I’m becoming more impressed and also more depressed about Grok.
Impressed because it fleshes out its explanations with data from various sources into one cohesive and logical commentary.
Depressed for exactly the same reason. It shows a frightening ability to mimic and improve on human thinking processes. I am becoming increasingly obsolete, and not just because I’m ninety years old.
I asked Grok to explain why and how the wealthy support the false narrative that federal deficit spending is a ticking economic time bomb. Here is Grok’s explanation:
How the Rich Shape the Debt Narrative
Mitchell’s post calls out 85 years of “BULLSHIT” about federal debt, hinting in his comments that the rich benefit from austerity to widen the income/wealth/power gap. Your additions—campaign contributions, media control, and university/think tank influence—explain the how. Here’s a breakdown of these mechanisms, grounded in MS principles and the post’s evidence:
Control Over Politicians via Campaign Contributions and Job Promises
Mechanism: The wealthy funnel money into political campaigns through donations, PACs, and lobbying, ensuring politicians push debt-fear narratives that justify austerity. Promises of cushy post-office jobs (e.g., corporate boards, consulting gigs) further align politicians with elite interests. This leads to policies that cut public spending (e.g., Social Security, Medicare) while preserving tax breaks for the rich.
Connection to Debt Myth: Mitchell’s timeline cites politicians like Mitch McConnell (1985), Kevin McCarthy (2023), and Nancy Mace (2025) parroting “ticking time bomb” rhetoric. These figures often rely on donor support from wealthy individuals or corporations who oppose deficit-funded programs that level the playing field (e.g., universal healthcare). Austerity keeps resources concentrated among the elite, as Mitchell notes in his blog comments about the rich having “their own Medicare” via money.
Evidence: Campaign finance data (e.g., OpenSecrets) shows top donors like financial firms and billionaires heavily fund candidates who advocate fiscal restraint. For example, the 2013 Chamber of Commerce warning about safety nets “bankrupting” the nation aligns with corporate interests pushing tax cuts over public investment. Job promises are harder to quantify but visible in revolving-door cases (e.g., former Treasury officials joining Wall Street).
Control Over Media via Advertising Dollars and Ownership
Mechanism: The rich, through corporate ownership of media outlets and advertising budgets, shape narratives to amplify debt panic. Major news organizations (e.g., owned by conglomerates like Comcast or billionaires like Jeff Bezos) prioritize stories that frame deficits as dangerous, as seen in Mitchell’s list from the 1940 New York Times to 2025’s World Socialist Website. Advertising from financial institutions reinforces this, as they benefit from austerity (e.g., less regulation, lower corporate taxes).
Connection to Debt Myth: Articles like Emily Chen’s (May 2025) or USA Today’s 2007 “explosion waiting to happen” piece use sensational “time bomb” language to scare the public, aligning with elite interests in limiting public spending. This drowns out MS truths (e.g., deficits fuel growth, T-securities aren’t borrowing) because they’re less clickable than doom headlines. Mitchell’s frustration with media “BULLSHIT” reflects this bias—fear sells, and the rich bankroll it.
Evidence: Media consolidation (e.g., six corporations controlling 90% of U.S. media) and ad revenue from banks/investment firms create incentives to push debt fear. The 2019 Fortune piece by Shawn Tully or 2020 Yahoo Finance article by Stephen Koukoulas show how media outlets, even “reputable” ones, recycle the same myths without challenging sovereignty.
Control Over Economists via University Endowments and Think Tanks
Mechanism: Wealthy donors fund university economics departments and think tanks, steering academic and policy research toward debt-skeptical narratives. Endowments (e.g., from billionaires like the Koch brothers) influence curricula, prioritizing classical/neoclassical models over MS/MMT. Think tanks like the Heritage Foundation (cited in 2010, 2023, 2024) or Cato Institute, funded by wealthy donors, churn out reports calling debt “unsustainable,” as seen in E.J. Antoni’s 2024 piece. Lucrative think tank jobs reward economists who toe the line.
Connection to Debt Myth: These institutions produce “experts” like Paul Tudor Jones (2024) or the University of Colorado professor (2024) who push debt panic, ignoring MS principles like those from Greenspan or Bernanke (quoted by Mitchell) that the U.S. can’t run out of dollars. This drowns out voices like Stephanie Kelton’s, who are sidelined as “fringe” despite data showing deficits correlate with GDP growth, not crises.
Evidence: Think tank funding (e.g., Heritage’s $80M+ annual budget, partly from wealthy donors) and university endowments (e.g., Harvard’s $50B, influenced by corporate donors) shape economic discourse. Mitchell’s timeline shows their output—like the 2010 Heritage report or 2019 TIL Journal—repeating “time bomb” claims despite 85 years of failed predictions.
