Tag: Social Security

–How President Obama’s National bipartisan Commission on Fiscal Responsibility and Reform could destroy America

The debt hawks are to economics as the creationists are to biology.

Parade Magazine, in its 7/4/10 “Intelligence Report”, printed an interview by Steven Beschloss and Janet Kinosian titled, “Can These Men Fix the Deficit?” The men are Erskine Bowles, a former White House chief of staff, and Alan Simpson, a former Republican Senate whip. Today, Messrs. Bowles and Simpson are co-chairs of President Obama’s National bipartisan Commission on Fiscal Responsibility and Reform.

Here, with my comments, are what they said:

BOWLES: “If we don’t solve the (federal) debt problem, we will be paying $1 trillion in interest in 2020. That’s money we can’t spend on Social Security, Medicare, education, infrastructure or innovation to make sure America is competitive in a global economy.”

RMM: “Of course, he’s dead wrong. America is a monetarily sovereign nation. Future spending is restricted neither by past spending, by debt, by deficits nor by tax collections. That $1 trillion in interest will function as an economic stimulus. This is classic cognitive inconsistency. Mr. Bowles believes the government cannot do what he sees with his own eyes, the government actually doing, i.e spending trillions on stimulus plans, despite debt that has grown more than 1,500% in only 30 years. In addition to cognitive inconsistency, he suffers from anthropomorphic economic disease – the mistaken belief that the government’s finances are like yours and mine.

BOWLES: “We’re looking at how we can reduce discretionary spending – things like education, transportation, the military, homeland security – and mandatory spending which includes Social Security, Medicare and Medicaid. We also need to raise revenue.”

RMM: He believes that cutting back on education, transportation, the military, homeland security, Social Security, Medicare and Medicaid, while raising taxes, will “make sure America is competitive in a global economy.” The notion would be laughable if it weren’t so dangerous.

SIMPSON: “We’re not going to cut Social Security – we’re going to stabilize it. None of the ideas that have been presented will affect anyone over the age of 58.”

RMM: “Stabilize” is political double talk for, “We are going to cut Social Security for everyone 58 and younger.”

SIMPSON: “As it is, it (Social Security) can’t sustain itself.”

RMM: Ah, the old (and false) “unsustainable” claim.

BOWLES: “We’re going to work our hearts out succeed.”

RMM: In their world, “Fiscal Responsibility and Reform” are code words for austerity, which always causes recessions and depressions. Heaven help us from those who have power, yet cannot learn.

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

No nation can tax itself into prosperity

–Get rid of big government

An alternative to popular faith

Ever since Ronald Reagan said, “In this present crisis, government is not the solution to our problem. Government is the problem,” (then proceeded to run the largest federal deficits in history), the chic thing has been to criticize big government as an affront to our self reliant, can-do, cowboy heritage. The media pundits, both major political parties and the Tea Party repeatedly call for less government.

On March 24, 2009, Bobby Jindal, governor of Louisiana said, “There has never been a challenge that the American people, with as little interference as possible by the federal government, cannot handle.” Oh, really? Today, May 31, 2010, the Chicago Tribune published a wonderful article written by Leonard Pitts, all government haters should read. I’ll quote a few passages:

“. . . Bobby Jindal . . . is singing a new song . . . Now, he’s BEGGING for federal ‘interference.’ He wants federal money, federal supplies, wants the feds to help create a barrier island to protect Louisiana wetlands from oil.
[…]
“One hears pointed questions about President Barack Obama’s engagement or lack thereof in the unfolding crisis. One hears accusations that the government was lax in its oversight duties and too cozy with the oil industry it was supposed to be regulating. One hears nothing about deregulation, about leaving the free market alone to do its magic […] the sudden silence of the apostles of small government and free markets is telling.

“Yes, government is not perfect […] Any bureaucracy serving 309 million people . . . is likely to have flaws. […] But . . . people like Jindal rail against the very concept of government itself, selling the delusional notion that taxation and regulation represent the evisceration of some essential American principle. They wax eloquent about what great things the free market and the free American could do if government would just get off their backs.

