Translating a letter from a debt nut

The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:

President Trump’s budget aims to reverse an unsustainable fiscal situation and put debt on a downward path relative to the economy.

Unfortunately, as in previous years, he relies on far too many accounting gimmicks and fantasy assumptions and puts forward far too few actual solutions.

Even full of accounting gimmicks meant to paper over deficits, the President’s Budget would still borrow $7.8 trillion over the next decade.

Under reasonable economic assumptions, however, we find it would be closer to $10.5 trillion.

President Trump has already signed into law debt-financed tax cuts and spending increases that will add $2.3 trillion to the debt over the next decade, despite budgets that proposed revenue-neutral tax reform and spending reductions.

 

This budget does nothing to address or pay for these expanded deficits – in fact, it assumes the tax cuts are extended without even recognizing the cost.

Perhaps most disappointing is the decision to continue

Deficits –federal tax cuts and spending — add growth dollars to the economy.

And expand recent defense increases by funding almost $100 billion in new spending through an off-book emergency war account.

This Overseas Contingency Operations (OCO) gimmick is not new, but the proposed abuse of this account rises to a new level never before seen and sets a dangerous precedent.

Meanwhile, a fantasy assumption of sustained 3 percent economic growth makes a return appearance in the budget.

Every independent forecaster foresees growth to average closer to 2 percent over the next decade.

Assuming an extra point of growth serves no purpose but to mask the high deficits and debt likely to materialize under the President’s budget.

Thoughtful Medicare, disability, and other proposals in the budget deserve serious debate, but these policies are overshadowed by inflated economic growth, unrealistic policy assumptions, and a failure to recognize the deep hole that policymakers have dug in recent years.

If the past two years are any indication, this budget will be followed by more debt, not debt reduction.

On our current course, Americans will soon face record levels of debt, leading to slower income growth, increased interest payments, and less opportunity.

• “deposits into T-security accounts”  for “debt,”
• “investments in the private sector” for “deficits,”
• “sustainable since 1940” for “unsustainable,”
• “favorable precedent” for “unfavorable precedent,” and
• “Republican” for “Trump” (who never reads anything and will sign anything anti-Obama),

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell

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The most important problems in economics involve the excessive income/wealth/power Gaps between the richer and the poorer.

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

2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

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

MONETARY SOVEREIGNTY