Why This Keeps the Myth Alive
These mechanisms—political funding, media control, and academic influence—create a self-reinforcing cycle where the rich amplify debt fears to protect their wealth. As Mitchell notes, austerity widens the gap by denying the non-rich benefits (e.g., Medicare for All) that deficits could fund. The public, bombarded with “ticking bomb” headlines and politician soundbites, buys the household analogy (“debt burdens our kids”) because it’s intuitive, even though it’s wrong for a sovereign issuer. This drowns out MS truths: Deficits are an economy’s surplus, T-securities are deposits, and taxes control demand, not fund spending.
Tying It to Mitchell’s Post
Mitchell’s 85-year catalog of “BULLSHIT” shows how these influences manifest. Politicians (McConnell, Mace) rely on donor cash to push austerity. Media outlets (NYT, Fortune) parrot debt fears for clicks and ad dollars. Economists (Antoni, Tudor Jones) from funded institutions churn out “unsustainable” warnings, ignoring FRED data showing deficits driving GDP and recessions following surplus attempts. The rich’s control ensures this narrative persists, as it protects their tax breaks and private wealth while blocking public goods.
Wrapping It Up
The rich perpetuate the debt myth via campaign contributions (buying politicians like McCarthy), media control (funding sensationalism in NYT, Fortune), and academic influence (endowments and think tanks like Heritage). This keeps the public scared of deficits, justifying austerity that widens inequality while ignoring MS truths: The U.S. can’t go bankrupt, deficits fuel growth, and the “debt bomb” is 85 years of hot air. This is how the rich rig the game, and Mitchell’s post exposes their narrative for what it is: pure “BULLSHIT.”
A normal person might say that the man should simply get off the track. But sometimes, politicians, economists, and media writers are not normal people.
They sometimes eschew normal solutions to problems and present complex, non-solutions. A politician probably would say, “It’s too late for the man. We could raise his taxes to cover the cost of installing brakes on the train, or we could stop service altogether. Walking will do people good.”
Consider Social Security and the federal government. Social Security is running short of dollars. The government has infinite dollars.
Fed 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.
Fed 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 stated, “As a central bank, we have the ability to create money digitally.
Secretary of the Treasury, Paul O’Neill: “I come to you as a managing trustee of Social Security. Today we have no assets in the trust fund. We have promises of the good faith and credit of the United States government that benefits will flow.”
Paul Krugman (Nobel Prize–winning economist): “The U.S. government is not like a household. It literally prints money, and it can’t run out.”
Given that Social Security is facing funding issues and the federal government has the ability to create unlimited money, one might suggest that the government should simply fund Social Security.
Ah, but no. That is not the way of our information leaders, as the following article will attest:
A new report has projected that Social Security funds could be depleted by 2033
Time is running out to avert a Social Security cataclysm, said William A. Galston in The Wall Street Journal. The program’s trustees warned in a recent report that the Social Security trust fund “will be exhausted in the first quarter of 2033″—nine months earlier than they predicted a year ago—at which point benefits will be cut by 26%.
Is Mr. Galston a “normal person”? Does he suggest that the entire “cataclysm” would disappear if the federal government simply funded Social Security? No.
A few factors explain why the coffers are being drained:
How much money is in the federal government’s “coffers”? Actually, it doesn’t have coffers. It creates dollars, on demand, by paying creditors. The process is quite straightforward:
Congress and the President pass a law, funding a project
The chosen agency of the federal government writes checks to suppliers
The Federal Reserve clears the checks based on the law passed by Congress and the President.
Dollars appear in the checking accounts of creditors.
Where did those dollars come from? Thin air, the same place the very first dollars came from in the 1780s. Congress votes. The President approves. Numbers appear in the government’s books. Those numbers are money. That is all money is: Numbers in the government’s books.
There is no physical money — just numbers. Even dollar bills are not money, They just represent the dollars on the government’s books. And the government controls its books.
The over-65 population has nearly doubled since 2000, beneficiaries are living longer, and declining fertility rates mean there are fewer workers to support each beneficiary.
It widely, and falsely, is believed that the FICA extracted from your paycheck funds Social Security. It doesn’t. Even if the government didn’t collect a single penny in FICA taxes, it could continue funding Social Security (and Medicare) forever.
The old saw about “fewer workers to support each beneficiary” is wrong, wrong, wrong. Even if there were no workers, the government could fund Social Security — yes, again — forever.
