California Free Press

Off the Top of My Head

Biden: The Least Appreciated Great President in American History

by John Lawrence

President Biden has gotten more real work done for the American people than any President with the exception of Franklin D. Roosevelt. So why is his job approval rating so low - just 39%? Chalk it up to the fickleness of the American people. They don't know a great President when they see one. Biden has been able to do so much with much narrower margins in Congress than FDR had in all his terms as President. In fact Roosevelt had Democratic majorities in both the House of Representatives and the Senate from 1933 until his death in 1945, and in those days the filibuster was a speaking filibuster that delayed but didn't terminate legislation and so was of little consequence compared to the fact that today 60 Senators are required to pass any bill.

So what are some of Biden's accomplishments? The Inflation Reduction Act is a historic legislative achievement that lowers costs for families, combats the climate crisis, reduces the deficit, and finally makes the largest corporations pay their fair share. For the first time, Medicare is able to negotiate the price of certain high-cost drugs, a month’s supply of insulin for seniors is capped at $35, Medicare beneficiaries pay $0 out of pocket for recommended adult vaccines, and seniors’ out of pocket expenses at the pharmacy will be capped at $2,000 a year. Historically low unemployment at 3.5%. A manufacturing boom is occurring. Companies have announced nearly $300 billion in manufacturing investments in the United States. These investments are ensuring the technologies of the future are made in America, and bringing back supply chains from overseas. And they are creating good-paying jobs, including union jobs and jobs that don’t require a four-year degree. As part of the bipartisan CHIPS and Science Act, the Department of Commerce is overseeing $50 billion to revitalize the U.S. semiconductor industry, including $39 billion in semiconductor incentives. The first funding opportunity seeks applications for projects to construct, expand, or modernize commercial facilities for the production of leading-edge, current-generation, and mature-node semiconductors. This includes both front-end wafer fabrication and back-end packaging. The Department will also be releasing a funding opportunity for semiconductor materials and equipment facilities in the late spring, and one for research and development facilities in the fall.

President Biden signed the American Rescue Plan to change the course of the pandemic and jump start our economic recovery. The American Rescue Plan funded our successful vaccination campaign, safely re-opened schools for in-person learning, helped 200,000 child care providers keep their doors open, and delivered relief to American families. Biden forged a consensus and got the Bipartisan Infrastructure Law passed – a once-in-a-generation investment in our nation’s infrastructure. We are rebuilding our roads, bridges, ports, and airports, upgrading public transit and rail systems, replacing lead pipes to provide clean water, cleaning up pollution, providing affordable high-speed internet to every family in America, delivering cheaper and cleaner energy to households and businesses, and creating good-paying jobs – including union jobs, and jobs that don’t require a four-year degree.

President Biden signed into law the PACT Act – the most significant expansion of benefits and services for toxic exposed veterans in more than 30 years. This law also enables the Department of Veterans Affairs to move more quickly in the future to determine if illnesses are related to military service, and it offers critical support to survivors who were harmed by exposures. And, the law authorized 31 new clinical sites and provides VA several tools and resources to ensure effective implementation of the law. The Biden Administration announced debt relief of up to $20,000 for Americans earning less than $125,000 per year who had Pell Grants in college, and up to $10,000 for all other borrowers below that income threshold. More than 40 million borrowers stand to benefit from this action, and about 20 million would see their debt entirely wiped out - and nearly 90% of this relief will go to borrowers earning less than $75,000 per year. In early 2023, the Biden-Harris Administration announced a plan to provide millions of borrowers with more affordable monthly student loan payments through changes to income-driven repayment plans.

The U.S. is positioned to achieve our ambitious climate goals of cutting our emissions in half by 2030 and net-zero emissions by 2050. The President has taken executive action and signed legislation to develop clean energy at home, accelerate the adoption of electric vehicles, and reduce pollution that endangers overburdened communities. And, the President is lowering energy costs for families, creating good paying jobs, and ensuring America leads the global clean energy economy. The President also protected more lands and waters in his first year than any President since John F. Kennedy. President Biden took action to lower the cost of health care for millions of Americans. Right now, four out of five people who sign up for health insurance through the Affordable Care Act can find health care coverage for $10 a month or less and millions of Americans on Obamacare are saving an average of $800 a year. Since he took office, there has been a combined 50 percent increase in enrollment in states that use HealthCare.gov and the nation’s uninsured rate is historically low at 8 percent. Over 16 million Americans signed up for quality, affordable health coverage, the highest number ever produced in an open enrollment period.

So what are Biden's most significant achievements? In my opinion infrastructure and climate action lead the way. These areas have been neglected too long, and the Biden initiatives will just barely make amends. In and of themselves, they are probably insufficient, but they are a good start, a start that has been delayed too long. Changing the narrative on taxation, I think, is a major accomplishment. Making it clear that a tax bill does not have to apply to everyone. By not raising taxes on anyone making less than $400,000, an oft repeated phrase, the narrative has been changed from "tax and spend" to "tax the rich and spend on helping the poor and middle class". Deficit reduction doesn't mean necessarily to stop spending on social programs as it means getting more money into government coffers by taxing the rich. Inequality is out of control; taxing the rich ameliorates this situation. What Biden did to get us through the COVID crisis is remarkable. It could have been an economic disaster for everyone; it wasn't. Student debt relief was a great achievement although it is still not clear how that will play out in the courts.

The American people by and large don't appreciate all that Biden has done compared to what any Republican administration would have done. Clearly, Democrats are on the side of rationality and helping the American people. Republicans are on the side of winning at all costs and helping the rich. They don't give a damn about helping the American people especially the middle class and the poor. The Republican mantra of reducing the deficit and the debt would have you believe that it can only be done in one way, that is by reducing spending. No, it can also be done by taxing the rich which would also reduce inequality. But this is all the Republicans have, that and the discredited policy of tax breaks for the rich that have done little to "trickle down" and have greatly contributed to the national debt. Enhancement of Obama's landmark health care legislation is another major achievement although Obama deserves much of the credit. It's a testimony of what the Democratic party is able to achieve for the country. The fact that Biden accomplished so much in a bipartisan way is something few other politicians could have hoped to accomplish especially in the political environment that exists today.

My criticism of Biden has to do with the Ukraine war. On the one hand he has prevented it from becoming a world war as of yet. However, in the negotiations preceding the war, I believe more could have been done to prevent the war in the first place. By not acknowledging or being sensitive to Russia's concerns about the encroachment of NATO on its borders which started during the Clinton administration and was hastened by Secretary of State Madeleine Albright, Biden and other diplomats missed an opportunity to defuse the crisis. Their policy was a de facto attempt to bully Russia into accepting the fact that Ukraine would also become part of NATO. Now the US is entrenched in a policy of Ukraine "winning" and Russia "losing" instead of a policy of a negotiated settlement to end the war, a negotiated settlement which could have been had before the war even started IMHO, for instance, by delaying Ukraine's admission to NATO for a period of time during which Russia's security concerns might have been addressed. In effect Ukraine has become a vassal state of the US instead of its historic situation of being a vassal state of Russia.

Off the Top of My Head

Government Deficit Spending Is Not the Problem: Lack of Labor and Physical Resources Is

by John Lawrence

Since the US dollar is a sovereign fiat currency, the US can never run out of dollars. The debt ceiling is a totally artificial limit which results in the US hoisting itself on its own pitard. According to Modern Monetary Theory (MMT) as espoused in The Deficit Myth by Stephanie Kelton, the only limit on government spending is inflation, and inflation is concerned with the amount and nature of resources available to soak up the money injected into the economic system by the government. According to this theory it makes sense that a lack of labor resources could lead to inflation. Consider that right now there is a shortage of air traffic controllers, and this is leading to a cancellation of flights. If there were more air traffic controllers available, the number of flights could be increased, and more economic activity would ensue. The constraint on flights available because of the lack of air traffic controllers leads to inflation because the money charged for each available flight can be increased. Essentially there is a bidding war for the available flights. If any resource including natural resources like steel and cement is not sufficient for the demand for those resources, then the price of those resources will increase leading to inflation. Right now in the US labor is becoming a scarce resource especially labor of the type necessary in the essential economy, that is the economy of goods and services necessary for the continuation and enhancement of everyday life. As more labor is developed for essentially useless services like the entertainment and social media industries, plumbers, electricians and carpenters are not available for useful services, and, therefore, the cost of those services increases.

Which brings us to Biden's Inflation Reduction Act which allocates $370 billion to rebuild infrastructure and fight climate change. These are all necessary and vital goals, but the question should be asked are the resources for this amount of spending sufficient or will this spending be inflationary. To put it more succinctly is the blue collar labor sufficient for the job? If not, the price of labor will be bid up and the spending will be inflationary. More and more these days students are encouraged to go to college where they end up after graduation working for Wall Street or hedge funds or in the entertainment/social media industry. They are not encouraged to go to vocational technical schools to become carpenters, plumbers and electricians. So they go into industries which are not essential to the real economy. There are shortages of labor for the real economy everywhere we look. In order to overcome these shortages, it would be necessary to step up legal immigration since immigrants by and large fill the jobs Americans don't want to do, and by and large Americans don't want to perform any kind of the less glamorous and remunerative type of labor necessary for production in the real economy. Also outsourcing has made it unnecessary for Americans to perform labor in the real economy. We rely either on immigrants or foreign workers for that.

The next thing is that all this infrastructure rebuilding is going to contribute to global warming as well as reducing it. Rebuilding all the bridges of America will require large amounts of steel and cement. Steel and cement production produce large amounts of carbon dioxide which is emitted into the atmosphere. The International Energy Agency estimates that direct CO² emissions due to crude steel production is approximately 1.4 tons of CO² per ton of steel produced. The cement industry is responsible for about 8% of planet-warming carbon dioxide emissions — far more than global carbon emissions from aviation. If the cement industry were a country, it would be the third-largest emitter of carbon dioxide in the world, after the U.S. and China. So rebuilding America's infrastructure will contribute to global warming while at the same time attempting to reduce global warming. The fact is that alternatives to steel and cement which do not produce greenhouse gasses are not available. Research on these topics needs to be stepped up. But more research in areas like artificial intelligence, of the kind which has no use in the amelioration of global warming, takes place while productive research into materials to replace steel and cement languishes. Also while more electric vehicles are being produced, the electric energy to power these vehicles is coming from power plants that still use fossil fuels to produce it. One form of greenhouse gas production is being traded for another. Nothing is gained unless all energy generating power plants are using renewable and non carbon dioxide producing fuels.

The problem is that limited resources both in terms of labor and physical resources will hamper efforts both in repairing American infrastructure and building infrastructure which reduces the amount of greenhouse gas production. Stephanie Kelton writes: "That's why MMT recommends a different approach to the federal budgeting process, one that integrates inflation risk into the decision making process so that lawmakers are forced to stop and think about whether they have taken the necessary steps to guard against inflation risk before approving any new spending. MMT would make us safer in this respect because it recognizes that the best defense against inflation is a good offense. We don't want to allow excessive spending to cause inflation and then fight inflation after it happens. We want agencies like the CBO helping to evaluate new legislation for potential inflation risk before Congress commits to funding new programs so that the risks can be mitigated preemptively. At its core  MMT is about replacing an artificial (revenue) constraint with a real (inflation) restraint." The artificial revenue constraint is the debt ceiling!

In the above passage the words "inflation risk" could also be replaced with "greenhouse gas emission risk." The CBO should evaluate both kinds of risks. So as the economy becomes more electrified in terms of electric cars and buildings, we need to think about the fact that the electricity generated by these increased demands needs to come from non carbon dioxide emitting sources. Also substitutes must be found quickly - in other words research needs to be stepped up - to find substitutes for steel and cement. To boot, non polluting energy sources must be found for ships and planes. Both human and physical natural resources must be taken into account. Have all these things been thought through?

Off the Top of My Head

Biden's Changing The Asylum Law Without Congress' Help

by John Lawrence

The asylum law in effect says that any alien who enters the US legally or illegally may apply for asylum. This incentivizes aliens to enter illegally, and, if caught, to simply request asylum. Since they would have to go before a court to determine if they should get asylum and the court is backed up for years, entering illegally and requesting asylum is a guarantee of at least currently five years in the US during which time they could attempt to remain hidden and not show up at court. The reality is that only about 40% of asylum seekers that show up for their court date actually get asylum. The rest are deported. According to U.S. and international law, a claim of persecution must be made based on one of five “protected grounds”: race, religion, nationality, political opinion, or membership in a particular social group. Poverty, scarce economic opportunities, displacement caused by natural disasters or a desire to reunite with family are not grounds for asylum under U.S. law. Here's the actual law:

Any alien who is physically present in the United States or who arrives in the United States (whether or not at a designated port of arrival and including an alien who is brought to the United States after having been interdicted in international or United States waters), irrespective of such alien’s status, may apply for asylum in accordance with this section or, where applicable, section 1225(b) of this title.

In order to dissuade asylum seekers from just showing up in a disorderly fashion en masse at the southern border, the Biden administration has been setting up a system to encourage people to apply for asylum in an orderly manner. This includes applying at a port of entry or applying from a country in south or central America. Also,they are disincentivized from coming across the border illegally because, if they do, they are ineligible for asylum for 5 years. Here's the new rule:

SUMMARY: The Department of Homeland Security (“DHS”) and the Department of Justice (“DOJ”) are issuing a final rule in anticipation of a potential surge of migration at the southwest border (“SWB”) of the United States following the termination of the Centers for Disease Control and Prevention’s (“CDC”) public health Order. The rule encourages migrants to avail themselves of lawful, safe, and orderly pathways into the United States, or otherwise to seek asylum or other protection in another country through which they travel, thereby reducing reliance on human smuggling networks that exploit migrants for financial gain. The rule does so by introducing a rebuttable presumption of asylum ineligibility for certain noncitizens who neither avail themselves of a lawful, safe, and orderly pathway to the United States nor seek asylum or other protection in a country through which they travel. In the absence of such a measure, which would apply only to those who enter at the southwest land border or adjacent coastal borders during a limited, specified date range, the number of migrants expected to travel without authorization to the United States would be expected to increase significantly, to a level that risks undermining the Departments’ continued ability to safely, effectively, and humanely enforce and administer U.S. immigration law, including the asylum system, in the face of exceptionally challenging circumstances. Coupled with an expansion of lawful, safe, and orderly pathways into the United States, the Departments expect the rule to lead to a reduction in the number of migrants who seek to cross the SWB without authorization to enter, thereby reducing the reliance by migrants on dangerous human smuggling networks, protecting against extreme overcrowding in border facilities, and helping to ensure that the processing of migrants seeking protection in the United States is done in an effective, humane, and efficient manner. In addition, the Departments are requesting comment on whether applicability of the rebuttable presumption should be extended to noncitizens who enter the United States without documents sufficient for lawful admission during the same temporary time period at a maritime border.

DATES: Effective date: This rule is effective on May 11, 2023.

This document is scheduled to be published in the Federal Register on 05/16/2023 and available online at federalregister.gov/d/2023-10146, and on govinfo.gov

The Biden administration is solving the border crisis without the help of Congress in a way that's sure to be challenged in court, but in the way that Congress would actually probably solve it if they were inclined to act and reform immigration laws. Biden should get a lot of credit for going ahead without Congress which is a sewer of conflict, stagnation and malfunction. An orderly process for applying for asylum has been created by the Biden administration which should discourage masses of people showing up at the southern border. For this they deserve much credit.

Off the Top of My Head

Why the Republican Congress Will Drive the US into Default

by John Lawrence

Simply put it's in their interests to do so. They themselves will profit politically and financially. They will blame Biden for the default, and they will sell short their stock portfolios so that, when the stock market crashes, they will make money. Default doesn't mean that the US will not pay its debts. It means that going forward seniors on social security will not get their monthly checks. Neither will Federal workers or active duty military. However, since the US Treasury still has some money and money coming in from taxes, it will prioritize paying interest on Treasury bonds. So rich people that hold financial obligations of the US government will be paid while everyday average slobs will be left to suffer. This is exactly the type of solution Republicans have always sought. It fits in nicely with their modus operandi: cater to the rich and starve the poor and working class. Millionaires and billionaores will not suffer. Smart people who sell stocks short will not suffer. They will prosper. Financial wizards and private equity corporations will snap up distressed properties like a shark snapping up a school of fish.

The financial obligations of the US, money that has supposedly already been spent, is a misnomer. They represent money that has already been allocated by the previous Democratic controlled Congress. If Republicans had controlled the previous Congress instead, the money would never have been allocated. So it's not money that's already been spent, it's money that's already been allocated. The spending is in the future. The allocation was in the past. If Democrats controlled the present Congress, there would be no problem. Since it's up to the Congress both to allocate spending and to raise the debt limit, there is a whiplash if one party allocates the money and the other party is supposed to preside over the spending of the money. In a sense the Republican Congress is rebelling over the fact that, although they didn't allocate the money, they are supposed to preside over the spending of it.

Now Joe Biden could preempt the Congressional decision not to raise the debt limit by using unconventional but completely legal means, something that has never been done before. The Federal Reserve Act gives the power to print money to the Fed, However, the Coinage Act grants the Secretary of the Treasury rather broad coin seigniorage authority. The debt ceiling could be side stepped by ordering the West Point Mint to coin a 1 oz. $ 1 trillion coin. Treasury can then present the jumbo coin at the NY Fed to buy back $1 trillion in Fed-held debt (the Fed has to accept it, a creditor can’t refuse legal tender paid in to settle a debt). Or I see no reason why the Treasury couldn't simply deposit it in its account at the Fed thereby giving the US government the wherewithal to pay its bills. Esteemed economist Paul Krugman is all for the minting of the trillion dollar coin: "So go ahead, Democrats, and do whatever it takes to get through this. Gimmickry in the defense of sanity — and, in an important sense, democracy — is no vice."

