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Just saw John Sununu, one of Republicans favorite Bushie junk yard attack dogs all up in arms about the debt subject to the limit (the so-called national debt) reaching $16 Trillion dollars, and going on to tell people that every man, woman, and child in the United States now owes $50,000 to pay that debt off. Now, I’m here to tell you that all that is bull shit.
The debt subject to the limit is a debt incurred by the Congress and the Treasury Department because when the Government spends more than it taxes, the Treasury Department issues debt instruments in the name of the US Government even though it doesn’t have to do that in order to deficit spend. These instruments make the Government a debtor. But they don’t make any individual man, woman, or child in the United States a debtor. So, the idea that YOU owe $50,000 or even a single dollar is BS. You’ve signed no such note. You’ve not charged a single dollar on your credit card for this purpose. And you’ve not made a single promise that any portion of the national debt will be paid by YOU.
Well, you might ask: “Doesn’t the US have to pay the $16 T debt sooner or later by taxing, and won’t we then be responsible for our portion in the form of a tax obligation?”
The answer is that the US must pay all its debts when they fall due. It’s in the Constitution. If the Federal Government refused to do that it would be violating the Constitution, and would be illegal. But saying that the US must pay all its debts, doesn’t say that it must do so only by using taxation to raise enough revenue to run budget surpluses and pay those debts. It’s that lie that Sununu and the other austerians want you to believe!
How we pay US debts is up to us and is a political question. If we do it the way Sununu suggests we’ll condemn the country to permanent recession in the context of a perpetually depressed economy in which the wealthy get wealthier and everyone else gets poorer. That’s what a plutocratic tool like John Sununu wants. But there are other ways to do it.
The best way, because it ends unnecessary welfare for the rich and foreign nations is to stop issuing debt instruments, continue with enough deficit spending to create full employment and an economy operating at its full potential, and make up the gap between spending and revenue by using the legal power of the Government to issue 1 oz. Proof Platinum coins with arbitrary face values, and using the coin seigniorage profits gained by depositing the coins at the Federal Reserve. Here’s the process, along with the political speech explaining it to everybody.
Read it, and understand that There Is An Alternative (TIAA) to making every, or any, man, woman, or child pay $50,000 to pay off that national debt through taxing more than we spend, and that John Sununu, as usual, either doesn’t know what he’s talking about or is lying through his teeth about there not being one. Take your choice!
(Cross-posted from Correntewire.com.)
24 Comments
Rec’d.
Since 1996, the Treasury has had the authority under 31USC5112(k) to issue money to pay all Congressionally appropriated expenses. There has been no further need for borrowing by the U.S. government.
Section 5112(k) specifically is for the platinum coin.
Section 5111(a)(1) is the general authorization of the Treasury to issue coins, and it says:
That seems to be pretty broad discretion.
Section 5301 “Buying obligations of the United states government” has the authorities for dealing with the Federal Reserve System as follows:
Sununu is just using big numbers to scare people to adopt the Republican proposed policies.
It’s much easier if the whole system is so complicated and convoluted that ordinary citizens can’t understand it without lengthy explanation.
x2
Good to put it that way!
One wonders why FDL News or FDL Action don’t pick up on this and keep driving it home. Don’t people recognize how powerful the debt/deficit BS is in providing rationales for Congress and the President to avoid making jobs or passing Medicare for All?
Take the money from the rich, don’t borrow it from them.
Exactly lets. This bullshit is so pervasive, FDL should the place state over and over, it’s bullshit!
Rec’d
The debt/deficit crisis it the biggest and most damaging lie since the lies that led to the invasion of Iraq. And, as in 2003, both parties and the media are going along with it.
Since 1996, 31USC5112(k) has authorized the Treasury to pay appropriated expenses without borrowing.
I’m tempted to make up bumper stickers and campaign pins with simply [ 31USC5112(k) ] on them.