We’ve known about these trends for decades and could have enacted reforms gradually. Now it’s too late. If lawmakers acted today, “restoring Social Security’s long-term solvency would require a 22% benefit cut for current and future beneficiaries,” or an increase in payroll tax to 16%, from the current 12%.
You have just read an example of the Big Lie in economics: That benefit cuts or tax increases are necessary to “save” Social Security. Three lies in one paragraph:
The “Now it’s too late” lie. Congress and the President could provide the funds to save Social Security this afternoon.
The “benefit cut” lie. The government could triple benefits and still maintain Social Security’s solvency.
The “tax increase” lie. The government could eliminate FICA, and Social Security could continue to be solvent.
But lawmakers won’t act today. President Trump “has repeatedly ruled out cuts to Social Security,” and Democrats didn’t do anything when they were in power. At some point, politicians will have to “level with the American people about the hard choices that lie ahead.”
Yes, at some point, politicians will have to “level with the American people” about the vast sums of money the government could, if it wished, allocate to Social Security and Medicare.
“If endless borrowing were no cause for concern,” the fix would be easy, said Bloomberg in an editorial. Congress could just change the rules that say Social Security can’t borrow money to pay out benefits and carry on.
But with the national debt sitting at $36 trillion and rising fast, that’s not possible.
The government does not borrow dollars. Why would it. It can create all the dollars it needs, simply by pressing a computer key. Who says so? Well, for one:
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.
The federal government is not financially constrained and does not need to ‘fund’ its spending.”
Not being dependent on credit markets means the government doesn’t borrow.
The writer almostadmits the truth: “Congress could just change the rules that say Social Security can’t borrow money to pay out benefits.
Get it? Congress always can “just change the rules.” Congress could fund Social Security the same way it funds the army, the navy, the marines, the air force, the space force, the SCOTUS, the White House, and Congress itself, along with almost every other federal agency: By voting for the money.
So why doesn’t Congress do that? We’ll explain shortly.
So we have to consider the other available options, said David Von Drehle in The Washington Post. One is to raise more revenue, possibly by making the wealthy pay more. “Another choice is to further raise the age of full eligibility,” which has already gone from 65 to nearly 67 for those born in 1960 or later.
Or we could “increase the number of workers paying into the system.” But President Trump’s immigration crackdown means the opposite is happening.
We already have discussed these so-called “solutions” and why they neither are necessary nor advisable. And now we get to what Congress would really love to do.
There’s one more idea on the table, said Allison Schrager in Bloomberg. Sens. Bill Cassidy (R-La.) and Tim Kaine (D-Va.) have proposed creating “a separate fund for Social Security” that could invest in “stocks and other investments,” not only Treasurys, as the current trust fund is required to do.
Oh, how the political donors would love to get their greedy hands on your retirement money. Remember the 2008 recession caused by banks selling fake investment products to a naive public? Yes, those are the crooks who thing Social Security should be privatized.
The senators estimate that savvy investing would be enough to fill the fund’s coffers. And maybe they’re right: “In hindsight, the program would not be facing a shortfall” if it had jumped into stocks two decades ago. “
But investing is always easy in hindsight.” There’s no guarantee the market will replicate the outsize returns of the past 20 years.
And with Social Security so near to insolvency, some tax hikes and benefit cuts are likely inevitable even with a shift to stocks. “The first rule of investing, after all, is that there is no such thing as a free lunch.”
Yes, it’s all part of the Big Lie, easily seen if one has the sense to look.
So if it’s so obvious that all solvency problems would end if the federal government merely funded Social Security, why hasn’t it been done? And the answer is: The rich donors don’t want a solution.
Here’s why.
1. “Rich” is a comparative.
2. Being rich doesn’t just mean one owns a great deal of wealth. It means one owns a great deal more wealth than others.
3. Becoming richer requires widening the income/wealth/power Gap
4. The Gap can be widened by obtaining more for oneself or by forcing others to have less.
5. The rich use their financial power to widen the income/wealth/power Gap below them.
6. The rich discourage benefit-narrowing benefits to those who are poorer
7. They do this by bribing thought leaders to promulgate economic lies.
a. They bribe the media via ownership and advertising dollars.
b. They bribe the economists via school endowments and lucrative jobs in think tanks.
c. They bribe the politicians via campaign contributions and company employment
8. Among the economic lies the rich promulgate are:
a. The federal deficit and debt are too high. Economically, they are too low.)
b. Social Security is funded by FICA (All federal spending is funded by money creation, not taxes)
c. To prevent SS insolvency (and Medicare insolvency, too), FICA must be increased or
d. Benefits must be reduced.
e. The government cannot afford to pay for Social Security (The government can afford anything.)
f. The poor are naturally lazy, and benefits encourage them not to work (On average, the poor work harder than the rich)
g. It isn’t fair for the poor to receive money for not working. (It’s fairer than the current Gap)
h. Federal spending is inflationary (Inflations are caused by shortages, never by spending, which can cure shortages)
You are being conned into believing Social Security (and Medicare) are facing intractable financial problems that only can be cured by giving recipients less and/or taxing them more (or by allowing the rich to handle the money and profit from it).
