The debt hawks claim to be concerned about your children and grandchildren, but their proposals actually will punish your heirs. The debt hawks say future taxpayers will pay for today’s federal deficit spending. This is factually wrong. Unlike state and local governments, the federal government does not spend tax money. It, in fact, destroys the tax money sent to it, and it creates new money, ad hoc, when it credits the bank accounts of creditors. Federal spending is not limited by, or related in any way to, federal taxes. Thus, taxpayers never have, nor ever will, pay for federal spending.

    What the debt hawks fail to mention is that their solutions (raising taxes and cutting federal spending) to this non-existent problem will impoverish you, your children and your grandchildren. Here is a sampling of debt hawk proposals. Read them carefully, and think about each proposal’s effect on current and future generations.

Retirement:
    Raise the normal retirement (Social Security) age to 68
    Reduce scheduled Social Security benefits
    Reduce Social Security spousal benefits
    Increase taxes on Social Security benefits

Health care:
    Tax insurance benefits
    Tax employees for employer-paid premiums
    Cut Medicare payments
    Cut Medicaid payments
    Raise Medicare premiums
    Cut spending on graduate medical education
    Raise the Medicare retirement age (again)
    Cut federal Medicaid funding to states

Jobs:
    Do not enact a new jobs bill

More taxes; higher taxes
    Raise taxes on higher incomes
    Increase the inheritance (“death”) tax
    Increase the gas tax
    Enact a VAT tax
    Increase the payroll tax (FICA)
    Eliminate the mortgage interest deduction
    Eliminate state and local tax deductions
    Tax life insurance benefits
    Eliminate EITC (Earned Income Tax Credit for low and moderate income workers
    Eliminate the $400/person making-work-pay credit
    Eliminate the “American Opportunity” college tax credit
    Add and excise tax on high-cost health plans

Military and Security:
    Reverse the “Grow the Army” initiative (fewer paid soldiers)
    Reduce purchases of weapons systems
    Reduce veterans’ income security benefits
    Reduce Homeland Security spending

Aid for the poor:
    Cut food stamps
    Cut average unemployment benefits
    Cut temporary assistance to needy families (TANF) program
    Cut funding for adoption and foster care

Education:
    Cut federal funding of K-12 education
    Cut school breakfast programs
    Cut funding for the education of disadvantaged and disabled children

Infrastructure:
    Cut federal highway funding
    Cut funding for bridge repair

Research & Development:
    Cancel NASA missions to the moon and Mars

States and Cities:
    Cut mass transit funding
    Cut federal funding to the states and cities

This is the world — a world of higher taxes and fewer benefits — the world the debt hawks propose for you, your children and your grandchildren.

And what is the federal debt the debt hawks worry over? The federal government spends by crediting the bank accounts of its vendors. Every credit demands a debit, and this debit on the government’s balance sheet is called “debt.” It more properly should be called, “money,” because the way the government creates money is by crediting bank accounts. That balance sheet merely is a score sheet, showing how much money the government has created.

You don’t owe it, nor do your children and grandchildren. It’s just a score sheet.

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

No nation can tax itself into prosperity