Looks like the long-overdue Crash of 2020 is finally here, with the novel coronavirus panic being the catalyst that finally popped the truly massive stock market bubble--scratch that, BOIL--that was several years in the making. And there does not appear to be a firm bottom in sight yet. And shhhh!--don't even talk about the even bigger derivatives bubble yet. In other words, this can get real ugly real fast!
(And not even the FERAL Reserve can delay the inevitable for much longer, it seems.)
But as bad as it gets, better that it should happen several months before the 2020 presidential election rather than after. A big crash and/or recession before the election would virtually guarantee Trump's defeat, and by extension (hopefully) Bernie's victory. And so would finally mark the end of America's 40 year failed experiment with neoliberalism, that was started by Reagan and self-destructed by Trump. Bookended by two unlikely "dark horse" yet celebrity candidates, Reagan and Trump, that both cut their teeth in Hollywood before entering politics late in life, and who both said they would "Make America Great Again" (right!), this will be the end of an era--or more accurately, the end of an ERROR on January 20, 2021. Then we can finally pick up where we left off in 1980 when Carter almost won re-election but for the Reagan campaign's October Surprise dirty tricks (a conspiracy theory that actually turned out to be true, by the way). Yes, you read that correctly.
And thus, America's long, dark night of the soul will finally be over. Not just the past four years, but the past 40 as well. That is, of course, only if enough Americans actually get off their butts and VOTE--not just in the general election, but also in the primaries as well. The basket of deplorables will sure as hell vote regardless, so all progressives and even the fence-sitters need to get out and vote as well.
Showing posts with label Bernie sanders. Show all posts
Showing posts with label Bernie sanders. Show all posts
Wednesday, February 26, 2020
Thursday, November 14, 2019
Just Print The Money
What seemingly intractable problems can be solved with just four simple words? And which current presidential candidate once actually said those four exact words, "just print the money", or at least the last three of those four magic words?
A) Bernie Sanders
B) Elizabeth Warren
C) Kamala Harris
D) Joe Biden
E) Donald Trump
Give up? Scroll down to find the answer:
The answer, believe it or not, is E, Donald Trump. Yes, THAT Donald Trump. Meanwhile all of the other 2020 candidates (sorry Bernie, but even you don't get a pass on this one) are apparently too cowardly to utter those words when asked how they will "pay for" the various high-ticket items on their wish list.
Back in 2016, then presidential candidate Donald Trump said a lot of outrageous and controversial things and too many gaffes to count. But one in particular stands out in light of recent posts and current events, namely, the one in which he implied he would default on the national debt if he couldn't negotiate a better deal. Now that is clearly not something for a politician or candidate to even joke about, let alone actually do. But it was what he said after he was criticized for it and he backpedaled on it which was actually much more noteworthy:
Wait, what? You read that correctly. Modern Monetary Theory (MMT) has actually been arguing this for years now, as has Rodger Malcolm Mitchell and his own theory of Monetary Sovereignty (MS). That is, a Monetarily Sovereign government like our own federal government and many others (but unlike the euro nations or any US state or local government) has the inherent and unlimited power to create money by fiat. The only limits such a government has are those it chooses to impose on itself, such as the remaining arcane and archaic rules left over from when we actually had a gold standard before we got off of it in 1971. The world changed in that year, but our "leaders" have apparently not gotten the memo.
You might want to sit down before you read any further. Taxes do NOT actually pay for federal spending, rather, the government simply creates the money they spend ad hoc with a few clicks of a computer as they go along. Nor is there any physical need for them to borrow money, but they do so anyway by issuing Treasury securities (i.e. T-bills, T-notes, and T-bonds) whenever they create new money that is unmatched by taxes in order to match it with borrowing--all because of those arcane and archaic rules that they could remove with a stroke of a pen if they chose to. That is, IF they actually chose to.
So where do our tax dollars actually go then? Well, one could argue that those dollars are effectively taken out of the economy and needlessly destroyed. And yes, some of those dollars are ultimately destroyed in practice if not in theory. But it is worse than that, for at least at some point before destruction, they first have to make a pit stop at the privately-owned FERAL Reserve, where they do little more than further enrich the bankster oligarchs. Again, all because of those arcane and archaic rules.
And that big, scary number that we see on the National Debt Clock? Well, nowadays the national debt is literally just an accounting gimmick. What it really consists of are deposits in federal Treasury security accounts, not debt in the way that private debt is. Effectively, it is really a national savings account, and so-called "deficit" spending is simply when the government puts more money into the economy (via spending) than it takes out (via taxes and fees). Thus, a deficit for the federal budget is actually a surplus for the rest of the economy, and vice-versa.