I cannot say whether William A. Galston and the Wall Street Journal editors are ignorant of the facts or are outright lying. I suspect that, given all the informational resources at their command, they are not ignorant.
The fact that a very rich man, Rupert Murdoch, owns the WSJ, provides one clue.
In the following months, you will continue to hear versions of the Big Lie drummed into your head, again, again, again, in the hopes that repetition alone will make you accept it and not protest at what is being taken from you.
Your best hope is to contact your Senators and Representatives repeatedly, letting them know you’re on to them and will hold them accountable in the coming elections. Do the same with any medium that tells the Lie.
Fight hard enough and maybe, just maybe, we won’t have to keep reading headlines like this:
Here is a scam that even those who understand Monetary Sovereignty will fall for:
News article: President Donald Trump says the government might start cutting checks again, but this time, not for COVID-19 relief or tax refunds. Instead, the money could come straight from the tariffs his administration has slapped on foreign imports.
In his words, “We have so much money coming in, we’re thinking about a little rebate.”
And by “little,” he means from a pool of more than $100 billion in tariff revenue already collected this year.
Sounds good, right? Some of the dollars those tariffs are taking out of your pocket will come back in the form of rebates. What could be wrong with that?
This illustration actually exaggerates the impact of tariffs on the federal government’s ability to spend. The ocean doesn’t contain an infinite amount of water, but the government can create an infinite number of dollars.
It’s 100% misleading.
There is no “pool of tariff revenue.” The federal government has infinite dollars.
Every dollar that comes to the government disappears into an infinite pool of funds.
Fed 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.”
Fed 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 stated, “As a central bank, we have the ability to create money digitally.
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.”
If Trump wanted to send a “rebate” to Americans, he could do it tomorrow, simply by having his acquiescent Congress vote for it.
There, quite literally. is no limit to how much the federal government can send to anyone and everyone, today, tomorrow, or any time.
Then there is this nonsense:
The US government is raising record-high revenue from tariffs, thanks to President Donald Trump’s embrace of new import levies. The White House may exaggerate the potential, but independent budget analysts agree the new tariffs may bring trillions of additional dollars into government coffers over a decade.
The United States government has the potential to collect US$2trn or more in tariff revenue for its coffers in the next decade from President Donald Trump’s new import levies, according to economic and budget researchers.
Since his second presidential term began in January, Trump has ordered a series of new import tariffs on a global, per-country and per-item basis. Among the president’s stated goals is to raise enough money to offset, or even eliminate, federal income taxes.
The independent analyses do not envision any possibility that tariffs, even under the highest plausible outcome, can replace the income tax. The US collects approximately US$2trn in income taxes annually.
There are no “coffers.”
This situation is similar to the ocean boasting about a tiny thimbleful of water being added to it.
However, that analogy isn’t quite accurate because even the ocean doesn’t have an infinite supply of water, while the U.S. government has an unlimited capacity to create dollars.
The government has the power to create a trillion, trillion, trillion dollars today, if it chooses to, simply by pressing a computer key.
Therefore, the government does not need to “raise” money to eliminate federal income taxes; it could eliminate those taxes immediately.
And this:
Howard Lutnick: “The tariff revenues are amazing — $700 BILLION a year. That’s just net new money the government never had before. You take that for ten years, that’s $7 TRILLION.”
An abject lie. The federal government has infinite money. The mythical $7 TRILLION would be taken from the private sector and disappear.
The purpose of federal income taxes is not to supply the federal government with money. Instead, the purposes of federal taxes are:
To control the economy by taxing what the government wishes to discourage (Examples: “Sin taxes on cigarettes, liquor, etc.) and by giving tax breaks to what the government wishes to reward (Examples: Tax breaks for charitable contributions, and tax loopholes for the rich.)
To assure demand for the U.S. dollar by requiring dollars to be used for tax payments.
Unlike state and local governments, which rely on tax dollars, the federal government does not need or use tax revenue.
Rather than taking tariff dollars from the public, the federal government should simply vote to eliminate poverty by funding comprehensive, no-deductible health care insurance and generous Social Security benefits for every man, woman, and child in America.
No, this wouldn’t cause inflation any more than Trump’s so-called “rebates” would. Inflation is caused by a shortage of essential goods and services, and it can be alleviated through federal spending to address those shortages.
