Social Security and Medicare Funds Face Insolvency, Report Finds Tuesday, Dec 10 2019 

It’s old news, fake news, and a lie — a “Big Lie.” But it demonstrates why the public is so confused and misinformed about federal financing.

Image result for national enquirer fox newsThis following came from the venerable and venerated New York Times, but the article is as accurate as an article in Breitbart, Fox News, or the National Enquirer.

Social Security and Medicare Funds Face Insolvency, Report Finds By Alan Rappeport, economic policy reporter, who covers the Treasury Department and writes about taxes, trade and fiscal matters, April 22, 2019

WASHINGTON — The financial outlook for Medicare and Social Security, two of the nation’s most important social safety net programs, remains precarious, threatening to diminish retirement payments and increase health care costs for Americans in old age, the Trump administration said on Monday.

An annual government report on the status of the programs painted a dire portrait of their solvency that will saddle the United States with more debt at a time when the economy is starting to cool and taxes have just been cut.

Let’s get this straight. The NY Times incredibly is being as honest as Breitbart, Fox News,  and the National Enquirer.

But, the U.S. federal government cannot become insolvent. That is 100% impossible.

Who says so? How about:

Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”

Image result for greenspan

Greenspan

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.”
St. Louis Federal Reserve: “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.

Since the U.S. federal government cannot become insolvent, no agency of the federal government can become insolvent, unless the federal government wishes it.

Social Security and Medicare are agencies of the federal government. Therefore, neither Social Security nor Medicare can become insolvent unless the federal government wishes it.

And as far as “saddling the United States with more debt,” the scare-mongers have been shoveling this manure for at least 80 years (See: “It is 2019, and the phony federal debt “time bomb” still is ticking.“)

Neither the United States nor U.S. taxpayers are “saddled” with even one cent of federal “debt.” The misnamed “debt” is nothing more than the total of deposits into Treasury security accounts. These accounts are paid off, not with federal tax dollars, but rather by simply returning the contents of those accounts to the account holders. No “saddle” there.

The NY Times editors surely know this. So why do they scare-monger a lie? Why did they publish the “Big Lie”? There is a reason, which we will discuss.

According to the report, the cost of Social Security, the federal retirement program, will exceed its income in 2020 for the first time since 1982. The program’s reserve fund is projected to be depleted in 16 years, at which time recipients will get smaller payments than they are scheduled to receive if Congress does not act.

Meanwhile, Medicare’s hospital insurance fund is expected to be depleted in 2026 — the same date that was projected a year ago. At that point, doctors, hospitals and nursing homes would not receive their full compensation from the program and patients could face more of the financial burden.

The so-called “reserve fund” is an accounting fiction. It is not a fund and it is not held in reserve. It merely is a record showing the difference between FICA and spending. It’s just a piece of information about the difference in two numbers; it does not reveal anything about the government’s ability to pay for things.

The U.S. government is Monetarily Sovereign, and so has the unlimited ability to create its own sovereign currency, the U.S. dollar. Even if all FICA collections totaled $0, the federal government could pay infinite Social Security benefits, forever.

An infinite account cannot be “depleted.”

The article continues:

“Lawmakers should address these financial challenges as soon as possible,” the trustees of the program wrote.

“Taking action sooner rather than later will permit consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare.”

There are no trustees because there is no trust. It is just an accounting record, that has none of the qualities of a trust. (See: Fake federal trust funds and fake concerns)

The above makes the naive and false assumption that federal (Monetarily Sovereign) financing is the same as personal (monetarily non-sovereign) financing.

For the federal government, there are no “financial challenges” that need “solutions.” And while the author of the article claims benefits will need to be cut or taxes increased, the public should not be prompted to “prepare” for those unnecessary changes.

It is all the “Big Lie.

Some Republicans sought to take credit on Monday for the fact that the news was not worse while also calling for changes to the programs.

