Why the right-wing wants to cut benefits to the average American

The Libertarians (the cruel shills for the Republican Party) have a non-solution for a non-problem.

The non-problem is that the U.S. federal government is running short of its sovereign currency, the U.S. dollar. The non-solution is to take dollars from the poor and middle-income people.

Welfare Cuts Are Inevitable Because Congress Won’t Touch Social Security
Until Congress is willing to acknowledge that it makes no sense to send monthly checks to wealthy seniors, everything else will be on the chopping block.
ERIC BOEHM | 9.27.2023 2:05 PM

The headline implies at least four lies:

Lie #1. The federal government can’t afford to send money to the poor and middle-income people.

Lie #2. The solution would be for the government to take dollars from Social Security.

Lie #3. Congress doesn’t dare to take Social Security dollars from the poor and middle-income people.

Lie #4. The only recourse is to take welfare dollars from the poor.

Amid the fractious debate over the federal budget, Speaker of the House Kevin McCarthy (R–Calif.) has outlined plans for cutting several prominent welfare programs to save about $150 billion annually.

According to The Washington Post, those cuts would affect a wide range of federal safety net programs, including food stamps and Meals on Wheels, which help feed needy families.

Other cuts would affect Federal Pell Grants for low-income college students, grants that help families afford housing, and a program that helps offset high heating bills.

Notice that none of the Libertarian non-solutions to the non-problem involve taking dollars from the rich by eliminating the kind of tax dodges that all people like Donald Trump to pay almost $0 federal taxes.

Regardless of whether you think the federal government should be in the business of funding any of those things in the first place, there’s no denying that sudden cuts to existing welfare programs can be disruptive to the individuals and families that have come to rely upon them.

Here, the Libertarian implies that the federal government should not help low-income college students, families that can’t afford housing, or low-income families that can’t pay their heating bills. This is typical for the heartless Libertarians and Republicans.

They don’t give a damn about people but are concerned with just two things: Saving government money for a government that has infinite money and helping the rich grow richer.

Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

It’s also true that, as Reason’s Liz Wolfe points out in this morning’s newsletter, the proposed cuts reflect the reality of a government that has been living beyond its means for too long.

You and I can “live beyond our means.” but the federal government cannot. It has infinite “means.”

Alan Greenspan: “The United States can pay any debt it has because we can always print the money to do that.

“It’s not exactly a winning PR move to slash the programs that serve needy toddlers and first-generation college kids, but there’s an important fundamental truth at the heart of the fiscal hawks’ concerns: government spending simply cannot continue at current levels with no consequences,” Wolfe writes.

This lie has been told since at least 1940 and probably beyond. That was the first year I found that the federal debt, or deficit, was called a “ticking time bomb.” The phony bomb still is ticking after eighty-three years.

And precisely what are the “consequences” to which Wolfe refers and Boehm agrees? You never will see that explained in any Libertarian screed. The reason: There are no consequences. Period.

That’s true. But here’s an element of this debate that doesn’t get talked about enough: Cutting welfare programs for needy families is necessary because Congress insists that relatively wealthy senior citizens get paid first.

And here it comes: The theory is that seniors are wealthy, and despite paying the useless FICA tax for their entire lives, they really don’t deserve anything for their investment. So, cut Social Security because that’s where the money — the infinitely available money — goes. And who cares about those old folks, anyway?

Budgeting is always, at its core, an exercise in priority-setting. That’s especially true when your budget is wildly out of whack, and you’ve been borrowing at an unsustainable rate, as Congress has done for years.

What part of budgeting is “wildly out of whack”? Would reducing the money going to the middle and the low be the best way to put the budget in “whack”?

And then for two more lies in just five words (Is that a world record?) “Borrowing at an unsustainable rate.”

Lie #5. The federal government borrows. No, the federal government does not borrow dollars. Why would it borrow when it has the infinite ability to create dollars?

Statement from the St. Louis Fed: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.”

The confusion arises because T-bills, T-notes, and T-bonds differ entirely from private sector bills, notes, and bonds.

The former have to do with borrowing. The latter have to do with depositing. A borrower receives from a lender money that the borrower uses. But the federal government doesn’t use or even touch the dollars deposited into T-security accounts.

The federal government, unlike state/local governments, is Monetarily Sovereign. It pays all its creditors with newly created dollars, ad hoc.

Despite Monetary Sovereignty being the single most important difference between federal and personal finances, you will never see those words in any discussion of federal budgeting being “unsustainable.”

Lie #6. “Unsustainable rate.” No amount of spending is unsustainable for the federal government. It has the infinite ability to create dollars.

When there’s no longer enough money to go around, you’re faced with a difficult proposition: Who gets paid first, and who has to wait at the back of the line?

The federal government always has enough money to go around. It cannot run short of dollars. Ever. Boehm knows this.

Alan Greenspan: “There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody.”

In the federal budget, seniors get paid first. Everyone else has to wait.

Lie #7. No, the rich are paid first. They are paid by the tax loopholes that allow them not to pay taxes in the first place.

McCarthy and his fellow Republicans are not proposing any cuts or changes to Social Security and Medicaid, the Post notes. That’s despite the fact that the two major entitlement programs are driving most of the federal government’s long-term deficit.

The federal deficit is the government’s method for pumping growth dollars into the economy. If the government did not run deficits, we would have yearly recessions and depressions.

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.
1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.

Over the next decade, discretionary spending—including those welfare programs the GOP aims to cut—is projected to decline relative to the size of the U.S. economy, according to the Congressional Budget Office’s (CBO) projections.

Meanwhile, Social Security and Medicare are growing, fast. By 2030, the CBO expects so-called “mandatory spending” on entitlement programs to consume more than 60 percent of the federal budget.

The federal budget is what Congress wishes it to be. If 60% is too much, the government merely can increase discretionary spending. This would reduce the meaningless percentage and increase the Gross Domestic Product.

Economic growth is both a direct and indirect result of federal spending. 

GDP=Federal Spending + Nonfederal Spending + Net Exports

Of course, because those programs are funded with a separate revenue stream—payroll taxes—it would be complicated for Congress to cut spending on Social Security to offset cuts on welfare programs.

Unlike state and local governments, the federal government does not fund programs via “revenue streams.” It supports all programs by creating new dollars, ad hoc. Tax dollars are destroyed upon receipt.

Even if all federal tax collections totaled #0, the federal government could continue spending forever.

Even so, the ongoing refusal of either major party to consider any long-term changes to the two major entitlement programs tells you all you need to know about the priorities in Washington.

What tells me all I need to know about priorities in Washington is the failure of either party to get rid of tax dodges by the rich.

There is no shortage of alternative ideas out there.

Congress could fiddle with the specifics of Social Security to make the program less expensive over the long term—raising the retirement age, for example, or changing how contributions and disbursements work.

Yes, soaking the elderly is the Libertarian mantra. But they don’t ask the rich to pay more by closing tax loopholes. That would reduce those luscious political contributions the politicians love so much.

It could (and should) allow younger Americans to opt out of the system retirement.

Boehm exceeds his stupidity allowance by suggesting that younger Americans opt out of Social Security. I can’t even go into how cruel and ignorant that idea is other than saying it does not surprise me coming from Libertarian Eric Boehm.

A pox on him and his descendants ten generations, hence.

Rodger Malcolm Mitchell
Monetary Sovereignty

Twitter: @rodgermitchell Search #monetarysovereignty
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The Sole Purpose of Government Is to Improve and Protect the Lives of the People.

MONETARY SOVEREIGNTY