Republicans would have you believe that spending is out of control. No, undertaxation is out of control especially undertaxing the rich. Economic inequality has soared reaching unprecedented new heights not seen even in the Gilded Age. As Joe Biden has proposed, the budget could easily be balanced and the debt paid down by taxing the rich. Republicans would have you believe that raising taxes is a policy that would have to be enforced on everyone including the poor and the middle class, but that, unfortunately for them, is not the case. It is not written in stone that raising taxes would have to apply to everyone. As Bernie Sanders, Elizabeth Warren, AOC and others have pointed out, raising taxes on the rich could not only balance the budget, but could solve the problem of social security shortfalls. Republicans are in the unenviable position of wanting to screw the working class while catering to the rich while holding on to their MAGA supporters, a large portion of whom are the working class.

So given the fact that Republicans don't care about social security or Medicare recipients, there is a good chance that they will not vote to raise the archaic debt ceiling and force the US into default not on its debt but on its ongoing payments to Federal workers, who they hate anyway, social security recipients, who they will cheerfully throw under the bus and active duty military who as MAGA supporters will cheer them on at their own expense. Meanwhile, Congressional Republicans, private equity corporations and billionaires will short the market and salivate over the cheap assets they will be able to snap up. In other words they will profit from a default.

Off the Top of My Head

The Dystopian American Democracy

by John Lawrence

As set up by the Founding Fathers, the mechanics of the American electoral system inevitably lead to a two party system. This is as opposed to a parliamentary democracy as exists in most other democratic nations. Third parties never make it in American democracy precisely because they take votes away from the party whose views they most closely resemble. Example: the Presidential election of 2000. Since with the American voting system, a voter can vote for one and only one candidate, voters waste their votes voting for a third party candidate who has no chance of winning. Ralph Nader ran as the Green party candidate and won almost 3 million votes, votes which most assuredly would have been cast for Gore if Nader weren't running. As it was, Gore won more popular votes than George W Bush who eked out a victory because of the antiquated electoral college system. If Gore had also won the 3 million votes that Nader received, he may have had enough electoral votes to tip the balance. These voting mechanics have enshrined what is called plurality voting or the first past the post system into law. If the approval voting system had been in effect in 2000, Gore would have won. Approval voting is a system in which a voter can cast votes for all candidates he or she approves of. That means that all those who voted for Nader would also probably have voted for Gore giving Gore 3 million more votes.

Why the two party system, which is the inevitable result of plurality voting, is so toxic is that it leads to a government like we have today in which the two parties are diametrically opposed to each other. Instead of working in the best interests of the American people, the two parties end up fighting each other for power. This produces gridlock and a seesawing back and forth regarding policy depending on which party controls which branch of government. The dystopia that results from this winner take all system is that compromise becomes impossible. All the energy goes into winning and making the other party lose. It is all about the competition between the two parties and not about finding solutions to societal problems that benefit the American people. Another factor is that the plurality system of voting at best leads to majority rule. That means that at best each party represents a majority of the American people and not minorities at all. Certainly neither party needs to seek the votes of the poorest Americans who usually don't vote anyway, and, if they did, their interests need not be served by the winning party.

The American system has become a dystopia precisely because one party is only interested in winning, and, if the other party is in power, in making that party lose the next election. They do this by denying insofar as possible that party from making any constructive changes which might benefit the American people. As the American people get disenchanted with the ruling party because it can't bring about constructive change, they inevitably vote for the other party hoping that they can do what the ruling party wasn't able to based on their campaign promises. In a multi party system such as a parliamentary democracy, a party whose only purpose is to deny the ruling party the ability to bring about constructive change and thereby gain power for itself is less likely to be able to pull this off. A center party is more likely to win. The two party system is more likely to breed two extreme parties diametrically opposed to each other with each party vying for power.

Fortunately, because of his skill and dexterous maneuvering, Joe Biden has been able to bridge a lot of gaps in getting things done for the American people. However, it wasn't without the other party's determinattion to make him fail. Republican leader Mitch McConnell said this about President Obama: "The single most important thing we want to achieve is for President Obama to be a one-term president." How they endeavored to do this was to make Obama fail at everything he promised in his campaign to do for the American people. If Obama wasn't able to accomplish his campaign goals, the American people would become disenchanted with him and put Republicans back in power. This is why Republicans never compromise with Democrats in the best interests of getting good things done for the American people. They only see these things as "wins" for the Democrats and hence "losses" for themselves. On the other hand, Democrats are somewhat more magnanimous in that they will vote with Republicans some times when they are in power. Example: Democrats voted 3 times to raise the debt ceiling when Trump was in power even though they objected to the $7 trillion that Trump added to the national debt by giving tax breaks to the rich. The only reason Biden was able to accomplish anything or any American President is able to accomplish anything is when their party controls all 3 branches of government. Even then the other party can filibuster making a mockery of the idea of democratic government.

Off the Top of My Head

Why Didn't Democrats Raise the Debt Ceiling When They Controlled Both Houses of Congress?

by John Lawrence

What is clear is that Democrats can only get new legislation passed when they control all three branches of government. This legislation usually increases spending on social programs. Likewise, Republicans can only get their legislation composed - usually of tax cuts - when they control all three branches of government. Both cases usually require the government to deficit spend, the former because of increased government spending, the latter because of decreased government revenues from taxes. So whichever party controls Congress and the Presidency and passes a budget requiring increassed deficit spending should also at the same time raise the debt limit. Make sense? So now we're in this dystopian dilemma that, after Democrats passed Biden's budget requiring a huge amount of government spending, Republicans, who now control the House, effectively want to repeal Biden's budget or else they won't agree to raise the debt ceiling. What a conundrum! These problems would never come up if the party that deficit spent also raised the debt ceiling to accommodate the deficit spending.

Congress has raised the debt ceiling twice under Biden, by about $3 trillion. Republicans voted three times to raise the debt ceiling under President Donald Trump, who added nearly $8 trillion to the national debt. "Republicans in Congress raised the debt three times when Donald Trump was president and each time with Democrat support, but now they won’t raise it, even though they're responsible for more than $8 trillion in bills incurred in four years under the previous administration," Biden said. The 115th Congress (2017–2019) featured unified Republican control of the government with GOP majorities in the House and Senate, and Republican President Donald J. Trump in the White House. So Republicans had no problem with raising the debt ceiling during the Trump administration which added $7 trillion to the national debt. Please note that Democrats could have filibustered the debt ceiling increases during the Trump administration because Republicans did not have a filibuster proof Senate, but they didn't

Raising the debt limit is not about new spending; it is about paying for previous choices policymakers legislated. However, if the previous choice were made by a government controlled by the Democratic party in a two party system, there is every reason to get those choices reversed when the Republican party comes into power and vice versa although Democrats have never tried to bring the country to the brink of default, a game of chicken which Republicans have been all to eager to engage in. They were successful in doing this when Obama was President. Having seen that chaos and mess as vice Preesident, Biden is not willing to engage in negotiations this time around hoping that more sensible heads will prevail. It didn't used to be this way. Sometimes called the Gephardt Rule in honor of Representative Dick Gephardt who introduced its first version, the rule used to provide that when the House agrees to a budget resolution, the Clerk shall prepare a joint resolution suspending the debt limit for the fiscal year covered by the budget resolution. In other words the debt ceiling was automatically effectively raised to accommodate the budget. This all changed when Newt Gingrich became Speaker of the House. When Newt Gingrich took over the House in 1995, he nullified the ingenious “Gephardt rule” that deemed the debt limit to be increased whenever a budget passed. This eventually led to the 1995 and 1996 government shutdowns, when Republicans refused to increase the limit because the president was a Democrat. In 2011, a showdown over the debt ceiling during Barack Obama’s presidency led to the Budget Control Act and ten subsequent years of austerity budgets.

So the simple answer to the question posed by the title of this piece is that, although Democrats controlled both Houses of Congress during the first two years of the Biden administration, they did not have a filibuster proof majority in the Senate. Therefore, they could get a budget passed under the budget reconciliation rule which prevents a filibuster, but they could not raise the debt ceiling because that is subject to the filibuster. Oh what tangled webs these politicians weave! Nothing makes clearer the need to end the filibuster than another round of hostage-taking of the full faith and credit of the U.S. government. Add this to the mounting problems of American democracy. Congress has created an arcane jumble of chaotic rules which threatens government of the people, for the people, and by the people. Go figure.

Off the Top of My Head

The Only Way to Create Affordable Housing Is For Government to Set the Price of Rent

by John Lawrence

As long as the market sets the price of rent, rents will become increasingly unaffordable especially in highly desirable areas like San Diego. Remember public housing? Some version of this is necessary or homeless will be relegated to shelters and/or time limited stays in subsidized housing for eternity. Why isn't public housing feasible? It's NIMBYism (not in my back yard) and NMTMFTism (not my tax money for this). What most people don't realize is that the Federal government can build public housing with no tax implications because unlike state governments, the Federal government has a sovereign fiat currency, the US dollar. The only non-artificial restraint on Federal expenditures is inflation so right now is probably not a good time to allocate dollars for public housing. Of course we expect that lessons have been learned so that public housing does not degenerate into the kind of situation like the notorious Cabrini-Green development.

Crime and neglect created hostile living conditions for many residents, and "Cabrini–Green" became a metonym for problems associated with public housing in the United States. In 1995, the Chicago Housing Authority (CHA) began tearing down dilapidated mid- and high-rise buildings, with the last demolished in 2011. Today, only the original two-story rowhouses remain. The area has seen major redevelopment due to its proximity to downtown, resulting in a combination of upscale high-rises and townhouses, with some units being CHA-owned, creating a mixed-income neighborhood. Dispersal of affordable units throughout an area is necessary in my opinion to prevent concentration of crime and gangs in certain areas. There is no need for public housing to be concentrated like the Cabrini-Green development. It can be dispersed so that an area is mixed income, and less likely to attract gang activity which seems to happen in pockets of poverty.

Of course the US Federal government, based on the two party system can hardly rationalize spending money on public housing as long as Republicans have any say about it or as long as they can filibuster it to death. Progressives have been lucky to get a modicum of progressive legislation passed during the Biden administration. Biden has had to tone down much of the progressive legislation he attempted to pass at first. Nevertheless he has accomplished much. Public housing is not even on the table as a solution to the homeless and housing affordability problem. Rents just continue to increase way beyond a family's ability to pay them. State and local governments are throwing millions of dollar at the homeless problem without even putting a dent in it. It will take some radical ideas to solve it of which disbursed public housing is one. It totally goes against prevailing notions of a capitalist based, profit oriented society, not the least of which is that an ample supply of public, affordable housing units would undermine landlord profits by keeping the cost of housing in the for profit market under control. It would put a base line under housing costs.

Off the Top of My Head

Republicans Hate Socialism ... Except When They Need Help Themselves

by John Lawrence

When Superstorm Sandy hit, then Congressman DeSantis voted against giving help to New York state. Now after the Hurricane Ian disaster, Governor DeSantis is asking the Federal government for every dollar he can possibly get. This is typical Republican behavior. After all socialism is about helping people. Republicans want every ounce of help they can get for themselves while denying it to others. All of a sudden DeSantis is Joe Biden's best friend. Joe wants to help people, but he should think twice about helping DeSantis. First of all a hard look should be given to rebuilding on hurricane prone barrier islands. DeSantis, of course, wants the increased economic activity that rebuilding will entail for construction companies especially if the Federal government pays for it. Building Back Better in hurricane prone areas is not good economic sense. And it will cost a fortune in an inflationary era while only adding to inflation as the Federal government injects more money into the economy.

Robert Reich wrote in a recent email:

"No Republican governor has been more vocal in his opposition to what he describes as “socialism” than Florida’s Governor Ron DeSantis. “I stand against socialism,” DeSantis thundered in Florida’s 2018 gubernatorial election. “Socialist policies have failed time and time again.” In June, DeSantis signed an education bill directing Florida’s Department of Education to develop a curriculum educating students on the evils of socialism (as well as communism)."

But now, when his state needs the money, DeSantis is either a full on socialist or a full on opportunist who, once he gets his, will be against anyone else getting theirs. In 2013 DeSantis said: "I sympathize with the victims of Hurricane Sandy and believe that those who purchased flood insurance should have their claims paid. At the same time, allowing the program to increase its debt by another $9.7 billion with no plan to offset the spending with cuts elsewhere is not fiscally responsible." So now after Hurricane Ian, which will run into the tens of billions, is giving the state of Florida the money DeSantis is requesting from the Federal government "fiscally responsible"? Reich poses the question: "So, would DeSantis call any form of government assistance to those in need “socialism?” Obviously, not when it's his ox that's being gored. DeSantis' hypocrisy is immense here, but it will probably work for him. He will take credit for "getting Florida and Floridians back to normal" as he enters the 2024 Presidential contest. Before Biden gives DeSantis all the money he wants, DeSantis should do a mea culpa, stating that he was wrong to vote against disaster relief for New York state after Superstorm Sandy.

DeSantis website headlines: "Governor Ron DeSantis Requests President Biden Approve Major Disaster Declaration and 100 Percent Federal Cost Share for 60 Days for Hurricane Ian" This isn't the first time that DeSantis has used Federal cash to tout his own agenda. Just prior to the fatal hurricane, DeSantis held a press conference in Jacksonville where he gave $1,000 checks to individual firefighters and law-enforcement officers that were being made available through this year’s state budget. Of course he didn't mention that this was cash the state of Florida got from the American Rescue Plan, Federal money which provided more than $8.8 billion to the state of Florida.DeSantis will likely continue to bash President Joe Biden and the Democrats for pushing policies that he says have caused inflation — which includes the massive spending included in the American Rescue Plan. I've got news for Gov. DeSantis: if he cared about inflation, he would take the money to recover from Hurricane Ian out of state taxes instead of letting the American taxpayer foot the bill while all the time giving Joe Biden no credit. He will take all that for himself.

 

Off the Top of My Head

How Liz Cheney Can Defeat Trump in the 2024 Election

by John Lawrence

Run for President as a third party candidate. She will siphon off enough Republican votes to insure Trump's loss. She has the name recognition and chutzpah to run for President. She's already raising money with her super PAC - The Great Task. There are enough disaffected Republicans that will vote for her, and, even though she would probably come in third in a Presidential race, she could guarantee that Trump or a Trump-like candidate would lose. Therefore, a Democrat will win. Cheney obviously has no affection at this point for the Republican Party, a party that oversaw her defeat in a landslide for her incumbent Congressional seat in Wyoming. She is more interested in a win for America and the principles of the Constitution, and, as an American patriot, she is committed to Trump's losing the 2024 Presidential election.

The US has a history of third party candidates handing wins to the party that they are least aligned with. In 1992, Ross Perot ran unsuccessfully as an independent candidate for President of the United States. Perot was a Texas industrialist who had never served as a public official, but he had experience as the head of several successful corporations and had been involved in public affairs for the previous three decades. Although Perot received no votes in the Electoral College, he won several counties, placed second in two states, and ended up far ahead of any other non major party candidate finishing in third place overall, receiving close to 18.97 percent of the popular vote, the most won by a third-party presidential candidate since Theodore Roosevelt in 1912. His presence in the race may have been enough to deny George H W Bush a second term.

Even more salient was the 2000 Presidential election. The 2000 presidential campaign of Ralph Nader, political activist, author, lecturer and attorney, began on February 21, 2000. He cited "a crisis of democracy" as motivation to run. He ran in the 2000 United States presidential election as the nominee of the Green Party. Nader siphoned off enough votes from Al Gore, who was the Democratic candidate, that George W Bush won the election despite the fact that Gore won the popular vote and despite the fact that, at Bush's request, the Supreme Court stopped the recount in Florida which would have nailed the state of Florida for Gore and the Presidential election itself.

Third party candidates can wreak havoc for the party that they're most closely aligned with. In 2000 Nader was more aligned with Democrats than Republicans. Yet he helped cinch the race for the Republican since he siphoned off Democratic votes. The same goes for Perot in the 1992 Presidential election in which he helped defeat the candidate of the party he was most closely aligned with - in this case the Republican party. Liz Cheney knows all this. She's no dummy. She knows she can guarantee a Trump defeat in 2024 if he should run by running for President herself as a third party candidate. No doubt Adam Kinzinger and other influential Republicans will join her in an effort to overthrow the Republican party which has become the party of Trump. Liz is well known enough that she does not suffer from any name recognition deficit. Polling shows that in the neighborhood of 30% of registered Republicans are disenchanted with Trump and Trumpism. They are appalled at the January 6 insurrection by devotees and sycophants of Trump. Liz Cheney can guarantee that the United States of America will be able to turn over a new leaf and start a new day with a new party dedicated to the principles of the rule of law and the American Constitution - sort of what the old Republican party used to be like. She is in a position to relegate Trump to the dustbin of history if he should somehow escape the grip of all the lawsuits he's now entangled with.

Off the Top of My Head

Manchin and Sinema Should Be Kicked Out of the Democratic Party

by John Lawrence

They have blocked Biden's agenda every step of the way. Biden and his team have spent countless hours "negotiating" with them to no avail. They have treated them with kid gloves to no avail. Now they should call them out. They are effectively blocking the codification of Roe v Wade, voting rights legislation, Biden's Build Back Better initiative and every other thing every other Democrat stands for. They are Democrats in name only - DINOs. Instead of being treated with kid gloves, they should be treated like the pariahs they are. Democrats are too nicey nice. Biden got a little testy and said he was open to ending the filibuster in order to codify Roe. Who's standing in the way of ending the filibuster? Manchin and Sinema. Who's standing in the way of every other thing Biden and most Democrats want to get done? Manchin and Sinema. If it weren't for them, Democrats could get rid of the filibuster today and codify everything the Supreme Court is torpedoing plus do a lot more. As it is, Biden is hamstrung by two quasi Democrats who are really Republicans in sheep's clothing.