“Following historic reforms to America’s tax code, this strong economy has strengthened these important programs, but today’s reports remind us of a fact we have known for far too long: Medicare is going broke and Social Security is not solvent,” Representative Kevin Brady, Republican of Texas, said in a statement.

Either Rep. Brady either is incredibly ignorant about economics, or he is an incredible liar. Pick one. There are no other alternatives.

The United States will not become insolvent, and for the same reasons, neither Medicare nor Social Security will go broke, unless a bribed Congress forces that to happen. 

Lawmakers have been struggling to come to grips with a solution for the country’s eroding entitlement programs, which have for years been at the center of a political tug of war between Republicans and Democrats.

No. Lawmakers have been struggling to find more ways to continue fooling the public. It’s been a struggle because arguing against plain facts always is difficult.

Mr. Trump was initially resistant to calling for cuts to the programs, but his budget proposal last month did just that. The request, which is being ignored by Congress, proposed shaving $818 billion from projected spending on Medicare over 10 years.

Completely unnecessary.

It also called for $26 billion less on Social Security programs, including a $10 billion cut to Social Security Disability Insurance, which provides benefits to disabled workers.

Well, of course, Mr. Trump wanted to cut Social Security and Medicare, two programs that benefit the middle classes and the poor. Isn’t that what the GOP always wants to do?

And of course, the GOP Congress passed tax cuts that mostly benefitted the rich. Isn’t that also what the GOP always wants to do?

The problem is not that the GOP, the party of the rich, wants unnecessarily to gut programs that benefit the non-rich. The problem is that the Democrats, supposedly the party of the middle- and lower-income groups, go along with the fiction of federal insolvency. 

“That fact that we now can’t guarantee full benefits to current retirees is completely unacceptable, and it should be cause enough for every policymaker to rally around solutions to restore solvency to those programs,” said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget.

“Certainly we should be focused on saving Social Security and Medicare before we start promising to expand these programs.”

She added that “now isn’t the time for partisan bickering — we need solutions.”

Just as Wayne LaPierre, of the National Rifle Association (NRA) is a mouthpiece for gun manufacturers, Maya MacGuineas, of the Committee for a Responsible Federal Budget (CRFB) is a mouthpiece for the very rich.

The rich in America, and all over the world, for that matter, never are satisfied. They want to become richer and richer. To become richer, you must widen the income/wealth/power Gap between you and those below you on any economic scale.

It isn’t sufficient that your income increases if the incomes of those below you increase even more. Without the Gap, no one would be rich; we all would be the same.

It is the Gap that makes you rich, and the wider the Gap, the richer you are.

This is known a “Gap Psychology,” the desire to distance yourself from those below and to approach those above.

So the rich bribe your three main economic information sources — the media,  the politicians, and the economics professors — to tell you the Big Lie, that federal spending is funded by federal taxes rather than by money creation.

–The rich bribe the media via advertising dollars and media ownership.
–The rich bribe the politicians via political contributions and promises of lucrative employment after they leave office.
–The rich bribe the economics professors via contributions to universities and with jobs at think “tanks.”

The public accepts the Big Lie because it equates to personal experience, where personal spending is funded by personal income.

One day, perhaps within your lifetime, the general public will learn that federal taxes do not fund federal spending, that the federal government and its agencies cannot become insolvent, and that social programs can and should be funded for the benefit of all America.

It will have to begin with a moral billionaire, a moral politician, or a moral economist who has both the money and the influence to promulgate the truth, and to have it accepted.

Waiting.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY

The “Bold Plan to Strengthen and Improve Social Security” Saturday, Nov 9 2019 

Social Security certainly needs “strengthening and improving.”

The amounts being paid are at starvation levels. The people who need it most often receive the least or none at all.

It contains an unnecessary “gambling” element; you must try to guess how long you will live, to determine when you should begin to receive benefits.

Image result for pickpocket

The sole purpose of FICA

Most of Social Security’s shortcomings are based on the myth that it is funded by FICA. It is not. FICA funds nothing — not Social Security, not Medicare, nothing.

