California Free Press

Off the Top of My Head

A Comparison of US Democracy and Chinese Meritocracy

by John Lawrence

China has been characterized as an autocracy or a dictatorship by American media which is basically a misrepresentation of how their political system actually works. China has a long history going back 5000 years including a number of dynasties such as the Han, Tang, Song, Ming, Yuan and Quing. For most of its history China's political system has been primarily influenced by Confucianism which mandated that Chinese scholar-officials be chosen after submitting to a rigorous and extensive examination so as to choose the best and the brightest people and also those with the highest ethical standards to comprise the government. In one dynasty applicants had to show up at the examination site with their own food and sleeping bags and be locked into a cubicle for 3 days while they took the exam. China does have democracy at the local level. These local leaders then choose the government at the prefectural level who choose the leaders in the National Assembly so it is an indirect democracy in a sense just as parliamentary democracies choose their prime minister not by a vote of the people but by a vote of the people elected to parliament.

The US has a form of democracy where the people vote district by district for members of the House and state by state for members of the Senate. They also vote directly for the President. Because of the nature of the voting system which is first-past-the-post or plurality, the candidate with the most votes, even if not a majority, wins. The voting system is further complicated by the electoral college when voting for the President and by gerrymandering when voting for Congressional representatives. US voters get to vote for one Congress person representing their district and two senators representing their state so only three people at the national level at all. There are no standards of knowledge or expertise for any candidate so any fool or idiot can be elected President or a member of Congress. Because of the nature of the voting system, the US is a two party system as opposed to China which is a one party system. The best form might be a no party system in which at least one House of a bicameral legislature is chosen by sortition (random selection) which is what Aristotle recommended. This type of system would exactly mirror the society which arguably is what democracy is supposed to accomplish. That would at least reduce the divisiveness between elites and non-elites which both the US and the Chinese systems suffer from.

Some people have argued that the Chinese Communist Party controls the Chinese government. To some extent this is true since China is a one party system. However, China changed its economic system in 1980 When Deng Xiaoping became Chairman. China's economic success is largely due to Deng's abandoning the communist economic system in favor of capitalism. So while China is no longer communist, they have still stuck with the name. Many scholars have recommended a name change to eliminate the word communism such that the party is simply known as the Chinese party, not the Chinese Communist party. Due to private enterprise, more than 800 million people have been lifted out of poverty in the last 40 years. Both the Chinese one party system and the US two party system have their defects. In the recent US election the majority or voters had no interest in long term solutions to problems such as climate change. Their only interest was their own wallets. China is capable of long term planning and also of making big changes on an immediate basis while the US is stuck in gridlock on many issues due to divisiveness of the two parties. True the US has a one person, one vote democracy, but the quality and sophistication of the voters, themselves, determines to a great extent the quality of US democracy as a whole.

Perhaps the Chinese system could be broadened in such a way that the people voted on all those candidates who passed the Confucian style examinations. The American system could also be improved by requiring its candidates for office to have attained some level of expertise for the offices they seek. A combination of democracy and meritocracy might be the way to go.

Off the Top of My Head

Elon: There Are Great Cost Savings to be Made by Cutting the Trillion Dollar Budget of the Defense Department

by John Lawrence

The United States spends more on defense than the next 9 countries combined. In 2024 the US spent over a trillion dollars just on interest on the Federal debt. The current defense budget is $895 billion. The US budget for intelligence agencies in 2023 was $99.6 billion which was a nearly $10 billion increase from 2022. U.S. programs to operate and modernize nuclear forces would cost $756 billion over the next 10 years. So when you add it all up, the US spends well over a trillion dollars a year on defense/offense. In 2023 The federal government spent 38.0% more than it collected  resulting in a $1.7 trillion deficit. In 2024 the US added $2 trillion to the national debt. The last trillion was added just 4 months after the previous trillion. In the new Trump/Musk era, in which the US will purportedly retreat from being a globally connected power, there are much cost savings to be had by cutting all these budgets down to size. China's total military spending for 2024 has been estimated at US $471 billion, roughly half the US military budget. The US could bring it's defense/offense budget down to roughly that size and still spend more money than any other country.