The filibuster is an anti democratic rule of the Senate that prevents decisions being made by majority rule. There's no good reason for it to exist. Democrats think that, if they get rid of it, Republicans will go wild with their legislation when they control both Houses of Congress and the Presidency. But they are just wrong. When Republicans control both Houses of Congress and the Presidency but don't have 60 votes in the Senate (the number of votes necessary to overcome the filibuster), they can just vote to end or suspend the filibuster to get their legislation passed and signed into law. They don't care whether or not Democrats "observed" the traditions of the Senate by not voting to end the filibuster for their purposes. They will just do it themselves when it suits their interests. That's what the Democrats don't get. Democrats are afraid to end a "rule" when they theoretically have the power now to do so which is anti Democratic in order to get good things passed for the American people. And who are standing in the way of that? Not Republicans but 2 Democrats - Manchin and Sinema. If it weren't for them, abortion rights could be codified. A whole host of other things which the Supreme Court is casting to the wind, could be codified. In fact everything that was considered settled law is not because, if it hasn't been codified, it is under attack by the Supreme Court.

The Supreme Court has pointed out that it's not enough to win a case before the Supreme Court. It must be codified by the Congress and signed into law by the President before it is "settled law." Therefore, the Supreme Court will throw out every so called "Constitutional protection" because nothing is constitutionally protected just because somebody has won a case before the Supreme Court. As sclerotic and underperforming as Congress is, the Supremes know that throwing things back to Congress effectively overturns every decision the Supreme Court has ever made! Forget about Roe v Wade. They are now attacking the EPA so that the US can do nothing about climate change except to sit back and let it happen. The US is fast becoming a backwater among nations and all because Trump had the power to appoint 3 conservative Justices to the Supreme Court. So what will be next on the Republicans' agenda? Getting rid of social security and Medicare? The Supreme Court will help them with that. Their only talent is using arcane language to do the Republicans' dirty work.

Off the Top of My Head

Biden Alternately Fights, Fuels Inflation

by John Lawrence

Normally the government spending money into the economy is a good thing. It promotes economic growth and prosperity. But when the economy overheats causing inflation, the government needs to extract money from the economy. It does that by, among other things, raising taxes. Also the Fed, like it's doing now, raises interest rates. This puts a damper on major purchases because of interest costs. The American Rescue Plan injected a lot of money into the economy that kept the wheels turning during the worst parts of the pandemic. That was a good thing, but too much of a good thing is a bad thing. The traditional way the Fed controls inflation is to squeeze the economy in such a way as to cause higher unemployment. The Phillips curve is a theoretical economic tool that shows the relationship between inflation and unemployment, the higher unemployment, the lower inflation and vice versa. At present, however, businesses are begging for workers, not laying them off. This is good news for workers, bad news for inflation.

Biden is trying to blunt the cost of inflation to low wage workers by getting Congress to pass some of the remnants of his Build Back Better plan. However, some of these items would cause the government to spend more money into the economy causing even more inflation. Biden doesn't want to tell the truth about inflation which is that the traditional solution is to cause even more pain for low wage workers by squeezing the economy to the point that they will lose their jobs thus increasing unemployment as the Phillips curve dictates. So basically there is nothing Biden can do except to decrease government spending. Republicans would cut programs that benefit the poor and raise taxes on the middle class to do just that.

Biden is continuing to spend money into the economy by purchasing billions of dollars worth of weapons which are then sent to Ukraine. This is inflationary in and of itself. As of May 20, 2022, the US has spent $54 billion on Ukraine, and, evidently, even more will be allocated. Ukraine has become a ward of the US with the US taking responsibility not only for supplying weapons but also for keeping the whole economy afloat. All this money spent on Ukraine is money not spent on programs for the American people unless you are an employee of the military-industrial complex for which Ukraine spending has become a bonanza. Of course there are other causes of inflation than too much government spending. The loss of Russian oil is causing gas prices to rise. Chinese COVID lockdowns are exacerbating the supply chain crisis. This is not a traditional inflation, but too much government spending is certainly a part of it. Biden's good intentions of protecting the American people during the COVID pandemic by flooding the economy with money had the concomitant effect of also causing inflation. Biden will never, of course, tell Americans the truth which is that in order to fight inflation the government will have to turn around and cause them more pain especially low wage workers.

Off the Top of My Head

Problems of American Democracy - Part 4: The Easter Bunny Approach to Good Citizenship

by John Lawrence

Voters usually turn against the party in power in the mid term elections. Why? Because the party in power has promised voters all kinds of Easter goodies, and they haven't delivered on all of them. They haven't delivered all of them because the job of the party out of power is to prevent the party in power from doing so. Meanwhile, the party out of power promises voters a different bag of goodies if only they elect them. After all the party in power hasn't delivered all of the goodies promised. The result is the voters vote for the party out of power in the mid term elections. They've gotten all the goodies they're likely to get from the party in power, and their vote is cast in such a way that they are expecting a new bag of Easter goodies that has been promised by the party out of power if only the voters will vote for them which they willingly do. Why? Because voters don't vote for the party most likely to provide the country with good government. They don't vote for the party that is most likely to provide them with intelligent government. They vote for the party that has promised them a new and different bag of Easter goodies than the party in power which hasn't fulfilled all its promised goodies.

So the mid term elections are coming up. Republicans have done their job of obstructing many of Biden's campaign pledges. He did get an infrastructure package passed and got enormous COVID economic relief for citizens, but his hallmark campaign platform pledge, the Build Back Better plan has gone unfulfilled, thanks largely to the Republicans and two Republican wolves in Democratic sheep's clothing. The fickle voters do not assess how Biden has handled the chores of government, whether or not he's handled them in an intelligent and proficient manner. Their fickleness only assesses whether or not they've gotten all the Easter goodies Biden and the Democrats had promised. They have not. Therefore, it has been decreed by pundits, one and all, that Democrats don't have a snowball's chances in Hell of getting reelected in the Halls of Congress come this November.

Voters would rather elect a nincompoop like Trump who knew nothing about government except for the fact that it made him the most powerful man in the Free World, and, therefore, he could do and say most anything he wanted. He also promised voters the Republican bag of goodies - lowered taxes. Thoughtfully, Biden has carefully changed the Democratic meme from raising taxes on everyone to raising taxes only on the rich thus depriving Republicans of their main accusation towards Democrats: "They will raise your taxes." However, Biden doesn't seem to be getting very far in fighting inflation by raising taxes on the rich. Why? Because most Congress persons and Senators are the rich, and they've been lobbied very thoroughly by the rich. Of course this is all very legitimate. It's the American way of doing government unlike the Russian way where a rich businessman just offers cash to a member of parliament if they'll vote a certain way. In America the rich lobby and make generous campaign contributions in order to get Congress persons to vote a certain way. There's also an implied, though not explicit, wink, wink, nod, nod that the Congress person will get a lucrative job on a Fortune 400 Board when they retire from Congress in order to spend more time with their family. Of course this is not considered corruption, but the result is the same. In Russia politicians and government officials do the bidding of the rich; in America politicians and government officials do the bidding of the rich. What else is new?

Off the Top of My Head

Is Democracy Doomed by the Constitution Itself?

by John Lawrence

According to the Constitution, state legislatures have complete control over their state's electors so, even if the popular vote is for a Democrat, a Republican controlled state legislature can choose electors dedicated to the Republican candidate for President. The electoral college was established by Article II, Section 1, Clause 2 of the U.S. Constitution and modified by the 12^th and 23^rd Amendments. Article II, Section 1, Clause 2 of the U.S. Constitution states:

"Each State shall appoint, in such Manner as the Legislature thereof may direct, a Number of Electors, equal to the whole Number of Senators and Representatives to which the State may be entitled in the Congress: but no Senator or Representative, or Person holding an Office of Trust or Profit under the United States, shall be appointed an Elector."

The 12th amendment is irrelevant to our discussion as it has mainly to do with how electors should deliberate and the number of which are chosen by each state. The 23rd amendment gives citizens living in DC the right to vote. The Constitution makes clear that state legislatures have complete control over the selection of electors, and, therefore, that state's control of its votes for President regardless of the popular vote in that state. In fact the following is true:

"Currently, all states select electors through a popular vote (although how that vote works can differ), but that was not always the case throughout American history. In many states, the state legislature selected electors, a practice which was common until the mid-1800s."

Many "battleground states", those where the popular vote is close, have Republican controlled legislatures. When the same party holds both legislative chambers and the governorship, that party has state control. Republicans have state control in the battleground states of Arizona, Georgia, Florida and Ohio as well as 19 other states mostly in the south and midwest. State legislatures that are Democrat controlled are mostly on the west coast and northeast. In the next Presidential election red states that have state control of their legislatures and governorships could change the rules about how they choose electors and decide that they will choose Republican electors regardless of the popular vote. Of course they would be sued and the suit would wind up in the Supreme Court which is majority controlled by Republicans and conservatuves. One of the tenets of conservatism is a strict interpretation of the Constitution. They are called "strict constructionists." There is absolutely no doubt that a strict interpretation of the Constitution gives state legislatures complete control over the selection of electors. If rules need to be changed in those states to allow for the selection of electors not to be made by popular vote, that can easily be accomplished in states in which both the Houses of the legislature and the governorship are in Republican hands such as in the battleground state mentioned above.

So while the US Congress has been concerned over the years with voting rights such as the 15th and 19th amendments to the Constitution which gave voting rights to African Americans and women, respectively, and the Voting Rights act of 1965 which prohibits racial discrimination in voting, the real test for nondiscriminatory election of the President of the U.S. will come up in the 2024 election in which many red states will avail themselves of their rights as states to select electors. In the final analysis expanding voting rights legislation such as the John Lewis Voting Rights Act and the Freedom to Vote Act are irrelevant to the outcome of the election. The John Lewis Voting Rights Advancement Act would make illegal voting rules that discriminate on the basis of race, language, or ethnicity and empower voters’ to challenge discriminatory laws. The Freedom to Vote Act (S. 2747) is currently in the Senate and would solidify comprehensive voter protections, including a minimum of 15 days for early voting, mail-in ballots, and making Election Day a national holiday. It would require eliminating the filibuster to get these laws passed in the Senate.

If states pursue what is their right according to the Constitution to change electoral law to allow them to choose electors not in accordance with popular vote, it will precipitate a Constitutional crisis in 2024. If Trump runs and is elected due to these changes at the state level, the Supreme Court will uphold the election results and Trump will be elected despite the popular vote. This is the scenario that Trump clumsily tried but failed to succeed with in 2020. Next time it could succeed and be perfectly legal. All this goes to show that the U.S. Constitution is fundamentally flawed. Minimal changes that would bring it into the modern world would be elimination of the electoral college so that Presidents are elected by popular vote, the elimination of the filibuster so that the Senate operated as a democratic institution and elimination of the Second Amendment so that every nut case doesn't have the right to own firearms.

Off the Top of My Head

Mancin Wants a Different Version of Family Leave and Child Tax Credit For Him to Support Build Back Better

by John Lawrence

Mancin will not vote for Build Back Better if the child tax credit and family leave are included in their current form. Progressive Dems should just drop their demands, declare victory for the Biden agenda and get on with the rest of the bill. The child tax credit in its proposed form is a good thing, but it's just free money and it could be inflationary. The larger issue is that Dems have been spinning their wheels for months. Joe Mancin has the power, and he is willing to torpedo the whole bill if he can't get his way. The rest of the bill he supports so why not just go along with Mancin, get the bill past with a few tweaks, and revisit the child tax credit on another day. Most Americans don't even understand how the child tax credit works other than paying people to have more children. This interminal, agonizing negotiating process has worn people's patience thin. Let's get on with it and get over it. If we don't spend the money in the bill on climate change, children will have no future at all let alone a child tax credit. Mancin has reasonable arguments and he has the power. There are so many other good provisions in the bill that it is unconscionable that the whole bill be scuttled. Climate change is the paramount concern, and Mancin supports the half a trillion dollars devoted to it.

What is the child tax credit and how does it work? There are various versions that have been enacted over the years. Basically it gives poor people a reduction off their income taxes. If the reduction comes out to be more than the taxes they owe, they have also been able to get at least a portion of that money paid back to them by the government. Mancin isn't totally against the child tax credit. He just wants people to have some taxable income for them to be eligible. On family leave Mancin would support it if there were a different funding mechanism. He favors a payroll tax. His demands aren't completely unreasonable. The Democrats could claim victory if they just went along with them. Mancin doesn't want to eliminate either family leave or the child tax credit. He just wants a less generous version of them in the bill if he's going to support it.

The Washington Post reported:

"Sen. Joe Manchin III last week made the White House a concrete counteroffer for its spending bill, saying he would accept a $1.8 trillion package that included universal prekindergarten for 10 years, an expansion of Obamacare and hundreds of billions of dollars to combat climate change, three people familiar with the matter said.

"But the West Virginia Democrat’s counteroffer excluded an extension of the expanded child tax credit the administration has seen as a cornerstone of President Biden’s economic legacy, the people said, an omission difficult for the White House to accept in the high-stakes negotiations. The people spoke on the condition of anonymity to discuss the closed-door deliberations."

This negotiation process has gone on too long. It's time to just give Joe Mancin what he wants and get on to the next big item on the agenda: voting rights. There too, you almost better let Mancin write the bill.

Off the Top of My Head

Oh No, Joe, Say It Isn't So

by John Lawrence

Despite prior commitments to Joe Biden and House Democrats, Joe Mancin is a "No" on Biden's Build Back Better bill which will provide child care, eldercare, universal Pre-K and more. Dr. No made his position clear yesterday. He's tired of farting around aka negotiating. Democrats need all 50 votes in the Senate to pass the bill. 49 are on board and this gives Mancin extraordinary power. It's his way or the highway. Mancin has said he would support a bill totaling $1.5 trillion, but the house and Senate Democrats have been gingerly "negotiating" with Joe for more. Here's an idea: take what you can get and go home. Cuz you ain't gonna get no mo. Let Mancin write the bill. Throw in voting rights as well, and pass both in the same bill by reconciliation. Mancin has already essentially written a voting rights bill he would support. Again it's not everything progressives want, but it's better than nuttin.

Conservatives have traditionally broken inflation on the backs of the poor. The Phillips curve which is gospel among conservative economists says that you need to increase unemployment in order to rein in inflation. Problem is at this time there is hardly any unemployment. So what else can you do to keep poor people poor? Don't give them any more government benefits. That's the ticket. Of course, progressives say the Phillips curve is hogwash. All you need to do is to extract money from the economy by taxing the rich. But tell that to rich corporation who are spending billions on lobbyists to convince quasi conservative Democrats like Joe Mancin otherwise. And then there is conservative activist Paul Weyrich who famously said, "“I don’t want everybody to vote . . . our leverage in the elections quite candidly goes up as the voting populace goes down.” Translate that into economic terms and you get, "I don't want everyone to be middle class. Who would do the necessary back breaking labor to keep the economy growing if not for the poor."

So conservatives don't want the poor to vote and they also don't want them to work their way into the middle class. They want to keep the poor poor so the economy has a goodly supply of backbreaking and menial labor which it badly needs, especially if you want to buy American. Otherwise, we would have to export the backbreaking labor to other countries where there is a plentiful supply of poor people. Right now conservatives are aghast at how the shortage of labor is fueling demands for higher wages. This is a blow to their very way of life which is predicated on keeping the poor poor. They don't want to be flooded with immigrants to take the menial labor jobs so those who came in 20 years ago can progress to the middle class like Joe Biden wants them to do. The best way to keep them poor is to not give them any more government benefits.

So progressive Democrats in the House and Bernie Sanders in the Senate have been screwed once again. The whole deal was that both the infrastructure bill and the Build Back Better bill were supposed to pass in tandem. Then after farting around (excuse me, "negotiating") for months and months, finally Joe Mancin has put the kibosh on Build Back Better after successfully delinking the two. Screwed again. Lucy with the football. So here's the solution. Stop negotiating. Let Mancin write the bill and then everybody genuflect. And while you're at it, throw  Mancin's voting rights, bill written by him, into the package and pass the whole ungodly stew by reconciliation and be done with it.

Off the Top of My Head

Snake in the Grass Kyrsten Sinema Sells Out to Corporate Lobbyists

by John Lawrence

Corporations, especially the pharmaceutical, can thank Kyrsten Sinema for selling out to them. The least objectionable parts of Biden's Build Back Better plan are the ones Sinema vetoed. Biden's plan would have been much better if corporate lobbyists hadn't gotten to her. But not to worry. She's set for life with probable promises of corporate board positions paying hundreds of thousands of dollars for a few hours "work." With Democrats like her, we don't need Republicans. She's a Republican wolf in Democratic sheep's clothing. But never fear. Biden's Build Back Better Bill will eventually pass within the next couple of weeks, and it's still truly transformational. Too bad that every Democratic Senator had effectively a veto over any provision of it. Joe Mancin was at least up front with the public about his concerns, some of which were at least plausible. Sinema sprung her demands on Biden at the seeming last minute forcing him to renegotiate the whole deal and delaying the whole process. While pundits quibble over Biden's ratings, I don't think he's too concerned about that. He knows he has a BIG DEAL or a BIG FUCKING DEAL as he once whispered to Obama. He'll go down in history as a transformational President.

So what do the Republicans have to offer? Election denialism and insurrection denialism. It wouldn't be so bad except for the fact that they could spring back to life in two or maybe four years. Too bad for the rest of the world's confidence in America. Although the US decries Soviet and Chinese authoritarianism in which one leader can remain in power for a number of years, while the whole US relationship with the rest of the world could change every four, what about Angela Merkel, who remained in power for 16 years, in a putative democracy. Longevity of intent is not a function necessarily of type of government. The US is back? Biden would like to convince others it's so. But Trump has a different perspective which is that Biden's version of the US is back until he, Trump, takes over again in 2024. The US could veer wildly back and forth without any continuity whatsoever. While Democrats are doing their best to help families and bring the US into the modern world, Republicans offer warmed over conspiracy theories aided and abetted by social media. The US needs to get serious about denying Trump a chance of ever running again. In fact he should be in jail for attempting to overthrow a legitimately elected US government which is treason. Yes, the T word applies to him. The S word, sedition, as well. Yet as of now he can run again and possibly win in 2024.

