Should a big country with big needs have a big government? Why not?

REASON is a libertarian publication.

Libertarians oppose “big government.” The problem is, they never provide a reason why they oppose big government, and they never tell exactly what “big” means.

ᐈ Scolding stock images, Royalty Free scolding photos | download on Depositphotos® — **The Libertarians are content to act only as scolds**

You can search their website for the answers to these questions, as I have, and you will be disappointed.

Is a “big” government one that employs many people, and if so, how many? How many is too “big” and how many are just right?

Or is a “big” government one that has many departments and agencies, and if so, how many? How many is too “big,” and how many are just right?

Or is a “big” government one that spends a lot of money, and if so, how much? How much is too much and how much is just right?

One would expect that a group complaining about “too big,” “too many,” and “too much” at least would have the answers to those fundamental questions.

But, so far as I can discern, any number of government employees is too many for the Libertarians; any number of departments and agencies is too many, and any amount of spending is too much.

Seemingly, the Libertarians are content to act only as scolds. They seem to feel that as long as they simply complain, they have demonstrated prudence, acumen, and wisdom, and let someone else come up with real-world solutions to real-world problems.

Here is yet another article of that ilk. In red, is what REASON published, and in black is my commentary.

Will Joe Biden Destroy Trump’s Legacy of Deregulation?
Trump did more than any recent president to pare back regulatory red tape, but the incoming Biden administration is eager to add more.
Chrisitan Britschgi | 1.19.2021

Translation: Trump has many legacies, nearly all harmful. Trump did more than any recent president to pare back consumer protections.

During his first days in office, incoming President Joe Biden is planning to sign “dozens of executive orders, presidential memoranda” which will involve rejoining the Paris Climate Accords, expanding wilderness protections, and moving the country toward a 100 percent “clean energy” economy.

Translation: During his first days in office, incoming President Joe Biden is planning to . . . help reduce global warming and to protect our environment for our children and grandchildren.

“The priority of the Trump administration has been to reduce regulatory burdens,” says James Broughel, a senior research fellow at George Mason University’s Mercatus Center.

“The Biden administration is going to want to issue lots of new regulations. That’s a near certainty. We’re going from an era where reducing burdens was the goal to where burdens will be added in the name of achieving certain social goals.”

Translation: “The priority of the Trump administration has been to reduce regulatory burdens” on polluters and dishonest businesses, while increasing burdens on consumers and on the earth itself. In reality, the priority of the Trump administration was Trump himself — his wealth, his power, his re-election.

Those “certain social goals” of the Biden administration have to do with the health, safety, and well-being of Americans and of the world.

The guiding light of the Trump administration’s deregulatory efforts was Executive Order 13771. That 2017 order instituted the famous rule that regulators issue two deregulatory actions for every new regulatory action.

. . . the infamous “rule that regulators issue two deregulatory actions for every new regulatory action” without regard to the benefit of the regulations or to the effect of the cuts. It is the most simplistic, childish solution to the perceived problem of overregulation.

It also created a system of . . . regulatory budgets that limited the costs of new regulations they could impose, and often required them to find regulatory savings.

. . . while ignoring the social, environmental, and legal costs of cutting protective regulations, willy-nilly, just to save dollars.

Using this measurement of regulatory savings, the Trump administration has been modestly successful at its goal of deregulating the economy, claiming $198 billion in eliminated regulatory costs.

From fiscal years 2017–2019, the administration claims to have eliminated 3.6 rules for every new rule added. That ratio is 3.2 for fiscal year 2020.

“. . . successful at its goal of deregulating the economy, claiming $198 billion in eliminated regulatory costs,” while completely ignoring the costly damage caused by cutting regulations that protect the nation, the public, and the environment.

The irony is: The Trump administration rightly complained that “defund the police” was a stupid idea. But it’s a classic, senseless, cut-the-budget, Libertarian idea. It would have saved a great deal of money for local governments, which being monetarily non-sovereign could use the savings.

Trump’s cuts were equally senseless, and they saved money for the federal government, which being Monetarily Sovereign, didn’t need the savings. It creates unlimited dollars, at will.