FICA dollars disappear upon receipt by the Treasury. They do not enter those mythical “Social Security Trust Funds.”

They do not enter the economy. Federal spending is unrelated to tax collections, which is why there is a $20 trillion federal “debt.”

According to misleading statements by the federal government:

The Social Security Trust Funds are the Old-Age and Survivors Insurance (OASI) and the Disability Insurance (DI) Trust Funds. These funds are accounts managed by the Department of the Treasury.

They serve two purposes: (1) they provide an accounting mechanism for tracking all income to and disbursements from the trust funds, and (2) they hold the accumulated assets.

These accumulated assets provide automatic spending authority to pay benefits. The Social Security Act limits trust fund expenditures to benefits and administrative costs.

The funds do provide an unnecessary accounting mechanism, but they do not hold anything. They aren’t even trust funds.

According to The Motley Fool there are three elements to a trust fund:

  1. The Grantor: The person who establishes a trust fund and contributes property to it.
  2. The Beneficiary: The person or people who will eventually benefit from the assets in the trust fund.
  3. The Trustee: The person or organization responsible for administering the trust as it was intended.

In the Social Security “trust funds,” the grantor is the federal government, which supposedly populates the funds, but uses your property.

The trustee is the federal government which supposedly manages the assets, except you make the biggest management decisions of all: When to begin taking benefits.

Here is how the Foundation for Economic Education describes it:

Though Congress legislated the Trust Fund, it is not the grantor, because a grantor puts his own property into a trust, which Congress did not do.

As for the Board of Trustees, who in a true trust would hold the legal title to its property,  (the Board not have) title to anything.

Nor do the purported trust “beneficiaries” have property in the fund to which they have an enforceable property right, as beneficiaries of a true trust do.

Board Chairman Altmeyer revealed that Social Security maintains no accounts containing funds earmarked for individuals, and never had.

Its accounts, then, are just record-keeping entities: file folders, not piggy banks.

Assistant Attorney General Robert Jackson stated that under Social Security, “There is no contract created by which any person becomes entitled as a matter of right to sue the United States or to maintain a claim for any particular sum of money. Not only is there no contract implied but it is expressly negatived, because it is provided in the act, section 1104, that it may be repealed, altered, or amended in any of its provisions at any time.

And the government’s brief for the Supreme Court case Flemming v. Nestor (1960) argued that a current or prospective Social Security beneficiary does not acquire an interest in the Trust Fund—that is, a property right to its assets—and that the belief that Social Security benefits are “fully accrued property rights” is “wholly erroneous.” The Court concurred.

All this confirms the observations by Suffolk University Law School Professor Charles Rounds, a fellow of the American College of Trust and Estate Counsel:

“Despite the term ‘trust,’ the Social Security system contains nothing that remotely resembles the common law trust.

“There is no segregation of assets, no equitable property rights, no private right of enforcement (all characteristics of the common law trust).

“It is merely a system of taxation and appropriation sprinkled with trust terms to hide its true nature.”

Demonstrating the uselessness of FICA, is the “tax holiday”:

The Middle Class Tax Relief and Job Creation Act of 2012 temporarily reduced the amount of Federal Insurance Contributions Act (“FICA”) taxes owed by employees by two percentage points from 6.2% to 4.2%.  This reduction expired on December 31, 2012.

The “holiday” resulted in no change in Social Security benefits.

The purpose of the tax holiday was to stimulate economic growth, particularly favoring the lower- and middle-income Americans. Isn’t that something the government should do all the time?

To summarize, so far:

  1. Federal taxes do not fund federal spending, nor do they fund Social Security benefits. Federal spending does not rely on federal taxing.
  2. The federal government, being Monetarily Sovereign, cannot run short of its own sovereign currency, the U.S. dollar. It creates dollars, ad hoc, by paying creditors.
  3. Just as the federal government cannot run short of dollars, no agency of the federal government can run short of dollars, unless Congress wills it.
  4. There are no Social Security trust funds. They are just bookkeeping devices.
  5. The non-existent “trust funds” cannot run short of dollars unless Congress wills it.

