Tag: Ten Steps to Prosperity

Two flaws in tax cut debate: Deficit reduction & trickle-down economics

It takes only two things to keep people in chains:
The ignorance of the oppressed
and the treachery of their leaders.

——————————————————————————————————————————————————————————————————————————————————————————–

Cutting federal taxes is a good idea. Contrary to popular belief, federal taxes do not fund federal spending. Even if all federal tax collections were $0, the federal government could continue spending, forever.

The reason is that the federal government, unlike state and local governments, is Monetarily Sovereign. It is sovereign over its currency, the dollar. The federal government never can run short of dollars, which it creates, ad hoc, every time it pays a bill.

The sole effect of federal taxes is to reduce the economy’s money supply, a rather dubious accomplishment, since a growing economy requires a growing money supply.

That is why cutting taxes grows an economy. This brings us to the first flaw in the tax cut debate:

Debate Flaw #1. The desire to reduce or even eliminate federal deficits.

This clearly is the strangest idea since homeopathy. There is zero credible evidence that federal deficits are “unsustainable” (the favorite word of deficit attackers), and there is massive evidence that deficits are necessary to grow the economy.

For example: U.S. depressions tend to come on the heels of federal surpluses.

1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.

There also is zero evidence that federal deficits lead to hyperinflations, which actually are caused not by “money printing, as so often is claimed, but rather by shortages of goods and/or services.

The U.S. never has had a hyperinflation, despite gigantic past deficits.

There even is zero evidence that deficits are a prime cause of inflations. Since America has gone off its most recent gold standard (1971), the prime cause of inflation has been oil prices, i.e. oil shortages.

The GOP’s various tax-cut plans are truly awful, and are nothing more than a “We-have-to-pass-something, – anything” bit of political desperation. So, there is enough to hate about the plans without resorting to false objections based on “excessive deficits.”

Debate Flaw #2. The notion that “trickle-down” economics benefits America. 

The so-called “trickle-down” economics hypothesis boils down to this “wrong-on-its-face” notion: If you give the rich more money, they will hire more people and give these people higher salaries. 

In the entire history of human existence, that never has been true. It is a con-job by the rich. They want you to have the pitiful hope that the rich will be kind to you, if only you make them richer.

The fact is: If you give the rich more money, they will have even greater power over you, and will use that power to provide you with the fewest jobs, at the least pay they can get away with.

If, as the GOP tax planners want, you cut taxes on business, those dollars will not go primarily to increases in payroll, but rather to shareholders and to executive bonuses. The last 10 years have proven that increased business profitability does not translate into increased payrolls.

Why do you think the stock market had been zooming in anticipation of the GOP tax bill passing?  Certainly not because businesses will increase pay scales.

If anything, businesses will use the dollars to automate, thereby reducing the number of good-paying jobs.

So rather than the proven-to-be-wrong trickle-down economics, how about the mathematically-certain-to-be-correct trickle-up economics?

How about giving the middle- and lower-income groups more financial support, which would allow them to buy more goods and services, thus benefitting the rich owners of business?

Why try to help businesses directly, if consumers don’t have enough money to buy from those businesses?  Doesn’t it make more sense to help consumers buy more, and allow that additional buying to trickle up to business owners?

The Ten Steps to Prosperity (below) does exactly that. The Steps are designed to put more money into consumers’ pockets, so that they can spend, spend, spend.

The most common measure of the economy is Gross Domestic Product (GDP), the formula for which is:

GDP = Federal Spending + Non-federal Spending – Net Imports

Notice the word, “Spending“? Increasing Federal Spending to support the poor and middle-income groups will increase Non-federal Spending — two of the three factors that move GDP.

Money is the way modern economies is measured. By definition, a large economy has a larger money supply than does a small economy. Therefore, a growing economy requires a growing supply of money. QED

The graph below shows the essentially parallel paths of GDP vs. perhaps the most comprehensive measure of the money supply, Domestic Non-Financial Debt:

One could argue that money begets production or that production begets money, and both would be correct. The point is that money supply (i.e. debt) and GDP go hand in hand.

