Her fear mongering about Social Security etc. follows the decades-old screeds from the Peterson Foundation. However, again she is cynically subversive since Social Security, Medicare, Medicaid, Disability Insurance, etc. goo.gl/DCnEyM can never involuntarily, pose a solvency risk to the federal government. Why not??? Because all that's needed to continue current or increased benefits is an appropriation. No taxes need be levied, no need for modifications in program eligibility, and most importantly no reduction in program benefits.
As Greenspan and Bernanke have both testified in support of the fact of the U.S. being monetarily sovereign, "The U.S. can meet any obligation denominated in its own currency and never pose a solvency/security risk as long as our economy can produce the goods and services with which the benefits from these programs can purchase without causing inflation."
Sovereign spending is necessary to get U.S. dollars into the private sector where entrepreneurs and businesses then leverage them with bank loans to create goods and services, jobs and careers. What is amazing to contemplate, however, is that the initial sovereign spending of these dollars also accomplishes something else: it creates goods and services that we benefit from collectively as a society--in many cases, that we benefit from substantially (as in we might not even be alive without them.) In other words, the thing that drives our fiscal-monetary system coincidentally also makes it possible for us to build and create goods and services that make us collectively healthy and prosperous. Source J.D. Alt goo.gl/7YekjX
Interest payments (4) are nothing more than transfers of dollars from the FRB's checking account to accounts of bond holders. No taxes needed. Absent these transfers the economy would lose net assets with which to consume and invest.
As for crowding out (5), deficit spending adds dollars to the economy. How can adding dollars by purchasing goods and services from the economy and by putting more dollars into people's pockets "crowd out" investments? If the economy reached full employment and government continued to spend, crowding out would occur. But we have not had real U6 full employment since the mid-50s. goo.gl/QfOi8
Any serious discussion of tax policy/reform, a perennial hot button for voters and an opportunity candidates use to promise the undeliverable, should begin by spelling out the purpose of taxation after FDR and Nixon abandoned the gold standard and fixed exchange rates.
Their actions eliminated a major purpose of taxation; that of raising revenue to fund federal government expenditures.
This outcome was explained in 1946 by Beardsley Ruml, the former Chairman of the Federal Reserve Bank of New York and published in a periodical named American Affairs. While Ruml was writing about the merits of corporate taxes, it is his discussion about how the function of taxes changed after the nation exited the gold standard that makes this a must read. (Mosler) http://neweconomicperspectives.org/2010/04/fed-chairman-ruml-got-it-right-in-1946.html
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
3
2
2