Of course, Rodger Mitchell has an even better, more fundamental idea that makes it so the government would never need to borrow a single penny ever again, and it doesn't require raising taxes OR cutting spending. Not only that, but it would guarantee that Social Security and Medicare, and any other program, would remain fully funded indefinitely as well without the use of FICA taxes (or any other tax for that matter). The solution, in his exact words:
Before that, there actually is a painless (albeit unconventional) method of paying off the existing debt in one fell swoop. Not just this year's deficit, but ALL of the cumulative $21 trillion of the debt. It's called the Noble Solution (named after its creator, Richard E. Noble) and does not involve any significant tax hikes or spending cuts. So what is it? It's something we never would have advocated just a few years ago: printing (electronically creating) money out of thin air to pay it off all at once. After all, FERAL Reserve has been creating money out of thin air for decades now (including that recent whopping $16 trillion secret bailout of the banks, which eventually rose to nearly $30 trillion) so we might as well put this practice to productive use. Money is really nothing more than an accounting entry nowadays, so let's make the entry and be done with it for good.
But wouldn't that lead to hyperinflation? In a word, NO. Noble points out that while creating such money is undoubtedly inflationary, using it to pay off the debt (which is in Treasury bonds and is thus already part of the money supply) would be deflationary in that it would shrink the money supply by an equal amount. Thus, the two effects would cancel each other out, as paper (electronic data) would be exchanged for paper (data). Besides, inflation and hyperinflation is NOT caused by money creation, but rather by shortages of food and/or energy, leading to reverse causation. Of course, we would have to bypass the FERAL Reserve to avoid creating more debt in the process, such as #MintTheCoin. Or better yet, nationalize the FERAL Reserve entirely and return the power of money creation to its rightful owners, our elected representatives in Congress and the Department of the Treasury. America would then be "free and clear" for the first time in history since Thomas Jefferson. And it would cost us NOTHING.
Not like it really matters, since as we already noted, the "debt" is not even really debt at all, but simply deposits in Treasury securities. And as Mitchell notes, since the federal government has infinite money, it does not actually touch those deposits at all, but simply returns the existing money in those accounts to the account holders by transferring it, while adding newly-created interest dollars to whatever amount is there. Thus, to "pay off" / extinguish the debt completely, the only new money that needs to be created is the interest, and that new money will stimulate the economy. You read that right.
Alternatively, Joseph M. Firestone points out that the very same effect can also be had more gradually, with Congress passing an Act (such as the very next budget or appropriations bill) that removes those arcane and archaic rules entirely, and mandates/guarantees than any new deficits as well as any outstanding Treasury securities (i.e. national debt) be funded / paid for automatically with the very same ad hoc money creation that they already do in practice, but no longer needing to match it with new borrowing or tax revenues. Thus, the federal government would no longer need to borrow even one penny (i.e. issue any new Treasury securities) unless they truly wanted to for reasons unrelated to the federal budget. And according to Rodger Mitchell, such bonds do, in fact, have other useful, unrelated functions (i.e. providing a safe haven for investors to park their money, and an effective platform for the government to control both short and long-term interest rates, and thus the demand for dollars). But the point is they would no longer HAVE to do so just to meet their current and future fiscal obligations, so the national debt would stop increasing and gradually decrease as any existing Treasury securities mature and/or are redeemed. And thus the 100% contrived political issue (and cudgel) that is the national debt / deficit would quickly become a dead issue, and we can finally focus on other, real priorities for a change.
You know, things like Universal Basic Income, Medicare For All, free college, improvements to education, rebuilding our crumbling infrastructure, and stuff like that. All of which can be readily "paid for" with the stroke of a pen and the click of a computer key. No taxes or borrowing required. And if the "inflation dragon" ever does happen rear its ugly head again, simply raising interest rates will quash it, as will the practice of draining excess bank reserves and "sterilizing" cash inflows at the FERAL Reserve (which again, really should be nationalized to to become truly FEDERAL) when the newly-created dollars pass through many hands and then the banks and make an inevitable pit stop there. Problem solved. And any inflation that is driven by food and energy shortages can be resolved by simply redirecting federal spending to incentivize the producers of such to produce more, by buying such products at a premium and selling (or giving them away) at a loss. Hey, it's infinite money, remember?
So what are we waiting for?
A) Bernie Sanders
B) Elizabeth Warren
C) Kamala Harris
D) Joe Biden
E) Donald Trump
Give up? Scroll down to find the answer:
The answer, believe it or not, is E, Donald Trump. Yes, THAT Donald Trump. Meanwhile all of the other 2020 candidates (sorry Bernie, but even you don't get a pass on this one) are apparently too cowardly to utter those words when asked how they will "pay for" the various high-ticket items on their wish list.
Back in 2016, then presidential candidate Donald Trump said a lot of outrageous and controversial things and too many gaffes to count. But one in particular stands out in light of recent posts and current events, namely, the one in which he implied he would default on the national debt if he couldn't negotiate a better deal. Now that is clearly not something for a politician or candidate to even joke about, let alone actually do. But it was what he said after he was criticized for it and he backpedaled on it which was actually much more noteworthy:
This is the United States government. First of all, you never have to default because you [just] print the money. I hate to tell you. So there’s never a default.And that second "gaffe", ladies and gentlemen, was actually NOT a gaffe at all. Why? Because it is actually TRUE, believe it or not. Even a stopped clock is right twice a day, after all.