Similarly, reduced debt growth results in reduced economic growth.

In summary:

The GOP tax “reform” plans focus on exactly the wrong goals: Deficit reduction and trickle-down economics.

The correct goals are: Deficit spending increases and trickle-up economics.

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

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The 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 (Economic Bonus)) 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

One simple tax cut to grow the economy & shrink the rich/poor Gap

Image result for make america ignorant again

.

It takes only two things to keep people in chains:
The ignorance of the oppressed
and the treachery of their leaders.

——————————————————————————————————————————————————————————————————————————————————————————–

The following should come as no surprise to you who see news from other than Breitbart and FOX:

Why the GOP Tax Bill Is So Unpopular
The Atlantic • November 25, 2017

President Donald Trump says he doesn’t want to cut taxes on the rich. His Treasury Secretary Steven Mnuchin said he doesn’t want to cut taxes on the rich. The Democratic Party says they don’t want to cut taxes on the rich. Americans say they don’t want to cut taxes on the rich.

Right. Billionaire Donald Trump, widely known for caring more about his money than about people, says he does not want to cut his own tax bills. And yes, billionaire Steven Mnuchin says he doesn’t want to increase his own income, either.

Fortunately, most of America (about 2/3) is smart enough to recognize a con when they hear one.

Trump, Mnuchin and the rest of the Republicans, aka “the Party of the Rich,”  always are ready to vote against the 99%, as their hideous “health care reform” attempts demonstrated.

Their tax “reform” bills are true to form. Continuing the Atlantic article:

The House and Senate Republican tax bills cut taxes on the rich—significantly.

Their plans would slash the corporate tax rate by almost half, cut taxes on pass-through income for smaller businesses, eliminate the Alternate Minimum Tax, and erode the estate tax, all of which disproportionately help rich families.

This comes at a time when post-tax corporate profits as a share of GDP have hovered at a record-high level for the last seven years, and the top 1 percent’s share of total income is higher than any time in the second half of the 20th century.

Nearly 50 percent of the benefits of the Senate tax cut would go to the top 5 percent of household earners in the first year of the law, according to the Tax Policy Center.

By 2027, 98 percent of multimillionaires would still get a tax cut, compared to just 27 percent of households making less than $75,000.

Other than Republicans, all party, gender, education, age and racial groups disapprove of the bill.

Despite the unpopularity of both the House and the Senate bills, the GOP is plowing ahead with their pro-rich, anti-middle, anti-poor programs, just as they did with their anti-poor, health care bills.

Here is why, in the words of The Atlantic. 

“My donors are basically saying, ‘Get it done or don’t ever call me again,'” Representative Chris Collins, a New York Republican, told The Hill.

The “financial contributions will stop” if the GOP fails to deliver corporate tax cuts, Senator Lindsey Graham, a Republican from South Carolina, told NBC News.

“The donor class … has concluded that the inaction of this administration and Congress is totally unacceptable,” Josh Holmes, the former chief of staff to Senator Mitch McConnell, told CNN.

“(Donors) would be mortified if we didn’t live up to what we’ve committed to on tax reform,” Steven Law, the head of Senate Leadership Fund, a super PAC, told the New York Post.

In summary, the GOP tax plans, like the GOP health care plans constitute a taking from the 99% and giving to the 1% “donor class.”

Rather than give a huge, permanent tax break to all of the rich and a small temporary tax break to some of the poor:

We could eliminate FICA.

According to the Tax Policy Center of the Brookings and Urban Institutions,  the government collects about $1.2 trillion in FICA taxes.

If the FICA tax were completely eliminated, the federal government simply could deficit spend to pay for Social Security (retirement, survivor, and disability) benefits and Medicare benefits.

This directly would benefit you salaried people of America. If you earn $127,200 per year or less, you pay 7.65% of your salary in FICA taxes.

Let’s say your salary is $100,000 That’s $7,650 coming directly out of your paycheck.