“One thinks of one’s meat oozing with salmonella, one’s paint filled with lead, one’s car getting 12 miles to the gallon, one’s self being breezily denied a job for reasons of race, creed, gender or sexual orientation and yes, one’s ocean covered from horizon to horizon with a sheen of oil. And one shudders.

“[…]there are no small government disciples in massive oil spills. No, . . . Bobby Jindal turned righteously to that big, sometimes bloated, often intrusive federal government and asked for help. He said, Send money, send resources. You will notice he never once said, send less.”

Yes, it is so terribly chic, so wonderfully clever to criticize big government, as though each of us were ready to shoulder the responsibilities of the army, Social Security, Medicare, roads, bridges, education, policing and the thousands of other tasks we happily delegate to the bureaucracy.

I have spoken about this on many occasions, for instance YOUR CHILDREN WON’T PAY FOR DEFICITS and EUROPEAN WELFARE STATE and TEA PARTY CONFUSION, but Leonard Pitts said it better.

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

No nation can tax itself into prosperity

–Europe and the welfare-entitlement state

An alternative to popular faith

Today, the Wall Street Journal’s editors managed to pack one sentence with more misleading inferences than I thought possible. The sentence was: “Greece’s problems are familiar across Europe: a welfare-entitlement state that is unaffordable given the country’s anemic economic growth.”

First, Greece’s economic problems are familiar across Europe, because most of Europe is in the European Union, an ill-conceived, economically doomed arrangement. These nations have essentially the same problem, and it has nothing to do with a welfare-entitlement state. It has to do with each EU nation’s inability to control its own money supply — a charter requirement for belonging to the EU. So when one nation encounters its individual economic crisis, it is prohibited from creating the money necessary to save and rebuild its economy.

The EU nations are on a “euro standard,” similar to a gold standard, in that the supply of their money is controlled by the EU. In this, the EU nations resemble California, Illinois, Cook County and Chicago, which are on a “dollar standard.” None can create the money needed to rebuild its economy.

Because a political entity on a “standard” cannot arbitrarily create money, it eventually will need to receive money from outside, either in the form of export payments, or payments from the owner of the money. For Greece, the owner is the EU. For California et al, the owner is the U.S. government.

For Greece to survive, it must receive money from the EU. It cannot survive on taxes alone, because taxing does not add money to the state. California, to survive, must receive money from the federal government.

The so called “welfare-entitlement” state merely is description of what every nation is and must be: A source of funds for the common good. Since all countries are “welfare-entitlement states, to greater or lesser degree, at what point does the state offer too much welfare?

–When the government pays for its army?
–When the government pays for roads, bridges, levees and docks?
–When the government pays for police and fire protection?
–When the government pays unemployment benefits? Food stamps? Medicaid? Housing?
–When the government pays for primary education? Secondary education? Advanced education?
–When the government pays to rebuild parts of a city that has flooded or hit by a hurricane or volcano?
–When the government provides FDIC insurance?
–When Social Security and Medicare benefits are provided to people over the age of 95? 55? 35? 10? All?
–When the government pays for vaccines? Inspects food? Supervises investments? Makes medical expenses tax deductible? Creates and enforces laws?

Where should a welfare entitlement state begin and end? I’d guess the WSJ editors, who criticize the “welfare-entitlement” state, have no idea. But, the term makes for a handy whipping boy, like “socialism” and “bailouts” and “big government” and “activist judges,” that everyone dislikes in general, but wants in the specific.

Finally, the “welfare-entitlement” state is not unaffordable because of the nation’s anemic economic growth. The government doesn’t pay its bills with Gross Domestic Product. Of course, some argue that increased GDP growth begets increased taxes, making government spending more affordable. But high taxes cause anemic economic growth, so in essence you have a circular argument and a self-fulfilling prophesy.

What makes EU governments’ spending unaffordable is the EU system, which prevents unilateral money creation. By contrast, no amount of U.S. spending is unaffordable for the U.S. government.