I think that, after the twin Build Back Better bills finally pass, Democrats will turn their attention to voting rights. Will Sinema and Mancin go along with holding the filibuster in abeyance to get voting rights passed? That's the big question. If not, Democrats are sunk in 2022 and 2024. And so is the US as a world leader. The US will become a backwater and a latter day banana republic with an outsize military, corporate lobbyists run amuck and a fast fading US dollar as the world's reserve currency. Runaway global warming will be a given if Trump is elected again in 2024. The US will become a billionaire's paradise with unrestricted limits in economic inequality and a burgeoning homeless population that neither Republicans or Democrats seem to be able to do anything about. Rents will soar out of sight as more people live in their vehicles and on the streets without adequate sanitation. The rest of the developed world will leave the US in its dust, but they alone will not be able to solve the problem of climate change which will eventually make parts, if not all, of the earth uninhabitable. So there is a lot riding on a Federal voting rights bill overriding the Republican state efforts to gerrymander and restrict access to the ballot in order to favor the electability of Republicans.

Off the Top of My Head

Trump Can't Be Allowed to Run Again

by John Lawrence

This man tried to overthrow the Constitution and precipitated an insurrection. If he runs again, it'll be the end of Constitutional democracy in America. What is treason if it is not attempting to overturn the results of an election? Let's start with the fact that he asked the Secretary of State of Georgia to find him 11,000 more votes so he would have one more vote than Biden in that crucial state. But that's only the beginning, folks. It gets worse from there. CNN reported: "A conservative lawyer working with then-President Donald Trump's legal team tried to convince then-Vice President Mike Pence that he could overturn the election results on January 6 when Congress counted the Electoral College votes by throwing out electors from seven states, according to the new book "Peril" from Washington Post journalists Bob Woodward and Robert Costa." An attempt at election fraud is enough not only to disqualify Trump from ever holding public office again. It is also sufficient, in my opinion, for him to be tried for treason. The January 6 Committee is on course to bring out all the sordid facts, but, if they don't also go further and "disbar" Trump from ever running for public office, they will not have gone far enough. After all Clinton was disbarred for having sex in the oval office, a minor offense compared to what Trump has done.

If Trump should run again, he will undoubtedly call the election results another "Big Lie" unless he should happen to win of course which I don't think he would. Trump's base although sizable is dwindling to a certain hard core. Most Democrats and independents will not vote for him, but, if he runs again, there will be trouble. Another civil war is not out of the question. In order to avert one, the January 6 committee needs to run the course of its investigation and then to take action to prevent Trump from ever holding public office again. Better to nip this cancer on the Constitution in the bud than face the consequences of a man running for public office that is fully capable of precipitating another crisis. Trump has not even accepted the fact that he lost the last election. Imagine how he could whip up crowds if he wouldn't accept the results of the next election.

The book, "Peril" pointed out:

"The Eastman memo laid out a six-step plan for Pence to overturn the election for Trump, which included throwing out the results in seven states because they allegedly had competing electors. In fact, no state had actually put forward an alternate slate of electors -- there were merely Trump allies claiming without any authority to be electors.

 

"Under Eastman's scheme, Pence would have declared Trump the winner with more Electoral College votes after the seven states were thrown out, at 232 votes to 222. Anticipating "howls" from Democrats protesting the overturning of the election, the memo proposes, Pence would instead say that no candidate had reached 270 votes in the Electoral College. That would throw the election to the House of Representatives, where each state would get one vote. Since Republicans controlled 26 state delegations, a majority could vote for Trump to win the election."

 

So Democrats should treat the present situation as the preamble to a possible civil war in which they hold most of the cards because they control the government. They should do everything possible to neuter Trump and his cronies lest they should rear their ugly heads again in 2024 at which time they will be a more formidable force. It's not so much about politics as it is about whether or not the US will remain a democracy focused on solving the problems of average Americans and remains a constructive force in solving the problems of planet Earth like global warming. If Clinton could be disbarred for sex, Trump needs to be disbarred from ever running again, sex being the least of his transgressions.

Off the Top of My Head

Biden's Goal of 50% Electric Vehicles by 2030 in Peril Because of American's Freedom of Choice

by John Lawrence

Fast forward to 2029 and we find ourselves in the situation that many Americans are insisting on purchasing gas fueled vehicles because of their freedom of choice. Even though the government has subsidized electric vehicles to the tune of $10,000 per vehicle, and electric vehicles outperform gas powered ones in every category, even though electric vehicles have more bells and whistles than the same identical gas powered one, Americans are insisting that their freedom of choice is more important than helping President Biden reach his goal of 50% electric vehicles on the road by 2030. Wolf Blitzer's son, Chip Blitzer  interviewed Joe Blow of Shrevesport, Louisiana. Blitzer: "Why do you want to purchase a gas powered vehicle when the electric one is cheaper and a better performer?" Blow: "My Daddy drove a Ford F-150 with an internal combustion engine which was the pride of America as did his Daddy before him. The internal combustion engine is what built this country. It's how we won every war we ever fought in. My Daddy was a roustabout in the oil fields and my family has a long history of fossil fuel products. You won't ever catch me in an electric vehicle as long as I have my freedom of choice."

President Biden is considering mandates to get gas powered cars and trucks off the road, but some southern Governors are balking at that. Governor P.T. Abernathy of Texas said this: "The Federal government is overstepping its bounds when it comes to telling us here in the south what kind of vehicles we can drive. I've always preferred a gas powered vehicle myself, and, as long as I'm Governor, I will let our citizens decide for themselves what kind of vehicle they want to drive. It's unAmerican to dictate to American citizens that they have to drive an electric vehicle. We also won't be following Federal government incentives to get people to move out of flood plains." Back in Shrevesport Mr. Blow had this to say. "I ain't moving out of my house even though it is in a flood plain. My Grandpappy built this house. We Blows have lived here for generations, and no Federal government is going to order me to move out of my house." It is notable that 2 years ago, FEMA gave Blow $350 K to rebuild his house after Hurricane Upsilon totally destroyed it. Yet Blow said at the time: "I've never seen anything like it before in my life, but I will rebuild. I'm not going anywhere. This is America."

We note that in blue states people are 90% compliant with Biden's goal. They are buying electric vehicles at a fast rate taking advantage of the generous government incentives in doing so. Red state Governors on the other hand are imploring their residents to support the oil and gas industry by buying gas powered vehicles making it less likely that Biden will reach his goal of 50% electric vehicles on the road by 2030. Despite the cleaner air that has come with more electric vehicles on the road not to mention helping in the effort to forestall and mitigate global warming, many in southern states primarily are insisting on their right to choose as Americans citizens. Ex-President Donald Trump said at a CPAC convention: "Global warming is a hoax. We have so many wonderful oil and gas resources in this country that we'll never have to import another barrel of oil. Yet these socialists like Biden want to cripple that industry destroying the livelihoods of red blooded Americans to feed their families." As a result of American hesitancy to go ahead and buy electric vehicles, Biden will probably not be able to reach his goal. One guy from Alabama said: "Have these electric vehicles even been FHA fully approved. I heard that they were just provisionally approved. When there is full FHA approval, then I might consider buying one. In the meantime I'll just stick with my F-150 with the American internal combustion engine, the engine that made America great. Don't tell anyone, but I take off that godforsaken catalytic converter every time I buy a new pickup. Internal combustion rules, baby! Let 'er rip!"

Off the Top of My Head

Americans Getting Tired of All the Delays

by John Lawrence

Shit or get off the pot. Politicians of both parties are going round and round ad infinitum. A couple of Democrats are helping Republicans with their policy of making Joe Biden spin his wheels until they can take over again. They talk and talk or they don't even do that since they can't even vote in the Senate to debate something. Gridlock, political constipation and never-get-anywhereism. They just are not doing their job. They're letting 2 conservative Democrats control the party's agenda. Republicans are very pleased. They are carrying the Republicans' water. They will be even more pleased if Joe Biden gets nothing done other than what he's already accomplished which is considerable. Mitch McConnell wants to defeat Biden's entire agenda. Republicans are only too happy to sit back and let Manchin and Sinema do their dirty work. Meanwhile, China surges ahead not being restrained by any of these problems. After they delay and delay, they will be going on vacation for the August recess. They don't deserve a recess. They are proceeding at a glacial pace, and then finally they will have a vote which will not have enough Republican support to pass.

C'mon, guys. You're living in the pony express days. This is the age of computers. Expedite. Expedite. Don't spend so much time dialing for dollars. You can work remotely during your recess. These guys are overpaid for what they do, and then what they do doesn't amount to much. Juneteenth is a federal holiday. Clap. Clap. Symbolism is about as far as bipartisanship can go. MSNBC reported:

"Mitch McConnell's come under a lot of criticism for saying, at one point, he wanted to make sure that Barack Obama was a 'one-term president,'" [Wyoming Senator John] Barrasso said last Thursday at an event hosted by the Ripon Society, a centrist Republican think tank, which posted the remarks Tuesday. "I want to make Joe Biden a one-half-term president."

Problem with American Democracy: No sooner has one administration been elected, Republicans are getting ready for the next one in which they hope to regain power. So of necessity they have to do everything they can to make the current administration fail. No thoughts of doing something for the American people. It's all about defeating Democrats who just might do something constructive for the American people. Then when the Republicans get in power, they will reduce taxes on the rich which is about all they can think about doing, and they will do this without any worries or concerns about "pay fors." But anything Democrats want to do has to be covered by "pay fors."

Modern Monetary Theory explains that the US government doesn't need to tax before it can spend. The way the system works is that the Federal Reserve puts enough money into the US Treasury's account to cover any payments the US government has to make whether or not there is tax money to pay for it. The only thing to be concerned about is inflation if too much money in the economy is chasing too few goods and services or if enough human resources aren't available to soak up the spending. Most politicians are still living in the world that the US needs to tax before it can spend. They are totally ignorant in this regard. They don't know how the system actually works. The US has a sovereign currency. Therefore, it can never go bankrupt. It does not have to borrow money in the capital markets and pay the going rate of interest. It sets the interest rate on US debt. If no entity wants to buy US debt it ends up on the Fed's balance sheet where it can remain indefinitely. It never has to be paid off.

Forget about competing with China. The Chinese are running circles around the US because they don't have to deliberate ad nauseum before they act. They don't have to argue with states about states' rights. They don't go on August recess for a month when no work gets done. The US law stipulates that “unless otherwise provided by the Congress,” both Houses must adjourn no later than July 31 each year or the first Friday in August that occurs 30 days before the first Monday in September, until the second day after Labor Day. How many American get the entire month of August off?

Off the Top of My Head

US Is Not a Democracy. It's a Republic if We Can Keep It.

by John Lawrence

Benjamin Franklin said, “It's a republic, if you can keep it.” when asked if we had a monarchy or a republic. We almost didn't keep it when Trump tried to turn it into a monarchy with him as the first monarch. However, the US is not a democracy. A democracy would be a nation governed by a majority of the people. There are a lot of reasons why this is not the case. #1 States' rights: The Federal government is not a national government. It's not a central government with power over the whole nation. Because of states' rights, the US federal government is a weak form of government that shares powers with the states which can veto an administration's agenda if they feel so inclined. States can overrule the central government. A country with a strong central government can set its agenda at the national level and then pursue it without any obstructions from various states or regions or provinces. All things being equal, a nation with a strong central government will surge ahead of one with a weak central government in a competitive enironment.

#2 Representative instead of direct democracy. A representative democracy does not necessarily govern in the same way a direct democracy would. Representatives are subject to lobbying which distorts their votes and makes them represent their donors more than their constituents. Opinion polls show that a majority of Americans want gun control, affordable health care and addressing the issue of climate change among other things. Yet the US government does little if anything regarding these issues because vested interests are funding politicians to vote "No" on these issues.  #3 Gerrymandering or political party control of district boundaries. When a political party controls district boundaries they can draw the districts in such a way as to favor the electability of their party's candidate. They can also practically guarantee that their party's candidate will be elected in perpetuity.

#4 The Electoral College. The electoral college makes it possible for a Presidential candidate to win the popular vote and lose the electoral college vote and hence the Presidency. Again it's minority rule not majority rule.

#5 The winner-take-all two party system eliminates representation for minorities. The way the US districting system is set up, it is impossible for third party candidates to win. They can be spoilers though taking votes away from the party that they're closest to ideologically. A parliamentary system is more amenable to multiple parties being represented.

#6 A Constitution set in stone whose barriers to change are seemingly infinite. The Constitution can be amended but not change except for amendments. The amending process requires a two thirds vote, not a majority vote, and hence is undemocratic. Other countries have procedures whereby the whole Constitution could be changed or updated or rewritten.

#7 Lack of continuity: Elections every 2 years can change the direction of government or the government's agenda or lack thereof. #8 Gridlock: An administration's agenda can't go forward due to the filibuster. In short, while other countries are surging ahead, America has the political equivalent of constipation. Gridlock is the outcome of a divided country controlled by the minority.

Fareed Zakaria wrote in an article in the Washington Post, The decay of American democracy is real:

"One aspect of the United States’ power remains substantially diminished: its role as a beacon of democracy. Among countries surveyed, 57 percent of people said the United States is no longer the model for democracy it used to be. Young people worldwide are even more skeptical about America’s democratic institutions.

"In one fundamental way, things look worse now than in prior periods of crisis. After Watergate, many were surprised that the world looked up to the United States for facing and fixing its democratic failures. It was a sign of the country’s capacity to course-correct. But imagine if after that scandal, the Republican Party, instead of condemning Nixon, had embraced him slavishly, insisted that he did absolutely nothing wrong, settled into denial and obstructionism and proposed new laws to endorse Nixon’s most egregious conduct? Imagine if the only people purged by the party had been those who criticized Nixon?

"The decay of American democracy is real. It’s not a messaging or image problem. Until we can repair that, I’m not sure we can truly say America is back."

 

Off the Top of My Head

Without Majority Rule Is The US Still a Democracy?

by John Lawrence

The US Senate is not ruled by a majority. Arguably that makes the US not a democracy or a democracy in name only. The filibuster is an artificial rule that precludes majority rule in the Senate, and, therefore, in the US since the Senate is a representative body of the people. A majority of the people want gun control, but, because the Senate is not a democratic institution, there is no gun control. A Pew Research Center survey conducted in 2019 found that 60% of Americans say gun laws should be tougher. Conclusion: the US is no longer a democracy. Strong majorities of voters across party lines view access to clean water, a quality public education, adequate food, and housing as basic human rights that should be secured by the federal government. A survey by Harvard University found the following: "The right to clean air and water, for example, was considered important by 93 percent of those surveyed; protection of personal data, by 93 percent; the right to a quality education, by 92 percent; racial equality, by 92 percent; affordable health care, by 89 percent; and the right to a job, by 85 percent."

The filibuster precludes democracy. It is not in the Constitution. Neither is the right to own a gun. The Second Amendment states: "A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed." At the time of the American Revolutionary War, militias were groups of able-bodied men who protected their towns, colonies, and eventually states. They were state based armed groups that later became the National Guard. It was these groups that were allowed by the Constitution to bear arms, not every idiot who came down the pike. Other more mature societies regulate gun ownership the way the US regulates drivers.

NPR reports:

"It's illegal for Russian citizens to own automatic and semi-automatic guns. It's possible to apply for a handgun or shotgun license, though citizens are required to provide reasons such as hunting or target shooting. Applicants face strict background checks, including criminal history, a full psychological evaluation and a medical exam. They must pass a test on firearm laws and safety. Each weapon is then registered by the police during a home visit. Police take bullet patterns, test bullets and cartridges so bullets can be matched if the gun is used in a crime. A license lasts five years, after which applicants must go through the whole process again."

The US is falling apart because groups with lots of money are lobbying Congress to perpetuate their income stream from gun sales regardless of what the majority of US citizens want. Yet the US lectures other countries about human rights. Is it a human right to own a gun? I don't see it listed in the UN Declaration of Human Rights. What is listed is the following:

1. Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.
2. Motherhood and childhood are entitled to special care and assistance. All children, whether born in or out of wedlock, shall enjoy the same social protection.

The controlling interests of US society are not the majority of the people. US society is controlled by wealthy interests which lobby Congress providing them with financial incentives to do their bidding. One of the main reason companies lobby Congress is to preserve their rights not to have to pay for externalities. Externalities are byproducts of the production process that pollute the environment. It would lower their profits if they had to pay for them. William D Nordhaus writes in The Spirit of Green:

"One prominent example is the activities associated with the Koch brothers and their companies. Koch Industries is a privately owned company holding companies with major environmental impacts and with revenues of around $115 billion in 2017. As reported by the Center for Public Integrity, one of Koch's holdings, Georgia-Pacific, is significantly impacted by the US Environmental Protection Agency (EPA) decision on dioxin. They write that Koch has intervened 'in various regulatory proceedings to dilute or halt tighter federal regulation of several toxic by products that could affect its bottom line, including dioxin, asbestos and formaldehyde, all of which have been linked to cancer.' According to Greenpeace, 'Koch Family Foundations have spent $145,555,197 directly financing 90 groups that have attacked climate change science and policy solutions, from 1997 - 2018.'"

So it's understandable why Republicans especially don't want Joe Biden's climate change agenda to pass even though a majority (actually two thirds!) of Americans want the government to do something about climate change according to a Pew poll. "A majority of Americans continue to say they see the effects of climate change in their own communities and believe that the federal government falls short in its efforts to reduce the impacts of climate change." But since the Koch brothers and others like them have the Republican party in their pockets, the filibuster assures them that nothing will get done. And this is happening in a democracy where democracy rule supposedly prevails? The US, sadly to say, is no longer a democracy if it ever was.