But it gets worse. Your company also pays another 7.65%, and when your bosses are deciding what to pay you, they figure that additional $7,650 as part of the cost of employing you.  So, in actual effect, FICA costs you, a $100,000 worker, $15,300 a year. 

That’s not chump change. If you own your home, that may be close to what you pay for your mortgage.

Not only would the elimination of FICA put important dollars in your pocket, but it might help you get the job in the first place. Your company continually decides whether or not to hire, and the cost of hiring is the single biggest factor. FICA adds more than 15% to the cost, which could dissuade them from adding an employee.

FICA also would be an excellent tax cut for businesses, a tax cut which would be used to increase profits, business growth investment, or salaries.

No matter how the dollars are used, eliminating FICA would provide an annual $1 trillion stimulus to economic growth.

This is a big number. Last year, GDP grew a comparatively anemic 2.78%. That translates into $500 billion growth.

The formula for GDP is: GDP = Total Domestic Spending + Net Exports. A mathematical case can be made that the elimination of FICA. Adding $1.2 trillion to the economy, would increase Total Domestic Spending growth an average of 7%-8%.

Particularly, with Net Exports currently taking $500 billion a year out of the economy, economic growth desperately needs increased Domestic Spending, which in turn, requires increased federal deficit spending.


ANNUAL PERCENTAGE CHANGE IN GROSS DOMESTIC PRODUCT

You can read a more detailed description of this recommendation at: “Step 1. Eliminate FICA of the Ten Steps to Prosperity. Image result for give to the rich

Eliminating FICA would be simple to accomplish, requiring no additional labor (less labor, actually), no new loopholes, and no complications. Just stop collecting it.

The government would continue to pay the bills, as it already does. No change there.

We can grow the economy and shrink the Gap between the rich and the rest, all with one quick, simple tax cut.

With the current talk about tax cuts and tax reform, this is the time to end FICA, the most regressive, least fair tax in America. Even if we make no other changes, this one change will have a profound positive effect on our nation and us.

We don’t need to settle for the GOP’s crazily complicated gift to the rich. We can have a simple, easy tax break for the workers and a boost for the economy.

Our opportunity is now. We have only to demand it.

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

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

The 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 (Economic Bonus)) 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

I want more $ for the military; less $ for you: Leon Panetta

Image result for make america ignorant again

.

It takes only two things to keep people in chains:
The ignorance of the oppressed
and the treachery of their leaders.

——————————————————————————————————————————————————————————————————————————————————————————–

The Committee for a Responsible Federal Budget published an article containing a letter written by (or for) Leon Panetta, co-chair of the CRFB.

The title is: Leon Panetta and Other Former Defense Secretaries: Debt-Increasing Tax Bill Threatens National Security

Here are some excerpts, together with my comments:

November 15, 2017

Dear Leader McConnell, Leader Schumer, Speaker Ryan, Leader Pelosi, Chairman McCain, Ranking Member Reed, Chairman Thornberry, and Ranking Member Smith:

As former Secretaries of Defense, we have witnessed the negative impact of arbitrary budget cuts in defense, diplomacy and intelligence since the passage of the Budget Control Act of 2011.

In particular, we have seen military readiness erode as a result of deep sequester cuts in funding for training, maintenance, force structure, flight missions, procurement and other key programs.

The result is the growing danger of a “hollowed out” military force that lacks the ability to sustain the intensive deployment requirements of our global defense mission.

The Navy’s recent report on the causes of the two destroyer collisions with civilian cargo ships that took the lives of 17 seamen confirms the lack of adequate training.

Panetta makes the strange claim that the ships crashed because there wasn’t enough money to train their sailors.

Yesterday, a Navy aircrew left an obscene (penis) condensed air trail in the sky. We wonder whether Panetta will claim that too was due to limited budgets

Contributing to this crisis is a broken budget process in Congress that relies heavily on temporary, short-term continuing resolutions on spending.

The consequence is increasing deficits and a mounting national debt that threatens the resources needed for our national security.