The question is couldn't the US slash its military budget and still be a world power? The only other alternative to cutting US expenditures down to the size of US revenues is to cut spending on social security and medicare. The federal government spent $1.35 trillion on Social Security in fiscal year 2023. This accounted for 22% of the total federal budget. In 2023, the federal government spent about $848.2 billion on Medicare. Medicaid is financed jointly by the federal government and the states. In 2022, the federal government covered 71 percent of the program's cost, spending $592 billion. So the Trump/Musk cost cutting regime is likely to focus on Medicaid, which is the health care program that mostly helps poor and vulnerable people. The federal government collected nearly $4.5 trillion in revenue in FY 2023 and spent almost $6.2 trillion. So the US government was $1.7 trillion short! In 2024 $2 trillion was added to the national debt, and currently the US spends $882 billion just on interest on the national debt, about the same amount as the nominal defense budget and more than was spent on Medicare!

In the first Trump presidency the national debt rose by almost $7.8 trillion mainly due to tax cuts for the rich. Now that Trump wants the debt ceiling abolished, he will probably want to use the same playbook to give more humungus tax cuts to the rich. This will drive up the national debt, which now stands at $36 trillion to even higher nose bleeding heights. Meanwhile, Musk will find that his cost cutting measures can only come to fruition by raising payroll taxes, the money paid into the social security fund by working people. He could also raise the cap on social security payments which now stands at $176,100. So all those making more than this cap pay nothing on income above it. However, since this would affect rich people, it may not be raised except in the case that there would be all kinds of carve outs or exceptions for the very rich. In other words the working rich, who receive a salary, might have to pay more. What we are not likely to see is any kind of taxes raised on stock sales or carried interest, in other words money that is made by the very rich.

Medicaid will probably be the first target of Musk cost cutting. Many red states have already opted out of Medicaid expansion which was included in Obamacare. The Kaiser Commission on Medicaid and the Uninsured identified 21 states that, as of July 2013, were not proceeding with Medicaid expansion and 6 states in which a decision had not been made. Forty-six percent of uninsured adults in the United States who could become eligible for coverage live in a state that is not planning to expand Medicaid. In the south, the region with the highest rates of uninsured, more than 80% of potentially eligible adults will not gain coverage because of decisions to opt out. Trump/Musk will probably want to leave Medicaid totally to the states leaving Federal funding off the hook altogether. Many of these states will then totally opt out of any Medicaid responsibilities whatsoever.

How to Escape the Federal Debt Trap

Posted on December 10, 2024 by Ellen Brown

The U.S. national debt just passed $36 trillion, only four months after it passed $35 trillion and up $2 trillion for the year. Third quarter data is not yet available, but interest payments as a percent of tax receipts rose to 37.8% in the third quarter of 2024, the highest since 1996. That means interest is eating up over one-third of our tax revenues.

Total interest for the fiscal year hit $1.16 trillion, topping one trillion for the first time ever. That breaks down to $3 billion per day. For comparative purposes, an estimated $11 billion, or less than four days’ federal interest, would pay the median rent for all the homeless people in America for a year. The damage from Hurricane Helene in North Carolina alone is estimated at $53.6 billion, for which the state is expected to receive only $13.6 billion in federal support. The $40 billion funding gap is a sum we pay in less than two weeks in interest on the federal debt.

The current debt trajectory is clearly unsustainable, but what can be done about it? Raising taxes and trimming the budget can slow future growth of the debt, but they are unable to fix the underlying problem — a debt grown so massive that just the interest on it is crowding out expenditures on the public goods that are the primary purpose of government.

Borrowing Is Actually More Inflationary Than Printing

Several financial commentators have suggested that we would be better off if the Treasury issued the money for the budget outright, debt-free. Martin Armstrong, an economic forecaster with a background in computer science and commodities trading, contends that if we had just done that in the first place, the national debt would be only 40% of what it is today. In fact, he argues, debt today is the same as money, except that it comes with interest. Federal securities can be posted in the repo market as collateral for an equivalent in loans, and the collateral can be “rehypothecated” (re-used) several times over, creating new money that augments the money supply just as would happen if it were issued directly.

