–Chicago Tribune nominated for Guinness World Record

Mitchell’s laws:
●The more budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor, which leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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The November 15th edition of the Chicago Tribune, contained two related stories. The first, titled “Guinness World Records made to be broken today.” It said:

The eight annual global celebration of the weird and wacky will see more than 420,000 people attempt to smash old favorites of the record-breaking world, many for charity.

I am from Chicago, but I don’t want you to think I am playing to home-team pride when I nominate my home town newspaper editors to a Guinness record. This strictly is well deserved, as I’m sure you will agree, when you read the rest of this post and the editorial that earned the nomination. Here it is:

U.S. House and Senate leaders will meet Friday at the White House with President Barack Obama. The president plans to greet Republicans with a reiteration of his revenue proposal from last winter — a plan popular with his liberal base, but which didn’t get a single vote in Congress last spring:

The president will call for $1.6 trillion in new taxes over the next decade, double the amount that House Speaker John Boehner offered Obama during their failed budget talks in mid-2011.

Republicans likely will resist Obama’s call to raise tax rates for high earners but suggest alternative ways for the government to soak the rich.

Translation: ” . . . didn’t get a single vote” and “soak the rich” are clues to readers that Obama’s plan is not liked by the wealthy editors of the Tribune.

A week ago, we explained why, with the economy in danger of toppling off a fiscal cliff of tax hikes and across-the-board spending cuts Jan. 1, this is the ideal moment to cut the sort of “Go Big” deal that eluded Obama and Boehner last year. The urgency of the cliff offers an opportunity — an excuse, if you prefer — for a bargain that also encompasses tax reform, entitlement programs now headed for insolvency and a $16.4 trillion federal debt limit that also arrives at year’s end.

Translation: The “fiscal cliff” is the recession to be caused by deficit reduction. So this is the ideal moment to “Go Big” with deficit reduction. (??)

“Tax reform” means cut taxes on the wealthy while broadening the tax base, by taxing more poor people. Entitlement programs, being federal agencies, never can be insolvent unless Congress refuses funding. No federal agency ever has been bankrupt.

If Congress and the president can’t reach a grand bargain in the next 47 days, there is an alternative solution. We poached a few of these ideas from interviews with Marc Goldwein, senior policy director for the bipartisan Committee for a Responsible Federal Budget. Goldwein probably has forgotten more about these crises than most of us ever will know:

Translation: We know absolutely nothing; Goldwein knows next to nothing. So he knows more than us.

•At minimum, our leaders need to temporarily extend today’s tax and spending rates rather than drive off the fiscal cliff.

•Second, Congress would signal that it’s serious about attacking deficits by plucking some low-hanging fruit, such as ending mortgage deductions for second homes, certain breaks for oil and gas companies, and deductions involving those corporate jets that so many politicians scorn (when they’re not flying in them as VIP guests).

Translation: The solution is to temporarily extend the current deficit. Meanwhile, Congress should cut the deficit. (“Mother may I go out to swim? Yes my darling daughter; hang your clothes on a hickory limb, But don’t go near the water.”)

•Third, Obama and the leaders . . . would agree that going forward, here is how much money we’ll budget for social programs and other discretionary spending, for employee pension and other mandatory spending, and for health care. Here’s how much tax revenue we’ll raise. And here’s our dollar target for Social Security reform.

Translation: Although we should not reduce the deficit (that would hurt the economy), here is how we should reduce the deficit: Screw the middle and lower classes by cutting Social Security, Medicare, Medicaid, food stamps and other social programs. And as a final stomp on the head, let’s also attack pensions for the middle and lower classes.

•The point would be to demonstrate to Americans and the world that, in future years, deficits will fall and debt will be a declining percentage of our Gross Domestic Product. “We want our growth rising faster than our debt,” Goldwein says, “not our debt rising faster than our growth.”

Translation: The guy who forgot more than we knew also forgot that GDP = Federal Spending + Non-federal Spending – Net Imports, so cutting the deficit has a negative effect on GDP growth (it’s simple algebra).

A The Simpson-Bowles report remains a superb framework for a Go Big deal. Strengthening that plan’s entitlement reforms should push to more than $4 trillion the amount that Simpson-Bowles would slice from federal deficits over 10 years. That’s enough to begin lowering our perilous ratio of debt to GDP.

Translation: A $560 billion, first year deficit reduction would send us over a “fiscal cliff,” because deficits reduce GDP. So we recommend a $4 trillion “Go Big” deficit reduction over ten years — $400 billion per year. No problem, there.

Simpson-Bowles is thick with proposals to cut spending, overhaul taxation, target health care costs, raise eligibility ages for Social Security and use a stingier measure of inflation to drive increases in all manner of government (social) programs.