At this stage, you properly might wonder how “increasing deficits and mounting national debt” — which imply increased national spending — could “threaten resources” and  “hollow out” the military.

It can’t. The opposite is true.

Panetta apparently hopes you won’t think about it too closely. He also hopes you will not try to figure out what “hollowed out” means for the largest military budget in the world.

I should warn you that nowhere in Panetta’s letter will you find any data showing how much has been, is being, or will be spent by the military.

All you will be told is that it isn’t enough, whatever it is.

So, for your interest, here is what Panetta is complaining about:

The U.S. 2017 military budget is larger than the military budgets of the next 8 nations, combined.

Here is another view:

See the big blue area at the bottom?  That’s the U.S. spending. All the other colored areas are the rest of the world. The U.S. spends on defense about 2/3 of what the entire rest of the world spends.

Is this is why our military is “hollowed out”??? Is this is why two of our ships crashed and why navy airmen drew a penis in the sky?

It is difficult, if not impossible, to properly plan for future budget contingencies when there is a lack of certainty as to what budget resources will be provided for defense and other national security requirements in the next year.

This much is true, not only for the military but for all groups that rely on federal money. The annual (daily?) budget revisions make long-term planning impossible.

Many military applications require years of planning and execution. Many efforts have had to be abandoned midstream, resulting in mountains of wasted time and effort left behind.

But none of the above will be cured by transferring dollars from Medicaid to the military.

Now added to all of this uncertainty is a tax bill under consideration by Congress that is estimated to add anywhere from $1.5 to $2 trillion dollars to the national deficit over the next decade.

In the absence of a comprehensive budget that provides essential fiscal discipline on entitlement spending, and enforces a tough “pay-go” requirement that pays for both additional spending and tax relief, the burden of increased future debt will fall – as it always does – on the discretionary accounts of the federal budget, with the largest being defense and national security.

Let’s summarize what Panetta (aka the CRFB) is saying

  1. The debt and deficit are too high
  2. Taxes should be cut
  3. We need to spend more on the military

Now think about that. If the debt and deficit are too high, and taxes should be cut, the only way to reduce the debt and deficit would be to cut spending.

But the CRFB says we need to spend more on the military. So if we cut spending, from where will the additional military money come?

Panetta wants more spending for the military, but there should be “fiscal discipline on entitlement spending.” No “fiscal discipline” for the military, of course

We recognize the importance of providing tax relief to the American people. Our intent is not to criticize tax relief itself, but to raise the concern that tax relief without fiscal discipline will inevitably add to the national debt.

“Tax relief” = higher deficits.  “Fiscal discipline” = less spending. But Panetta says he wants lower deficits and more spending. 

That increase in the debt will, in the absence of a comprehensive budget that addresses both entitlements and revenues, force even deeper reductions in our national security capabilities.

Panetta wants to “address entitlements and revenues.” But tax cuts reduce revenues, so again, from where will the money come? And again, from “Entitlements.”

And what are “Entitlements”? Depending on various definitions, they may or may not include your Social Security, Medicare, Medicaid, aids to education, anti-poverty, housing aids, aids to education, and all the other things the government of “the greatest nation on earth” should do for its citizens.

In short, the CRFB, America’s leading debt Henny Pennys, tell you our sky is falling, and that the only way to save us is to spend more on the military and less on Americans.

And to top it all off, Panetta finishes with phony patriotism. While you read the next two paragraphs, be sure to play the Star Spangled Banner on your iPad:

We are proud of the men and women in uniform who bravely serve our nation and recognize the sacrifices that so many others have made for their country.

Our goal is to make sure that those who volunteer to serve in our military will never have to experience the consequences of a “hollowed out” national defense system.

No, Leon, your goal is to cut spending for the poor and middle-income people and to give the money to the voracious,  never-satisfied (but supposedly “hollowed out”) military, the largest military the world has ever known — and we aren’t even in a war.  

Imagine Panetta’s demands if the U.S. were in an actual shooting war.

