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The only 3 possible solutions to the entitlements crisis — no, make that 3 fake solutions + 1 real solution.

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You often hear about the “entitlements crisis. Here is what it is and the 3 solutions — no, make that the 3 fake solutions + the one real solution.

In US Economics, what is the Entitlement Crisis? Erin J. Hill, Last Modified Date: February 28, 2023 The United States entitlement crisis refers to the deficit between what programs such as Social Security and Medicare will require in comparison to how much funding is available.

Men: We have three solutions to your situation. Man: How about taking the rope off my neck. Men: Hmm, never thought of that one.


Immediately, Erin J. Hill starts on the wrong foot when she talks about “how much funding is available.” The U.S. federal government uniquely is Monetarily Sovereign. It created the first dollars from thin air by passing laws it created from thin air. So long as the federal government can pass laws, it can pass laws that create dollars.

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

This means that the cost of these programs will be more than what is in the federal budget.

There is nothing to prevent the U.S. federal government from increasing what is in the federal budget enough to pay for all the entitlements, twice over.

Government officials have not yet discovered a long-term solution for the issue, although some have suggested raising taxes on certain goods and making some government programs harder to be accepted into.

Those are the two fake solutions to the manufactured crisis, raise taxes and cut benefits. Both solutions would impoverish the middle- and lower-income groups by widening the income/wealth/power Gap between the rich and the rest. Here is the third fake solution:

The third rail Republicans can’t stop touching By Natalie Allison Social Security and Medicare are wildly popular. So why do GOP Senate candidates keep talking about privatizing them?

For two decades, campaign after campaign, Republican politicians have floated the idea of privatizing government entitlement programs including Social Security and Medicare. And campaign after campaign — from Paul Ryan to George W. Bush — it’s been a loser.

But for some reason, they keep trying. The latest is Don Bolduc, New Hampshire’s GOP Senate nominee, who advocated privatizing Medicare during a campaign town hall in early August, according to a recording of the event obtained by POLITICO.

In a statement, Bolduc spokesperson Jimmy Thompson walked back Bolduc’s comments, saying the candidate now opposes privatizing Medicare, Medicaid and Social Security.

“Having served 10 tours of combat in Afghanistan, General Bolduc relies on his health care from the VA,” Thompson said in an email. “He knows first-hand how important its services are to veterans, and he believes that every American who is eligible should be able to rely on the benefits they have paid into it, including Medicare, Medicaid and Social Security.”

Having wilted from the political heat, Bolduc retreated to his military service for shelter. But he wrongly said people should rely on the benefits they have paid into it.

What people have paid may be politically relevant, as President Franklin D. Roosevelt claimed, but it is not financially relevant. Those FICA dollars are destroyed upon receipt by the U.S. Treasury.

FICA payments are made with M2 money-supply dollars. When they reach the Treasury, they cease to be part of any money supply. They disappear into the government’s infinite money-creation system. Infinity + FICA dollars = infinity.

(President Roosevelt, the originator of Social Security: “We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions. With those taxes in there, no damn politician can ever scrap my Social Security program.”)

FICA does not exist for financial reasons. It is all psychological. The government neither needs nor uses those dollars, but FICA makes people feel they are entitled to the benefits.

All entitlement benefits are paid the same way every federal obligation is paid: By the ad hoc creation of new dollars.

Even if all FICA collections ended (as they should), the federal government could continue funding entitlements, forever.

The 3 “solutions” are especially supported by the rich-loving GOP. Sadly, the Democrats agree that “something must be done} about the crisis, though their solutions involve raising taxes or cutting benefits, either of which would recess the economy and widen the Gap between the rich and the rest.

Most agree that the entitlement crisis is a result of poor government budgeting and overzealous spending.

No, the crisis is not due to budgeting and spending. It is an artificially manufactured crisis based on to failure to understand Monetary Sovereignty and the federal government’s infinite ability to pay for things with U.S. dollars.

(Former Federal Reserve Chairman, 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.”)

Programs like Medicaid have been expanded, and overspending is a large issue within the government. This has resulted in a much higher national debt.