One of Simpson-Bowles’ great features was its explanation (not recommendation) that eliminating all deductions, credits and other so-called tax expenditures would allow today’s tax rates to plummet to 8, 14 and 23 percent. A middle approach that retains but limits deductions and credits for charitable giving, mortgage interest, retirement savings and employee pensions, and that phases out the deduction for employer-provided health insurance over 25 years, would let rates drop to 12, 22 and 28 percent.

Translation: This would save low income taxpayers $0, and middle income taxpayers next to $0. But the rich would benefit big time. And anyway, why encourage charitable giving, saving for retirement, pensions and health insurance? Who needs that stuff?

Mr. President, ladies and gentlemen of Congress: Cut a Go Big deal right now. Or set its parameters now and commit to meeting those parameters early in 2013. Please, though, no cliffs. We’ve seen “Thelma and Louise.”

“Go Big” but no fiscal cliff. A perfect ending for a thoroughly stupid editorial in a long list of stupid editorials.

Based on this editorial, and numerous similar editorials through the years, I nominate the Chicago Tribune Editors for the Guinness World Record: Most Stupid Big City Newspaper Editors in America.

I challenge anyone to top them.

O.K., I admit it. This was not stupidity by the Tribune editors. They know full well what they are doing. They are shilling for the wealthy. They themselves are wealthy and they suck up to the wealthy. So maybe they don’t deserve the Guinness “Most Stupid Editors” award.

Maybe the Tribune Editors deserve the Romney/Trump Contempt for the Poor Award.

Rodger Malcolm Mitchell
Monetary Sovereignty

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Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99%

No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports

#MONETARY SOVEREIGNTY

–Sorry to say this: Obama really is a liar and a traitor to the middle class. But Romney would have been worse

Are you shocked that someone should be so disrespectful as to call the President of the United States a liar and a traitor? Even I am shocked at my own words. They burn in my throat. But what else can you call a man who was elected on the solemn promise, often repeated, that he would benefit America by lifting the struggling middle and lower classes — a man who had zero intention to do so?

By Jake Horowitz (jhorowitz@policymic.com), 14-Nov-2012

Obama Sets Steep Tax Target – (via WSJ) “President Barack Obama will begin budget negotiations with congressional leaders Friday by calling for $1.6 trillion in additional tax revenue over the next decade – double the $800 billion discussed in talks with GOP leaders during the summer of 2011.

Mr. Obama, in a meeting Tuesday with union leaders and other liberal activists, also pledged to hang tough in seeking tax increases on wealthy Americans. In one sign of conciliation, he made no specific commitment to leave unscathed domestic programs such as Medicare, leaving the door open to spending cuts many fellow Democrats oppose.”

So here is how Mr. Obama will help the middle and lower income groups. He will raise taxes on the upper income group and he will cut Medicare, Social Security and food stamps.

Got it? He will claim to remove $1.6 trillion from the economy. (Will that help you and your children?) He will reduce social programs (Will that help you and your children?)

And he will continue to tell you that in some mysterious, magical way, this will make you happy. That’s called an “Obama compromise:” Give the rich what they really want – an increased gap between them and the rest of us – then claim this is good for us.

And it continues:

Today, Obama meets with CEOs from GE, Honeywell, Wal-Mart, Ford, Chevron, and IBM to discuss the fiscal cliff.

What do you think all those rich guys will tell Obama? Will they say, “Raise rich people’s taxes, don’t raise poor people’s taxes, and above all, don’t cut the social programs they need so desperately”? Sure they will.

For many years, MMT and Monetary Sovereignty have been working under the delusion that the President “doesn’t get it,” and if only we could explain it better and more simply, he would see the error of his ways. It was a fool’s mission. The President gets it. He’s no fool. And he has plenty of smart people advising him, and they get it, too.

But he does the bidding of the 1%. He learned about money in Chicago, from people like convicted swindler Tony Rezko, who magically got Obama some real estate at a big, big discount. Obama believes in magic, and hopes you will, too.

The demand that taxes be raised on the 1% is a magicians misdirection, forcing you to believe he is for the “little guy.” The rich don’t give a fig about that income tax increase. They never will pay it. But the President wants to cut social spending even more, and that is what will increase the gap.

Obama’s whole “grand bargain” is a charade to fool the voters. It really is a discussion about the best way to increase the gap without being too obvious. As you will see, when this all is resolved, the middle and lower classes will take a big hit, and the 1% will not even be scratched.

Bottom line: Any plan to reduce the deficit will reduce the money supply, and by formula, will reduce Gross Domestic Product. There is no mechanism by which any tax increase and/or any spending cut can have a positive effect on economic growth. Obama knows this. The rich know it. The poor, who elected Obama, don’t. So he will let them suffer for their ignorance. “Liar”? “Traitor”? Add “cruel” to the description.