Chris Martenson, another economic researcher and trend forecaster, asked in a Nov. 21 podcast, “What great harm would happen if the Treasury just issued its own money directly and didn’t borrow it? … You’re still overspending, you still probably have inflation, but now you’re not paying interest on it.”

The argument for borrowing rather than printing is that the government is borrowing existing money, so it will not expand the money supply. That was true when money consisted of gold and silver coins, but it is not true today. In fact borrowing the money is now more inflationary, increasing the money supply more, than if it were just issued directly, due to the way the government borrows. It issues securities (bills, bonds and notes) that are bid on at auction by selected “primary dealers” (mostly very large banks). Quoting from Investopedia:

Because most modern economies rely on fractional reserve banking, when primary dealers purchase government debt in the form of Treasury securities, they are able to increase their reserves and expand the money supply by lending it out. This is known as the money multiplier effect.  

Thus, “the government increases cash reserves in the banking system,” and “the increase in reserves raises the money supply in the economy.” Principal and interest on the securities are paid when due, but they are paid with borrowed money. In effect, the debt is never repaid but just gets rolled over from year to year along with the interest due on it. The interest compounds, an increasing amount of debt-at-interest is generated, and the money supply and inflation go up.

U.S. Currency Should Be Issued by the U.S. Government

Well over 90% of the U.S. money supply today is issued not by the government but by private banks when they make loans.  As Thomas Edison argued in 1921, “It is absurd to say that our country can issue $30 million in bonds and not $30 million in currency. Both are promises to pay, but one promise fattens the usurers and the other helps the people.”

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Off the Top of My Head

President Trump: Will You Shut Down the 750 US Military Bases on Foreign Soil?

by John Lawrence

The United States has around 750 military bases in at least 80 countries, but the Pentagon doesn't publish all data, so the actual number may be higher. According to multiple sources, maintaining the approximately 750 US military bases on foreign soil costs the American taxpayer around $55 billion per year. Now, Elon Musk, you can start there with your Department of Government Efficiency. Dismantling the American Empire could save taxpayers beau coup bucks. This totally fits with the MAGA plan. Make America Great Again by not wasting taxpayer money on a bunch of real estate assets which are of dubious value either militarily or financially. After all we have aircraft carriers which can be stationed all over the world and in particular in hot spots. In addition we have ICBMs which can hit any target world wide in a matter of seconds. Add to that our submarine fleet armed with nukes.

$55 billion - that ain't hay just to have an unneeded military presence on foreign soil. Besides the military personnel stationed at these bases are sitting ducks for terrorists.A recent incident where military personnel stationed at a base were injured involved a rocket attack on Al Asad airbase in western Iraq, where several US service members and contractors were injured by two rockets launched by militants. Three U.S. soldiers were killed January 28, 2024 in Jordan, while more than 40 other service members were injured following an uncrewed aerial system attack at a military base near the Syrian border. Two dozen American military personnel were wounded in October 2023 in a series of drone attacks at American bases in Iraq and Syria, Nineteen American service members stationed in Iraq and Syria have been diagnosed with traumatic brain injury after rocket and drone attacks from Iran-backed militants in this same attack.

Is it worth it? What kind of premium does the Department of Government Efficiency put on a human life? Making America Great Again requires that money not be wasted on fooolhardy ventures on foreign soil when sea and air borne military assets are fully capable of dealing with any military situation anywhere in the world. And by the way, when was the last time the Defense Department passed an audit? The Pentagon on November 15, 2024 failed its seventh audit in a row, with the nation’s largest government agency still unable to fully account for its more than $824 billion budget, though officials stress they are making good progress toward a clean audit in 2028. Elon should look into those toilet seats and hammers too. The New York Times reported: Over the past few months alone, the Defense Department has had to explain why it’s been paying $14,000 for individual 3-D printed toilet seat lids and purchasing cups for $1,280 each. These are just the latest examples on a long list of unacceptable purchases made by the department, including $436 for hammers in the 1980s, and $117 soap dish covers and $999 pliers in the 1990s. Elon is famous for telling his employees to run down to Home Depot to buy needed items for Space X rather than going through the government procurement process. Well, let's hop to it. Let's get real. The Pentagon is where the real waste in government is. There's plenty for Elon and Vivek to cut there. Will they do it?