These factors, combined with the housing crisis and government bailouts may result in some programs being downsized or cut altogether.

Overspending is a non-issue for a government that pays for everything with dollars it creates at will. The so-called “national debt” is not even a debt. It is the total of deposits into T-security accounts, which resemble safe deposit boxes. The depositors in those accounts are not lenders. They are owners. The government never touches the deposits which remain the property of the depositors. To pay off the so-called debt, the federal government merely returns the deposits, plus interest, which the government has the infinite ability to do. The sole purpose of those deposits is not to provide the government with spending money. The purpose is to provide a safe, interest-paying place for dollar-users to store currently unused dollars. This stabilizes the dollar by making it safer to own.

As Baby Boomers get older, many expect the Medicare program to be placed under heavy financial stress.

Baby Boomers expect this because that is what they have been (falsely) told.

Some studies have shown that if the entitlement crisis is not remedied soon, in 15 years the only programs that will be able to be funded will be Social Security, Medicare, Medicaid, federal employee retirement, and interest on the national debt.

Other programs would have to be cut or funded through deficit spending.

No federal programs ever need to be cancelled for the government’s lack of money. The federal government never lacks money. Federal deficit spending not only is beneficial (It adds dollars to the economy), but it is necessary for economic growth. When deficit spending is absent, we have depressions:

Fact: 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.

Even when federal deficit spending exists, but in too-small amounts, we have recessions:

Reductions in federal debt growth lead to inflation
When federal deficit growth (blue line) declines, we have recessions (vertical gray bars) which are cured by increased federal deficit spending.

One of the primary reasons for the entitlement crisis happening in this time frame is that roughly 78 million baby boomers will reach retirement age during this time period.

The primary reason for the “entitlement crisis” is people being told there is a crisis, when the so-called crisis is an invention of the rich. They want to grow richer by widening the Gap between the rich and the rest. This widening can be accomplished by reducing the net income of the rest. The government easily could fund entitlement programs, not just for the 78 million baby boomers, but for every man, woman, and child in America.

While many agree that the entitlement crisis is a huge issue facing the American economy, others believe that the issue has been blown out of proportion.

It hasn’t been blown out of proportion. It doesn’t even exist. It is pure fiction.

Some even go so far as to say that it is a sham used to raise taxes and scare the public out of their money.

I’ll say it. It is a sham used to raise taxes and to scare the public out of their money. Pure and simple.

There is no debate, however, on the United States economy being in a tough position. In order to stop a crisis, either now or further in the future, changes need to be made to remedy government spending.

Raising taxes to pre tax-cut rates would also allow more breathing room, along with downsizing many government programs.

The author restates the pitifully wrong “solutions” to the non-problem of federal insolvency.

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

Deficit growth declined before the recession. Increased deficit growth cured the recession.

If nothing is done and lawmakers continue to turn a blind eye, the coming economic crisis may bear many similarities to the one which started in 2007.

The recession of 2007 was caused by reduced deficit growth from 2003 through 2007. It was cured by increased deficit growth from 2007 through 2009.

Fortunately, the problems at hand are not insurmountable, and changes in Social Security and Medicare can be made so that both programs can be sustainable.

These changes need to be implemented sooner rather than later, though, before it’s too late.

The “changes” lead us to the 4th, the real solution: The federal government should eliminate all FICA taxes and should fund:

  1. Comprehensive, no-deductible Medicare for every, man woman and child in America.
  2. Social Security benefits for every man, woman, and child in America, regardless of age, income, or wealth
  3. School for grades K-12 + graduate levels for everyone who wants it.

That one tax cut and those three easily affordable benefits would enrich America far beyond current myopic visions. They permanently would eliminate the crippling and false financial equivalence between our Monetarily Sovereign U.S. government and the monetarily non-sovereign states, counties, cities, businesses, euro nations and people.

Scott Pelley: Is that tax money that the Fed is spending? Ben Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account.

And finally, lest you believe the myth that federal spending causes inflation, it’s just that: a myth.

There is no relationship between changes in federal debt (blue) and changes in the consumer price index (red).

Ofttimes, the simplest solutions are the best solutions. Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell


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