Wait, what? You read that correctly. Modern Monetary Theory (MMT) has actually been arguing this for years now, as has Rodger Malcolm Mitchell and his own theory of Monetary Sovereignty (MS). That is, a Monetarily Sovereign government like our own federal government and many others (but unlike the euro nations or any US state or local government) has the inherent and unlimited power to create money by fiat. The only limits such a government has are those it chooses to impose on itself, such as the remaining arcane and archaic rules left over from when we actually had a gold standard before we got off of it in 1971. The world changed in that year, but our "leaders" have apparently not gotten the memo.
You might want to sit down before you read any further. Taxes do NOT actually pay for federal spending, rather, the government simply creates the money they spend ad hoc with a few clicks of a computer as they go along. Nor is there any physical need for them to borrow money, but they do so anyway by issuing Treasury securities (i.e. T-bills, T-notes, and T-bonds) whenever they create new money that is unmatched by taxes in order to match it with borrowing--all because of those arcane and archaic rules that they could remove with a stroke of a pen if they chose to. That is, IF they actually chose to.
So where do our tax dollars actually go then? Well, one could argue that those dollars are effectively taken out of the economy and needlessly destroyed. And yes, some of those dollars are ultimately destroyed in practice if not in theory. But it is worse than that, for at least at some point before destruction, they first have to make a pit stop at the privately-owned FERAL Reserve, where they do little more than further enrich the bankster oligarchs. Again, all because of those arcane and archaic rules.
And that big, scary number that we see on the National Debt Clock? Well, nowadays the national debt is literally just an accounting gimmick. What it really consists of are deposits in federal Treasury security accounts, not debt in the way that private debt is. Effectively, it is really a national savings account, and so-called "deficit" spending is simply when the government puts more money into the economy (via spending) than it takes out (via taxes and fees). Thus, a deficit for the federal budget is actually a surplus for the rest of the economy, and vice-versa.
Of course, Rodger Mitchell has an even better, more fundamental idea that makes it so the government would never need to borrow a single penny ever again, and it doesn't require raising taxes OR cutting spending. Not only that, but it would guarantee that Social Security and Medicare, and any other program, would remain fully funded indefinitely as well without the use of FICA taxes (or any other tax for that matter). The solution, in his exact words:
The best way is to eliminate the federal budget deficit and debt: Ending government borrowing. The government has the unlimited ability to create and spend money without borrowing. The process will be:
1) Congress will create an account called "Money."
2) Congress will determine how much money this account contains. The process will be similar to the way Congress now determines the debt ceiling.
3) Federal agencies will write checks against this account according to budgets decided by Congress. If any federal agency needed additional funds, Congress would decide whether or not to allow this spending, in the same way that Congress votes for additional spending by the military et al.
This would eliminate concerns about "our grandchildren paying for the federal debt." There would be no federal debt.And as long as such money were created without any interest or related fees attached to its creation (as per Ellen Brown), such a solution would actually work. Modern Monetary Theory indeed supports such an idea. Congress can already spend money into existence rather than lend it into existence, all they would have to do now is officially decouple such spending from taxes and Treasury securities. (And since he mentioned the debt ceiling, that is another thing we should really get rid of as well in the meantime, since it does far more harm than good.)
Before that, there actually is a painless (albeit unconventional) method of paying off the existing debt in one fell swoop. Not just this year's deficit, but ALL of the cumulative $21 trillion of the debt. It's called the Noble Solution (named after its creator, Richard E. Noble) and does not involve any significant tax hikes or spending cuts. So what is it? It's something we never would have advocated just a few years ago: printing (electronically creating) money out of thin air to pay it off all at once. After all, FERAL Reserve has been creating money out of thin air for decades now (including that recent whopping $16 trillion secret bailout of the banks, which eventually rose to nearly $30 trillion) so we might as well put this practice to productive use. Money is really nothing more than an accounting entry nowadays, so let's make the entry and be done with it for good.
But wouldn't that lead to hyperinflation? In a word, NO. Noble points out that while creating such money is undoubtedly inflationary, using it to pay off the debt (which is in Treasury bonds and is thus already part of the money supply) would be deflationary in that it would shrink the money supply by an equal amount. Thus, the two effects would cancel each other out, as paper (electronic data) would be exchanged for paper (data). Besides, inflation and hyperinflation is NOT caused by money creation, but rather by shortages of food and/or energy, leading to reverse causation. Of course, we would have to bypass the FERAL Reserve to avoid creating more debt in the process, such as #MintTheCoin. Or better yet, nationalize the FERAL Reserve entirely and return the power of money creation to its rightful owners, our elected representatives in Congress and the Department of the Treasury. America would then be "free and clear" for the first time in history since Thomas Jefferson. And it would cost us NOTHING.
Not like it really matters, since as we already noted, the "debt" is not even really debt at all, but simply deposits in Treasury securities. And as Mitchell notes, since the federal government has infinite money, it does not actually touch those deposits at all, but simply returns the existing money in those accounts to the account holders by transferring it, while adding newly-created interest dollars to whatever amount is there. Thus, to "pay off" / extinguish the debt completely, the only new money that needs to be created is the interest, and that new money will stimulate the economy. You read that right.