For these reasons, we respectfully ask Congress to adopt a tax bill that will be paid for and will not further contribute to the uncertainty of future budgets.

Sincerely,

Secretary Leon Panetta, Secretary Ash Carter, Secretary Chuck Hagel

But it isn’t only the CRFB that wants to spend more on the military and less on social programs. It’s the party-of-the-rich, the GOP:

Here’s What’s In The House Republican Budget

The House budget plan would slash spending by $5.4 trillion over 10 years, including more than $4 trillion in cuts to mandatory spending like Medicaid and Medicare, while ramping up defense spending.

The House budget would bump up defense spending by around $929 billion over the next decade and save on non-defense discretionary spending by $1.3 trillion.

It slashes safety net programs. The House budget would slash Medicaid — it says that via Medicaid cuts plus changes to Obamacare, it would save $1.5 trillion.

And the House budget would also impose work requirements on Temporary Assistance for Needy Families (known as welfare) and the Supplemental Nutrition Assistance Program (known as food stamps).

It also cuts Medicare. The House bill would cut Medicare by $487 billion over 10 years, while the president’s budget, as proposed, barely touched it.

In the face of inflation, all social programs need to be increased, not cut. But then, those programs “only” benefit the middle and the poor, so they are not considered necessary by the GOP.

What does the GOP say is necessary? Tax cuts for the rich. They are the ones who will benefit from the GOP’s budgets.

If you doubt it, ask yourself why our billionaire President (who refuses to disclose his tax returns) and the billionaires he has appointed to his cabinet, and all the billionaires supporting him, so ardently vote Republican and favor the GOP pro-rich budgets.

In summary:

The GOP rightly claims that federal tax cuts will stimulate economic growth. The reason: Tax cuts leave more dollars in the private sector. The GOP also rightly claims that federal spending increases will stimulate economic growth. Spending increases also put more dollars into the private sector.

The commonality is dollars in the private sector.

Gross Domestic Product growth parallels the growth of dollars in the private sector.

Federal deficit spending adds dollars to the private sector. But the GOP claims that tax plans should be “revenue neutral,” meaning the GOP strives for plans that will add no dollars to the private sector.

Considering inflation, a revenue-neutral (no deficit) tax plan will reduce economic growth by reducing real dollars in the economy.

Thus, we see the impossibility of tax reductions that “pay for themselves” without increasing the federal deficit and debt.

  1. If a tax rate reduction results in less total tax being collected, it will grow the economy, while generating higher federal deficits and debt.
  2. If a tax rate reduction results in more total tax being collected, it cannot add dollars to the private sector, and so cannot grow the economy.

The self-imposed limitations on the federal deficit and debt are what limit economic growth.

There is no evidence that increased federal deficits and federal debt have any adverse effect on economic growth. It mathematically is impossible to grow the economy while the money supply declines.

Reductions in federal deficits and debt lead to recessions, which are cured by increases in federal deficits and debt.


[Vertical gray bars are recessions.]

We can, and should, have tax cuts for the lower- and middle-income groups. We can, and should, increase spending for entitlements, to make life better for the 99% of Americans who will depend on entitlements — Social Security, Medicare, Medicaid, etc.

We even can spend more on the military, though the priority, when we aren’t in a real war, is questionable.

We can have all those things if we simply realize that the federal debt is no problem at all, and the federal deficit is too low.

The federal government is not like you and me. Its finances are not like ours. Unlike you and me, the federal government never can run short of its own sovereign currency, the dollar. The government creates dollars, ad hoc, by spending dollars.

The government is what is known as “Monetarily Sovereign.” It has the ability to spend an unlimited number of dollars, which it creates by pressing computer keys.

The only limit to federal spending is an inflation that cannot be controlled by raising interest rates. The U.S. never has had such an inflation.

The GOP’s tax plans are hideous giveaways to the rich. Panetta’s comments about the budgets are designed to impoverish the 99% under the guise of making us safer.

And it’s all based on the private sector’s ignorance of Monetary Sovereignty.

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

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THOUGHTS

•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.