But then, Romney would have been even worse. He would have appointed another Scalia. That’s why I voted for Obama.

Rodger Malcolm Mitchell
Monetary Sovereignty

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#MONETARY SOVEREIGNTY

–The cure for the fiscal cliff: The fiscal slide

The so-called (originally by Ben Bernanke) “fiscal cliff” is, to quote Wikipedia;

. . . laws which, if unchanged, will result in tax increases, spending cuts, and a corresponding reduction in the budget deficit beginning in 2013. These laws include tax increases due to the expiration of the so-called Bush tax cuts and across-the-board spending cuts under the Budget Control Act of 2011.

Translation: The fiscal cliff results from reduced deficits.

Some analysts have argued that “fiscal slope” or “fiscal hill” would be more appropriate terminology because while the cumulative economic effect over all of 2013 would be substantial, it would not be felt immediately but rather gradually as the weeks and months went by.

Translation: Whatever the fiscal cliff is, it will be “substantial” and felt over weeks and months –actually, for years.

The Congressional Budget Office reported an increased risk of recession during 2013 if the deficit is reduced suddenly, while indicating that lower deficits and debt over time improve long-term economic growth prospects.

Translation: Sudden deficit reduction will cause a recession, but through the unfathomable magic of political mathematics, slower deficit reduction will improve economic growth.

How does that work? No one seems to know, or if they know, they aren’t telling.

Nearly all proposals to avoid the fiscal cliff involve extending certain parts of the 2010 Tax Relief Act or changing the 2011 Budget Control Act or both, thus making the deficit larger by reducing taxes and/or increasing spending.

Translation: As we said, to avoid a recession, increase the deficit, but to grow the economy, reduce the deficit. You may find this confusing, but the voters seem to understand it perfectly, as the vast majority favor reducing the deficit while avoiding recession.

What does the Congressional Budget Office (CBO) say?

Large budget deficits would reduce national saving . . .

Uh, er, excuse me, CBO, but how can lower taxes (taking less money from the people) and increased federal spending (sending more dollars into the economy) reduce savings? The actual formula is Federal Deficits – Net Imports = Net Private Savings

Interest payments on the debt would consume a growing share of the federal budget, eventually requiring either higher taxes or a reduction in government benefits and services.

Translation: Raise taxes, cut benefits and destroy lives now, so we don’t have to raise taxes, cut benefits and destroy lives later. (The lives already will be destroyed; no need to do it twice.)

By the way, CBO, but what is that weasel word, “eventually”? Federal spending already has grown massively without tax increases. So why would future spending require tax increases, especially for a Monetarily Sovereign government having the unlimited ability to create its sovereign currency?

Bottom line: Cutting the deficit reduces GDP, and is unnecessary, because the government can create unlimited dollars (and for you debt hawks, no, this does not cause inflation.)

Then, there is this from Fox News (My bible for facts):

Boehner calls on Obama to ‘lead’ on averting ‘fiscal cliff’
Published November 09, 2012
FoxNews.com

WASHINGTON – House Speaker John Boehner on Friday put the ball in President Obama’s court over the so-called “fiscal cliff,” calling on the president to step up with a solution to avert the double-whammy of spending cuts and tax hikes that threatens to trigger another recession.

“This is an opportunity for the president to lead,” Boehner said late Friday morning. “This is his moment to engage the Congress and work towards a solution that can pass both chambers.”

Translation: We dare you to try to do anything that will benefit the country and make the Democrats look good. We double dare you. Remember your last term? Our filibusters still wait at the ready.

Boehner had already telegraphed that he wants the president to be in the driver’s seat on a deal, and not pass the tough decisions to Congress. “We’re ready to be led,” he said.

Translation: You may be in the driver’s seat, but my foot is on the brake.

The Congressional Budget Office said failing to avert the spending cuts and tax hikes would send the nation into another recession and drive up the jobless rate to 9.1 percent by next fall.

But trust us, in the long term, recession and unemployment actually will be good for America. The higher the jobless rate, the better things will be for the Republicans in 2014. We did it before; we can do it again.

The CBO analysis says that the cliff would cut the deficit by $503 billion through next September, but that the fiscal austerity would cause the economy to shrink by 0.5 percent next year and cost millions of jobs.

Translation: That’s our plan: Cut the deficit; cause a recession.

Democrats continue to demand that the Bush-era tax rates lapse for those making $250,000 and up. Republicans continue to insist on keeping tax rates stable for everyone.

Translation: Taking dollars from the rich, somehow does not take dollars from the economy. No one knows how that works, but it’s great demagoguery, especially to influence clueless voters.