At long last, when will the media, the politicians, and the economists acknowledge the federal government’s infinite supply of dollars?
You can’t blame the public for not understanding economics when economists themselves struggle to comprehend it.
Here are excerpts from two articles that demonstrate the incredible ignorance (or perhaps, intentional misleadingness) from people who should (or perhaps do) know better.
The first is from Paul Krugman, who is billed as having won the Nobel Prize (He didn’t. It was the Nobel Memorial Prize in Economic Sciences, officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel ).
The following article ran July 3, 2025.
Trump’s Big Beautiful Debt Bomb
The budget bill is both devastatingly cruel and deeply irresponsiblePaul Krugman, Jul 03, 2025Do readers remember the debt panic of the early Obama years? For a while scare stories about national debt dominated discussion in the media and inside the Beltway.
I got a lot of grief at the time for bucking that consensus, urging people to relax about government debt. The United States, I argued, had lots of “fiscal space” — ability to run up debt without losing investor confidence — so it should focus instead on the importance of restoring full employment, which required running substantial deficits.
So far, so good. He was right to tell people to “relax about government debt.”
His argument, though, about “fiscal space” is troubling, because it hints that there are times when we don’t have “fiscal space, and should worry about government debt (which isn’t government and isn’t debt.)
The money is owned by the public, not by the government, and resides in Treasury Security deposits. If it were debt, the government would own the money and owe it to the creditors.
Depositing dollars into an account that you own — dollars you always own and the government never touches — does not create “government debt.” (Think of a safe deposit box, and you will have a better understanding of Treasury Securities accounts.)
These days, however, many though not all of the people who were screaming about debt back then have gone quiet. Funny how that happens when there’s a Republican in the White House.
Republicans scream about benefits for the poor and taxes on the rich. Funny how “solutions” to the debt always seem to involve cuts to Medicaid, Medicare, Social Security, food stamps, childcare, and other benefits enjoyed by those who are not rich.
You never hear about the elimination of tax loopholes that benefit the rich.
Yet there is much more reason to be worried about debt now than there was then. On one side, there’s no longer any good economic reason to be running large deficits.
That statement is utterly wrong, diametrically wrong, even more wrong than the notion that Krugman won a real Nobel Prize.
The reasons to run large deficits never change and are quite obvious:
Being Monetarily Sovereign, the government canrun any size deficits at no cost to anyone — not to you, not to me, and not even to Paul Krugman. All deficit spending is funded not by taxes, but by the creation of new money, which the federal government can do endlessly.
The formula for economic growth clearly shows why the government must run deficits. Gross Domestic Product = Federal Spending + Nonfederal Spending+ Net Exports. Government deficits fund both bolded terms in the equation.
Every depression in U.S. history has resulted from the lack of federal deficits (aka “surpluses.”)
Almost all recessions have resulted from deficits that were too small, and all have been cured by increased deficit spending.
Here is the evidence:
Changes in Gross Domestic Product closely parallel changes in “federal debt.” Recessions are preceded by reduced “debt” growth and are cured by increased “debt” growth.
Every depression in U.S. history has followed years of federal surpluses:
1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.
On the other, America has changed in ways that have greatly reduced our fiscal space, our ability to get away with a high level of debt.
There is nothing to “get away with.” Not only is the “federal debt” not federal or debt, but running deficits is necessary. What we can’t afford to do is not to rundeficits.
And the One Big Beautiful Bill Act, which just passed the Senate and will probably pass the House, will make things even worse.
It is one of the worst bills ever to pass Congress and the President, but not because it causes deficits. That’s the good part. The bad part is that the entire bill is devoted to taking money from the low- and middle-income groups and giving it to the very rich.
Why was I relatively relaxed about debt back in the day? Largely because history tells us that advanced nations can normally run up large debts without experiencing crises of confidence that send interest rates soaring.
Look, for example, at the debt history of the UK, which ran up huge debts relative to GDP during the Napoleonic Wars and the two world wars without losing investor confidence:
Why are advanced countries normally able to pull this off?
Not all advanced countries — only those that are Monetarily Sovereign, like the UK. The euro nations, many of which could be called “advanced” (France, Germany, Italy, et al), cannot run up large debts without experiencing crises of confidence.
However, the Monetarily Sovereign European Union (EU) can incur any amount of debt it wishes without problems. It has the infinite ability to create euros.
First, they’re normally run by serious people, who don’t try to govern on the basis of crackpot economic doctrines and will take responsible action if necessary to stabilize their nations’ debt.
“Serious people”? Do you know what that means? I don’t.