•The more federal budgets are cut and taxes increased, the weaker an economy becomes..

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

•Cutting federal deficits to grow the economy is like applying leeches to cure anemia.

•A growing economy requires a growing supply of money (GDP = Federal Spending + Non-federal Spending + Net Exports)

•The limit to federal deficit spending is an inflation that cannot be cured with interest rate control. The limit to non-federal deficit spending is the ability to borrow.

•Until the 99% understand the need for federal deficits, the upper 1% will rule.

•Progressives think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.

•The single most important problem in economics is the Gap between the rich and the rest.

•Austerity is the government’s method for widening the Gap between the rich and the rest.

•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..

MONETARY SOVEREIGNTY

It’s a “chump-or-brains” decision. Which are you?


It takes only two things to keep people in chains:
The ignorance of the oppressed
and the treachery of their leaders.

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Let’s begin with an absolute truth: Unless you own at least $20 million — and this is a ridiculously bare minimum — you are a chump if you vote for the GOP, aka “The Party of the Rich.”

Yes, yes, I know. The Dems are “libtards,” and Hillary is “crooked,”, and Bernie is a clown, and Bill is a womanizer, etc., etc. , but the fact remains that the GOP uniquely does everything in its power to take dollars from you and give those dollars to the very rich.

First, the GOP tells you the rich are “makers” and the poor are “takers” — a bold-faced lie — to make you believe you should be grateful for what the rich do to you. In fact, as you will see, it is the rich who are the real “takers” in America, and it is the lower income groups who do all the actual “making.”

Look at any major corporation. The top executives live high, while you peons are sweating.  Nothing is done for you. Instead, you do for them.

Any jobs the rich make are incidental to their primary purpose: Self-enrichment. Any money that floats down to you not only is inadvertent, but is resented by the rich. (That’s why they call you “takers.”)

The minimal benefits you receive are just designed to be barely enough to get your vote; nothing more.

Then the GOP tells you the federal government can’t afford deficits and debt — another lie — which requires that your meager social benefits like Medicare, Medicaid, Social Security, housing aids, food aids, education aids must be limited or eliminated.

But, the U.S federal government never can run short of its sovereign currency, the dollar. All the dire warnings about “unsustainable” deficits and your grandchildren paying for the debt, are 100% false, lies designed to make you accept short rations, while the rich sop up all the gravy.Image result for pickpocket

By no coincidence, the social benefits despised by the GOP were provided by the Democrats.

Now, the GOP offers tax “reform” that cuts taxes on the rich and raises taxes on the middle classes, while cutting ACA and other benefits to the middle-class.

This will be one of the largest pickpocket, money-transfer schemes in history.

You can read about the scam at:

The Trump tax cuts fall far short of Ronald Reagan’s reforms
The Gipper is an inspiration to Republicans, but they are not following his example

As Republicans embark on yet another sweeping rewrite of the tax code, many point to the 1986 effort as a model to emulate. It was “really something special”, Donald Trump said in August.

However, admirers of America’s last comprehensive revision of its tax code should be disappointed with the GOP’s current attempts.

The authors of the last reform relied heavily on advice from professional economists. In contrast, Mr Trump’s Treasury department is yet to find a credible study supporting its claim that tax cuts will deliver enough economic growth to pay for themselves.

It also removed from its website a paper arguing that the benefits of corporate tax cuts flow primarily to investors, rather than to workers.

Also, the 1986 tax code law:

” . . . included full committee hearings, markups and deliberations. That legislative process bears little resemblance to the Republican Party’s current approach to tax reform.

Republicans are using the restrictive procedure of budget reconciliation to try to push the legislation through on a party-line vote.

And unlike the exhaustive review that occurred from 1984 to 1986, Mr Trump has promised to sign a bill by Christmas, just two months after the first legislative text was introduced.

. . . According to figures from the Joint Committee on Taxation, most of the benefits will go to the rich. Reagan’s 1986 reform did the opposite.

Despite these shortfalls, the House is expected to vote on its tax proposal today.