Alternatively, Joseph M. Firestone points out that the very same effect can also be had more gradually, with Congress passing an Act (such as the very next budget or appropriations bill) that removes those arcane and archaic rules entirely, and mandates/guarantees than any new deficits as well as any outstanding Treasury securities (i.e. national debt) be funded / paid for automatically with the very same ad hoc money creation that they already do in practice, but no longer needing to match it with new borrowing or tax revenues. Thus, the federal government would no longer need to borrow even one penny (i.e. issue any new Treasury securities) unless they truly wanted to for reasons unrelated to the federal budget. And according to Rodger Mitchell, such bonds do, in fact, have other useful, unrelated functions (i.e. providing a safe haven for investors to park their money, and an effective platform for the government to control both short and long-term interest rates, and thus the demand for dollars). But the point is they would no longer HAVE to do so just to meet their current and future fiscal obligations, so the national debt would stop increasing and gradually decrease as any existing Treasury securities mature and/or are redeemed. And thus the 100% contrived political issue (and cudgel) that is the national debt / deficit would quickly become a dead issue, and we can finally focus on other, real priorities for a change.
You know, things like Universal Basic Income, Medicare For All, free college, improvements to education, rebuilding our crumbling infrastructure, and stuff like that. All of which can be readily "paid for" with the stroke of a pen and the click of a computer key. No taxes or borrowing required. And if the "inflation dragon" ever does happen rear its ugly head again, simply raising interest rates will quash it, as will the practice of draining excess bank reserves and "sterilizing" cash inflows at the FERAL Reserve (which again, really should be nationalized to to become truly FEDERAL) when the newly-created dollars pass through many hands and then the banks and make an inevitable pit stop there. Problem solved. And any inflation that is driven by food and energy shortages can be resolved by simply redirecting federal spending to incentivize the producers of such to produce more, by buying such products at a premium and selling (or giving them away) at a loss. Hey, it's infinite money, remember?
So what are we waiting for?
Wednesday, June 20, 2018
Protectionism Without Tariffs and Trade Wars? Easy-Peasy
Looks like Trump's asinine trade war (not just with China, but also our own allies as well) has now begun in earnest. And that does not bode well at all for our economy OR theirs, since no one really wins a trade war. Smoot and Hawley must both be spinning in their graves right now, as any history buff will note.
You may remember that one of our previous posts outlines the TSAP's rather nuanced position on tariffs and trade, but we should also elaborate more on how it is possible to have an intelligent and rational kind of protectionism that does NOT depend on tariffs, quotas, or any other beggar-thy-neighbor policies. For example, since our federal government is Monetarily Sovereign, they can easily afford to do the following to actually protect important domestic industries, as the ever-insightful Rodger Malcolm Mitchell notes:
- Federal government purchases from domestic suppliers, even at higher than import prices.
- Federal tax breaks for selected industries
- Direct federal cash infusions (i.e. direct subsidies) to the selected companies.
And that is true because, as he also notes, a Monetarily Sovereign government like ours literally has the unlimited ability to create and spend its own sovereign currency. All federal government spending, without exception, involves the ad hoc creation of brand new dollars every time, arcane and archaic rules notwithstanding. No need to bring the proverbial coals (i.e. tax/tariff dollars) to Newcastle only to effectively destroy them. And unlike tariffs and quotas, these measures result in a positive-sum game rather than a zero or negative-sum game.
Of course, all of these things are proverbial carrots, so what about the sticks, you ask? Even then, most tariffs (and quotas) are far too blunt an instrument, are prone to backfiring, and should be narrowly tailored and used only as a last resort (i.e. to enforce specific trade and other agreements that are being blatantly flouted, and/or for strictly Pigouvian reasons), if even at all. If outsourcing/offshoring of American jobs is the real concern, it would be far better to start by closing the ludicrous loopholes in the corporate tax code that encourage outsourcing/offshoring of such jobs in the first place. The latter tactic is the basis for Bernie Sanders' Outsourcing Prevention Act, which would also end or claw back subsidies for American corporations that send jobs overseas. And his other big idea, the Rebuild America Act, would create additional jobs rebuilding America's obsolete, neglected, and/or crumbling infrastructure as well.
Note that Trump had clearly stolen, bastardized, and ran with several of Bernie's ideas while combining it all with empty rhetoric and beggar-thy-neighbor policies. That is, when Trump's ideas are anything even close to coherent, as opposed to the usual incoherent verbal defecation that he is famous for.
But make no mistake. Our nation's once-great manufacturing base has been hollowed out for decades, and much of it is currently rotting and rusting thanks to the neoliberal "free trade" scam brought to us by Reagan (and Thatcher in the UK) and embraced by both corporate parties ever since. We ignore it at our own peril. And the genuine political left would truly do well to abandon this highly toxic and corrosive ideology yesterday.