Second, they’re competent: They have strong administrative states that can collect a lot of tax revenue if necessary. The United States collects 25 percent of GDP in taxes, but could collect much more if it chose. Some European nations collect more than 40 percent.
This is utterly wrong:
While state and local taxes dopay for state and local government spending, federal (Monetarily Sovereign) spending is not funded by taxes. Even if the U.S. federal government collected no taxes, it could continue spending indefinitely. Amazingly, the Nobel winner seems not to understand the differences between Monetary Sovereignty and monetary non-sovereignty.
Not only does federal tax collection not fund federal spending, but it reduces GDP by reducing non-federal spending. Federal tax collections are anti-growth.
These factors normally lead investors to give advanced countries the benefit of the doubt, even when they run big deficits. That is, investors assume that the people running these countries will take action to rein in debt once the emergency justifying deficits ends, and that they will be able to take effective action because they have effective governance.
No, smart investors know that Monetarily Sovereign nations easily can fund deficit spending by creating their sovereign currencies.
It isn’t emergencies that justify deficits; it’s economic growth that makes deficits necessary.
And what is the “effective action” Krugman is talking about? In the 65 years since 1960, there has been only one short period when America failed to run a deficit — 1998-2001 — and that caused the recession of 2001.
And, as usual, the recession was cured by — you guessed it — deficit spending.
Reductions in deficit growth (red line) lead to recessions (represented by gray vertical bars). Recessions are cured by increased deficit spending. The reason: Federal deficits, which never are funded by taxes, increase the supply of growth dollars in the economy, at no cost to anyone.
And that’s why I was a deficit dove in, say, 2011. America needed to run substantial deficits to recover from the 2008 financial crisis.
But I didn’t think this would cause trouble down the road, because we were a serious country run by serious people, easily able to do what was necessary to stabilize the debtonce the economic emergency was past.
Again, with the “serious” business? Serious people would understand Monetary Sovereignty.
We didn’t “stabilizethe debt.” We ran “substantial deficits to recover”, i.e., to grow the economy, after the 2008 financial crisis. (Why we should wait for a financial crisis to grow the economy, never is explained.)
We ran larger deficits than ever, which coincided with substantial GDP growth and low inflation.
But that, as I said, was then.
Right now we are running big budget deficits even though we aren’t fighting a war, facing high unemployment, or dealing with a pandemic. We should be taking action to bring those deficits down.
Why? What is the supposed harm that deficits are causing? There is none. Why turn off the engines when the plane is flying well?
Instead, Republicans have rammed through the One Big Beautiful Bill Act, which will add trillions to the deficit even as it causes mass misery.
I think he means “adding trillions to the debt,” but either way, this is one of the few good parts of the Bill — deficit spending to add growth dollars to the private sector.
The bad part is that not only with the rich get more money, but the poor will get less. When an economy widens the Gap between the rich and the rest, there always is much suffering among the millions while a few thousand prosper.
Money aside, the way Congress was bullied into passing that bill and the lies used to sell it show that we are no longer a serious country run by serious people.
Republicans are using transparently dishonest accounting to hide just how much they’re adding to debt — hey, we aren’t really cutting taxes, just extending tax cuts that were scheduled to expire.
And they’re also claiming that the OBBBA’s tax cuts (the ones that they say aren’t really happening) will generate a miraculous surge in economic growth.
If there were real tax cuts they would, in fact, stimulate economic growth. But Trump’s tariffs will hurt the economy in two ways:
Tariffs are taxesthat remove dollars from the economy. We Americans pay Trump’s tariffs out of our pockets. Foreigners do not pay our taxes. Trump is hitting us on the head with a tariff hammer, to punish them.
Tariffs also are inflationary, affecting the prices of all products, even those not directly subject to a tariff.
I’ve had my differences with the Committee for a Responsible Federal Budget, but it’s an honest, highly competent think tank, and its (appropriately) incredulous analysis of Trump officials’ economic projections is titled “CEA’s fantastical economic assumptions.”
The CRFB is honest and competent if you agree with their endless calls to cut benefits to the middle- and lower-income groups as a way to grow the economy. Otherwise, one might think they are a group of wealthy individuals catering to the greed of other wealthy individuals.
Add in Trump’s bizarro claims about what his tariffs will achieve. Again, do we look like a serious country run by serious people?
Moreover, mass deportation and incarceration of immigrants, aside from being a civil liberties nightmare, will inflict severe economic damage and significantly worsen our debt position.
Totally agree. Is this the same Donald Trump whose party complains Americans are not having enough children to support a growing economy — so he’s sending away immigrants who do the work and pay taxes, but receive few benefits??? Absolutely senseless.