Boehner, though, has said he’s willing to accept “new revenue” in exchange for serious entitlement cuts.

Translation: This has been our goal all along. Cut Social Security. Cut Medicare. Cut Medicaid. Cut aid to the poor. Do everything possible to increase the income gap between the rich and the rest.

Many of his Democratic allies hope Obama will take a hard line when he addresses the matter Friday. Republicans warn that a fight could poison efforts for a rapprochement in a bitterly divided Capitol and threaten his second-term agenda.

Translation: If you sacrifice the benefits to the poor and middle classes — benefits Democrats have struggled to achieve for 70 years — we promise to help you with voters. Really, we do. Would we lie?

A new study estimates that the nation’s gross domestic product would grow by 2.2 percent next year if all Bush-era tax rates were extended and would expand by almost 3 percent if Obama’s 2 percentage point payroll tax cut and current jobless benefits for the long-term unemployed were extended as well.

Translation: Cutting taxes grows the economy. Amazing. Who could have predicted that. Next you’ll try to tell us that increased spending (the other way to increase the deficit) also grows the economy.

Voters can be made to believe anything. So let’s admit that cutting the deficit hurts the economy, but tell them we need to cut the deficit to help the economy. Then, we can cut benefits to the middle and lower classes, increase unemployment and widen the income gap — and the voters actually will believe we’re trying to help them!

Instead of causing a fiscal cliff, we’ll cause a fiscal slide. Both will push the lower 99% income groups to the bottom; one will just do it a little slower.

Ah, the voters, bless ’em. We tell them white is black, and black is white, and they believe it. Anyone want a ride down the fiscal slide?

Rodger Malcolm Mitchell
Monetary Sovereignty

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#MONETARY SOVEREIGNTY

–Lesson in life: When a plan always fails and never, ever can succeed, do it.

I have a plan to protect our children. It is a proven plan that has been tried in the past and failed miserably. It is a plan that was demonstrated to cause a dramatic increase in crime, and has been responsible for many thousands of deaths among our young people. It is a plan that is guaranteed to send thousands of our young people to jail.

My plan absolutely will cost our society many millions of dollars and thousands of lives and destroy many families, and not only doesn’t work, but actually worsens the problem it is supposed to solve.

My plan is called “Prohibition.”

What? You say that name is taken? “Prohibition” was the name given to a plan to save us from the most potent, the most dangerous, most addictive drug America ever has known: Alcohol? And all Prohibition did was increase alcohol consumption and crime? Wow. I didn’t know.

O.K., so “Prohibition” didn’t work, in fact made things worse, but if I keep my plan but give it a new name, I’m sure it will work. So, my new name for my plan is “War on Drugs.”

What? You say that name is taken, too? You say the “War on Drugs” has had exactly the same results as “Prohibition”? More drug use? More crime? More cost? More young people in jail? More lives and families destroyed?

Could it be that (and this may be a stretch) Prohibition and the War on Drugs have had the same results because they are the same plan?

Now, let me get this straight. You’re telling me if I have a plan that fails miserably, and even exacerbates the problem I’m trying to solve, changing the name of the plan won’t work? Hmmm.

So, how did we solve the problem of the most potent, most dangerous, most addictive drug America ever has known? You say we legalized it, regulated it and taxed it? You’re kidding. That’s how we solved the problem? Legalization?

Well that sounds crazy. Surely, if you outlaw a product that people want and will risk jail or even death to obtain, that should reduce usage. It doesn’t? Who’d a thunk?

So, if legalizing, regulating and taxing alcohol was proven to reduce usage, crime, jail time, financial and social costs and the destruction of our youth, do you think that maybe, just maybe, that same proven idea could work with currently illegal drugs?

Oh, you say Colorado and Washington State have begun the process by legalizing recreational use of the most benign of the illegal drugs, marijuana? What is the likelihood that the rest of the states and the federal government will learn from experience and legalize the recreational use of any drug someone wants to put in their own bodies?

I mean, the Democrats talk about privacy, and the Republicans complain about too much government intrusion on our lives. And taking recreation drugs is a private, personal decision, like drinking alcohol.

So could it be that the government should simply let people eat, drink, smoke and otherwise ingest whatever they want? And if we did that, might millions of lives and billions of dollars be saved?

So what’s the problem?

Ah, I see. You say that if only we tried harder, we could make Prohibition and the War on Drugs work. Makes sense to me. As I always say, if a plan does not work, never has worked and never can work, and actually makes things worse, keep doing it.

Only more so.

Rodger Malcolm Mitchell
Monetary Sovereignty

P.S. I have an idea. Next, let’s have a “War on Sugar.” Oh, Mayor Bloomberg already has begun that?

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#MONETARY SOVEREIGNTY

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