Saturday, March 10, 2018
Our Position on Tariffs and Trade
With Donald Trump essentially starting a trade war with his latest import tariffs (25% on steel, 10% on aluminum), the TSAP must clarify our often ambiguous position on tariffs and trade. Unlike both corporate political parties, we have always rejected the so-called "free trade" scam as the neoliberals typically define it (we aren't called the True Spirit of America Party for nothing, you know), but have nonetheless gone back and forth over the years on the question of just how protectionist we ought to be.
We believe that protectionism is indeed a razor-sharp, double-edged sword, and can backfire if done excessively or improperly, but if done wisely and properly (unlike Trump's bass-ackwards version) it can work well. No one really wins a trade war, so trade policy must be based on more than beggar-thy-neighbor policies. Thom Hartmann wrote an excellent article on how properly implemented tariffs can, in conjuction with subsidies and other important measures, contribute to the goal of protecting vital American industries and the jobs that go with them.
While we are not against tariffs, protective or otherwise, any tariffs should be carefully targeted to those essential goods and countries for which we have a significant trade deficit today. Unlike Trump's rash and hamhanded version of protectionism that is prone to backfiring, tariffs should not be applied to raw materials that American industry uses to make finished goods, nor should they apply indiscriminately to unnecessarily include our allies as well. They should apply primarily to situations where workers in other countries are grossly underpaid to make the good in question and/or environmental standards are more lax than ours. And they should never be done in isolation, but rather other measures should be done along with it, such as subsidies for crucial domestic industries, "Buy American" clauses in government stimulus packages, and even more importantly, closing the ludicrous loopholes in the corporate tax code that encourage outsourcing and offshoring of American jobs. The latter tactic is the basis for Bernie Sanders' Outsourcing Prevention Act, which would also end or claw back subsidies for American corporations that send jobs overseas. Note that Bernie was not against tariffs, and even advocated for some level of protective tariffs in 2016 before Trump cribbed his idea, bastardized it, and successfully stole his thunder as a result.
Alternatively, or in addition to the above, the TSAP also supports the Buffett Plan. In 2003, the legendary Warren Buffett came up with a simple and very clever idea to close America's yawning trade gap by issuing tradeable Import Certificates (IC) to American exporters equal to the dollar value of exports. And anyone holding these tradeable certificates would be allowed to import the same dollar amount of these certificates, thus being a similar idea to cap-and-trade. The inevitable result would be trade balance, as every dollar worth of imports would have to be offset by a dollar worth of exports. While the downside is that prices will inevitably go up somewhat as a result, the upside is that jobs will return to America and workers' wages would also go up as well, so the net effect would be beneficial overall. And if tariffs still exist and/or ICs are auctioned by the government, the revenue could be directly refunded to the people to further help offset the price hikes for any affected goods and services.
But make no mistake. Our nation's once-great manufacturing base has been hollowed out for decades, and much of it is currently rotting and rusting thanks to the neoliberal "free trade" scam brought to us by Reagan (and Thatcher in the UK) and embraced by both corporate parties ever since. We ignore it at our own peril. And the left would do well to abandon this highly corrosive ideology yesterday.
We believe that protectionism is indeed a razor-sharp, double-edged sword, and can backfire if done excessively or improperly, but if done wisely and properly (unlike Trump's bass-ackwards version) it can work well. No one really wins a trade war, so trade policy must be based on more than beggar-thy-neighbor policies. Thom Hartmann wrote an excellent article on how properly implemented tariffs can, in conjuction with subsidies and other important measures, contribute to the goal of protecting vital American industries and the jobs that go with them.
While we are not against tariffs, protective or otherwise, any tariffs should be carefully targeted to those essential goods and countries for which we have a significant trade deficit today. Unlike Trump's rash and hamhanded version of protectionism that is prone to backfiring, tariffs should not be applied to raw materials that American industry uses to make finished goods, nor should they apply indiscriminately to unnecessarily include our allies as well. They should apply primarily to situations where workers in other countries are grossly underpaid to make the good in question and/or environmental standards are more lax than ours. And they should never be done in isolation, but rather other measures should be done along with it, such as subsidies for crucial domestic industries, "Buy American" clauses in government stimulus packages, and even more importantly, closing the ludicrous loopholes in the corporate tax code that encourage outsourcing and offshoring of American jobs. The latter tactic is the basis for Bernie Sanders' Outsourcing Prevention Act, which would also end or claw back subsidies for American corporations that send jobs overseas. Note that Bernie was not against tariffs, and even advocated for some level of protective tariffs in 2016 before Trump cribbed his idea, bastardized it, and successfully stole his thunder as a result.
Alternatively, or in addition to the above, the TSAP also supports the Buffett Plan. In 2003, the legendary Warren Buffett came up with a simple and very clever idea to close America's yawning trade gap by issuing tradeable Import Certificates (IC) to American exporters equal to the dollar value of exports. And anyone holding these tradeable certificates would be allowed to import the same dollar amount of these certificates, thus being a similar idea to cap-and-trade. The inevitable result would be trade balance, as every dollar worth of imports would have to be offset by a dollar worth of exports. While the downside is that prices will inevitably go up somewhat as a result, the upside is that jobs will return to America and workers' wages would also go up as well, so the net effect would be beneficial overall. And if tariffs still exist and/or ICs are auctioned by the government, the revenue could be directly refunded to the people to further help offset the price hikes for any affected goods and services.