Finally, how long will we have an effective government that can collect taxes when necessary? Elon Musk’s DOGE failed to find significant amounts ofwaste, fraud and abuse, but it did degrade the functioning of the federal government and demoralize hundreds of thousands of civil servants.
Like little puppets, the Republicans mouth the phrase “waste, fraud and abuse.” It’s always exactly the same — “waste, fraud, and abuse.” Never, “fraud, abuse, and waste.” Never “abuse, waste, and fraud.”
Always exactly the same words, which not only are symptoms of rehearsed madnessbut have also been proven untrue.
Republicans have done all they can to eviscerate the IRS and make tax evasion great again. Even if control of the government is eventually returned to people who want to govern the country rather than pillage it, it will take years to recover competence in taxing faith in America.
I don’t mourn for the IRS. Federal taxes pay for nothing at all. The sole purposes of federal taxes are:
To control the economy by taxing what the government wishes to discourage and by rewarding what the government wishes to encourage.
To assure demand for the U.S. dollar by requiring taxes be paid in dollarsl
To widen the Gap between the rich and the rest by providing tax loopholes only the rich can crawl through, allowing them to pay a lower percentage of their incomes than the rest of us do.
Get it? Federal taxes don’t fund federal spending.
But I don’t think they fully realize, even now, that the risk of a U.S. debt crisis is vastly higher now than it was when Republicans were yelling about Obama’s deficits.
There was no “debt crisis” then. There is no “debt crisis” now.
The issue is that we have a dangerous, hateful criminal as President, a group of unethical supporters in Congress and the Supreme Court, and a sufficient number of misinformed voters to enable it.
A concern of conservative Republicans is that the bill adds to both the national debt and deficit,Jackson Richman,Josep h Lord, Nathan Worcester, 7/2/2025
WASHINGTON—House Republicans appear stuck on July 2 when it comes to advancing President Donald Trump’s One Big Beautiful Bill Act.
House Republicans are working overtime to bring their ideologically-divided caucus—split between moderates and conservatives who often want opposing outcomes—on board with the mammoth bill. With Republicans controlling 220 seats to Democrats’ 212, House Speaker Mike Johnson (R-La.) can spare no more than three defections.
Here are some of the biggest unresolved divisions in the bill.
Pricetag
Many conservatives have expressed concerns about the bill’s impact on the national debt as well as the deficit.
“The changes the Senate made to the House passed Beautiful Bill, including unacceptable increases to the national debt and the deficit, are going to make passage in the House difficult,” Rep. Marlin Stutzman (R-Ind.) wrote on X.
Mathematically, they are talking about “unacceptable increases in Gross Domestic Product.” Crazy or ignorant? You decide.
The conservative Freedom Caucus said in an X post on June 30: “The Senate’s version adds $651 billion to the deficit—and that’s before interest costs, which nearly double the total. That’s not fiscal responsibility. It’s not what we agreed to.”
It is not “fiscally responsible” to assume federal financing is the same as personal financing. How are people so ignorant of economics elected to Congress?
Rep. Ralph Norman (R-S.C.), a caucus member, told The Epoch Times on July 1 that he would vote against the legislation. Norman and other fiscal hawks have called for at least $2 trillion in spending cuts, while the bill delivers $1.5 trillion in cuts.
Translation: Norman and other fiscal hawks have called for at least $2 trillion in cuts to economic growth.
There are also concerns about the Congressional Budget Office’s (CBO) prediction of a $3.2 trillion deficit increase under the bill.
Translation: There are also concerns about the Congressional Budget Office’s (CBO) prediction of a $3.2 trillion increase in Gross Domestic Product
Rep. Jeff Van Drew (R-N.J.) took a different perspective.
“People are going to have more money to spend, the economy is going to do well, and people are going to be happy,” Van Drew told reporters.
OMG! Is Van Drew the only member of Congress who understands that federal deficits put money into people’s pockets?
Johnson and Trump have argued that the bill will reduce the deficit by kindling economic growth and have criticized the CBO numbers for relying on a lower growth rate .
Translation: Johnson and Trump have argued that the bill will reduce the deficit by increasing taxes, which somehow will grow the economy.
Cut Provisions
Rep. Chip Roy (R-Texas), who also voted against advancing the bill through the House Rules Committee, posted on X that the Senate eliminated provisions passed in the House version of the legislation
This included getting rid of “provisions to terminate the ‘green new scam’ subsidies in the House bill,” removing “key provisions we put in the bill to stop illegal aliens from getting Medicaid,” and eliminating “key provisions we put in the bill to stop taxpayer funding of transgender surgeries.”