Off the Top of My Head

How to Pay For Infrastructure

by John Lawrence

Modern Monetary Theory (MMT) points out that neither social programs nor tax cuts need to be "paid for." A government such as the US with a sovereign currency can issue the money without having to tax first. Taxes are only necessary to control inflation. The biggest amount of inflation in the economy right now is the inflation of billionaires' wealth assets because their increases in wealth are not taxable. The IRS only taxes workers' incomes, not billionaires increasing asset wealth. That's why economic inequality is growing by leaps and bounds, and we need a wealth tax. But as for infrastructure, the Fed can just create the money in the Treasury's account at the Fed with a few keystrokes on a computer like it did when it bailed out Wall Street in 2008.

In The Deficit Myth, Stephanie Kelton writes (circa 2015):

"No one [on Capitol Hill] questioned the significant need for infrastructure investment. A trillion dollars, while ambitious, would have only taken a bite out of the problem. No one blanched at the price tag, but there was considerable debate about whether (and how) to pay for it.

"Before I tell you about that debate, it's important to understand what those words mean to lawmakers and their staffers on Capitol Hill. In truth, there is only one way to pay for anything. All federal spending is carried out in exactly the same way - that is, the Federal Reserve credits the appropriate bank account(s). But in Washington speak, you "pay for" your spending by showing that you can "find" enough money to cover the cost of whatever it is you're proposing to spend. It's all a game, really, and it's rooted in the flawed mental model [that the government needs to tax and/or borrow before it spends] that holds back so much of our potential. To avoid adding to the deficit, lawmakers look for ways to cover the costs of their proposed spending without borrowing. That means they usually go looking for new tax revenue."

As Kelton points out, the US doesn't need to tax before it can spend. Biden's wanting to pay for infrastructure by taxing the rich is not necessary to pay for infrastructure per se, but it is necessary to get unbounded economic inequality under control.

Kelton continues:

"So back to the debate over the trillion-dollar infrastructure ill. The conversation began with staffers being asked whether we thought a so-called pay-for should be attached to the bill. It was my first week on the job, so I was relieved when another staffer spoke up first. "No," this person began, "I think we should just do it as a clean bill." A clean bill meant writing a spending bill that didn't include any language abut how to pay for it. Another staffer agreed, and soon I echoed their sentiments. Our country desperately needed to make these investments. There was clearly enough fiscal space to do it, and infrastructure is one of the things that has traditionally enjoyed bipartisan support. Since the GOP was in control of the Senate, we reasoned, the bill would need at least some support from Republicans to pass. [Ha. Ha] Proposing a tax increase would guarantee defeat. Not everyone agreed. Another staffer objected that the press wouldn't take the legislation seriously unless it specified exactly how it would be paid for. In the end, the bill included a proposal to raise revenue by closing a variety of tax loopholes that overwhelmingly benefit the rich. Needless to say, the legislation did not pass. Meanwhile, the latest ASCE [American Society of Civil Engineers] report card shows how deferred maintenance is catching up with us, as the cost of our needed improvements has climbed to a whopping $4.59 trillion."

Is it deja vu all over again? Is it gridlock or spinning our wheels as infinitum? Is it Republicans thinking it is more important to defeat Obama's and now Biden's agendas than it is to prevent bridge collapses?

Kelton's point is that the US doesn't really need to "pay for" anything by taxing first or finding the money first. "In 2017, a 1215-page bill, known as the National Defense Authorization Act, sailed through the Senate with a vote of 89-9. The White House had requested $700 billion, but the Senate had authorized $737 billion, kicking in another $37 billion without hint of concern about where to "find" the money. They simply voted in an overwhelmingly bipartisan way to increase the Pentagon's discretionary budget."

Yet the Pentagon budget has not protected us from international ransomware attacks nor domestic terrorists. May I submit that the money is misspent and misdirected? Instead of going where the money is really needed it goes to the vested interests in the military-industrial complex who continue to justify war in order to line their own pockets.

Kelton continues: "That might seem like a double standard. As Congresswoman Alexandria Ocasio-Cortez put it, "We write unlimited blank checks for war. We just wrote a $2 trillion check for the GOP tax cut, and nobody asked those folks, 'How are they going to pay for it?' She's right. Somehow, there's always money for war and tax cuts. For just about everything else, however, lawmakers are expected to show that they can "pay for" their spending."

As MMT has shown, the US government does not need to tax or borrow in order to spend. Taxation is necessary to control inflation, to extract money from the economy if there is too much of it out there chasing too few goods or services. Right now there is too much money out there in the hands of billionaires that should be extracted in order to prevent runaway financial inequality. But it is not necessary to tax before money can be spent on infrastructure or anything else. There are limits, and the limits are the material and human resources that are available to soak up that money by providing constructive economic activity like building infrastructure. Hyperinflation like what happened in the Weimar Republic or even Greece cannot happen in the US because the US never has to go to the capital markets to borrow money at prevailng interest rates. The US central bank, the Fed, issues whatever money is necessary to pay US bills and that includes any money appropriated by Congress whether for war, tax cuts or building infrastructure.

https://www.youtube.com/watch?v=a9pAPIUYXxQ

 

Off the Top of My Head

We Need to Change Our Spending Priorities Away From Military Adventurism and Toward Domestic Concerns

by John Lawrence

The military-industrial complex needs to be defunded, and the budgets of Homeland Security, the FBI and cybersecurity need to be augmented. We need to reconsider what "national security" really means especially in an era of climate change and pandemics. If the world's nations can not get along, climate change will end human civilization. The western nations, especially the US, need the cooperation of Russia and China in particular if climate change can even be mitigated to a less disastrous level than is already baked in the cake. Russia is one of the largest exporters of fossil fuel products, and will profit most from the thawing of the Arctic. If they are treated as pariahs, they will not be too concerned if the rest of the world becomes uninhabitable. Scientific American reported in an article entitled It's Time to Rein in Inflated Military Budgets:

"Despite the trillions of dollars Congress and successive administrations have lavished on the Pentagon since the turn of the century, the massive U.S. arsenal and fighting force deployed worldwide are powerless against grave, nonmilitary threats to national security—from a raging pandemic to the fact that tens of millions of Americans breathe foul air, drink tainted water, and struggle to pay for food, housing and health care.

"Such a reassessment is long overdue. No other country’s military outlays come close. In FY 2019, the Pentagon’s budget was nearly three times bigger than China’s defense spending and more than 10 times larger than Russia’s. All told, the U.S. military budget in 2019 exceeded the next 10 countries’ defense budgets combined and singlehandedly accounted for a hefty 38 percent of military spending worldwide."

The truth is that lobbyists for the military-industrial complex will lose money if a sane foreign and domestic policy is adopted. It is a hotbed of self interest which will come up with infinite rationales for continued military spending even when it is obvious to a disinterested observer that the Defense Department is just an unabashed money pit. The article continues;

"There are plenty of reasons to cut the Pentagon’s budget, but its track record of profligate spending is among the most obvious. If the Pentagon were a private corporation, gross mismanagement would have forced it into bankruptcy years ago. Dysfunctional internal controls, aided and abetted by years of lax congressional and administration oversight, have enabled it to waste tens of billions of dollars annually, and the last 20 years are littered with a parade of overpriced, botched and bungled projects.

"In just the first decade of this century, the Pentagon was forced to cancel a dozen ill-conceived, ineffective weapons programs that cost taxpayers $46 billion. They included the Future Combat Systems program, a fleet of networked high-tech vehicles that did not work; the Comanche helicopter, which—after 22 years in development—was never built; and the 40-ton Crusader artillery gun, which never even made it to the prototype stage.

"To put this example of managerial malfeasance in context, these canceled programs collectively cost more than the federal government spent on the Environmental Protection Agency (EPA) over the last five years.

At least the Pentagon killed those projects before they wasted any more money. All too often, it does not know when to pull the plug. The Army’s attempt to replace its outmoded Bradley tank is a case in point. Over the last 17 years, it has blown an estimated $22.9 billion on three flawed prototypes, but in February—just three weeks after rejecting the third failed design—it issued yet another request for proposals from defense contractors."

To put it bluntly many peoples' livelihoods and many corporation's profits are tied up with the continued exorbitant spending by the Federal government in support of the Defense Department, but Defense is a misnomer if the spending priorities are so out of wack compared to the actual threats to the American people. In short we are wasting money on so-called defense and letting the real threats go unfunded and undefended.

 

Off the Top of My Head

Joe Biden's Trillion Dollar Budget Plan

by John Lawrence

Don't worry about how to pay for it. Any nation with a sovereign currency (let alone the world's reserve currency) and a floating exchange rate can never go bankrupt. The Federal Reserve can issue the money. In fact in the real world this is exactly how it works for any budgetary legislation passed by Congress and signed by the President. Let's say, for example, Biden's $2 trillion infrastructure plan is signed by him into law. The US Treasury has an account at the Federal Reserve bank. Let's say there is only a trillion dollars in that account. What happens next is that the Fed just augments the Treasury's account by a trillion dollars by means of a few keystrokes on a computer. Bingo the government now has all the money it needs to spend on infrastructure. It didn't have to receive tax money in advance of the money it needed to spend. At the same time the Treasury Department creates a trillion dollars worth of Treasury bonds and sells them to the primary dealers who are required by law to buy them. These are mainly big Wall Street banks. These banks sell the bonds in the secondary market. If they can't find enough buyers, the Fed "adds liquidity to the market" by taking the Treasuries onto its balance sheet in return for marking up the Wall Street banks accounts at the Fed with the appropriate amounts of cash. Now everybody is happy. The US government has the money it needs in its Treasury's account at the Fed. The Wall Street banks have plenty of liquidity in their reserve accounts at the Fed, and the amazing thing is that it didn't require any money from additional taxes.

Another amazing thing is that most politicians are totally ignorant about how government financing actually works. The Republican Governor of Ohio, Mike DeWine gets on TV and opines about the fact that the US is going into too much debt and how will our grandchildren ever pay it off. "Here in Ohio," I'm paraphrasing," we have to pay our bills and pay down our debts. Every household has to be fiscally responsible and pay their debts." Well households and states are in a different category from the Federal government. They actually do have to pay their debts. So what he is claiming is a half truth. States and households cannot issue a sovereign currency whereas the Federal government can. States and households use the Federal government's currency. The big lie, however, is that the US government has to pay off its debts. It never does, and no entity can force it to do so. The other constraint that Larry Summers and others worry about is inflation or currency devaluation. Inflation could be a problem, and that problem, should it arise, can be dealt with by sucking money out of the economy by means of taxes. Biden's plan to tax the rich will suck some of their superfluous wealth out of the economy thus forestalling inflation while tending to reduce the runaway economic inequality that is now threatening democracy in the US.

The Federal government is not like a household or a state. Households and states actually do have to pay back the money they borrow plus interest. That's why it's so important that the various COVID rescue plans provide the states and municipalities with money. Otherwise, they could become financially insolvent and go bankrupt like Orange County in California did a few years ago. Birmingham, AL also got itself in hot water and went bankrupt. Countries in the Euro zone have the same problem as states in the US. They gave up their sovereign currencies when they joined the EU. So now countries like Greece and Italy have to beg the European Central Bank for relief, relief they could have provided for themselves if they had retained their sovereign currencies like Britain did. Britain will not have any problem with financial shortages because, like the US, its government can issue whatever currency is deemed necessary to weather any storm.

So in addition to the Big Lie that Trump won the election, politicians of both parties are perpetrating another Big Lie that the US actually has to borrow the money to pay for Biden's trillion dollar infrastructure and safety net programs. Some politicians, like Bernie Sanders and AOC, actually know the truth, and, evidently, they have convinced Joe Biden thereof as well although they won't actually come out and say it to the media: the US government can just issue money into the private economy. It doesn't need to borrow it or even tax for it in advance in order to spend. So the real policy of the Biden administration is not tax and spend. It's spend and maybe tax later, but target those taxes on the wealthiest among us. As opposed to the Republican philosophy of giving tax breaks to the wealthy and taking the social safety net away from the poor.

Off the Top of My Head

The Solution to Gun Violence in America

by John Lawrence

The government should simply buy out the gun industry. According to Fortune Business Insights: "The global guns and accessories market size was $6.14 billion in 2019 and is projected to reach $9.33 billion by 2027." So for just $10 billion or so, the US government could buy out the gun industry and shut it down except for those guns that are needed by police and the military. Without lobbying and campaign donations to Republican Congressmen, political support for guns would quickly dry up, and gun sales could be carefully controlled by the government. Throw in another $10 billion to buy back guns that are already on the street, and for a measly $20 billion the government could buy up the gun industry and get guns off the street. Or a billionaire could do it. With the government spending trillions of dollars on an annual basis, $20 billion is peanuts in order to solve the gun violence epidemic in America. It would also be peanuts for a consortium of billionaires. Bill Gates is an advocate for global health and eliminating global disease. He could singlehandedly eliminate this one.

Other countries are capable of controlling the sale, distribution and licensing of guns in rational manners. Only in the US is there a literal fury about the right to own a gun as if it were a sine qua non more precious than food or water. There have been 47 mass murders in the last month, and it will only be getting worse without control of gun distribution. Why not replace the right to gun ownership by the right to health care and the right to adequate housing? We have the world's worst and most expensive health care system with the pharmaceutical industry along with the car industry practically supporting network television with ads. It would be better to eliminate pharmaceutical ads like they used to be disallowed before Republicans made them legal. These ads have been generating a nation of hypochondriacs. Sickness is becoming a booming entrepreneurial industry. Better to encourage the American population to have more healthy lifestyles.

Sad to say but the US is becoming a second rate nation incapable of maintaining public order. Liberty has gotten out of hand. There can be too much of anything, and Republicans have doubled down on the Second Amendment despite mass violence which is draining the life and security out of the American people. No one is safe and secure any more as long as mentally disturbed people have the right to buy guns. Republican demands for liberty are also affecting the pandemic response as they demand that Americans go about their business in any way they freely choose despite the best advice from responsible experts on pandemics. Rights should be balanced with responsibilities but in the US there are no responsibilities expected of citizens. Compulsory voting, also called mandatory voting, is the requirement in some countries that eligible citizens register and vote in elections. Penalties might be imposed on those who fail to do so without a valid reason. According to the CIA World Factbook, 21 countries, including 10 Latin American countries, officially had compulsory voting as of December 2017. Instead the US is doing its best to restrict voting. It is a country getting out of whack with the rest of the world yet pretending it has the right to control the world. Even the vaunted US dollar is losing ground as other countries find workarounds to avoid US sanctions.

Compulsory public service should be required as an alternative to military service. This could be in return for free public education. The US has been turned into an exploiter's dream where everything must be paid for or people have to go into debt or people have to do without the necessities of life if they can't pay. Money talks and shit walks. Instead of a rational public order, we get sold a bill of goods about the need for a bloated military and the right to own guns when the biggest threat to the security of American lives is domestic terrorism and random nuts with guns. In short unless some things are changed, America will lose whatever moral authority it ever had. This is a fast track to second ratedness and moral bankruptcy.

Off the Top of My Head

America to End Forever War in Afghanistan Thanks to Joe Biden

by John Lawrence, April 15, 2021

So far Biden is making all the right moves, and I'm sure he has more up his sleeve. He's playing 3 dimensional chess while the Republicans haven't even learned to play checkers yet. The military-industrial complex is crying, "Oh, no," because they justify the huge expenditures on them by the need for continuance of forever wars. They are aghast at the prospect that their trillion dollar annual budget will be inevitably reduced. It has become obvious that the biggest threat to the US is not international terrorism but domestic terrorism. The FBI and the National Guard will deal with that very nicely; they don't need the Pentagon. The FBI is doing a remarkable job cleaning up the terrorists who took part in the January 6 bungled coup attempt. Over 400 arrests and counting so far. The idiots self videoed their own arrest warrants.

The US spends more on defense than the next 10 countries combined. As an added service they also train the Oath Keepers, Proud Boys and the Three Percenters. The military-industrial complex has done a lot to militarize the consciousnesses of young Americans, especially young non-college bound Americans. College graduates, especially in engineering, often end up, like I did, in the military-industrial complex working for companies like Lockheed Martin, Northrup Grumman and General Dynamics. As a country we have been spending our money in all the wrong places, but the military-industrial complex wants to hang on to its prerogatives. When I was an employee of General Dynamics many years ago, they encouraged you to vote Republican. Otherwise their budgets might be cut and there might be a RIF (Reduction in Force). When the military-industrial complex is cut down to size, right sized as they say, the Republican party will lose its raison d'être, its justification, because that's all in reality that it stands for - large defense budgets and tax cuts for the wealthy.

If we really want to compete with China, then we should cut our defense budget down to the size of China's and spend our money in more constructive ways like China is doing like building infrastructure with its Belt and Road initiative. The only infrastructure the US has been doing in foreign countries has been the building of military bases of which there are approximately 800 in practically every country in the world. Meanwhile, China has one military base in a foreign country - in Djibouti! If the US wants to compete with China, it will take a page out of China's book and build infrastructure not military bases. China and the US need to cooperate on problems facing the whole earth like global warming. It's no consolation to win the competitive war while the home we all live in goes up in flames or drowns as the case may be.

Republicans want Biden to tell them how he's going to pay for all his ambitious social programs? Let's see. Let me count the ways. Taxes on the rich - that's a good one. Reduce the size of the military-industrial complex budget. Even better. Military contractors, among others, provide the campaign donations for the Republican party as long as the guys they are providing the financial jet fuel for are hardliners for a "strong" defense. Well now, maybe they should stand up for transferring the money to the FBI so they can deal with domestic terrorism instead of a useless military engaged in forever wars which are only killing civilians, destroying real estate and creating refugees. The world doesn't need an America which thinks it has the self-appointed job of being the world's policeman or moral arbiter. There is something in the Bible about taking the beam out of our own eye before telling our neighbor to take the mote out of theirs.