But make no mistake. Our nation's once-great manufacturing base has been hollowed out for decades, and much of it is currently rotting and rusting thanks to the neoliberal "free trade" scam brought to us by Reagan (and Thatcher in the UK) and embraced by both corporate parties ever since. We ignore it at our own peril. And the left would do well to abandon this highly corrosive ideology yesterday.
Friday, March 4, 2016
Bernie's Tax Plan Is Good, But The TSAP Can Do Much Better
Bernie Sanders' tax proposals have recently been published and analyzed by the Tax Policy Center. You can read about it here. It happens to be a rather biased analysis that has some glaring omissions downplaying the value of public investment, and a more accurate one can be found here. While the TSAP continues to wholeheartedly endorse Bernie, we feel we can come up with a tax plan that is even better still. So here is the latest version of our own:
Universal Exchange Tax (UET)
Implement a tiny Universal Exchange Tax of between 0.05% (50 cents per $1000) and 0.1% (1 dollar per $1000) on all automated financial transactions of any kind. With a tax base estimated to be in excess of $4 quadrillion, this tax should raise between $2 trillion (half the federal budget) and $4 trillion (the entire federal budget).
Not only would it eliminate the deficit, it would create a surplus large enough to eliminate or dramatically cut all other forms of taxation at both the federal and state levels.
NOTE: We do NOT take credit for coming up with this idea; it was found posted on an anonymous website. Also, economist Dr. Edgar Feige apparently thought of a similar idea back in 2005.
Individual Income Tax
Overhaul and simplify the federal tax code by repealing the regular income tax while retaining and tweaking the AMT to reflect the following:
Absolutely no income tax on those making less than $20,000 per year, period.
Ideally, no income tax on those making less than $50,000 per year.
With preferably the following marginal income tax brackets for individuals:
Below $20,000 -- no income tax
$20,000 to $50,000 -- 5%
$50,000 to $90,000 -- 10%
$90,000 to $150,000 -- 20%
$150,000 to $250,000 -- 30%
$250,000 to $1,000,000 -- 40%
$1,000,000 to $10,000,000 -- 50%
Over $10,000,000 -- 70%
With no loopholes and no deductions other than state/local taxes and a limited amount of charitable donations.
All forms of income would be taxed equally at the normal rates, including dividends and capital gains. For capital gains, the basis will be indexed to inflation (which is currently not the case). The exclusion for capital gains below $250,000 from home sales will remain as is.
NOTE: If the Universal Exchange Tax (UET) is implemented and set at a high enough rate, we could theoretically reduce the income tax to only 10% on each dollar above $100,000 and 50% on each dollar above $1 million. We propose a UET rate between 0.05% (50 cents per $1000) and 0.1% (1 dollar per $1000) on all transactions, which would most likely be high enough to do so.
Corporate Income Tax
Overhaul the tax code to eliminate all loopholes and favoritism of any kind. Then implement the following tax brackets for corporations:
Below $100,000 -- no income tax
$100,000 to $1,000,000 -- 10%
$1,000,000 to $10,000,000 -- 20%
$10,000,000 to $100,000,000 -- 35%
Over $100,000,000 -- 50%
Unlike the current law, only undistributed profits would be taxed. Amounts distributed as dividends would not be taxed at the corporate level, but would be taxed at the normal rate for the individual shareholders.
Tax US corporate foreign income as it is earned, rather than when the income is repatriated.
Payroll/FICA Taxes
Remove entirely the wage cap for Social Security portion of FICA tax, or raise it to a very high value (i.e. $10 million) for as long as we still have a FICA tax.
Reduce FICA tax rates to the lowest possible level needed for long-term solvency, or better yet eliminate FICA entirely (if an alternative funding source such as the UET is implemented). If no alternative source is present, then raise the FICA tax by an additional 0.2%.
Create a tiny, fixed "Occupational Privilege Tax (OPT)" of about $50 per year at the federal level, similar to what many states and localities do. Use it for general revenue.
Luxury Tax
Similar to a sales tax, 2% on all new items priced at $1000 or more, and only on the amount over $1000. For vehicles of any kind, the exemption amount would be $30,000. For new homes, the exemption amount would be $1 million. Items purchased overseas would be considered "new" and taxable upon entering the country if purchased within the past year or two.
Estate Tax
Resurrect the estate tax ("death tax"), this time as a progressive one. The exemption amount would be $3.5 million, then 45% up to $50 million, 55% up to $500 million, 65% up to $1 billion, and 75% for $1 billion and above.
Excise, Vice, and Other Taxes
Bring back the Superfund taxes that expired in 1995, and expand it to cover ALL harmful and toxic chemicals.