Translation: The government should spend fewer growth dollars to cut global warming and healthcare, but don’t cut tax loopholes for the rich.
The Freedom Caucus document alleges that the Senate watered down a House provision to cut waste, fraud, and abuse from the Supplemental Nutrition Assistance Program (SNAP), which issues food stamps, as “it fails to prevent blue states from gerrymandering counties and cities to get around the work requirements.”
There are those words again, in the exact order, as spoken by zombie puppets: “Waste, fraud, and abuse,” which DOGE failed to find.
Translation: Cut the food stamps that save children in blue states from starvation, because they help Democrats.
MedicaidWhile the Freedom Caucus sought deep Medicaid cuts, this is a concern for moderates such as Rep. Don Bacon (R-Neb.). The Senate cut Medicaid by more than $1 trillion, while the House version cut it by $800 billion. Both figures are over the span of a decade.
Translation. Rep. Don Bacon is concerned about health, but he will vote for the bill because Trump told him to.
In a June 24 letter to Senate Majority Leader John Thune (R-S.D.), a group of moderates wrote that the “House’s approach reflects a more pragmatic and compassionate standard.”
Translation: To Republicans, “pragmatic and compassionate” means cut healthcare, but a bit less.
They also wrote that they are “concerned about rushed implementation timelines, penalties for expansion states, changes to the community engagement requirements for adults with dependents, and cuts to emergency Medicaid funding” as “these changes would place additional burdens on hospitals already stretched thin by legal and moral obligations to provide care.”
Translation: Yes, cut all those benefits to the poor; just do it slower, until after the midterm elections.
Rep. Dusty Johnson (R-S.D.), a leader in the moderate Main Street Caucus, said he and many other moderates had, nevertheless, had their concerns assuaged by their meeting with Trump.
Asked about the meeting, Johnson said Trump “and particularly [Centers for Medicare & Medicaid Services Administrator] Dr. [Mehmet] Oz did a good job of working through some of the specifics.”
“The president is the best closer in the business, and he got a lot of members to ‘Yes’ in that meeting,” he said.
Translation: “Concerns assuaged by Trump” means “he won’t campaign against me or put up a competing candidate.”
Rep. John McGuire (R-Va.), a supporter of the bill, said that Republicans’ changes to the currently “unsustainable” program will ensure that it’s “available for people who need it for future generations.”
Translation: McGuire falsely claims the government can run short of dollars, so we have to cut benefits to the poor while giving the rich more tax loopholes. And please don’t ask us to cut tax loopholes. Why do you think we cut IRS staffing?
Rep. Greg Murphy (R-N.C.) told reporters: “We’re going after waste, fraud, and abuse. People shouldn’t be on the system who are not eligible.”
“Waste, fraud, and abuse,” again. All rich people are eligible. The people who do the actual labor are not eligible.
Additionally, an issue with the bill, according to the document, is that it does not phase out quick enough the green credits under the Inflation Reduction Act as it “guts the benefit by including a last-minute carveout for projects that ‘begin construction’ a year after enactment, which will create a race to do the minimum 5 percent construction spending to lock in subsidies well past 2027.”
Translation: Those Democrats will sneak in measures to reduce global warming if we don’t phase out benefits for those who pollute less. Anyway, global warming doesn’t exist, and if it does exist it isn’t a threat to the rich, so why should we care?
Finally, an issue with the bill, according to the document, is that it includes $50 billion for rural hospitals—which they call a “slush fund”—and a “100 percent tax deduction for meal expenses on Alaskan fishing boats, and special lower thresholds for waivers for Alaska for SNAP work requirements and state cost share requirements, even after giving them a blanket waiver through 2028.”
Translation: “How awful. How can we increase benefits for the rich if we help rural hospitals, provide deductions for meal expenses on fishing boats, and make it easier for starving children to get food?”
I don’t blame the Republicans or even Trump for this monstrosity of a bill — a bill that will sicken and starve millions of innocent people.
I blame the ignorant, cruel, un-American voters, who carry their bigotry and hatreds into the voting booth with them. They think the rich Republicans will protect America from the black, brown, yellow, gay, poor, lazy, non-Christian foreigners who are “trying to take over.”
The MAGA version of the Statue of Liberty doesn’t carry the welcoming torch of freedom. She gives the middle finger to all those self-proclaimed “good Christians,” who actually are polar opposites of Christ.
Ironically, poetically, the red-state voters who are not wealthy will suffer the most. I do not feel sympathy for them. They will receive what they deserve. deserve.
I feel bad for their children, who will be harmed by the wanton cruelty foisted upon them by their parents.
#Monetary Sovereignty - Mitchell 