The US bloated military is wasting our money while militarizing the consciousness of our young men many of whom think their patriotism justifies invading and laying waste to our Capitol. Lawmakers were shocked, shocked to find out that the invaders of the People's House were present and former members of the military and police forces! Patriots! This is what happens when you define patriotism in military terms. The true patriots are the doctors and nurses, supermarket workers, delivery drivers, meat packers and others who put their lives at risk to help us get through this pandemic. True patriotism consists of reducing our military-industrial complex and defense budget to a reasonable size comparative with other countries and the real threats in the world while building up our infrastructure assets and social safety net programs as every other advanced country has already done. Joe Biden is on the road to doing this. May he prosper and prevail. And God bless our doctors and nurses.

Off the Top of My Head

If Republican Voters Want the Infrastructure Bill, Why Don't Republican Lawmakers?

by John Lawrence, April 12, 2021

Is this a failure of representative democracy? Polls show that a majority of Republican voters support Biden's infrastructure plan including the "care" components thereof. Yet Republican Senators are dead set against it, and the bill will probably not garner one Republican vote. It can still pass the Senate based on budget reconciliation which only requires a majority vote as long as all Democrats vote for it. Other Biden proposals involving voter's rights and gun control would require at least 10 Republican votes in the Senate under the current rules which involve the filibuster for non-budgetary items. In a representative democracy, a party should represent its voters. Otherwise, you don't really have a representative democracy which the US purports itself to be. So at present the US is in the position of being a government swerving back and forth from a representative democracy as long as Democrats control both Houses of Congress and the Presidency and a dictatorship of an elite when Republicans control either party or the Presidency.

The same applies to other issues like gun control, voter's rights and immigration which aren't subject to budgetary reconciliation and must garner 60 votes in the Senate. One of the minimum elements of democracy is majority rule. Because the filibuster is anti-majoritarian, this leaves the American democracy in the position of not really being a democracy at all in terms of non-budgetary items. So the US is on its way to being an authoritarian regime if Republicans control the Presidency and both Houses of Congress. All that would be necessary is a President like Trump with authoritarian tendencies. Then the US government becomes a government that's all about the use of power to get its way internationally and domestically, not about making the world a better place. Unfortunately, this leaves the US in the eyes of other nations as being untrustworthy since there is no consistent policy going forward. Other countries have more consistent leadership and hence are considered more trustworthy.

China, on the other hand, has very consistent policies going far into the future. China isn't perfect but most of the Chinese people and the leadership are on the same wavelength. US leadership likes to make a big deal of the plight of the Uyghurs, a Chinese minority that represents less than 1% of the Chinese population. So it's pretty remarkable that the only problem China seems to have with a minority that resents Chinese leadership  is with a minority that composes 0.31% of the population. The US should be so lucky yet the US harps on the Chinese over this situation of which little is actually know by the western world. China has pilled 800 million people out of poverty since 1990, one of the outstanding feats in human history, yet the US leadership continues to harp about the Uyghurs while giving no credit to China on poverty reduction. During the same time period the wages of US workers has stagnated. Kishore Mahbubani, author of the book, "Has China Won" writes: "In contrast to America's stagnation, China's culture, self-concept, and morale are being transformed at a rapid pace - mostly for the better." Rather than China's recent success being an assessment of the comparative values of Marxist-Leninist doctrines vis a vis American democracy, The Chinese Communist Party could more appropriately be called the Chinese Civilization Party since it reflects the 2000 year history of China more than it does Communist ideology.

So the response of the US to the progress of China in the last 30 years, instead of congratulating them on their remarkable accomplishments, is to be fearful that China is getting ahead of us. Well, duh, if you compare a society that is mostly all on the same wavelength and making remarkable steps forward with one that is divided and experienced a certain segment almost accomplishing a coup d'etat in a recent insurrection which threatened the lives of lawmakers in the seat of democracy itself. However, rather than viewing the world situation as a competition between the US and China, a more fruitful approach would be to cooperate with China with regard to climate change and pandemics, two things that affect the whole world and which require fast action, not a lackadaisical approach in which maybe we'll cooperate down the road, but in the meantime we have to compete. There's no time for that. The planet earth has almost passed an inflection point after which there will be no more time available.

Off the Top of My Head

Joe Manchin Is Living in La La Land

by John Lawrence, April 8, 2021

Joe Manchin is not facing the reality that exists in the US today. He is nostalgic for a day when a bipartisan consensus was possible. Today it's not. The best we can do is to go ahead with Joe Biden's agenda with the slim majority Democrats possess in the Senate, but Manchin is essentially siding with Republicans, the Party of No. Manchin wants stability in American governing, but his vision of stability is one in which Republicans will negate every attempt Biden makes to bring the US into the 21st century and effectively compete with China. Yes, America will swerve back and forth policywise if Federal control switches between parties. But that's the best that American democracy is capable of at this point in time. The alternative that Manchin suggests is a stability of no progress. China has no such problem. Their society is basically all on the same long term wavelength. They will go full steam ahead with progress.

In his recent op-ed in the Washington Post, Manchin states: "The time has come to end these political games, and to usher a new era of bipartisanship where we find common ground on the major policy debates facing our nation." Is he kidding? "usher a new era of bipartisanship where we find common ground" There is no way that is going to happen in the current political environment. There is very little to no common ground. Democrats want to get things done for the American people to improve their lot. Republicans only seek political power because their personal fortunes go up to the extent that they hold political power, and all they care about is their personal power and fortunes. Republicans have determined that their personal power increases to the extent that they make the Democratic agenda fail. Mitch McConnell actually stated this when Obama was President. McConnell was quoted as saying: "The single most important thing we want to achieve is for President Obama to be a one-term president." That's pretty clear. It's not about helping the American people except for the wealthy class of which they themselves are members. It's about making the other party fail.

So Joe Manchin has his head up his ass if he thinks there is going to be a new age of bipartisan consensus. It's wishful thinking. It's not going to happen right now or any time in the near future. Maybe some day, but right now the best hope is for the Democrats to go ahead and make improvements in American society while they hold power. Any other course only dooms the US to fall further behind the rest of the world, doom earth to catastrophic climate change and lets China zoom ahead in making progress. Joe Manchin is incredibly naive or else he wants to be the main power broker in the US Senate. "Generations of senators who came before us put their heads down and their pride aside to solve the complex issues facing our country. We must do the same. The issues facing our democracy today are not insurmountable if we choose to tackle them together." Doesn't he realize that the only issue Republicans want to face is how to make themselves and the rich even richer? Doesn't he realize that the only thing Republicans are interested in is political power? They will lie and cheat, create conspiracy theories and do anything that's even quasi legal to achieve and maintain political power.

Manchin is playing his role as the skunk at the party which is too bad. Biden's job is not trying to form a bipartisan consensus with Republicans. It's trying to appease Joe Manchin in order to get anything done. The only hope for America is to go big when Democrats hold power which they do only by a miracle in the fact that two Democratic Senators were elected in runoffs in the state of Georgia. Somehow Biden will get Manchin to go along with most of his agenda that Republicans will not be able to undo if and when they control the Federal government again. The atmosphere has already set the record this year of 420 parts per million of carbon dioxide making it unlikely that our planet will not face the worst consequences of global warming. Only cooperation with China, not only on this but on future pandemicsand other issues, will give our grandchildren the slightest chance at a decent life. To the extent Republicans control the Federal government this chance will be reduced to zero.

 

 

Off the Top of My Head

The Caring Component of Biden's Infrastructure Plan

by John Lawrence, April 6, 2021

It's about time that the need for a caring infrastructure is addressed. Caring used to be supplied almost entirely by wives when wives didn't work outside the house. However, they did considerable work inside the house caring for children, sick relatives and elders in addition to taking care of their husband's needs. Now that most wives are required by economic necessity to work outside the home, there is a need for child care for young children not old enough to attend school. There is a need for pre-K education plus babysitting services. Older family members have special needs for care giving as well. Who is to provide for this if wives are in the work force? Rich people can pay tuition for pre-K and child care as well as hiring caregivers for older relatives or paying for senior living facilities. For poorer people, wives have to do all this themselves in addition to working to provide income for the family.

That's why Biden's initiatives provides for a caring infrastructure. However, it is insufficient. The Guardian reported:

Just as our physical infrastructure is crumbling and requires substantial reinvestment in a 21st-century economy, our care infrastructure is fundamentally broken. As the only industrialized country in the world without a national paid family and medical leave program, only 17% of our people have paid family leave through their employers. Hundreds of thousands face daunting waitlists for essential home care. Childcare is the highest household expense for families in much of the United States. And the median annual pay of childcare and home care workers is $25,510 and $17,200, respectively, leading to high turnover and reliance on public assistance.

In the past most elderly people on Medicaid that needed care giving were forced into institutional care like nursing homes. There was no comparable funding level that provided care givers for people to stay in their own homes. Biden's care infrastructure corrects this anomaly by providing money for care givers to provide care outside of nursing homes and other institutions. However, the limitation is that people who qualify for either nursing homes or home care must be on Medicaid. Basically, this means that they have no assets. They could stay in their own home only if they don't own it. If they owned it, that would be considered an asset that would disqualify them from being on Medicaid. So older people on Medicare, but not Medicaid would not qualify under Biden's "care infrastructure" initiative. People with assets like home ownership usually want to pass those assets on to their children. It represents the intergenerational transfer of wealth. That's how white people have built wealth over the generations whereas black people, who were by and large prevented from owning their own homes after WW II, are by and large renters.

Elderly renters are mainly poor people who live off of social security which hardly provides for a decent living much less the intergenerational transfer of assets once the person dies. Biden's pre-election agenda called for an uping of social security payments so that people could have a decent existence just based on social security alone. It also called for an increased amount of social security for people who had been on social security for 20 years, in other words, the really old. The Boston Globe reported:

A critical part of Biden’s campaign plan was not only raising funds for Social Security but also expanding the benefits to reduce poverty among elderly Americans. It would, for example, ensure that benefits for workers who were in the labor force for 30 years or more would be at least 125 percent of the federal poverty line. The oldest beneficiaries would also receive a bump to offset dwindling retirement savings, and widows and widowers would receive a 20 percent increase so that their Social Security benefits don’t get cut in half when their partner dies.

The reason that Biden didn't include this in his "caring infrastructure" initiative is that the cap on wages subject to the payroll tax would (in the minds of politicians) have to be raised to "pay for" it, and Biden has promised not raising taxes on anyone making less than $400,000 annually. Right now, payroll taxes that go toward funding Social Security are capped at the first $142,800 of a taxpayer’s income. First of all the social security trust fund is basically a hoax. Money is available for social security in the same way that money is available for COVID relief, infrastructure and even tax cuts. As Modern Monetary Theory points out, the Federal Reserve creates the money without the need of taxes to pay for it. The same is true for social security. But Biden did not want to complicate the discussion around his infrastructure plan so he left his plan for social security increases behind presumably to be brought up at a later date.

There is much talk about enlisting the help of Republicans for Biden's infrastructure initiative, but it is a not a secret that Republicans will help with nothing Democrats want to do. The working across the aisle thing is a loosely held fiction. Democrats know that they must pass all Biden's bills just with the slim Democratic majority. That gives Joe Manchin of West Virginia, the most conservative Democrat, enormous power. You can bet your booty that West Virginia will get more than their fair share of roads and bridges. He wants to not raise the corporate tax rate to 28% as Biden as suggested. Big deal! Again tax money is not required for government spending. The Federal Reserve just issues the money, and then the Treasury Department sells the bonds. What bonds can't be sold to individuals or foreign governments end up on the Fed's balance sheet. The deficit between money spent and tax money collected is irrelevant. Taxes are only relevant to reduce income inequality as long as they are targeted on the rich. The Fed controls the interest rate, and as long as it keeps it at about zero, the Federal government can keep the amount of money it spends on interest under control.

Off the Top of My Head

Unlike Trump, Biden's New Deal Will Actually Make America Great Again

by John Lawrence, April 4, 2021

GDP is the measure of national economic activity and is composed of 4 components: private consumer consumption, business investment, government investment and net of imports and exports. America's economy is 70% consumption compared to about 50% for most of our western allies. Government spending is about 17% compared to 40-50% for most of our allies. In fact for Norway, Belgium, Finland and France it's over 50%. Joe Biden's infrastructure plan will change all that bringing government spending on infrastructure both material and human more in line with the rest of the developed world. While most of our allies spend around 50% on consumption, America is primarily a consumer economy at 70%. That's about to change under Biden's New Deal. Government consumption and employment will increase while private consumption and employment will decrease. This is a good thing, but Republicans and states' rights advocates disagree. American infrastructure is falling to Third World status while Americans entertain themselves to death. Nothing has been invested and everything has been consumed. Biden's attempted change in these dynamics, which Mitch McConnell has vowed to fight "every step of the way" is a bid to preserve first world status for the US which is rapidly diminishing.

The one thing the US has going for itself right now is the fact that the US dollar is the world's reserve currency. As such the US can spend large sums - trillions of dollars in fact - without fear of the dollar losing its value. So it might as well "go big" on spending because the dollar may not always retain that status. China is becoming the world's largest economy with major spending on infrastructure not only in China, but, with its Belt and Road Initiative, around the world. Meanwhile, what the US has to offer in that regard is using its bloated military to police the world. So if you were President of your country, which would you rather have - policing or investment. The answer seems clear to many, even to many US allies. China is consistent and values stability and unanimity of its citizens. The US government is subject to radical change every 2 or 4 years with deep divides among its populace, and more and more can't be counted upon by its allies even to the extent that a sizable number of US citizens invaded its Capitol! Autocratic countries may be brutal towards political dissidents, but they would never tolerate a threat to their very existence.

Some Americans will have to be brought kicking and screaming into the Biden economy. Just as they were cavalier about wearing masks, they could care less about good jobs at good wages. They just want good beer and football games. Cruises, spectator sports and abundant entertainment is what Americans have come to expect, and they prefer that to safer roads and rebuilt bridges. They are viscerally opposed to doing anything to prevent climate change or global warming. They don't want to work hard to make America great again. They want it all given to them on a silver platter preferably by an entertaining and charismatic President rather than a plodder who has their welfare at heart. There is a looming war between states rights Republicans who want the US to remain a private consumption economy and Democratic neo-New Dealers who want government to play a larger role in investing in American infrastructure, both material and human.There will be more and better paying jobs working in government infrastructure projects than there will be working in the entertainment industry. This infuriates some people.

Taxing the rich also brings Republicans out of the woodwork to proclaim that Biden will end up taxing the middle class as well "to pay for it" even though he has said that everyone making under $400,000 a year will not pay one penny more in taxes. Republican lawmakers will chomp at the bit to naysay that bit of profundity by saying over and over on their media outlets that it is not true. The truth is that Biden wants to construct a stronger safety net while rebuilding and extending American infrastructure, and a lot of Trump supporters just don't care about any of those things. They just want to be entertained and to eat out while watching spectator sports.

Off the Top of My Head

The Stock Market is Too Big to Fail

by John Lawrence, April 2, 2021

Just as the big Wall Street banks are too big to fail, so now is the stock market. The stock market will never take another radical dive downward because the Federal Reserve won't let it. The way the economy is shaping up Treasury bonds, which hardly pay any interest, are just a safe place to store your money and also for foreign nations which need the world's reserve currency (the US dollar) to have a savings account because they need dollars to conduct business. There is no worry that the US will have to pay off the trillion dollars in Treasuries that China owns because they need those dollars to do business with the US and other nations. If they did want to dump all their Treasuries for some reason the Fed could just create the money to pay them and effectively take the Treasuries on its own balance sheet.

So the stock market is the only game in town for those who want to actually "invest" their money. There is so much 401(k) money in the stock market that that is reason enough to never let it fail. Instead it will continue on its merry way upward while the Fed keeps interest rates at approximately zero so that not much in the way of interest will have to be paid on US debt. There is no reason to fear that Joe Biden's $2 trillion infrastructure plan will bankrupt the US. Since the US dollar is a sovereign currency, the Fed can print as much money as it wants. If international investors don't want to buy this debt, it ends up on the Fed's balance sheet which is an effective black hole from which it never has to emerge.

Then why is there all this kibuki theater about "how to pay for it," the $2 trillion infrastructure plan I mean. It's just that most Americans including most Congressmen are under the illusion that a country with a sovereign currency like the US faces any constraints in paying for anything. Well, there is one constraint - inflation. This is probably of little concern as long as the money is targeted at the lower middle class an the poor which haven't seen wages rise in 40 years. The real inflation in the economy is the asset inflation that the rich are mostly responsible for. That includes the stock market and real estate. Inflation in the stock market will be carefully controlled by the Fed. We've seen that the stock market moved up even during the pandemic. The real problem is inflation in the real estate market which has made housing unaffordable for many. It continues to get worse as the extra dollars the wealthy have to invest are driving up prices. That's why it makes sense to tax the rich ostensibly to pay for the infrastructure bill. The real reason, however, is that inequality is getting out of hand in the American and the world economy. Taxing the rich is the only effective means to reduce inequality to a reasonable level. It will also help to bring inflation in the real estate market under control.

The real problem that Biden's infrastructure bill will have to deal with is changing the nature of the US economy. When the economy was in full employment under Trump, there were still 4% unemployed. 5% unemployment is considered "full employment," but that still leaves about 15 million people out of work. Biden's infrastructure plan will put those 5% back to work. It had been considered by conservative neoliberal economists that 5% unemployment was necessary to ward off inflation, but that theory has been debunked by Modern Monetary Theory. While inflation will still be a concern with all of Biden's stimulus spending, the main concern is restructuring the US economy from an entertainment economy to a constructive labor economy. Trump's economy was arguably a full employment economy (except for the 4% unemployed), but it was an economy the jobs of which were mainly in the entertainment and military industries. In other words, in my opinion, it was an economy based on false unbeneficial values. An economy based on labor participation rebuilding American infrastructure will be an economy based on necessary and fundamentally beneficial values. This might mean that some of those presently employed in frivolous industries might be incentivized to change jobs. Reducing the entertainment and military sectors while increasing those employed rebuilding infrastructure would be, in my opinion, be a good thing.