Further, because Gross Domestic Product = Federal Spending + Non-federal Spending + Net Exports, Trump’s cuts immediately took billions from the economy, and more if you consider the economic damage they caused.

Using other measurements, the Trump administration has been less successful. In some areas, they’ve done more to slow the growth of the administrative state without significantly reducing it.

The length of the Code of Federal Regulations stayed essentially flat during Trump’s time in office, hovering at around 185,000 pages.

The Mercatus Center’s tracker of restrictive words in the federal regulatory code comes to a similar result, finding that these words grew from 1.08 million at the beginning of Trump’s term to 1.09 million as of January 1, 2021.

Trump “leaves us with fewer regulations than Hillary Clinton would have—though not many fewer regulations than we had before,” summarizes Robert Verbruggen in a November National Review article.

It’s not clear what exactly “the administrative state is” or why it is bad, but counting the number of words in the federal regulatory code cannot possibly be an intelligent procedure for anything.

Could it be that all the Libertarians really want is an editor who will make sentences shorter? What next for the Libertarians: A coloring book version of the federal regulations?

One can expect this limited progress to be more than reversed under the new administration. Biden has already announced plans to reinstate Obama-era regulations that were pared back by the Trump administration.

Oh, woe. Biden will resume protections for the public and the environment. How awful.

Politico reports that he’ll likely try to revive the Obama administration’s Clean Power Plan—which regulated carbon dioxide emissions from power plants—that the Trump administration had replaced in 2019. Biden’s housing platform calls for a revival of the 2015 Affirmatively Furthering Fair Housing Rule that Trump gutted in July 2020. The Trump administration’s replacement of the Obama administration’s clean water rules will also likely be ditched.

More woe. We’re going to have cleaner power production, less carbon dioxide emissions, fairer housing, and cleaner water. To the Libertarians, it’s outrageous that Biden won’t force our children to breathe polluted air, drink polluted water, and live in a world damaged by global warming.

Doesn’t Biden know that the real goal of the President is to make the Code of Federal Regulations shorter?

In order to facilitate new rules, large and small, Biden will almost certainly rescind Executive Order 13771 and all the limits it imposed on new red tape.

The Libertarians wrongly equate “red tape” (i.e. inefficiency) with the existence of rules. One assumes that speed limits, food and drug protections, saving lakes and rivers from pollutions, etc. are all classified as “red tape.”

“All the cost caps will probably be eliminated,” says Broughel, as will the regulatory budget the Trump administration used to account for the costs of new rules. Doing so would be a “slap in the face at trying to estimate the effects of the regulatory system.”

Nevertheless, the fact that the Trump administration was able to adopt a regulatory budget at all proves that it can be done. Other future administrations might be more able and willing to pick it up again.

“I suspect in some form the regulatory budget will come back,” says Broughel. “The Trump administration showed that it was workable.”

The Trump administration proved that any idiot could say, “Cut two rules for every new one, without regard to effect.” How about an improvement on that. Make it “cut three rules for every new one,” or even better, cut ten rules for every new one.

Or just let everyone run wild and eliminate all rules.

There, in fact, is no record of the Libertarians objecting to the cut of any rule, no matter how beneficial that rule had been or how damaging the cut. In truth, the Libertarians have no objection to anarchy. It is their model of success.

Throughout his presidential campaign, Biden promised Americans a return to normalcy after the unusual, often unsettling administration of Donald Trump. There could be nothing more normal than the federal government issuing a steady stream of red tape without bothering to account for its costs.

Since the Libertarians have not demonstrated any concern about social, environmental, and health costs, and only are concerned about governmental spending, why would anyone take them seriously?

More importantly, why do the Republicans object to Biden’s newly proposed stimulus spending?

Rodger Malcolm Mitchell

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

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

Monetary Sovereignty describes money creation and destruction.
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:

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

MONETARY SOVEREIGNTY

The fake fight over your Social Security benefits

Kiplinger’s is supposed to know what they are writing about.

Hah!

Here is an article that appeared in today’s Chicago Tribune. You decide whether Kiplinger’s Managing Editor knows what she is writing about.

