-Another reason deficits are necessary

An alternative to popular faith

Here is one of the many reasons federal deficit spending is absolutely necessary — even more so, now — and why trying to reduce the deficit is dangerous and imprudent.

Note how debt growth declines before recessions and increases to cure recessions

Source: Joe Weisenthal and Kamelia Angelova, Clusterstock – Business Insider, September 9, 2009

Economic growth requires spending by consumers, businesses, local governments and the federal government. When consumers aren’t spending, businesses also spend less. The federal government must spend even more to take up the slack.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

-Do you believe President Obama is gay ??


An alternative to popular faith

       If a reporter were to come to his editor with a proposed article titled, “President Obama is gay,” the editor would demand supporting evidence, before that article ever saw daylight.
      However, if the same reporter submitted an article titled, “Federal deficit is too high,” history says the editor would ask for no supporting evidence, nor would the article contain any. The media merely assume, as a matter of faith, that revenue neutrality is more prudent than deficits.

      Economics is rare, perhaps unique, among sciences, most of which demand evidence for their hypotheses. Only in economics can intuition and popular faith obviate facts or even the desire for facts. Thus, I have had editors, columnists and reporters tell me it is “obvious” that large deficits are unsustainable, crowd out lending funds, lead to recessions, depressions, inflations and hyper-inflations. When I ask for evidence to support these views, I seldom hear from them again, probably because they feel scientific evidence is unnecessary in a science, but more importantly, they don’t have any.
      Even the Concord Coalition, an organization that for seventeen years, has collected vast amounts of money to preach for federal deficit reduction, unashamedly offers no evidence to support its views. Check its website, http://www.concordcoalition.org, or write to them and you will see they neither offer, nor have, evidence.
      Because our leaders parrot the economic beliefs promoted by the media, lack of evidence has contributed heavily to the government actions that yield repeated recessions. Until the media learn to ask, “What is your evidence?” we will continue to suffer periodic, economic traumas. These traumas may seem inevitable and unavoidable, but in reality they are caused by beliefs lacking evidence.
      If you don’t believe President Obama is gay, unless you see solid evidence, don’t believe the federal deficit is too high, unless you see solid evidence.

Rodger Malcolm Mitchell
For more information, see http://www.rodgermitchell.com

-Health care for undocumented aliens

An alternative to popular faith


       President Obama assures us his health care plan would not cover undocumented aliens. While that statement is untrue, it cheered Democrats, who want to pass a health-care bill – any health care bill.
      Republican Representative Dean Heller said, “Congress should do everything within its power to curb abuse. Requiring citizenship verification for enrollment would ensure only citizens and legal residents receive taxpayer funded healthcare,” which cheered Republicans, who use the law and citizenship as excuses to exercise xenophobia.
       When Democrats and Republicans, liberals and conservatives, agree on a major principle, we all need to tremble. Here are some thoughts on this frightening situation:
      Despite all the claims, no one knows how many undocumented aliens reside in America. Depending on whom you believe, the number could be anywhere between 12 million and 70 million – from 3% of the U.S. population to 17%.
      Despite all the claims, no one knows how much income tax, Medicare tax, Social Security tax, sales tax, property tax and all other taxes they pay. Some right-wingers claim the undocumenteds pay no taxes, which is ridiculous on the face of it. No sales or property taxes? No income, Social Security or Medicare taxes withheld from their paychecks? No excise taxes, like gasoline tax? Please let me know their secret. We all might like to try it. Many undocumented aliens pay taxes out of deportation fear. Many pay out of a sense of obligation and morality. Many pay for many reasons.
      Despite all the claims, no one knows the degree to which undocumented aliens may “steal” jobs from American citizens. Usually the jobs in question are at the low end. We don’t hear doctors or lawyers complaining that undocumented aliens have stolen their jobs. Who does most of the low-end jobs in America? Disproportionately, blacks (aka African Americans) and Latinos (aka Mexican Americans). Who are the complainers? Mostly the right-wing whites, who wouldn’t take those jobs under any circumstances.
       Despite all the claims, no one knows the net economic contribution made by undocumented aliens. Conservatives claim it’s very little. Liberals tell us about all the industries that depend on undocumented aliens.
      So, despite much heat, shouting and claims, no one knows the fundamental facts of this debate. It’s like arguing religion. Everyone believes strongly, but no one has facts.
      We do know this, however. When undocumented aliens don’t have insurance, they use emergency rooms, for which we citizens pay, or they get sick and become a burden on society, for which we also pay.
      We know that people who pay tax are entitled to government services. So to deprive all undocumented aliens of federal support is unconscionable and may be unconstitutional.
      We know undocumented aliens are not going home. They will be here with us until they die, as will their children and their children’s children. Of course many of these children, and most of the children’s children will be born-in-the-U.S.A. citizens. Shall we deny these American children health care? Shall we deport their parents?
      We know undocumented aliens are people. They have families. They love each other and they love God. They go to churches. They build; they clean; they bathe; they plant; they reap; they eat. They have hopes and fears and pride and regrets. They care. They mourn. They are very much like you and me, except fate has not given them that piece of paper we were so fortunate to have received, most of us merely by the accident of being born in the right place. They are not monsters or criminals, any more than we are.
      Most right wingers are Christians. Are we naive to expect Christians to be more Christian toward their fellow human beings?
      We don’t know what President Obama really believes. He’s a politician. But it is sad to see a President pander to the xenophobes who espouse hatred of a minority, under the guise of law, especially when there is so much we don’t know.

Rodger Malcolm Mitchell
For more information, see http://www.rodgermitchell.com

–When China will pass the U.S. as the world’s dominant economy


An alternative to popular faith

      When China passes the U.S. as the world’s dominant economy, you can blame the economists, who parrot the popular faith that federal debts are unsustainable and cause recessions, inflations, high taxes and harmful high interest rates. No evidence supports these intuitive beliefs.
Contrary to popular faith:

–Fact: We do not need other nations to buy our debt. We do not even need to create debt. Just as the U.S. government has the unlimited ability to create T-securities and sell them (aka “borrow”), the government has the unlimited ability to create money, thus the unlimited ability to “sustain” any size debt.
–Fact: There is no historical relationship between deficits and inflation (See the blog: “Do deficits really cause inflation,” below). Data indicates inflation is more closely related to energy costs, specifically to oil, than to any other factor.
–Fact: In only 15 years, from 1979 through 1994, taxes were cut and the federal debt grew an astounding 500%. This massive, unprecedented money printing did not cause inflation or high taxes. Instead, we entered a long period of economic growth, low taxes and moderate interest rates. Repeating that 500% debt growth would yield a $72 trillion debt in 2024 and an average deficit of $4 trillion — and if history is a judge, the same economic growth, the same low taxes and the same moderate interest rates.
–Fact: All six depressions in U.S. history immediately followed years of federal surpluses. Every recovery coincided with increases in debt growth.
–Fact: All nine recessions in the past 50 years immediately followed reductions in federal debt growth. Every recovery coincided with increases in debt growth, such as we are seeing, today.
–Fact: There is no historical relationship between high interest rates and slow economic growth. Similarly, low interest rates have not stimulated growth.
–Fact: There is no historical relationship between deficits and tax rates. There is no mechanism for our grandchildren to pay for deficits.

The factually unsupported fear of federal deficits in the U.S., when compared with the lack of such fear in China, is why we will fail and they will succeed.

Rodger Malcolm Mitchell
For more information, see http://www.rodgermitchell.com