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


No nation can tax itself into prosperity

–Fiscal Sustainability Teach-In and Conference

Mainstream economics has led us to an average of one recession every five years. People have been fed obsolete hypotheses for so long and so often, we now have knee-jerk agreement among the media, the politicians and some economists.

But deficits neither are normal nor inevitable. Many prominent economists have discovered a better way to foster economic growth. They will host a conference to discuss their ideas, and you are invited.
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April 28th: Fiscal Sustainability Teach-In and Conference
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“The Fiscal Sustainability Teach-In Conference will be the important event in Washington on April 28. This will feature important work by honest scholars. It deserves (your)attention, and […] respect.”
— James K. Galbraith, The University of Texas at Austin. [April 19, 2010 via email with permission]
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The deficit hawks are at it again: attacking Social Security and Medicare with obsolete economic notions. We offer a counter-narrative to the false but conventional notion that Federal deficit spending is harmful, that it is a burden to the next generation, that deficit spending risks insolvency — basically that the Federal Government Budget is some how analogous to a household budget when, in fact, it is quite different.

The Teach-In Conference on Fiscal Sustainability on April 28th, 2010 in Washington, DC aims to do just that with some real world, honest economics.

We can move beyond the false economic orthodoxy that got us into the current economic mess and that is now being promoted to attack Social Security and Medicare — and harming our nation and it’s people. You can participate.

The tentative program schedule: Interesting topics and excellent presenters as of 04/16/10:

8:30–8:45 AM Welcoming Remarks
8:45–10:15 AM What Is Fiscal Sustainability? Bill Mitchell, Research Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the University of Newcastle, NSW Australia, and blogger at billy blog

10:15–10:30 AM BREAK
10:30 AM–12:00 PM Are There Spending Constraints on Governments Sovereign in their Currency? Stephanie Kelton, Associate Professor of Macroeconomics, Finance, and Money and Banking, Research Scholar at The Center for Full Employment and Price Stability (CFEPS), University of Missouri – Kansas City, Research Associate at The Levy Economics Institute of Bard College, and blogger at New Economics Perspectives

12:00–12:15 PM BREAK
12:15–1:45 PM The Deficit, the Debt, the Debt-To-GDP ratio, the Grandchildren and Government Economic Policy Warren Mosler, International Consulting Economist, Independent Candidate for the US Senate in Connecticut, and blogger atmoslereconomics.com

1:45–2:00 PM BREAK
2:00–3:15 PM Inflation and Hyper-inflation Marshall Auerback, International Consulting Economist, blogger at New Deal 2.0 and New Economic Perspectives, and Mat Forstater, Professor of Economics, Director of CFEPS, Department of Economics, University of Missouri — Kansas City, Research Associate at The Levy Economics Institute of Bard College, and blogger at New Economic Perspectives

3:15–3:30 PM BREAK
3:30–5:00 PM Policy Proposals for Fiscal Sustainability L. Randall Wray, Professor of Economics, Director of CFEPS at the University of Missouri – Kansas City, and Senior Scholar at The Levy Economics Institute of Bard College; and Pavlina Tcherneva, Assistant Professor of Economics at Franklin and Marshall College, Senior Research Associate at CFEPS and Research Associate at The Levy Economics Institute of Bard College and bloggers at New Economic Perspectives

How you can participate:
1. Contribute to the cost of the Conference — Please click below and make a donation of $50 (or more if you want) to show support. It’s about strength in numbers (the entire budget is under $10,000).
Make Donation
2. Attend the Teach-In — watch these pages for location and other logistical information
3. Spread the word — write a blog post, talk with your friends.
4. Educate yourself — some great introductory resources are:
o Teaching the Fallacy of Composition: The Federal Budget Deficit, by L. Randall Wray
o Fiscal sustainability 101, by William Mitchell
o 7 Deadly Innocent Frauds, by Warren Mosler
o In Defense of Deficits, by James K. Galbraith
o A Quick Summary, by Rodger Malcolm Mitchell

Please do what you can to help bring the truth to light. Deficits are not normal. Social Security and Medicare can survive without benefit cuts.

Every little bit helps. Thank you.
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Rodger Malcolm Mitchell
http://www.rodgermitchell.com


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