 

Off the Top of My Head

Biden's Infrastructure Initiative: Don't Worry About How To Pay For It

by John Lawrence, March 30, 2021

Even Republicans agree that there is a need to upgrade the infrastructure of the US. But they don't want to raise taxes to pay for it. Good news! You don't need to pay for it with tax money. The US dollar is a sovereign currency. That means that the central bank, in this case the Fed, can just create the money. In fact this is how it's always been done. The deficit is just an accounting regime. Money created by the Fed need never be paid back. It just goes on the Fed's balance sheet. This is a fact known and agreed to by most economists but many politicians and the American public are totally ignorant of this basic fact about how the economy works. Modern Monetary Theory has attempted to explain it in books like "The Deficit Myth" by Stephanie Kelton. So why does Biden also propose tax increases on the rich to pay for it? These are really two separate issues. Taxes need to be raised on the rich to try to bring into balance the skyrocketing financial inequality that has been occurring, not to pay for the infrastructure bill. Why do politicians including President Biden continue to perpetuate the myth that appropriations bills need to be "paid for." Why don't they just come out and say the truth - that a nation with a sovereign currency can never run out of money?

When just a few people own most of the wealth, we're back in a neo-feudal society where the rich control the political process, and the rest of the people are merely peons who don't really have a stake in the society at all. The Republican attempts to change the voting laws to suppress the minority vote is a way to cement that fact in American society. That's why it's so important to liberalize the voting laws so that every American citizen is encouraged to vote, not discouraged from it. So the infrastructure initiative is really two or even three pronged: rebuild infrastructure such as roads, bridges, ports, rail lines, airports and broadband thus putting millions back to work in good paying jobs. Secondly, to build back better in the sense that, insofar as possible, address the problem of global warming, and, thirdly, to make a first step in addressing economic inequality. All these things are important.

The only thing to watch out for while spending all this money is inflation, and some economists like Larry Summers are already sounding alarm bells over that. By taxing the rich and corporations money will be sucked out of the economy thus tending to reduce inflation. If sucking money out of the economy reduces inflation, then the sucking must be addressed to those areas where excess money really exists: namely, the rich and corporations who have been getting away with murder for years under both Republic and Democratic administrations. Forbes reported that "The 3 Richest Americans Hold More Wealth Than Bottom 50% Of The Country." Forbes ought to know. Perhaps with Biden's plan to tax the rich, it'll take 10 of the richest to equal the bottom 50%'s share. As for inflation, so much money in so few hands has already produced asset inflation in the form of rising housing and rent prices making it problematic for the young and the poor to support themselves especially at a minimum wage that hasn't increased in 50 years. What Summers doesn't understand is that the inflation that has occurred has been in the money that has been made by the rich which is actually wealth inflation, not in the form of wage inflation of the poor and middle class. Therefore, in turning this process around Biden's infrastructure bill is actually pointing the American economy in the correct direction.

Off the Top of My Head

Biden's Agenda

by John Lawrence, March 27, 2021

Biden has a definite agenda and a time table for putting it forward. His first two massive bills, COVID relief and infrastructure will go forward as planned because they can be passed with only a majority in Congress due to the budget reconciliation process. Other bills like voting rights and immigration are more dicey because they are subject to the filibuster. It's clear that Democrats will not get even one vote in the Senate for any bill subject to the filibuster. Biden will keep alive the meme that he "wants to work across the aisle" even though he knows that is impossible because he wants to at least appear moderate and cooperative. He doesn't want to alarm anyone, but push will come to shove inevitably when it becomes time to get a voting rights bill passed which is absolutely necessary if Democrats ever want to hold power again and accomplish anything. The coming figurative Civil War will be over voting rights. If Republicans are successful in rolling back voting rights for the poor and minorities, they will continue to hold power. If there is a Federal voting rights bill that will not only expand the way people can vote as was put into place because of the pandemic but also eliminate gerrymandering, then Democrats will continue to hold power because of the changing demographics of the American electorate. That's why a voting rights bill is so critical.

Republicans have devised different methods for voter suppression over the years not the least of which is gerrymandering. If they control how the voting districts are drawn on the map, they can insure that a Republican will be elected from each district. So expanding the voting franchise in a fair way is absolutely critical. If that is done, Democrats will hold and gain power for the foreseeable future. If not, Republicans will continue to hold power even as a minority party. So the stakes involved are huge. Biden has his timetable laid out. Do the easy stuff first. Two massive trillion dollar bills are the easy stuff because they can be passed in Congress with just a majority and without any Republican votes. When it comes time to pass a voting rights act, Democrats will have to attack the filibuster, and Mitch McConnell will go apoplectic. Be prepared for all kinds of threats from Republicans because they know that their time in power and the time when white people have controlled American politics is passed. America is becoming a multi-ethnic, multi-religious and very diverse society and American political power will reflect that if democracy and majority rule holds sway. Republicans and white people in general will do everything they can to hold onto power. American history demonstrates that.

However, Democrats, who have the slimmest of majorities in the Senate, have the power in their hands to change the filibuster rule or to eliminate it altogether, and I'm sure they will do whatever is necessary to pass their agenda. Their only problem is with the two conservative Democrats in the Senate, Joe Manchin of West Virginia and Kyrsten Sinema of Arizona. They will have to make sure that these two will come on board with whatever the Democrats decide to do. Biden has two of the best leaders on his side in terms of Nancy Pelosi in the House and Chuck Schumer in the Senate. They will figure out a way to outsmart the Republicans and bring the American people to their side as well. Republicans will be furious, no doubt. Fortunately, they blew their wad with the failed coup attempt popularly known as an insurrection. Now the FBI and the Department of Homeland Security is focused on their case. It won't happen again.

Biden only has two years for certain in which to enact his agenda. The special election in Georgia which elected Warnock and Ossof was critical to the success of the Biden administration. Warnock only has two years to serve until the next state election in Georgia to fill his seat whereas Ossoff was elected to a 6 year term. That's why there is a furious attempt to change the voting laws in Georgia so that a Republican senator will be elected there in 2022 and Democrats will lose their majority in the Senate which will again be controlled by Republicans. It was a happy coincidence for Democrats that Ossoff and Warnock were both elected; it was an anomaly for the state of Georgia, and Republicans are determined that it won't happen again. The success of the Biden administration hangs on his first two years to get his agenda done, and, if he wants to get anything done in the last two years from 2022 to 2024, it is critical that Federal voting rights are established which will roll back the white supremicist Jim Crow voting legislation currently being passed in Georgia and other states.

So the critical issue really is the filibuster. If Democrats don't go all out and eliminate it or at least create carve outs for voting rights legislation, they will lose control of the Federal government in 2022, and Biden's agenda will be defenestrated. It's all about the future of American politics and who will hold power - the Democrats who will serve the American people especially the poor and the middle class or the Republicans who will serve the rich and the white supremicists.

Off the Top of My Head

Ending the Filibuster is Necessary for Voting Reform and Other Crucial Initiatives

by John Lawrence, March 18, 2020

Voting reform at the Federal level is necessary to counter all the state efforts to restrict voting. This is as important as Biden's COVID relief bill which was passed by budget reconciliation and only needed a majority vote. It is important to note how precarious the COVID relief bill was because it got zero Republican votes. If even one of the two Senators from Georgia had not won in the runoffs, there would be no COVID relief bill or Democratic majority in the Senate. The Republican party is the party of NO. Biden's trope of "working across the aisle" is a total fiction and he knows it, but he's trying to keep it alive for appearances sake as it makes him seem more moderate. He knows that he will get no Republican votes for any legislation he wants to get passed, but he will seem less extreme if he at least keeps the idea alive. But when it comes right down to it, Biden will do what he needs to do to get his legislation passed into law. He's  not naive.

So Republican Mitch McConnell has threatened a "scorched earth" policy if Republicans ever regain control of the Senate. He even threatened to defund Planned Parenthood. Golly gee! I'll take that in return for comprehensive national voting reform including eliminating gerrymandering and overruling state efforts to restrict voting. Democrats have a lot on their agenda for helping Americans; Republicans have nothing. Here is McConnell’s complete account of the horrors that await the country were the legislative filibuster to perish:

“As soon as Republicans wound up back in the saddle, we wouldn’t just erase every liberal change that hurt the country. We’d strengthen America with all kinds of conservative policies with zero input from the other side. Nationwide right-to-work for working Americans. Defunding Planned Parenthood and sanctuary cities on day one. A whole new era of domestic energy production. Sweeping new protections for conscience and the right to life of the unborn. Concealed-carry reciprocity in all 50 states and the District of Columbia. Massive hardening of security on our southern border.”

Jeesh, Mitch, I'm totally terrified! I say go ahead and abolish the filibuster. When you weigh all the good Democrats can do for the country against all the bad Republicans can do, the scales are tipped heavily in favor of ending the filibuster which is an archaic Jim Crow rule anyway. Any democracy worthy of the name should at least stand for majority rule. The things that Republicans are against are only manufactured pipe dreams anyway for the most part. If we have to give up Planned parenthood and sanctuary cities in return for solving the problem of global warming, I say go ahead and do it. There is so much important business that has to get done that Democrats are capable of doing. Biden learned his lesson under Obama when for 8 years Republicans slow walked him through a futile Presidency. Biden learned his lesson then although he still wants to seem moderate so he will appear to be just that. After Republican intransigence has been conclusively demonstrated, however, Biden will, as a seeming last resort, abolish the filibuster in order to get the job that he came to do done.

The For the People Act (also known as H.R. 1) is a bill in the United States Congress to expand voting rights, change campaign finance laws to reduce the influence of money in politics, limit partisan gerrymandering, and create new ethics rules for federal officeholders. This is the minimum of what needs to be done that will require ending the filibuster. Much needed and much delayed immigration reform will also require that. The question is will the US be a nation that accomplished big things or one in which nothing gets done. Republicans can threaten all they want. Their agenda is a big nothing burger. If HR 1 is enacted into law, they may never be back in power again. Their access to power is based on restricting voting rights. Democratic access to power is based on expanding them. The real question is is the United States going to stand for a real democracy or is it going to retreat into an autocracy. The rest of the world including primarily China is moving ahead while head in the sand Republicans are challenging and threatening Americans with their damaging policies. Biden and the Democrats should not take that bait, and, having learned their lesson from the Obama years, go ahead and do what's necessary to get America on the move again towards a more equitable and rational nation which makes a positive contribution in world affairs.

Off the Top of My Head

Inflation Probably Not a Problem If Biden Programs Are Carefully Targeted

by John Lawrence, March 14, 2021

Critics have said, "Oh, My your children and grandchildren are going to have to pay back all these trillions of dollars that have been spent by both the Trump and Biden administrations on COVID relief and to get the economy going again." Not True! Modern Monetary Theory has shown that the Federal Reserve can just create the money and the Treasury Department can just spend it without ever worrying about paying it back. Finance is not the problem. The problem is potentially inflation which economist Larry Summers has sounded the alarm about. Most of Biden's relief bill is targeted at the poor which means that that money will be sucked up to pay past due rent and mortgage bills as well as providing a decent lifestyle which should not be inflationary except if you believe the nonsense of the neoliberal Phillips curve which supposedly proves that a certain segment of the population has to live in poverty and penury in order to fight inflation. That has also been debunked by Modern Monetary Theory although most politicians are still on the wavelength of neoliberal economics which has been shown to be fallacious in this and many other regards.

State and local governments likewise will just suck up the money in the relief bill to bail themselves out of debt and provide an adequate level of social services. This also is not inflationary because the money will not be just sloshing around in the economy with nowhere to go. What is inflationary is tax breaks for the rich, but this money can be sucked out of the economy by taxing the rich. What Larry Summers fails to take into account is that the US and much of the rest of the world has a two tier economy. The rich and upper middle class are doing very well, thank you, while the lower middle class and the poor are suffering. The COVID pandemic illustrated this in even starker terms with the so-called K-shaped recovery. The upper classes made money; the lower classes are on the verge of losing whatever financial gains they had made during the Trump economy. Inflation is caused by too much money sloshing around in the economic system. Most of that inflationary money is held by the rich in assets like stocks and real estate. Money injected into the economic system targeted at the poor is immediately sucked out of the system to pay debts and to provide basic necessities. There is enough physical and material capacity in the system to provide basic necessities so this money is not inflationary.

Inflation is caused when there is too much money chasing too few goods. As long as there is the material and human capacity, money directed at those sectors of the economy will not cause inflation. The real problem in future Biden administration bills involving infrastructure and the Green New Deal is that the materials to build out infrastructure, namely, steel, cement and plastics, require fossil fuels to manufacture and the manufacturing processes themselves are inherently carbon dioxide emitting. This comes about from basic chemistry which involves the carbon and oxygen atoms every step of the way. Most basic materials are composed of carbon, oxygen, hydrogen and nitrogen, and the chemistry involved in manufacturing releases large amounts of carbon dioxide. The manufacture of solar panels requires mining high quality quartz and combining it with coal. It's hard to get away from fossil fuels as the Michael Moore movie, Planet of the Humans, pointed out. For this reason spending large amounts of money on infrastructure involving cement, steel, plastics and other materials could actually produce more global warming rather than preventing it. The finances are available; the proper materials are not. The manufacture of wind turbines and solar panels require the release of large amounts of greenhouse gasses.

Because of these fundamental limitations regarding materials, it doesn't make sense to throw trillions of dollars at either infrastructure or global warming mitigation. That would be either inflationary or misguided in the sense that large projects in these areas could produce even more global warming. As Bill Gates has pointed out, money should be invested in promising startups and research that can solve these basic problems and into digital nuclear which is the only renewable energy source that won't result in a lot of greenhouse gasses being created in the first place. Advanced nuclear is the most promising source of clean energy. Gates has invested in a company TerraPower which does research on advanced nuclear reactors. Their mission statement reads:

"TerraPower was founded by Bill Gates and a group of like-minded visionaries that decided the private sector needed to take action in developing advanced nuclear energy to meet growing electricity needs, mitigate climate change and lift billions out of poverty. Advanced reactors and other isotopic applications are now possible with technology and enhanced computing capabilities that were unimaginable a few decades ago. At TerraPower, we are innovating in nuclear to improve the lives of people everywhere and to build the clean energy of tomorrow – today."

So when the Biden administration gets around to their initiatives on infrastructure and global warming, they need to heed Bill Gates' warning about traditional manufacturing methods involving cement, steel and plastic. Energy from solar and wind are inadequate to solve the problem for many reasons. Large scale demonstration and build out of nuclear energy reactors should be the order of the day, They are the only clean energy source that has the potential for diminishing the world's reliance on fossil fuels.

Off the Top of My Head

If Two Democratic Senators Were Not Elected in Georgia Run-offs, There Would Be No COVID Relief Package Under Biden

by John Lawrence, March13, 2021

It was crucial that the two Georgia Democratic Senators were elected. Not one Republican voted for Biden's $1.9 trillion bill. If there were one less Democrat in the Senate, nothing like it would ever have been passed. Republicans are the Party of No. Not one Republican Senator will ever vote Yes on any legislation put forward by a Democrat so that Georgia election was crucial. That's why Republican legislatures not only in Georgia but around the country are scrambling to put restrictive Jim Crow voting regulations in place on the belief that Republican operative Paul Weyrich was right. He said, "So many of our Christians have what I call the goo-goo syndrome: good government. They want everybody to vote. I don't want everybody to vote. Elections are not won by a majority of people, they never have been from the beginning of our country and they are not now. As a matter of fact, our leverage in the elections quite candidly goes up as the voting populace goes down."

So now economist Larry Summers is worried about inflation due to the fact that trillions have been added to the deficit. So far, lawmakers have enacted six major bills, costing about $5.3 trillion, to help manage the pandemic and mitigate the economic burden on families and businesses. Even those economists know that the Federal government doesn't need taxes  in order to spend money. The Federal Reserve can create it with a few keystrokes on a computer just the way they did to bail out Wall Street banks during the Great Financial Recession (GFR) of 2008. Of course the public wasn't suppose to know about this "secret" bailout by the Fed. Authorities wanted you to believe that the $700 billion bill passed by Congress provided the bailout. In reality it was much more. Rolling Stone reported: "Washington Post “Fact-checker” columnist Glenn Kessler disputes the numerous studies showing the real bailout outlay was through the Fed, which the Sanders campaign had said was anywhere from $7.7 trillion (the number Bloomberg used in its coverage of secret Fed lending) to $29 trillion (the number the Levy Institute at Bard College calculated, including guarantees and other forms of aid).

So how is it that  Larry Summers was not so worried about inflation due to the Fed's trillions of dollars created and given to Wall Street? The answer is that that money was given to rich people which has caused no inflation because rich people are not going to spend money in ways that drive up the Consumer Price Index (CPI). They are mainly going to invest their money in ways that aren't included in the CPI. They are going to purchase assets like stocks and real estate. Consequence: no inflation at least as measured by the CPI. Instead the Wall Street bailout during the GFR as well as the $2 trillion tax breaks of the Trump administration produced asset inflation. It's the reason that home prices and rents are becoming increasingly unaffordable. But Summers is worried about inflation as measured by the CPI which is what happens when poor and middle class people get a trillion dollar bailout. They will spend that money at least partly on consumer goods that are included in the CPI and potentially drive up prices. However, much of the bailout money will go to pay off debts like past due rent and mortgage payments. This is not inflationary. So the real moral of the story is that, according to economists like Summers, bailing out rich people is good, bailing out poor people is bad.