To anyone who objects that paying appropriated expenses with Treasury money freshly issued out of thin air might cause inflation, simply note that any bank will monetize (purchase) treasuries with bank credit freshly issued out of thin air. So, it makes no difference.
It’s not the “out of thin air” part that is troublesome. Arbitrarily designating a specific commodity as money, after all creates money out of thin air. (Though the gold bugs ignore this aspect, depending on historical precedent.)
What is troublesome is:
(1) Gaining the trust that the money is of a certain (and stable) value.
(2) Describing the process by which the amount created is neither arbitrary nor without limit.
(3) Establishing means of storage so the money doesn’t lose its value.
The attraction of metallic currency is that nature seemingly provides the limit. I seemingly, because there is all of the problems assaying the purity and checking the weight of metallic currency.
A dollar is a transferable tax credit. It has value because the U.S. government insists that U.S. taxes be paid in dollars.
The value of a dollar is a matter of supply and demand. We collect taxes to:
(1) provide a steady demand for dollars
(2) to control the supply of dollars by pulling some of the out of circulation.
The best way to debase the value of the dollar is to lower taxes. I’m talking to you, Paul Ryan. ;-)
Exactly. Is this, though, any more likely to happen than policy change per these MMT half-truths?
For thirty years, they’ve been promising to trickle down on us. IMHO, it’s time to catheterize them with some Eisenhower-era tax rates and no loop holes.
The major political import of this is to defang the defict/debt trolls by exposing two lies.
(1) We don’t owe $16 trillion all at once. Any bunch of creditors who would try to collect the entire amount all at once are fools who would get absolutely nothing.
(2) Each person doesn’t owe personally $50,000 because: (a) a quarter of those funds are Social Security, which works out to $10,000 — I think my math is right — or so per person; so folks owe that much to themselves even if the false analogy held; and (b) progressive taxation means that if the Congress was fool enough to pay by the debt all at once through taxes then those with higher incomes and fewer deductions and credits would pay proportionally more than $50,000 and those in the lowest tax bracket would pay nothing.
Fundamentally the title formulation is a dishonest scare tactic.
We went through and are still going through similar nonsense about the solvency of Social Security.
Here is the lastest Position and Activity Report (August 2012) [2pp PDF] from the US Bureau of Public Debt. If you look at the transaction amount, you will see that the Bureau of Public Debt does a lot of trading of the debt, most likely to capture decreases in the interest rate. The forecast is for $125 trillion in transactions on a $16 trillion debt by the end of FY 2012 (Sept 30, 2012).
Take the money from them to level the playing field; but not fund anything.
Exactly! Take their money away so that they can’t buy our politicians.
and to pay off existing debt without further borrowing.
Exactly. It’s just a matter of who gets to make the money. Me, I’m for the Treasury making it!
Strangely those high tax rates actually started under Hoover, were increased somewhat under FDR, and were lowered a bit under Truman and then Eisenhower; but still at 90% max marginal rate.
To expose the debt thugs one should expose who benefits from the debt and why they want the debt regulated. Countering their lies with counter-lies … well, let’s say it’s not wholesome.
Perhaps some imagine here a crypto-revolt, that through MMT they will outwit the crapitalists and dissolve their mechanisms of extortion. The obtuseness of MMT encourages that delusion. Those folks are in la-la land.
I have wondered how far back they went but would not have guessed Hoover — maybe Teddy Roosevelt.
Cheney himself snarled: “Deficits don’t matter.” There was no Republican outrage then, but it seems to matter now. Several economists, some of them Nobel Prize winners, have made the case that a sovereign government should run a deficit and should always plan to be able to do so. It is, however, a much too complex issue to explain to an ignorant public and a viciously partisan Republican. So far, the viciously partisan folks are winning the debate on this, so someone needs to try to take it on, simplify it somehow, and alter the public’s thinking. We need to get away from the comparison of governments with credit cards and households. It’s apples and oranges.
Here’s the simplest I can make it: