middle and the poor, so they are not considered necessary by the GOP.

What does the GOP say is necessary? Tax cuts for the rich. They are the ones who will benefit from the GOP’s budgets.

If you doubt it, ask yourself why our billionaire President (who refuses to disclose his tax returns) and the billionaires he has appointed to his cabinet, and all the billionaires supporting him, so ardently vote Republican and favor the GOP pro-rich budgets.

In summary:

The GOP rightly claims that federal tax cuts will stimulate economic growth. The reason: Tax cuts leave more dollars in the private sector. The GOP also rightly claims that federal spending increases will stimulate economic growth. Spending increases also put more dollars into the private sector.

The commonality is dollars in the private sector.

Gross Domestic Product growth parallels the growth of dollars in the private sector.

Federal deficit spending adds dollars to the private sector. But the GOP claims that tax plans should be “revenue neutral,” meaning the GOP strives for plans that will add no dollars to the private sector.

Considering inflation, a revenue-neutral (no deficit) tax plan will reduce economic growth by reducing real dollars in the economy.

Thus, we see the impossibility of tax reductions that “pay for themselves” without increasing the federal deficit and debt.

1. If a tax rate reduction results in less total tax being collected, it will grow the economy, while generating higher federal deficits and debt.
2. If a tax rate reduction results in more total tax being collected, it cannot add dollars to the private sector, and so cannot grow the economy.

The self-imposed limitations on the federal deficit and debt are what limit economic growth.

There is no evidence that increased federal deficits and federal debt have any adverse effect on economic growth. It mathematically is impossible to grow the economy while the money supply declines.

Reductions in federal deficits and debt lead to recessions, which are cured by increases in federal deficits and debt.

[Vertical gray bars are recessions.]

We can, and should, have tax cuts for the lower- and middle-income groups. We can, and should, increase spending for entitlements, to make life better for the 99% of Americans who will depend on entitlements — Social Security, Medicare, Medicaid, etc.

We even can spend more on the military, though the priority, when we aren’t in a real war, is questionable.

We can have all those things if we simply realize that the federal debt is no problem at all, and the federal deficit is too low.

The federal government is not like you and me. Its finances are not like ours. Unlike you and me, the federal government never can run short of its own sovereign currency, the dollar. The government creates dollars, ad hoc, by spending dollars.

The government is what is known as “Monetarily Sovereign.” It has the ability to spend an unlimited number of dollars, which it creates by pressing computer keys.

The only limit to federal spending is an inflation that cannot be controlled by raising interest rates. The U.S. never has had such an inflation.

The GOP’s tax plans are hideous giveaways to the rich. Panetta’s comments about the budgets are designed to impoverish the 99% under the guise of making us safer.

And it’s all based on the private sector’s ignorance of Monetary Sovereignty.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

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THOUGHTS

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

•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)

•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.

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

MONETARY SOVEREIGNTY