Increase and equalize the federal alcohol excise taxes to $22 per proof-gallon for all alcoholic beverages, equal to the liquor tax in 1991 adjusted for inflation. Microbrewers (those who produce less than 6 million barrels) would continue to pay the current rate of $0.58 per gallon ($18 per barrel) on the first 2 million barrels.
Equalize the federal tax for all tobacco products by weight to $1.55 per ounce, and tax the tobacco itself at the producer level. Set a national price floor for cigarettes of at least $5.00/pack to encourage low-tax states like Virginia to hike their own tobacco taxes.
If and when cannabis and/or any other currently illegal drugs are legalized, tax them as well. For example, cannabis could be taxed at a flat rate of $10-$50 per ounce, or perhaps set proportionally to potency (e.g. $5 per ounce, multiplied by percentage of THC).
Raise the gas tax by 1 cent/gal each week until it is $0.50/gal higher than it is today. "A Penny for Progress."
Enact the following "menu" of new taxes:
Enact a financial crisis responsibility fee (leverage tax) of 0.15% of covered liabilities of so-called "too big to fail" banks with more than $50 billion in assets.
Enact a Wall Street Gaming Tax of 0.5% specifically on derivatives and any other exotic financial products designed primarily for the purpose of speculation or gambling.
Carbon Tax and Dividend
Additionally, implement a "carbon tax and dividend" on all fossil fuels similar to what Steve Stoft proposes in Carbonomics. Start it at $10/ton in the first year, and double it every year until it reaches $160/ton, then increase it further by 5% each year or the rate of inflation, whichever is greater. Refund 100% of the proceeds directly to We the People.
Do these things and we can easily pay for all of what Bernie proposes and then some. Especially if we also nationalize the Feral Reserve and make our currency interest-free and inflation-free, as well as zero-out the national debt via money creation as discussed in a previous post. And our proposal would be even simpler and more progressive than his proposals currently are.
And yes, progressive taxation is indeed the fairest method and best for the economy as a whole. History has shown that "trickle-down" voodoo economics does NOT work, period. Cutting taxes at the top tends to create short-term "sugar highs" in the economy, followed by painful crashes. All while worsening inequality, and too much inequality ultimately kills growth in the long run. As Robert Reich famously said, the economy exists to make our lives better. We don't exist to make the economy better.
Universal Exchange Tax (UET)
Implement a tiny Universal Exchange Tax of between 0.05% (50 cents per $1000) and 0.1% (1 dollar per $1000) on all automated financial transactions of any kind. With a tax base estimated to be in excess of $4 quadrillion, this tax should raise between $2 trillion (half the federal budget) and $4 trillion (the entire federal budget).
Not only would it eliminate the deficit, it would create a surplus large enough to eliminate or dramatically cut all other forms of taxation at both the federal and state levels.
NOTE: We do NOT take credit for coming up with this idea; it was found posted on an anonymous website. Also, economist Dr. Edgar Feige apparently thought of a similar idea back in 2005.
Individual Income Tax
Overhaul and simplify the federal tax code by repealing the regular income tax while retaining and tweaking the AMT to reflect the following:
Absolutely no income tax on those making less than $20,000 per year, period.
Ideally, no income tax on those making less than $50,000 per year.
With preferably the following marginal income tax brackets for individuals:
Below $20,000 -- no income tax
$20,000 to $50,000 -- 5%
$50,000 to $90,000 -- 10%
$90,000 to $150,000 -- 20%
$150,000 to $250,000 -- 30%
$250,000 to $1,000,000 -- 40%
$1,000,000 to $10,000,000 -- 50%
Over $10,000,000 -- 70%
With no loopholes and no deductions other than state/local taxes and a limited amount of charitable donations.
All forms of income would be taxed equally at the normal rates, including dividends and capital gains. For capital gains, the basis will be indexed to inflation (which is currently not the case). The exclusion for capital gains below $250,000 from home sales will remain as is.
NOTE: If the Universal Exchange Tax (UET) is implemented and set at a high enough rate, we could theoretically reduce the income tax to only 10% on each dollar above $100,000 and 50% on each dollar above $1 million. We propose a UET rate between 0.05% (50 cents per $1000) and 0.1% (1 dollar per $1000) on all transactions, which would most likely be high enough to do so.
Corporate Income Tax
Overhaul the tax code to eliminate all loopholes and favoritism of any kind. Then implement the following tax brackets for corporations:
Below $100,000 -- no income tax
$100,000 to $1,000,000 -- 10%
$1,000,000 to $10,000,000 -- 20%
$10,000,000 to $100,000,000 -- 35%
Over $100,000,000 -- 50%
Unlike the current law, only undistributed profits would be taxed. Amounts distributed as dividends would not be taxed at the corporate level, but would be taxed at the normal rate for the individual shareholders.
Tax US corporate foreign income as it is earned, rather than when the income is repatriated.
Payroll/FICA Taxes
Remove entirely the wage cap for Social Security portion of FICA tax, or raise it to a very high value (i.e. $10 million) for as long as we still have a FICA tax.