Biden’s plan to strengthen Social Security
By Catherine Siskos, managing editor at Kiplinger’s Retirement Report

In 2021, Social Security is expected to begin drawing down its trust fund to cover benefits instead of tapping only the interest.

Right away, we are greeted with the Big Lie that federal taxes fund federal spending.

While, state and local government taxes fund state and local government spending, federal taxes do not fund federal spending. That is a major difference most people do not understand.

Because the U.S. federal government uniquely is Monetarily Sovereign, it has the unlimited ability to create its own sovereign currency. The U.S. government never can run short of U.S. dollars.

Even if payroll tax collections fell to $0, the federal government could continue to fund Social Security, forever.

550 Blank Cheque Photos - Free & Royalty-Free Stock Photos from Dreamstime — **An example of instructions: “Pay to the order of . . . “**

Why can the U.S. government never run short of dollars? Because it pays creditors with instructions, not with dollars.

It never can run short of instructions, which it creates from thin air, simply by voting.

To pay for its spending, the federal government creates new dollars, ad hoc, by creating and sending instructions to each creditor’s bank, instructing the bank to increase the balance in the creditor’s checking account.

The instructions are in the form of a paper check or more commonly a wire, both of which begin with the instructions, “Pay to the order of __________.”

When the creditor’s bank does as instructed (by pressing a computer key), new dollars instantly are created and are added to the M1 money supply. It is the bank that does the actual money creation.

The creditor’s bank then balances its books by getting approval from (i.e. “clearing” the government’s instructions through) the Federal Reserve Bank, and the money-creation cycle is complete.

What then becomes of the tax dollars sent to the U.S. Treasury? They are destroyed. They cease to exist in any money supply measure.

That is why no one on earth can answer the question, “How much money does the U.S. federal government have?”

Depending on your perspective, the answer either is “$0” or “infinite.”

Personally, I prefer “infinite,” because the Treasury does carry a comparatively small account with the Federal Reserve Bank.

And by the way, remember that bolded phrase above, “instead of tapping only the interest?” Guess where the interest comes from.

It comes from the fake “trust fund’s” investment in Treasury Securities.

The U.S. Treasury creates dollars from thin air to pay interest to a non-existent U.S. federal “trust fund.” The U.S. Treasury instead simply could create dollars to fund Social Security, and do away with the bookkeeping mumbo-jumbo.

Unless Congress acts, benefits will be cut at least 20% when the trust fund runs out of money in 2033 — two years sooner than previously projected, according to the Center for Retirement Research at Boston College.

At that point, the program will rely entirely on payroll taxes, which currently aren’t enough to fully fund Social Security.

Unless Congress acts, your benefits will be cut, but not because the fake “trust fund” runs out of money. Benefits will be cut because Congress created the fake “trust fund” as a device to limit your benefits.

Medicare Part A has a similar fake “trust fund,” which also is running short of money, while Medicare Part B has no trust fund that can run short of money.

Why? Because by law, the federal government will add dollars to this mythical “trust fund” as needed. Thus, in reality, the federal government pays for Medicare Part B, without the flim-flam tax pretense of Part A.

Hmmm . . . Does that give you any ideas? How about using the Medicare Part B system for Medicare Part A and for Social Security?

That way, we never would have to hear false warnings about running short of money, and we could dispense with deceptive articles like this one from Kiplingers.

President Joe Biden wants to expand Social Security in two ways. He would raise benefits for the people most in need: low-wage workers, surviving spouses of dual-earner couples, caregivers, government workers and those who have been collecting Social Security the longest. (The rationale for that last group? Seniors have higher medical and long-term care expenses later in life.)

Everyone else’s benefits would remain the same, but their Social Security cost-of-living adjustments would increase because Biden supports switching to the Consumer Price Index for the Elderly.

The CPI-E is considered a better measure of inflation for older adults because it weights senior citizens’ biggest expenses, such as health care and housing, more heavily.

The Social Security Administration estimates that switching to the CPI-E from the current wage earners index will raise annual COLAs 0.2 percentage points, on average.

