Tag: neo-chartalism

–Why Robert J. Samuelson wants to cut Social Security, Medicare and Medicaid.

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create the dollars to pay its bills.
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Robert J. Samuelson is a weekly columnist for The Washington Post, writing on political, economic and social issues. His column usually appears on Wednesdays. Add his name to the long list of economics writers who are ignorant of Monetary Sovereignty, the basis of all modern economics.

In a March 7, 2011 column titled, “Why Social Security is Welfare,” he makes the following comments:

Recall that Social Security, Medicare and Medicaid, the main programs for the elderly, exceed 40 percent of federal spending. Exempting them from cuts – as polls indicate many Americans prefer – would ordain massive deficits, huge tax increases or draconian reductions in other programs. That’s a disastrous formula for the future.

Yes, Robert, not cutting Social Security, Medicare and Medicaid would “ordain” (?) deficits. However, because the U.S. now is Monetarily Sovereign, there is zero connection between deficits and taxes. For your benefit, Robert, I’ll say again what you as an economics writer already should know: “Federal taxes do not pay for federal spending.”

And so far as those draconian reductions in other programs, why do you believe a nation with the unlimited ability to create dollars, needs to cut spending, when inflation is nowhere in sight?

Here is how I define a welfare program: First, it taxes one group to support another group. . .

Robert, now repeat after me until you get it: “Federal taxes do not pay for federal spending.” State taxes do pay for state spending, and city taxes do pay for city spending. The states and cities are not Monetarily Sovereign. But, federal taxes do not pay for federal spending. In fact, FICA could be eliminated, and this would not reduce by even one penny, the federal government’s ability to support this program – even were benefits doubled.

Since the 1940s, Social Security has been a pay-as-you-go program. Most benefits are paid by payroll taxes on today’s workers.

Things have changed markedly since the 1940’s, and Robert has not kept up with the changes. In August, 1971, one of the biggest economic changes in our lives occurred. We became Monetarily Sovereign. At that instant, Social Security ceased being a “pay-as-you-go” program, because FICA no longer supported benefits. In a Monetarily Sovereign nation, tax dollars are destroyed upon receipt. They do not, and cannot, support federal spending.

Think about it, Robert. Why would a government with the unlimited ability to create dollars, need to use taxes to pay for anything? It makes absolutely no sense. Sadly, Robert still lives in a gold-standard (aka “flat-earth”) world.

Annual benefits already exceed payroll taxes. The gap will grow.

Yep, the difference between FICA collections and benefits will grow. More net money will be created. This will stimulate economic growth. So what is the problem?

No doubt people would be outraged (by benefit cuts). Having been misled, they’d feel cheated. They paid their taxes, why can’t they get all their promised benefits? But the alternative is much worse: imposing all the burdens on younger taxpayers and cuts in other government programs. Shared sacrifice is meaningless if it excludes older Americans.

No, shared sacrifice is meaningless if it is purposeless. There is absolutely, positively no reason to cause widespread human misery by cutting Social Security, Medicare and/or Medicaid benefits. Causing misery out of sheer ignorance is unforgivable.

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

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

Are there good deficits and bad deficits?

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. Cutting the federal deficit is the most ignorant and damaging step the federal government could take. It ranks ahead of the Hawley-Smoot Tariff.
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While Congress struggles with plans to cut federal deficits (i.e. cut federal money creation), and simultaneously tries to encourage banks to lend (i.e increase private money creation), it might be instructive to see why this is exactly the wrong approach. Please go to a post I wrote last June (since updated), titled, Is federal money better than other money?

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

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

–Ohmigosh. So THAT’s what less government means!!

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. Cutting the federal deficit is the most ignorant and damaging step the federal government could take. It ranks ahead of the Hawley-Smoot Tariff.
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Reality comes as a shock to the Tea Party:

Tea Party voters, by almost 2-1, oppose Social Security cuts
1:00 pm March 3, 2011, by Jay Bookman

From the Wall Street Journal:

WASHINGTON— Less than a quarter of Americans support making significant cuts to Social Security or Medicare to tackle the country’s mounting deficit, according to a new Wall Street Journal/NBC News poll, illustrating the challenge facing lawmakers who want voter buy-in to alter entitlement programs.