Reduce FICA tax rates to the lowest possible level needed for long-term solvency, or better yet eliminate FICA entirely (if an alternative funding source such as the UET is implemented). If no alternative source is present, then raise the FICA tax by an additional 0.2%.
Create a tiny, fixed "Occupational Privilege Tax (OPT)" of about $50 per year at the federal level, similar to what many states and localities do. Use it for general revenue.
Luxury Tax
Similar to a sales tax, 2% on all new items priced at $1000 or more, and only on the amount over $1000. For vehicles of any kind, the exemption amount would be $30,000. For new homes, the exemption amount would be $1 million. Items purchased overseas would be considered "new" and taxable upon entering the country if purchased within the past year or two.
Estate Tax
Resurrect the estate tax ("death tax"), this time as a progressive one. The exemption amount would be $3.5 million, then 45% up to $50 million, 55% up to $500 million, 65% up to $1 billion, and 75% for $1 billion and above.
Excise, Vice, and Other Taxes
Bring back the Superfund taxes that expired in 1995, and expand it to cover ALL harmful and toxic chemicals.
Increase and equalize the federal alcohol excise taxes to $22 per proof-gallon for all alcoholic beverages, equal to the liquor tax in 1991 adjusted for inflation. Microbrewers (those who produce less than 6 million barrels) would continue to pay the current rate of $0.58 per gallon ($18 per barrel) on the first 2 million barrels.
Equalize the federal tax for all tobacco products by weight to $1.55 per ounce, and tax the tobacco itself at the producer level. Set a national price floor for cigarettes of at least $5.00/pack to encourage low-tax states like Virginia to hike their own tobacco taxes.
If and when cannabis and/or any other currently illegal drugs are legalized, tax them as well. For example, cannabis could be taxed at a flat rate of $10-$50 per ounce, or perhaps set proportionally to potency (e.g. $5 per ounce, multiplied by percentage of THC).
Raise the gas tax by 1 cent/gal each week until it is $0.50/gal higher than it is today. "A Penny for Progress."
Enact the following "menu" of new taxes:
- coffee beans or grounds ($0.10/lb)
- pure caffeine ($1.00/lb)
- refined sugars ($0.10/lb)
- salt ($0.10/lb)
- hydrogenated fats ($1.00/lb)
Enact a financial crisis responsibility fee (leverage tax) of 0.15% of covered liabilities of so-called "too big to fail" banks with more than $50 billion in assets.
Enact a Wall Street Gaming Tax of 0.5% specifically on derivatives and any other exotic financial products designed primarily for the purpose of speculation or gambling.
Carbon Tax and Dividend
Additionally, implement a "carbon tax and dividend" on all fossil fuels similar to what Steve Stoft proposes in Carbonomics. Start it at $10/ton in the first year, and double it every year until it reaches $160/ton, then increase it further by 5% each year or the rate of inflation, whichever is greater. Refund 100% of the proceeds directly to We the People.
Do these things and we can easily pay for all of what Bernie proposes and then some. Especially if we also nationalize the Feral Reserve and make our currency interest-free and inflation-free, as well as zero-out the national debt via money creation as discussed in a previous post. And our proposal would be even simpler and more progressive than his proposals currently are.
And yes, progressive taxation is indeed the fairest method and best for the economy as a whole. History has shown that "trickle-down" voodoo economics does NOT work, period. Cutting taxes at the top tends to create short-term "sugar highs" in the economy, followed by painful crashes. All while worsening inequality, and too much inequality ultimately kills growth in the long run. As Robert Reich famously said, the economy exists to make our lives better. We don't exist to make the economy better.
Thursday, January 7, 2016
The TSAP is Feeling the BERN!
It's 2016, and Election Day will be right around the corner. And the True Spirit of America Party will be unequivocally endorsing Bernie Sanders for President. On essentially all of the issues, his platform is the one that closest to ours among all the candidates that have a chance this year.
As much as we want a woman to be President yesterday, which is LONG overdue, the TSAP will not be endorsing Hillary since we believe that she is simply not progressive enough for us or for the nation. Granted, she is FAR better than literally any Rethuglican candidate out there (puke!), and we would much rather have her instead of any of them, we still feel that Bernie is the better choice overall this time around. And unfortunately Elizabeth Warren is not going to be running this year, nor is the woman who we feel would really be the ideal President, Marianne Williamson. Bernie is the next best thing, and in fact Marianne herself is endorsing him as well. So yes, we are FEELING THE BERN!!!
As much as we want a woman to be President yesterday, which is LONG overdue, the TSAP will not be endorsing Hillary since we believe that she is simply not progressive enough for us or for the nation. Granted, she is FAR better than literally any Rethuglican candidate out there (puke!), and we would much rather have her instead of any of them, we still feel that Bernie is the better choice overall this time around. And unfortunately Elizabeth Warren is not going to be running this year, nor is the woman who we feel would really be the ideal President, Marianne Williamson. Bernie is the next best thing, and in fact Marianne herself is endorsing him as well. So yes, we are FEELING THE BERN!!!
Subscribe to:
Posts (Atom)