Keep these points in mind as you read excerpts from the following article:

Dean Baker: A Bold Plan to Strengthen and Improve Social Security Is What America Needs
Posted on November 9, 2019 by Yves Smith
By Dean Baker, co-founder of the Center for Economic and Policy Research, where he is a senior economist.

The Social Security 2100 Act proposed by (Democrat) Connecticut Representative John Larson is getting closer to being passed by the House of Representatives. If it were to be approved and become law, it would both improve the program’s benefit structure and its financial picture.

The biggest item on the benefit side is that it guarantees a benefit of at least 125 percent of the poverty level for anyone who has worked for at least 30 years.

The logic here is straightforward; we should be able to ensure that anyone who has put in a full lifetime of work will not be in poverty in their retirement years.

An income of “At least 125 percent of the poverty level” does not guarantee anyone will not be in poverty, unless the government also can guarantee no one will live in a higher-cost area like New York, much of California, or many big American cities.

Further, why is it necessary for someone to have “worked for at least 30 years”?  Is there a moral code requiring labor for 30 years.

And what about people whose labor is not as a salaried employee? Does their labor not count?

The second big change on the benefit side is that it changes the cost-of-living formula for adjusting benefits by tying it to an index of consumption items purchased by the elderly rather than the overall Consumer Price Index.

The inflation adjustment for Social Security benefits has long been a major issue, with many politicians wanting to change the formula to reduce benefits.

Well, of course, that is what “many politicians” want. It is what the rich, motivated by Gap Psychology, pay them to “want.”

The third feature on benefits is a change in the formula that will increase average benefits for a bit less than $400 a year. This has provoked some opposition since this increase will go to not just lower-income seniors, but also middle-class and relatively affluent seniors.

The average benefit this year is just over $17,600, certainly not enough to maintain a middle-class lifestyle.

All this effort for a $400 per year benefit increase? And if $17,600 is “not enough to maintain a middle-class lifestyle” (It isn’t), would an increase of $400 to $18,000 be enough?

Hardly.

And now we come to the most economically ignorant part:

Rep. Larson proposes to cover this increase, as well as the projected Social Security shortfall, by having a gradual increase in the payroll tax and applying the tax to very high-income workers.

On the latter point, the income subject to the payroll tax is currently capped at just under $133,000. This means that someone earning millions of dollars each year would pay no more in Social Security taxes than someone earning $132,900.

Larson’s bill would make wages over $400,000 subject to the tax.

Note that the tax is on wages. But rich people receive most of their income from non-wage sources: Stocks, bonds, rents, etc.

And, as we have shown, taxes do not fund Social Security benefits. FICA taxes merely remove dollars from the economy, with a disproportionate coming from the pockets of the middle- and lower-income people.

In addition to being unnecessary and a burden on the economy, FICA is, and would remain, the most regressive tax in America.

No wonder the rich love it. FICA widens the Gap between the rich and the rest.

His other change is an increase in the payroll tax of 0.1 percentage point annually, split between workers and employers. This increase would continue for 24 years, for a total increase of 1.2 percentage points on both the worker and the employer.

While this is a middle tax increase, it is much smaller than increases we saw in the decades of the 1950s, 1960s, 1970s, and 1980s. More importantly, if we can sustain decent wage growth, it is a tax that should be easy to bear.

It is an unnecessary tax that is especially “easy to bear” for the rich, for they pay so little of it.

The article continues:

After adjusting for prices, wages have risen 1.5 percent annually over the last five years. If we can continue this pace of wage growth, the Larson bill would take back much less than 10 percent of the pay increase in taxes.

Of course, wage growth may not continue, but then our focus should be on getting decent wage growth, not blocking revenue needed for Social Security.

One wonders what “take back” means. The wage increases come from the private sector, and the taxes go to the federal government. So the government would not be taking “back” anything. It simply would be taking.