That may have less to do with enthusiasm for the bill itself than with Republicans’ belief that they need to approve some form of major legislation to avoid a wipe-out in next year’s midterm elections.

Do you see anything the GOP is doing for you? No, you don’t, because the GOP doesn’t care about you.

It cares only about fooling you long enough to get your vote so it can continue transferring dollars from your pockets to the never-satisfied rich.

The GOP assumes that by repeating “Hillary, Bill, Obama, and Democrats” often enough, your dislike for the left will prompt you to vote against your own self-interest, and instead vote for the interests of the billionaires.

In short, the GOP expects you to vote like a chump.

Speaking of billionaires, here are a few who think you poor chumps receive too much, and so you should give more to them:

The Paradise Papers
Bloomberg News

Earlier this week, the International Consortium of Investigative Journalists released over 13 million heretofore confidential records documenting the offshore financial interests held by wealthy individuals and corporations who may have wanted to shield their involvement in offshore tax havens from public scrutiny.

[You’ll see several references to “Appleby,” self described as “. . . an offshore law firm. We advise global public and private companies, financial institutions, and high net worth individuals, working with them and their advisers to achieve practical solutions.” The two word description of what Appleby does best is “tax havens.”]

Known as the Paradise Papers, the documents originate primarily from Appleby, a Bermuda-based law firm, says the ICIJ. The firm specializes in catering to UHNW clients and blue chip companies

  • Reveals offshore interests and activities of more than 120 politicians and world leaders, including Queen Elizabeth II, and 13 advisers, major donors and members of U.S. President Donald J. Trump’s administration
  • Exposes the tax engineering of more than 100 multinational corporations, including Apple, Nike and Botox-maker Allergan
  • Reveals tax haven shopping sprees by multinational companies in Africa and Asia that use shell companies in Mauritius and Singapore to reduce taxes
  • Shines a light on secretive deals and hidden companies connected to Glencore, the world’s largest commodity trader, and provides detailed accounts of the company’s negotiations in the Democratic Republic of the Congo for valuable mineral resources
  • Provides details of how owners of jets and yachts, including royalty and sports stars, used Isle of Man tax-avoidance structures

While your employer dutifully deducts payroll taxes and income taxes from your paycheck, the rich rake in billions of untaxed dollars — and still complain the federal deficit is too high.

Donald Trump told voters he would put “America First.” But surrounding him are associates who have used tax havens to conduct business.

Go to Explore The Influencers: Donald Trump’s allies in the Paradise Papers and you’ll see some of the people who cry about the federal debt and what meager “freebies” you receive, while they gorge at the tax-free trough.

You’ll see such names as:

Stephen Schwarzman, co-founder and CEO of the Blackstone Group, a global private equity firm, has been one of President Donald Trump’s closest allies on Wall Street. Shortly after his election victory, Trump named Schwarzman chairman of the White House’s business advisory council. An outspoken opponent of raising taxes on the rich, Schwarzman once compared an Obama administration plan to raise taxes on hedge fund managers to Hitler’s invasion of Poland.

Billionaire industrialists Charles and David Koch are among the most influential political donors in modern U.S. history. After declining to back Donald Trump during the 2016 election, the two brothers appear to have warmed to the new president.

In July, it was reported that they had launched a multimillion-dollar campaign in support of President Trump’s tax plan.

Real estate investor Thomas J. Barrack Jr., a close friend of and adviser to Donald Trump, was a fundraiser for Trump, donor to his campaign and chairman of the inaugural committee. During the campaign, Barrack said he raised $32 million for a super PAC backing Trump’s candidacy. CNN has called Barrack “perhaps the single
person closest to [Trump] outside of his immediate family.”

Barrack’s firm, Colony Capital, now known as Colony NorthStar, owns a vast web of offshore holdings that operate in tax havens around the globe. Among them are a pair of Cayman Islands shell companies in the law firm Appleby’s files that list Barrack as a director.