In the poll, Americans across all age groups and ideologies said by large margins that it was “unacceptable” to make significant cuts in entitlement programs in order to reduce the federal deficit. Even tea party supporters, by a nearly 2-to-1 margin, declared significant cuts to Social Security “unacceptable.”

Isn’t it fun to march around, shouting you want less government — until you realize what you’ve been shouting? The Tea Party (and the rest of the right wing) remind me of rebellious teenagers, who don’t want any help or suggestions from their parents. But when they need money for the dance, or for some clothes or to go to college, then it’s “Mommy, Daddy, help me. Ple-e-e-ase!”

One can only hope the politicians and the public come to their senses, soon.

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

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

–Watch, as politicians flush Medicare, Medicaid and Social Security down the drain

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. Cutting the federal deficit is the most ignorant and damaging step the federal government could take. It ranks ahead of the Hawley-Smoot Tariff.
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I’ll give you straight talk; I won’t mince words. It was inevitable, the debt hawks, not having found enough places to cut federal benefits, now want to cut your Medicare, Medicaid and Social Security, as well as just about every other federal benefit they could think find:

By ERIK SCHELZIG Associated Press, Feb. 27, 2011

House Republicans specifically want to target entitlement programs, like Medicaid and Medicare, the speaker (John Boehner) said.
“To not address entitlement programs, as is the case with the budget the president has put forward, would be an economical and moral failure,” Boehner said. “By acting now, we can fulfill the mission of health and retirement security for all Americans without making changes for those in or near retirement.”

Your benefits from these three programs already are far too low, and the debt hawks want to cut more. Why? They have absolutely no idea. Write to any debt hawk and ask this simple question: “Why do you want to cut the deficit?” If you get any answer at all (unlikely), it will be something nebulous like, “The deficit is unsustainable,” or “We’re living beyond our means.” In short, generalized BS based on nothing.

Never, will you receive a solid statement of exactly what would happen in the future, if the government keeps spending. Never will you be shown any supporting data. The reason: What will happen is: We will prosper.

But here is a solid statement of what will happen if government spending declines: We will have another recession or a depression. We will have fewer doctors, less medical research, poorer roads and bridges, worse education, poorer security, more states not able to pay their bills, more poverty and overall a reduction in our quality of life. How do I know? Read some of the posts in this blog, beginning with Summary, and work your way forward.

I’m sure you recall all that phony wailing about our children and grandchildren being hurt by deficits. Total nonsense. Use your brain. What do you think cutting federal programs will do to our children and grandchildren?

And the gall of these people talking about “fulfilling the mission of health and retirement security” by cutting spending. That’s classic double-speak. It’s like the southern senators criticizing the freedom marchers for “upsetting law and order.” No, Jim Crow upset law and order, and to fulfill the mission of health and retirement requires more money, not less.

And then there is the complete crap about how cutting federal spending somehow will alleviate unemployment. Are you kidding? What next? Cure hunger by withholding food?

In short, cutting federal spending is nuts. Anyone who thinks the economy works better or can grow, with less money, is equally nuts. The Tea Party anti-government mantra is the biggest fraud ever perpetrated on America. It makes absolutely no sense at all. Every dollar cut from the so-called “deficit” (more properly, “money supply”), is a dollar taken right out of the economy and right out of your pocket. These Tea Partiers make Bernie Madoff look honest.

Boehner wants to cut social programs “without making changes for those in or near retirement”. In other words, he wants to screw you young people. Why? Because he knows the older people would vote the Republicans out of office, if they get screwed, but he figures you young folks are so detached from retirement, you won’t realize what is being done to you until it’s too late. Anyway, aren’t most rich people older? No need to upset the wealthy contributors.

Today, you may not understand Monetary Sovereignty (though the basic concept is dead simple), but I suspect you’ll begin to understand it better when Medicare, Medicaid and Social Security and the rest of the economy go down the drain, and you’re left with insufficient medical care, insufficient retirement and a lousy world for your kids and grandchildren.

Then, you’ll have only yourself to blame, because you didn’t even take the trouble to learn Monetary Sovereignty, and instead, like little obedient sheep, you marched to the voting booth and elected those jerks. You didn’t contact your Congressperson; you didn’t write to the media; you didn’t argue; you didn’t demand. You just bent over and let them do it to you.

And that, my friends, is the straight talk I promised you.

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

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