To pay for these changes, Biden wants to increase Social Security payroll taxes on people earning more than $400,000 a year, a short-term fix that would also shore up the program for only another five years, Melissa M. Favreault predicts in an analysis for the Urban-Brookings Tax Policy Center.

She is a senior fellow in the Income and Benefits Policy Center at the Urban Institute.

Does the “senior fellow in the Tax Policy Center at the Urban-Brookings Institute really believe that Social Security taxes fund Social Security benefits?

Or is she merely parroting the Big Lie for political reasons?

Proposed legislation from Rep. John Larson, a Democrat, would secure the program’s funding for 75 years.

Along with the increase on those earning more than $400,000 that Biden has proposed, the bill calls for raising the payroll tax for everyone, with employees and employers each contributing an additional 1.2%, or roughly 50 cents more per week, estimates Social Security in an independent analysis of the bill. The increase would be phased in between now and 2043.

In a divided Congress, Democrats and Republicans could find common ground with smaller bills, such as one to reinflate Social Security benefits for people born in 1960 or 1961, says Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare.

Their benefits will be cut unintentionally by a formula glitch and the 2020 recession.

Isn’t it pitiful that even the president and CEO of the National Committee to Preserve Social Security and Medicare is, or pretends to be, so clueless about how federal finances really are handled?

Do you wonder why there has to be a “National Committee to Preserve Social Security and Medicare” when there is no such committee to “preserve” the military, or to “preserve” the Congress, or to “preserve” the Supreme Court?

They all are federal agencies, but somehow, they don’t need fake “trust funds” or financial “preservation.”

The federal government just pays the bills, as it does for every other agency of the federal government.

Do you know why Social Security and Medicare (Part A only) have fake trust funds?

The reason is “Gap Psychology.” You can Google it or click the link for a description, but the short meaning is the human desire to widen the income/wealth/power Gaps below you on any economic or social measure, and to narrow the Gaps above you.

If there were no Gaps, no one would be rich or powerful. We all would be the same. And the wider the Gaps, the richer and more powerful some people would be.

Widening the Gaps makes the rich richer and the powerful more powerful. A good way to widen the Gaps is to cut benefits for the non-rich.

Rodger Malcolm Mitchell

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

Monetary Sovereignty describes money creation and destruction.
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.”

Ten Steps To Prosperity:

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

MONETARY SOVEREIGNTY

It never happened

It never happened.

The biggest story of the year, perhaps of the century, never happened.

Then-President Donald Trump did not pre-emptively announce without evidence, that if he lost the election, it will have been stolen.
After he lost the election, Trump did not repeat his fact-free claim that the election was stolen.
More than 50 judges plus the Supreme Court, many of them Republican-appointed, did not rule that there was no evidence to show the election was stolen.
A crazed mob of traitors did not attack the Capitol of the United States and attempt to reverse the democratic election of President Joe Biden and Vice President Kamila Harris.
Many of the patriotic, flag-flying neo-fascists did not attempt to find Mike Pence, Nancy Pelosi, and others with the intention of kidnapping or killing them
Donald Trump did not incite the attempted coup, the first coup attempt in U.S. history
After the insurrection, Donald Trump did not express his appreciation for the traitors.
Donald Trump did not encourage such far-right, neo-fascist conspiracy theorists as Alex Jones, QAnon, Proud Boys, Sean Hannity, et al to spread riot-inducing lies
The entire Republican Party has not closed its eyes to the attempted coup and is not trying to pretend Trump is innocent of treason.
The GOP is not filled with conspiracy theorists pushing outrageous and dangerous claims that the GOP is supporting.

I know none of these things happened because surely, “law and order” politicians would not have forgotten so soon.

But in fact, forgetting seems to be what they really are doing.

Today (1/29/2021) I clicked on http://www.foxnews.com and these are the stories I found.