As vice chairman for supervision at the Federal Reserve, Randal Quarles is the central bank’s watchdog over the U.S. banking industry. Appleby files identify Quarles as an officer of two tax-exempt entities registered in the Cayman Islands and associated with the Carlyle Group.

Casino magnate Sheldon G. Adelson was the Republican Party’s leading donor in 2016, contributing more than $82 million to GOP candidates and causes. He provided an additional $5 million to Trump’s inaugural festivities, the largest-ever contribution to an inauguration.

Adelson’s Las Vegas Sands paid tens of millions of dollars to Adelson’s Interface Bermuda between 2010 and 2016, SEC filings show – effectively shifting Adelson’s money from the United States to a tax-free jurisdiction.

Rex Tillerson is the U.S. secretary of state. Before his nomination by President Donald Trump, he served for more than a decade as CEO of the oil giant ExxonMobil.

Robert Mercer is the CEO of Renaissance Technologies, a highly profitable
hedge fund that relies on secret trading algorithms. Mercer was a prominent financial backer of Donald Trump’s candidacy and is credited with influencing
key decisions by Trump, including the hiring of Stephen Bannon as White House
chief strategist, a position Bannon held for seven months.

An Appleby spreadsheet created on September 2015, lists Mercer as a director of eight Renaissance Technologies subsidiaries, all registered in Bermuda.

Another billionaire Las Vegas casino magnate Steve Wynn, is the founder of Wynn Resorts. A friend of Donald Trump, Wynn donated $729,000 in “entertainers and production work” to the incoming president’s inaugural fund, a Wynn spokesman told the Associated Press. In February, the Republican National Committee named Wynn its finance chairman.

Wynn’s casino company, Wynn Resorts, controls several offshore shell companies
associated with its move into the Chinese gambling hotspot of Macau in 2006. Although Wynn had no resorts or casinos on the Isle of Man, two of the offshore
entities relating to his Macau venture were incorporated in the small
island tax haven in the Irish Sea.

Wilbur Ross is the U.S. secretary of commerce. Before his appointment by President Donald Trump, Ross was a billionaire Wall Street investor best known for buying struggling companies to turn around and sell for a profit.

Ross’ private equity firm W.L. Ross & Co, LLC, was one of Appleby’s biggest clients. Appleby administered more than 50 W.L. Ross companies and partnerships, most in the Cayman Islands.

Paul Elliott Singer is the founder of Elliott Management, a hedge fund that purchases distressed assets and has been accused of acting as a vulture fund. A top donor to Republican candidates, Singer contributed $1 million to Donald Trump’s inaugural fund. As president, Trump has called Singer a “very strong ally.”

Among Elliott Management’s holdings in tax havens across the world has been a firm called Kensington International Ltd., registered in the Cayman Islands.

Gary Cohn is President Donald Trump’s chief economic adviser and the director of the National Economic Council. Before joining the administration, Cohn was the president and chief operating officer of the investment bank Goldman Sachs.

Cohn was the president of 20 Bermuda incorporated companies affiliated
with a fund managed by Goldman Sachs.

Real estate developer Geoffrey Palmer contributed $5 million to a super PAC that
supported Donald Trump’s presidential campaign and has donated to dozens of other Republican candidates and causes.

His company G.H. Palmer Associates owns more than 10,000 apartment units in Southern California, and he has been a strong opponent of affordable housing requirements for real estate developments.

Palmer is the principal of a Bermuda-based company called Malibu Consulting Ltd. In 2009, a lawyer for a Deutsche Bank affiliate contacted Appleby to
request the assistance of a “Bermuda aircraft attorney” in connection with the affiliate providing a loan to Palmer’s company.

These are but a few of the GOP Billionaires, who have avoided taxes.

While the chumps pay and pay and pay, the billionaires complain that the government spends too much on benefits for yes, the chumps.

Keep all this in mind as you read more details of the GOP tax plan.

Then decide whether, in the coming election, you will vote for your interests or for the billionaires’ interests.

It’s a “chump-or-brains” decision.

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

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The 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 (Economic Bonus)) 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