The article ends with this bit of nonsense:

In short, this is a well-considered bill that would accomplish good for current and future retirees. Congress should move on it.

No, it is an ill-considered bill, put forth by a Congress that either is ignorant of economics, or has been paid by the rich to widen the Gap between the rich and the rest — or both.

There is nothing “bold” about the plan, and it does nothing to “strengthen” Social Security, which is infinitely strong, based on the federal government’s infinite ability to fund it.

A “bold” plan would be to institute the “Ten Steps to Prosperity” (below), beginning with Step #1, Eliminate FICA.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY

Social Security: How you are being conned Wednesday, May 29 2019 

Yes, you are being conned, and the following article from the May 10, 2019 issue of The Week magazine unintentionally tells you how.

Social Security will be insolvent in only 16 years, said Eric Boehm in Reason​.com. That’s the finding of a new report by the program’s trustees, which says Social Security’s costs will exceed its income in 2020.

To put this as gently as possible, you are being fed 100% bovine excrement, with some equus poop tossed in.

It is absolutely impossible for any agency of the U.S. government to become insolvent unless the government wants it to become insolvent. Period.

Image result for greenspan and bernanke

A.G.: “A government can’t become insolvent from obligations in its own currency.”
B.B. “And the suckers never catch on.”

Unlike our state and local governments, our federal government uniquely is Monetarily Sovereign, meaning it cannot run short of its own sovereign currency, the U.S. dollar.

In the beginning, the federal government created an arbitrary number of the original U.S. dollars from thin air.

It continues to do so. (See: “Does the U.S. Treasury really destroy your tax dollars?“)

It also gave those original dollars an arbitrary value, and it continues to do that, too. (See here.)

Even if total FICA collections, which you have been told (erroneously) fund Social Security, were $0, the U.S. government could continue paying SS benefits, without limit.

In fact, even if all federal tax collections were $0, the federal government could continue spending forever, and still not borrow.

To cover benefits, the program will have to start dipping into its $3 trillion trust fund.

“If nothing changes,” those reserves will be exhausted by 2035 and recipients will receive only about three-quarters of their expected benefits.

The so-called “trust fund” is a bookkeeping fiction, designed to make you think federal finances are like personal finances.

There is no trust fund. There merely is a bookkeeping account, over which the federal government has total control.

If the government (i.e. Congress and the President) wished, that fictional “trust fund” could show a balance of $100 trillion. Or $0.

Those dollars do not “come from” anywhere. The government owns the balance sheets and puts any entries it wishes into them. (See: Monopoly)

“That may sound like a long way off, but 51-year-old workers today will just be hitting retirement age when the cuts kick in.”

Americans have long known this shortfall is coming, said Noah Rothman in CommentaryMagazine​.com, “and they do not care.

More bovine scat being fed to you. Americans do care, but they have been conned into believing that the only solution is higher taxes or reduced benefits.

In 2005, President George W. Bush unveiled a major effort to reform Social Security. It failed.

In 2012, GOP presidential nominee Mitt Romney and his running mate Paul Ryan outlined ways to trim the program’s costs.

“They were defeated.” Then in 2016, Donald Trump “explicitly ran against conservative efforts to rein in entitlement spending.” He won.

Americans have voted themselves into an entitlement crisis.

The politicians lie when they tell you that “reforming” Social Security requires benefit cuts or increased taxes. The real reform would be to eliminate FICA taxes and to increase benefits.

There is not a single financial reason why this cannot be done.

Congress could restore the program to health by letting the government invest some “of the Social Security trust fund in the stock market,” said Brett Arends in Barron’s

A truly dopey idea. Not only is the stock market a high-risk investment, inappropriate for an annuity-like account, but the investment is completely unnecessary. The federal government has the unlimited ability to fund Social Security, and with no deductibles.

Further, the notion of the federal government investing in publicly-traded corporate stock is the ultimate of the socialism (i.e. federal ownership and control) that conservatives love to decry.

Federal law says the fund can invest only in low-yielding securities backed by the U.S. Treasury.

That’s why Social Security has earned a “dismal” return of 17 percent on its investments over the past five years.

U.S. stocks over the same period: 49 percent. “Stock returns are more volatile from year to year, to be sure.” But Canada, Australia, and New Zealand invest their national pension funds in stocks and other assets, “and the results have been amazing.”

The “invest in stocks” idea has only two purposes:

  1. To further brainwash you into believing that the Social Security “trust fund” is a real trust fund that is running short of dollars, and
  2. To enrich wealthy shareholders, stockbrokers, and bankers.

Such radical free-market solutions aren’t needed, said Michael Hiltzik in the Los Angeles Times.

There are low-risk ways to shore up the program. Right now, the payroll tax that largely funds Social Security only covers wage income up to $132,900.

Two Democratic bills in Congress would remove that cap over time and increase “the payroll tax on the wealthy, who get away with paying an unwarranted low tax rate.”

Wrong. The Social Security program could be “shored up” by completely eliminating FICA, and by ending the pretense that FICA funds Social Security benefits.

But hiking taxes won’t address the key reason Social Security has a cash-flow problem: our rapidly graying society, said Robert Samuelson in The Washington Post.

Wrong, again. The “cash-flow problem” is an invention of the rich, who do not want the non-rich to receive money. (See: “The Gap Psychology con job“)

An American who reaches age 65 can now expect to live for about another 20 years, up from 15 in 1950. That means retirees are claiming more from Social Security than the program’s creators ever intended.

But seniors today are far healthier than in previous generations. “We could be working longer—and should be.” Politicians could stabilize Social Security by gradually lifting its eligibility age to 70.

But our leaders won’t even propose this change “because it is not a vote getter. They should be ashamed.”

Speaking of the program’s intentions, here they are:

Luther Gulick recalling why President Franklin Roosevelt Social Security seeminly was based on payroll contributions, 1941:

“I raised the question of the ultimate abandonment the payroll taxes in connection with old age security and unemployment relief in the event of another period of depression.

“I suggested that it had been a mistake to levy these taxes in the 1930’s when the social security program was originally adopted.

“FDR said, ‘I guess you’re right on the economics. They are politics all the way through.

“‘We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits.

“‘With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics.

“FDR also mentioned the psychological effect of contributions in destroying the ‘relief attitude.'”

In short, President Franklin D. Roosevelt, the creator of Social Security, did not intend that taxes fund Social Security. They only served as an excuse not to eliminate Social Security.

Image result for bernie madoff

I thought if the government can get away with it, I could, too.

Roosevelt knew that taxes only give the illusion of funding Social Security, but he believed that illusion would protect the program from the “damn politicians.”

Unfortunately, the dishonesty of politicians has proven too great, for they now have turned Roosevelt’s plan inside out; they use FICA as a false excuse for cutting benefits.

The fake FICA/Social Security relationship is a con that is far greater than anything Bernie Madoff ever thought of.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

The most important problems in economics involve the excessive income/wealth/power Gaps between the richer and the poorer.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.

MONETARY SOVEREIGNTY

How you can help protect Medicare and Social Security Friday, Jun 22 2018 

.

It takes only two things to keep people in chains:

The ignorance of the oppressed
And the treachery of their leaders

============================================================================

You endlessly have been told that Medicare and Social Security Trust funds will, in the near future, run short of money unless benefits are decreased or taxes are increased.

In the post, Fake federal trust funds and fake concerns we debunk this false idea. Today, I’ll suggest what you can do to help protect your Medicare and Social Security.

First, as a quick refresher, here are excerpts from a very short article in THE WEEK Magazine, June 22, 2018:t

Nolan Finley: The annual report from the trustees of Social Security and Medicare shows that both programs “have accelerated their race toward the brick wall of insolvency.”

Social Security will spend more money this year than it takes in for the first time since 1983.

Finley and the trustees are wrong.

Social Security and Medicare are departments of the U.S. federal government. As such, they cannot become insolvent unless the U.S. becomes insolvent and/or Congress and the President want them to become insolvent.

The U.S., being Monetarily Sovereign, has the unlimited ability to create its own sovereign currency, the U.S. dollar.

It can pay any debt denominated in dollars. Because the federal government’s financial obligations are denominated in U.S. dollars, the U.S. government always can pay them. It even can pay any obligation denominated in a foreign currency, simply by exchanging dollars for that currency.

Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”

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.”

In short, the United States government cannot become insolvent. 

The notion that a department of the U.S. government can become insolvent is like saying the mail room of a large, infinitely wealthy corporation can become insolvent — an obvious impossibility unless the corporation were arbitrarily to decide not to pay the mail room’s expenses.

Further, Social Security does not “take in” money. Those FICA dollars extracted from your paycheck do not pay for Social Security. Upon receipt by the Treasury, they disappear from any measure of the U.S. money supply — M0, M1, M2, M3, L — or any other code.

Your tax dollars effectively are destroyed upon receipt.

If you ask, “How much money does the federal government have,” you will not find the answer. What the federal government does have is the unlimited ability to create dollars. It “has” infinite dollars.

(If your business owned an infinite dollar-creating machine, how many dollars would your business have?  And would any department of your business be in danger of insolvency?)

Nolan Finley continues: “Without drastic changes, the Social Security Trust Fund is now expected to be depleted within 16 years, going bust by 2034.

Things are even grimmer when it comes to Medicare’s Hospital Insurance Trust Fund — Medicare Part A — which is projected to run out of money by 2016.

At 63, I’ll probably still collect my benefits but, ‘I feel for the generations behind me. There seems no chance they’ll ever collect anything.'”

These latter three paragraphs voice ideas promulgated by the rich to make the rest of us accept unnecessary reductions in our benefits.

You’ll notice that Finley did not mention Medicare Part B (mostly doctors)  and Part D (prescriptions). Why? Because these two benefits are run through the bookkeeping ledgers of the Supplementary Medical Insurance (SMI) Trust Funds.

These mythical “trust funds” receive their bookkeeping credits from the federal government’s General Fund which never unintentionally can run short of its sovereign currency.

That is why no one ever talks about Medicare Part B and Part D becoming insolvent. They have access to an infinite number of dollars.

So, you might ask, why not fund Medicare Part A and Social Security the same way Parts B and D are funded — from the limitless General Fund?

The answer: The politicians, the media, and the economists are paid by the rich to keep you ignorant of the fact that Social Security and Medicare, Parts B & D have infinite access to money.

If you knew this, you might ask for increases in benefits, thereby narrowing the financial Gap between you and the rich — the very last thing the rich want.

In fact, there is a very good chance you didn’t know it until this very moment, and now you are sitting there thinking, “Is this really possible? They’ve been telling me Medicare can ‘go bust,’ but they only are talking about Part A, and they are lying about that, too.”

Yes, that is exactly what is happening. You are being lied to. And the cure for lies is the fresh air of truth.

I suggest you contact your Senators and your Representative, and rather than go through the entire argument about Monetary Sovereignty, simply say this:

“We repeatedly are told that Medicare will become insolvent unless there is a decrease in benefits or a tax increase.

“Were you aware that this applies only to Medicare Part A? Medicare Part B and Part D are paid out of the federal General Fund, which means they cannot become insolvent.

“So the question is: Why doesn’t Congress merely specify that Medicare Part A benefits be paid the same way as Medicare Part B and Part D?

“That would completely eliminate all the concerns about insolvency.

“(The same would be true for Social Security. It too should be paid from the General Fund.)”

A letter would be good. A phone call would be better. A letter + a phone call would be better yet. Repeated phone calls and letters would be the best.

If enough people do this, maybe, just maybe . . .

Anything is possible if enough people want it.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

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The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Guaranteed Income)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.

MONETARY SOVEREIGNTY

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