-WH dodges as Biden sits with secretary paid by fund linked to GameStop scandal
-Barstool’s Dave Portnoy accuses Robinhood of stealing from own clients
-GameStop stock short seller losses total more than $19B, data firm says
-Barstool’s Dave Portnoy, Mets’ Steve Cohen spar over GameStop drama
-Ex-FBI lawyer whose big lie fueled Russia probe sentenced to probation
-Special counsel Durham investigation ‘making good progress,’ Barr says
-Fauci at odds with Biden’s chief of staff over research about schools reopening
-Fauci says coronavirus variants a ‘wakeup call’ to be nimble in vaccine development
-March for Life virtual rally to take place amid coronavirus pandemic
-FBI investigation into DC pipe bomb suspect reveals new details; reward increased to $100G
-ERIC SHAWN: We were told Jimmy Hoffa was buried in a metal barrel — guess what Fox Nation found
-Chilling new details emerge in Texas murder-suicide
-Ex-NY Times editor Bari Weiss bashes former paper over ‘press release’ praising Kamala Harris’ stepdaughter
-Meet the bull leading the charge on GameStop phenomenon
-What to know about the GameStop stock price frenzy
-Dave Portnoy slams Robinhood over GameStop trading scandal: ‘Flat out criminal’
-Google deletes nearly 100,000 negative Robinhood reviews
-‘Squad’ member blasts Wall Street over GameStop scandal: ‘Send them to prison’
-Republican senator: GameStop, Robinhood scandal shows ‘the fix is in’ on Wall Street
-Montana brothers seen on viral video chasing Capitol Police officer face charges, prosecutors say
-This is unity? White House silent as AOC claims Cruz ‘almost had me murdered’
-Biden signs 40 executive orders and actions in 9 days, shunning Congress
-Biden climate orders put Wyoming in crosshairs
-Chicago union won’t teach in-person without vaccine, as most others return
-Our hometown president’: Florida Republicans embrace Trump
-Getting the COVID-19 vaccine? Don’t take over-the-counter pain relievers beforehand, experts say
-Chinese biotech firm had ulterior motive when offering to build COVID labs across US: report
-Gaetz fires back after Cheney ‘taunts’ him for wearing makeup on TV
-Police chief resigns after girlfriend outs alleged ‘double/triple life,’ secret family and children
-Johnson & Johnson reveals how effective one-shot vaccine is against coronavirus
-Sicilian village auctioning homes for $1 and paying for renovations
-Actor’s estranged wife breaks silence on cannibalism scandal: ‘No. Words.’
-Tim Tebow tells story of ‘miracle baby’ during March for Life speech
-Chiefs rookie gets hurt in practice, will miss Super Bowl: report
-Nikki Bella and Artem Chigvintsev reveal their wedding date
-‘The Mentalist’ star Simon Baker and wife split after 29 years of marriage
-‘Naked and afraid’: Actress who first placed starring role in ‘Game of Thrones’ talks being replaced by Emilia Clarke
-‘Baywatch’ star’s new marriage started as affair, ex claims
-‘Shark Tank’ star Kevin O’Leary says AOC’s ‘Tax The Rich’ sweatshirt proves this about socialists
-Your new Chevrolet Corvette Stingray won’t let you drive it fast until its ready
-Nunes: When will real world Americans get their voice back on social media?
-Rep. Malliotakis: We need answers from Cuomo on COVID deaths and we need them now
-Pelosi needs to apologize to nation for saying House GOP is ‘enemy within’: Rep. Norman
-Hannity: Biden’s executive orders causing ‘life-changing’ problems
-Tucker: Our financial system is dangerously corrupt
-Charles Payne: ‘Shame on’ Robinhood for blocking high-flying stock buys
-Firms crack down on GameStop investors after short sellers panic
-Dagen McDowell: Andrew Cuomo’s career might be over after nursing home report

Records: Trump allies behind rally that ignited Capitol riot — It never happened, And anyway . . .

Not a word about the biggest story of the year, perhaps the century, that a losing Presidential candidate attempted a violent coup — a treasonous takeover of the American government by force.

Had the insurrectionists been successful, America’s democracy, our entire form of government, would be gone.

We would be a dictatorship like Hitler’s, Mussolini’s, Kim’s et al.

And yet, here we are, listening to Hannity, Carlson, Ingrahm, et al, tell us the violent acts of treason we saw and heard with our own eyes and ears are nothing to worry about.

They never happened.

And anyway, the insurrection doesn’t compare to the Black Lives Matter protests

And anyway, it was really a bunch of Black Lives Matter people who entered the Capitol.

And anyway, it was staged by George Soros as a false-flag operation.

And anyway, the Democrats are kidnapping children and eating them, just like Trump backer, QAnon says.

And anyway, there are more important things to do than to punish a former President who tried to destroy the American government.

And anyway, it’s unconstitutional to punish someone after they leave office.

And anyway, it’s the “cancel culture.”

And anyway, all those Republican-appointed judges who ruled against Trump are crooked and biased.

And anyway, they’re trying to take away our guns and our religion.

And anyway, all politicians lie, so what the big deal with Trump’s lies?

And anyway, what about Hillary and Benghazi?

And anyway, what about free speech?

Pay no attention to how close America came to losing our government to a mob sent by a psychopathic President of the United States.

None of that is important.

What’s really important is whether private citizen Hunter Biden might have received money from Russia or China.

The rumor is that Hunter made illegal millions by cheating students of Biden University and tax cheating the government with Biden Foundation.

And I heard that by lying about COVID and then refusing to do anything to protect people — in fact, even refusing to wear a mask — Hunter Biden caused the deaths of hundreds of thousands of Americans.

Yes, I even heard that Hunter surrounded himself with criminals and other unsavories like: Steve Bannon, Tom Price, Scott Pruitt, Paul Manafort, Rick Gates, Michael Flynn, Michael Cohen, Chris Collins, Salvatore Testa, Fat Tony Salerno, Roger Stone, Felix Sater, Jeffrey Epstein, Alexander Acosta, George Papadopoulos, Alex Van der Zwaan, Konstantin Kilimnik, Ralph Shortey, and Timothy Nolan.

But don’t worry; Hunter pardoned a bunch of them.

Yes, Hunter Biden should be punished severely for all that.

I heard it on Hannity.

And as for anyone selling out America. That never happened.

Ask Fox News.

Rodger Malcolm Mitchell

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

Monetary Sovereignty describes money creation and destruction.
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.”

Ten Steps To Prosperity:

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

MONETARY SOVEREIGNTY

Why do we hoard the infinite?

Monetary Sovereignty (MS) could not be simpler. The entire doctrine is based on one basic fact:

A Monetarily Sovereign entity cannot unintentionally run short of its own sovereign currency.

Everything devolves from that. President Richard Nixon decoupled the United States dollar from gold on in August 1971, allowing the Federal Reserve greater ability to increase the money supply. Factbar 39 minted June 10, 2018 11:04am | 10 claims claimed by GodwinS 1.3301 ETH ...

The U.S. government today, is Monetarily Sovereign.

For most of its history, it was on some form of metal standard, gold and/or silver.

But being on a metal standard limited the government’s ability to create dollars.

The supply of the metal limited the supply of money.

The U.S. finally became fully MS in 1971, when Richard Nixon ended the last gold standard, perhaps his single greatest act.

Today, the federal government could, if it wished, spend many trillions of dollars without collecting even one dollar in taxes. One might argue about the effect of such spending, but the government’s ability to do it is beyond debate.

Some types of spending will grow the economy more, faster, or in a better way than would other types of spending. But to various degrees, all federal spending grows the economy. This is a mathematical certainty derived from the equation:

Gross Domestic Product = Federal Spending + Non-federal Spending + Net Exports

Worries about the federal debt and deficit being “a ticking time bomb” or that the federal government is “broke,” or that the debt/GDP ratio is “unsustainable,” generally are based on the false belief that the federal government is like state and local governments, i.e. monetarily non-sovereign,

This false belief has led to several nonsensical activities:

The collection of federal taxes to “pay for” federal purchases. (The federal government needs no tax dollars.)
The establishment of mythical “trust funds” — Social Security Trust Fund, Medicare Trust Fund, Highway Trust Fund, ostensibly to pay federal bills. (They aren’t real trust funds and they pay for nothing.)
The unnecessary collection not only of federal taxes in general, but of specifically earmarked taxes, for instance, FICA taxes. (FICA is the most regressive tax among all the regressive taxes in America.)

For example, consider this article from the Peter G. Peterson Foundation website:

Federal trust funds bear little resemblance to their private-sector counterparts, and therefore the name can be misleading.

A “trust fund” implies a secure source of funding. However, a federal trust fund is simply an accounting mechanism used to track inflows and outflows for specific programs.

In private-sector trust funds, receipts are deposited and assets are held and invested by trustees on behalf of the stated beneficiaries. In federal trust funds, the federal government does not set aside the receipts or invest them in private assets.

Rather, the receipts are recorded as accounting credits in the trust funds, and then combined with other receipts that the Treasury collects and spends.

Further, the federal government owns the accounts and can, by changing the law, unilaterally alter the purposes of the accounts and raise or lower collections and expenditures.

The above is an accurate description of how federal “trust funds” really work. Sadly, the accuracy disappears with the following sentence:

When revenues for a trust fund fall short of expenses, the Treasury must finance payments through additional borrowing from the public.

Wrong.

Think about it. Why would any entity, having the unlimited ability to create its own sovereign currency, resort to borrowing? Further, where would the public obtain funds to lend to the government.

The federal government, in fact, does not borrow. Those Treasury securities (T-bills, T-notes, T-bonds) you may own are not the result of lending. They are the result of money deposits into T-security accounts — money the federal government never touches.

We have provided links for further discussions of these points, as all of the above merely is introductory to an article we now will discuss.

$1,400 Stimulus Payments Would Be a Waste of Money
President Joe Biden wants to provide additional stimulus checks of $1,400 to the majority of Americans.
By Steve Chapman, schapman@chicagotribune.com

Last spring, the Treasury Department sent out “economic impact payments” to some 160 million people, in the amount of $1,200 for each adult who qualified. Gallup then asked people if they would like the government to give them more money.

Only 17% said no — a group possibly dominated by those who didn’t qualify the first time and were seething with resentment.

In December, when then-President Donald Trump proposed to distribute another round of checks of $2,000 per person, he again found a receptive audience. Two-thirds of Americans were prepared to shoulder their patriotic duty to accept more money. But in the end, Congress agreed to payments of just $600.

President Joe Biden now wants to make up the difference, providing checks of $1,400 to the vast majority of Americans. In the middle of an economic crisis brought on by a raging pandemic, there are many ways the federal government could spend money that would be cost-effective as well as humane.

Stimulus payments are not one of them.

Private sector spending can be evaluated on the basis of “cost-effectiveness.” Federal spending cannot, for one simple reason: Cost is not an issue for an entity that has an infinite supply of money.

Further, contrary to popular wisdom, “waste” is not an issue, either. “Waste” is just the federal government pumping growth dollars into a part of the private sector that someone doesn’t like, so he terms it “waste.”

The real waste is the waste of human effort — the millions of valuable hours wasted calculating and paying taxes to the federal government, which destroys tax dollars upon receipt.

The only issues are: What should be accomplished and how should it be accomplished, no matter the cost.

Now here’s an interesting fact that most people don’t know: The Medicare “trust funds” consist of the Hospital Insurance (HI) fund (Part A) and the Supplementary Medicare Insurance (SMI) fund (Part B).

Unless reforms are enacted, the Trustees estimate that Medicare’s HI Trust Fund will be depleted in 2026. The SMI fund, however, cannot be depleted as contributions from the federal government’s general fund are set to cover any remaining deficit after premiums paid by beneficiaries are taken into account.

Translation: The federal government does with the SMI fund what it should do with all so-called “funds.” It simply pays the bills.

There is no talk about insolvency, or “borrowing,” or “ticking time bombs.” The federal government uses its infinite ability to pay the SMI bills.

It could and should do exactly the same thing for Social Security, Medicare (Part A), highways, et al. We could have Social Security for All, and Medicare for All without spending one cent of taxpayer money.

The question, “How will you pay for it?” will justly fall into the dustbin of history.

