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“Makers and Takers:” They’re Projecting Again!

7:01 pm in Uncategorized by letsgetitdone

I found a segment on MCNBC’s Up With Steve Kornacke show revealing for what it did not say. The segment started off with a clip from a recent town hall of John McCain’s. Senator McCain took a question from a woman who said, with more than a little emotion.

Woman: ‘It kills me every time i hear senators, especially republicans, talk about those takers. they’re just taken. the takers. I paid taxes for over 30 years and i have a rare illness and now I’m disabled. the state of arizona raised the eligibility for a program that was paying $100 a month for my medicaid to 3.4%. consequently, I was cut off. $100 a month, which meant (breaks down) I could no longer go to physical therapy. Do it intentionally to cut as many people as they can for as long as they can from benefits that are desperately needed and it’s just not right. We’re the takers.’

McCain walked slowly over to the woman and said in a consoling and emotional voice:

McCain: ‘I thank you, you’re not a taker. You’re not a taker.’

Kornacke comments on the clip: ‘That was amazing to watch because to me what i thought was i watching there is somebody, we talked earlier about the media bubbles, the media bubble on the conservative side where that rhetoric of makers versus takers. Paul Ryan talked about it and Mitt Romney had had the 47% tape that came out last year. That, to me, is somebody who has heard that and doesn’t live in that bubble and sort of looked at themselves and had a powerful, emotional reaction and here’s a public office holder and said, no, ma’am, you’re not a taker.’

Then Sam Seder added:

‘McCain walking over to her and say you’re not a taker, you’re not a taker. It’s absurd. It’s gotten to the point of absurdity when the Republicans have to justify to say to a person like that, you’re not a taker. This is still going on. Again, this is the same problem the Republicans have and this is why I think they ultimately so want the democrats to cut social security and medicaid and medicare down the road because they don’t want to have to own this. I mean, just last week fox news had had a two-hour special on how people on food stamps are takers.’

The Republican strategist on Kornacke’s panel then offered the insight that “anecdotal cuts both ways.” And Seder replied

‘I understand. but the reality is that guy who is getting $200, if that’s going to be the leverage point to deny this woman the benefits to get physical therapy, the republicans are going to have a problem. and they are feeling this. they are feeling this’”

Whereupon, Krystal Ball capped the political implications with:

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Krugman Goes Platinum!

6:42 pm in Uncategorized by letsgetitdone

Another platinum coin surge in the Second Wave rippled through the mainstream media yesterday and this time hit the Congressional Progressive Caucus. Domenico Mantanaro of MSNBC kicked things off on one of the morning shows by mentioning the Trillion Dollar Coin (TDC) as a possible solution to the debt ceiling problem. Then, in the afternoon, on MSNBC’s the cycle, Krystal Ball, and Steve Kornacke, in discussing the coming debt ceiling conflict talked rather matter-of-factly, I thought, about minting some TDCs to get around the debt ceiling.

Then Paul Krugman blogged about platinum coins. In the context of answering a question about whether we can “print money,” to get around the debt ceiling, he answers no, and then says:

The peculiar exception is that clause allowing the Treasury to mint platinum coins in any denomination it chooses. Of course this was intended as a way to issue commemorative coins and stuff, not as a fiscal measure; but at least as I understand it, the letter of the law would allow Treasury to stamp out a platinum coin, say it’s worth a trillion dollars, and deposit it at the Fed — thereby avoiding the need to issue debt.

An admirably brief statement of the basic idea, but followed then by this puzzler:

In reality, to pursue the thought further, the coin really would be as much a Federal debt as the T-bills the Fed owns, since eventually Treasury would want to buy it back. So this is all a gimmick — but since the debt ceiling itself is crazy, allowing Congress to tell the president to spend money then tell him that he can’t raise the money he’s supposed to spend, there’s a pretty good case for using whatever gimmicks come to hand.

So, it’s gimmicks for gimmicks to get around the debt ceiling, and no notion on Paul Krugman’s part that Platinum Coin Seigniorage (PCS) might have a much broader use than simply countering a gimmick the Republicans are using to try to trash the social safety net and drown the Government in a bathtub.

Apart from that, however, this “. . . the coin really would be as much a Federal debt as the T-bills the Fed owns, since eventually Treasury would want to buy it back” is a bit strange. A very high value platinum coin deposited by the Mint in its account at the Fed would have its value credited to the Mint’s account in the form of electronic credits. The Fed would then keep the coin in a vault forever, as an asset on its balance sheet, and the seigniorage profits from the deposit of the coin would be swept into the Treasury General Account (TGA) where it would be used for repaying debt or other spending appropriated by Congress. So why would the Treasury ever want or need to buy that coin back from the Fed? And why would the coin be a Federal debt that the Treasury must repay?

It’s true that base money issued by the Federal Government is a Federal debt in the sense that the Government has an obligation to accept it in payment of taxes. But in this case, the Fed holds the coin and it has no taxes to pay. Also, the coin never goes into circulation, but sits in a Fed vault, so where does a debt that the Treasury must repay come into this picture and why?

Paul Krugman goes on to make a number of comments about the Fed printing money and the need for the Fed to pull that money back by selling its Treasury debt at some future time when the economy is growing rapidly to prevent inflation. But these comments aren’t directly relevant to using PCS, since using it is no more, and perhaps less, inflationary than using debt financing.

The appearance of PCS in Paul Krugman’s blog apparently had an immediate impact. Congressman Jerrold Nadler (D-NY), in an interview reported in Capital New York said: Read the rest of this entry →