Mr. Chapman continues:

Now is no time for austerity.

Millions of people have lost jobs. Tens of thousands of businesses have closed. The federal government should be ready to take on large amounts of new debt to alleviate widespread hardship and keep the economy from collapsing.

Not “debt.” Federal debt (i.e. deposits in T-security accounts) pays for nothing. The federal government should be ready to implement large amounts of new spending.

But that obligation is no excuse for outlays that are poorly suited to either task. True, additional stimulus checks will help Americans who are in serious need, but they will help a lot more people who are not.

Any individual making $99,000 or less or two-adult household with an income of $150,000 or less was eligible for the full amount of the first payments.

So what if stimulus checks go to people whose income exceeds the $99K and $150K thresholds? This is America’s middle-class. By what logic should they not receive money?

The checks are commonly referred to as stimulus payments, but they’re not designed to stimulate the economy. Nor is stimulus what the economy needs.

When a normal recession hits, people spend less as they lose their jobs or fear losing them, which causes the economy to contract further. The federal government can help in the short run by giving people money to spend.

But this time, the economy contracted because the pandemic shut down or curtailed a wide range of activities. Giving people money doesn’t help when they can’t or don’t want to do so many things that involve outlays of cash — dining out, going to a movie, buying clothes, taking a trip or hosting a party. It’s like wasting matches trying to light a sodden firecracker.

The futility of this approach became clear after the first round of payments. A study published by the National Bureau of Economic Research found that just 40% of the money was spent on goods and services, with the balance going to pay down debt or increase savings.

Who says paying down debt and increasing savings is not economically beneficial for the private sector?? When did that not become stimulative for today’s current economy and for tomorrow’s economy?

The $600 checks cost $166 billion, and following up with $1,400 payments would bring the total to as much as $600 billion, according to the Committee for a Responsible Federal Budget.

That money could be dispensed in far more productive ways — to keep companies from going bankrupt, enable tenants to pay their rent or finance COVID-19 treatment, testing and vaccinations.

Why not do both? The federal government is not financially constrained. It should do everything to grow the economy, and especially the middle classes, and not be limited to Mr. Chapman’s favorite exercises.

Limiting the payments to individuals making up to $50,000 and families with incomes up to $75,000 would save $200 billion while concentrating the help on people most likely to need it and most likely to spend it.

Except what is the purpose of “saving” $200 billion for a government that can create trillions at the touch of a computer key. Clearly, Mr. Chapman wrongly believes the federal government’s ability to spend is limited.

It would be far better for the federal government to save families than to save money.

And now come classic economic ignorance:

For Washington to skimp on urgent needs during a crisis would be a false economy. But that doesn’t excuse pumping out cash with a fire hose.

Every dollar borrowed enlarges the swollen federal debt.

We’re lucky that interest rates are low now, making it cheap to borrow. But they won’t stay low forever, and when they rise, taxpayers will groan under the weight.

The federal government has a fire hose, but Mr. Chapman would put out the economic fire with a garden hose — for no reason.

Again, the federal government does not borrow, and that number incorrectly he terms “swollen federal debt” is neither swollen nor debt. It is just a bookkeeping number over which the federal government has total control. It is not a burden on the government or on taxpayers.

Finally, low interest rates do not benefit a government that has the unlimited ability to create dollars.

Most Americans would be happy for the federal government to give them free money, just as they would be happy for someone to offer them free beer or free food. They may not realize they’re volunteering to pick up the tab.

That would be true if federal taxes funded federal spending. But they do not.

Federal taxes go up and down, and neither move correlates with federal spending. Federal tax increases and federal tax cuts are not in any way related to federal spending increases and cuts.

Steve Chapman, a member of the
Tribune Editorial Board,
blogs at http://www.chicagotribune.com/chapman .
schapman@chicagotribune.com
Twitter @SteveChapman13

Chapman wants to hoard the dollars of which we have infinite. He should know better.

Rodger Malcolm Mitchell

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

Monetary Sovereignty describes money creation and destruction.
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.”

Ten Steps To Prosperity:

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

MONETARY SOVEREIGNTY

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