So two lessons are to be learned here. 1) The Fed doesn't need taxes to create money and spend it into the economy whether that money is to bail out banks or to bail out the poor and middles class. 2) Democrats need to enact at the Federal level voting laws which encourage as many people to vote as possible and roll back Republican enacted restrictions on voting at the state level. In order to do the latter, Democrats will have to eliminate the filibuster at least for particular types of legislation. The only reason Biden's $1.9 trillion relief bill passed is that it was done by a process known as "budget reconciliation" which only requires a majority vote in the Senate. A national voting rights bill cannot be passed by that process and is subject to the filibuster which requires 60 votes. The Party of No wouldn't hesitate to use the filibuster to doom any voting rights legislation at the Federal level which means essentially that Jim Crow voting rights would again be put in place to discourage black people from voting. And don't worry about your children and grandchildren having to pay off the national debt. The Federal Reserve doesn't need their money.

Off the Top of My Head

Bill Gates Needs to Get Up To Speed on Modern Monetary Theory

by John Lawrence, February, 28, 2021

Bill Gates is a smart guy. He has singlehandedly been the most influential person on pandemics and now on climate change with his book, How to Avoid a Climate Disaster. In this book the most important thing he points out in my opinion is that it is not enough to put electric cars on the road and to use renewables to power electricity generating plants. There is also much carbon dioxide emission coming from manufacturing and agriculture. In particular the manufacture of cement, steel and plastic produce as much or more carbon dioxide ton for ton as those products themselves. In addition beef and dairy cows produce a lot of methane due to the fact that they are ruminants with a certain kind of digestive system. Gates believes that much innovation, research and development is needed to come up with substitute products in all these areas as well as electrifying everything and running it all with renewables including a new digitized nuclear system.

The one thing that this polymath doesn't seem up to speed on is Modern Monetary Theory (MMT) which is important because all this innovation, research and development requires vast amounts of money. He personally can't provide it all although he has used his fortune in very constructive ways in terms of health care around the world and also seeding promising startups. The Gates Foundation is concerned with all these problems on a world wide basis and not only in the US. He is a globalist and not an America First type of guy which is altogether appropriate because pandemics and particularly global warming are universal problems affecting every country and all people on earth, and their solutions require a world wide approach.

Bill Gates like some economists is somewhat concerned about inflation after all these trillions of dollars are spent by the US government first on COVID relief and then on infrastructure and a Green New Deal. If they study MMT they would know that MMT shares that concern, but addresses it in terms of the amount of idle resources there are in the economy. For instance, if there is 5% unemployment (what is considered full employment by conventional economists), there are still over 15 million people available for work. If there are material resources available such as cement, steel and glass, the price of these items is not likely to be bid up causing inflation. However, while some material resources are readily available, their substitutes which don't cause carbon dioxide emissions in the manufacturing process are not. A large infrastructure project which requires huge amounts of concrete with rebar such as is necessary in constructing a bridge, for example, will also cause large amounts of carbon dioxide to be emitted into the atmosphere. As Gates points out, making things which require cement, steel and plastic adds about 31% of the total of greenhouse gasses which are emitted annually. For every ton of steel produced we emit 1.8 tons of carbon dioxide. For every ton of plastic, the figure is 1.3 tons of carbon dioxide, and for every ton of cement, we emit a ton of carbon dioxide.

With figures like that how is the US going to do a $4 trillion (which is the amount our infrastructure is in deficit) infrastructure project without producing even more billions of tons of greenhouse gasses (GHGs)? We need huge R&D projects funded by the government first before we can scale up the production of carbon free products which replace these traditional construction materials. Financing the R&D is not a problem as these human resources are widely considered to be available. This would cause no inflation. Getting the material resources when little or none of them is available would cause inflation. Nevertheless, the US ramped up production of ships and airplanes for World War II without causing much inflation. To deal with global warming or climate change is a thornier problem. If money is just poured into the economy on a non-targeted basis, it will cause inflation so it makes sense at least initially to pour the money into R&D as Bill Gates suggests. Doing a large infrastructure project without using the proper materials could make global warming even worse.

Off the Top of My Head

Republicans Are Restricting Voting Laws

by John Lawrence, February27, 2021

Republicans know that, if all eligible voters actually vote, they will lose. So they are busy at work at the state level to enact more restrictive voting laws making it as difficult as possible for people to vote. This will primarily affect Democratic voters, and they know that. They have been using voter suppression techniques ever since black people won the right to vote. They know that making voting easier will encourage more Democratic voters because many of them can't take a day off to go to the polls. So mail-in voting which was facilitated in many states because of the pandemic worked to their disadvantage. They are hurrying to correct that. Since Republicans control many state legislatures which set the voting rules, they are having a field day changing the laws so that they don't suffer any more humiliating defeats.

So Joe Biden needs to make the best of the two years he has during which Democrats control both Houses of Congress. Assuming that a Republican will be elected President in 2024, the nation will swerve to the right and disassemble all the Executive orders Biden has put in place. As a result of this division America will be seen, if it's not seen that way already, as unstable and inconsistent. World leaders will increasingly turn towards China for leadership because what China values most in consistency and stability. The US can't decide whether it wants to be a democracy or a republic. Democrats want a democracy in which it would seem appropriate that every citizen over the age of 18 should cast a vote. This should be made as easy and accessible as possible. Republicans, on the other hand, want a republic in which the levers of power are controlled by white Americans of European descant like they always have been and which the time honored methods of voter suppression of minorities and poor people remain fully in effect.

Paul Weyrich was an American conservative political activist and commentator, most notable for co-founding the Heritage Foundation and the Free Congress Foundation, both conservative think tanks.He famously said: "So many of our Christians have what I call the goo-goo syndrome: good government. They want everybody to vote. I don't want everybody to vote. Elections are not won by a majority of people, they never have been from the beginning of our country and they are not now. As a matter of fact, our leverage in the elections quite candidly goes up as the voting populace goes down." Quite a revealing quote. He identifies with "Christians" but chastens them that they shouldn't want everyone to vote. The question I ask is 'what would Jesus say?' Would Jesus want everyone to vote or not? Probably Jesus would be in favor of democracy as compared with a conservative minority that wants everything kept the way it has always been "from the beginning of our country." It makes me doubt the validity of the Christian religion as practiced by the "moral majority" of right wing Christians in this country. Jesus was for the poor and disenfranchised. They're not.

America can not remain a great country on the world stage if it swerves back and forth every two years between Democrats who genuinely want to make America and the world a better place and "America First" Republicans who don't give a hoot about the rest of the world except to dominate it with an outsized military establishment. The US is veering on the edge of autocracy if 74 million voters want Trump as their President in 2024 and Republicans are successful in suppressing 7 million voters because that was the margin between Biden and Trump. Trump did considerable damage not only to the US reputation vis a vis the rest of the world, but also within the US itself. It is a question of whether the US is a fact based country run by intelligent people or a no nothing country based on lies and conspiracy theories while the rich steal everything in sight and Republicans give their hoi polloi supporters political entertainment to keep their anger stoked. The rest of the world has looked to America as the Rock of Gibralter in the past because of its consistency and stability and its promotion of human rights (except the human rights having to do with economic rights). They may be looking now towards China for stability and consistency and be more concerned about intelligent leadership and economic human rights, especially if they observe that America's touting of human rights eliminates those of black people.

Off the Top of My Head

How to Throw Republicans for a Loop: Biden Should Propose Tax Breaks for the Middle Class and Tax Increases for the Rich

by John Lawrence, February 25, 2021

The proper use of taxation is to reduce income and wealth inequality. Instead Republicans use tax breaks to primarily benefit the rich. Democrats should modify this playbook. The increasing income and wealth inequality among American citizens cries out for redress. Robin Hood needs to come out and play. There's no law that says tax breaks have to go primarily to the wealthy or be based on some proportionate percentage over all incomes. Democrats should get into the tax break game too. We know that taxes aren't necessary to fund the government. Sure they're part of it, but the government can spend whatever Congress authorizes regardless of whether or not there is money from taxes to pay for it. The shortfall is made up with Treasury bonds most of which end up on the balance sheet of the Federal Reserve just like the Fed used Quantitative Easing (QE), a fancy name that signified that the Fed issued trillions of dollars to bail out the Wall Street banks in 2008. In that case the Fed took MBSs (Mortgage Backed Securities), most of which were worthless onto its balance sheet as "collateral." The Fed can lend money to any entity it likes as long as it takes collateral onto its balance sheet. Much of this collateral is worthless such as defunct MBSs and even old bicycles!

In the article, "Modern Monetary Theory and the Changing Role of Tax in Society," by Andrew Baker and Richard Murphy, published online by Cambridge University Press we find the following:

"Tax is traditionally viewed as the main funding mechanism for government spending. Consequently, social policy is often seen as something determined and constrained by tax revenue. Modern Monetary Theory (‘MMT’) presents a reversal of the tax-spend cycle, by identifying a spend-tax cycle. Using the UK as an example, we highlight that one of MMT’s most important, but under-explored, contributions is its potential to re-frame the role of tax from both a macroeconomic and social policy perspective. We use insights on the money removal, or cancellation function of taxes, derived from MMT, to demonstrate how this also creates possibilities for using tax to achieve social objectives such as mitigating income and wealth inequality, increasing access to housing, or funding a Green New Deal. For social policy researchers the challenge arising is to use these insights to re-engineer tax systems and redesign social tax expenditures (STEs) for creative social policy purposes."

MMT is a game changer. Conventional thinking is that government can only spend money collected from taxes. But that is not how the system really works. As a sovereign currency, the Fed can just create US dollars with a few keystrokes on a computer. The budget deficit and national debt just become accounting entries on the Fed's balance sheet. We are not mortgaging our children's and grandchildren's future. This is money that never needs to be paid back, that our children never need to pay back. China is not holding this debt over our heads; China could be paid back tomorrow if need be. The US government operates on a different set of principles than the US states, European countries in the Euro zone, and households. All these entities do need to pay back loans. The US government does not because it can just create or issue the money which is how the Fed operates on a daily basis. Even local banks create money when a loan is taken out without the need for deposits. They just have to have collateral - usually 10% of deposits - in their reserve account at the Fed. So money can just be created by the Federal Reserve, but, obviously, it does not do so willy nilly. Like alcohol, this facility must be used responsibly. So that is what the debate should be about, not the size of the deficit or the national debt.

The national debt was a problem when the US dollar was on a gold standard. The US promised to redeem dollars - paper currency - for gold up until 1971. Obviously, there was not enough gold if, all of a sudden, China, let's say, wanted to take all its US dollars and demand gold at $35 an ounce. But in 1971 President Nixon took the US off the gold standard. He said the US would forevermore not redeem US currency for gold. At that point the US dollar became a "fiat" currency. That means that a dollar was worth a dollar just because the US government said it was. The US dollar did not become immediately worthless. People continued to use it, and it continued to retain its value vis a vis other currencies. In fact it's the world's reserve currency as Nixon made a deal with the Saudis only to accept payment for oil in US dollars. That alone meant that the other countries of the world needed US dollars if for no other reason than to buy oil. As a matter of fact today most business dealings of foreign countries are settled in US dollars. So the US dollar has a bright future at least for now.

The conclusion is that US households, businesses, US states and European nations that use the Euro need to pay back loans when they borrow money. A nation with a sovereign currency such as the US, the UK, Japan, China and others creates its money when its central bank issues it by means of keystrokes. No one can demand repayment or exchange of dollars for gold or anything else. If China wants to be paid back for the Treasury bonds it holds, the money in its Treasuries (savings) account at the Fed will be debited and credited to its checking account at the Fed. It's as simple as that. That money can be exchanged for Chinese currency on the open market at the prevailing exchange rate. But probably the Chinese would want to keep much of their financial assets in dollars rather than renminbi since their currency is pegged to the dollar and many of their business dealings are settled in dollars.

Off the Top of My Head

Why Should Blue Collar Workers Have to Pay Taxes to Bail Out White Collar Student Loan Debt?

by John Lawrence

Short answer: There is no need for the Federal government to tax in order to spend. That has been demonstrated by Modern Monetary Theory. However, taxation, if imposed in order to fight inflation, needs to be imposed primarily on the rich and upper middle class, not on the poor or lower middle class. The smart thing for the Biden administration to do would be to decrease taxes on the lower middle class ^i.e. blue collar workers before 2022 thus drawing them away from the Trump camp. In general the American people need to be educated that deficits don't matter except just as accounting entries on the Fed's balance sheet. Biden's COVID relief initiative of $1.9 billion will not raise taxes nor will his follow-on trillion dollar initiative for the build-out of green infrastructure.

The question, "Can We Afford to Pay for the Green New Deal?" is equivalent to the question "Can We Afford to Pay the Costs of Avoiding Annihilation?". In the past we have been able to afford a massive build-up to pay for the Second World War. The climate challenge is the moral equivalent of war. If we lose this war we lose not just our freedom. We lose the habitability of the entire planet. Various attempts have been made to cost out the components of a Green New Deal. Green power generation and transportation are not sufficient in themselves to get to net zero carbon emission, but they are a start. As Bill Gates has pointed out in his recent book, How to Avoid a Climate Disaster, major industrial processes also generate much greenhouse gas emission. For instance, every ton of cement that is produced contributes one ton of carbon dioxide which goes into the atmosphere. Every ton of steel produced results in 1.8 tons of carbon dioxide emitted into the atmosphere, and every ton of plastics produced emits 1.3 tons of carbon dioxide. So it's not enough just to deal with green transportation (electric vehicles) and green power generation (solar and wind).

The cost of "greening" these industrial processes is pretty steep. Capturing carbon dioxide at the site of the manufacturing process is possible, but there is no cheap way to do it. Bill Gates is investing in promising start-ups and is counting on innovation to come up with new processes and materials which will not result in so much carbon dioxide being released into the air. Gates points out that we need to electrify every possible manufacturing process and make sure that all that electricity is generated cleanly. He advocates a new generation of nuclear power sources as wind and solar can not possible fill every energy need mainly because they are intermittent. Nuclear can fill the gap for consistent power generation when solar and/or wind are offline. Smart nuclear power which Bill Gates has been instrumental in developing would solve the problems encountered so far of explosion and what to do with nuclear waste. As a last resort Direct Air Capture of carbon dioxide from the air is possible but also costly.

What it all boils down to is this: we will need on the order of a trillion dollars a year for 10 years commitment to address climate change if we have a prayer for avoiding the worst consequences. What's more a lot of this commitment must be made in cooperation with China which is one of the worst polluters. Rivalry and even a Cold War must be set aside if the world is to avoid the worst outcome from global warming. India and China are building coal fired power generation plants at a rapid pace because coal fired power plants are so cheap comparatively and those countries are developing so quickly. It's not enough just to "green" the US. It has to be cooperation on a world wide basis. Competition has to be set aside and replaced by cooperation. The ownership of intellectual property is irrelevant when it comes to saving the planet.

A national budget for a Green New Deal shouldn't contribute to inflation since there are currently so many unemployed people available for work, and particularly because so many of the small businesses that were lost during the pandemic are not coming back. Also further robotizing of manufacturing processes will eliminate whatever blue collar workers are left working in those fields. In World War II there was some postponement of consumption in order to fight inflation. That may be necessary for the moral equivalent of war which the Green New Deal represents. If so, workers in certain nonessential industries may have to be repurposed and retrained for industries involved in combating climate change.

Off the Top of My Head

Former Energy Secretary Proposes Going to Capital Markets for Money to Upgrade Energy Grid Infrastructure: Is This Wise?

by John Lawrence, February 21, 2021

Clinton's Energy Secretary, Bill Richardson, proposes going to the capital markets since the government has been spending so much money on COVID relief. He suggests a public-private partnership. Evidently, Mr. Richardson, like most politicians and dignitaries, is totally ignorant of Modern Monetary Theory. The Federal Reserve can create interest free money with a few computer keystrokes while the capital markets will charge interest, and not only that. Once you enter the Wall Street casino you're subject to all the vagaries of the financial markets like securitzation, credit default obligations, interest rate swaps, betting against the success of various programs and much more. These are the kind of financial activities that caused the 2008 Great Recession and the bankruptcy of Orange County, Birmingham, Milan Italy and the misery in Greece. What's more going to the capital markets causes the same inflation risks as having the Fed create the money because inflation is caused by the amount of money sloshing around in the economy not who supplies it.

Larry Summers is worried about Biden's big spending bills causing inflation. What he doesn't get is that these bills are targeted. It's not just money pumped into the economy. The money going to states and municipalities, for example, is going to pay off debts. That holds for all the money going to families who are behind on their rents and mortgages. Paying off debts is deflationary not inflationary. Money going to unemployment insurance is just money that allows people to consume as if they had a job. That is not inflationary. Money going to businesses to prevent them from failing and putting employees back to work is not inflationary because having these businesses fail and employees without jobs is deflationary. All those flights and cruises not taken, all the money not spent going to movie theaters, all the money not spent on consumption when consumption is 70% of the economy - is deflationary. In fact there is so much deflation during a recession that that is the main worry - not inflation.

But reorienting priorities should also play a part in controlling inflation. Decreasing the trillion dollar budget of the military and military-industrial complex would help to offset inflation and pay for infrastructure repair. It would also free up the human resources needed for a build out of green infrastructure because wage inflation is caused by not enough human resources being available thus bidding up wages. The integrity of the US dollar could also be increased by eliminating sanctions on other countries. The US is using the fact of sanctioning other countries because the US dollar is the world's reserve currency causing the diminution of the use of the US currency as sanctioned countries find workarounds using other currencies. In America's Other Forever War, Peter Beinart explains that these sanctions do not accomplish anything except to hurt the people that happen to be living in the countries that are sanctioned. The chickens will come home to roost as the US dollar looses value in the international currency markets as the euro, yen and reminbi are used more for international trade. As Beinart writes, "“It is past time,” Joe Biden pledged last year, “to end the forever wars.” He’s right. But his definition of war is too narrow."

A careful analysis of Biden's spending plans  as well as reorienting current spending priorities needs to be carried out so that runaway inflation does not occur. Certainly putting people back to work is not inflationary. Federal money targeted toward paying off debts by states, municipalities and families is not inflationary. Federal money spent on infrastructure is not inflationary providing that the human and material resources are available. Since the Federal Reserve can create US dollars without the need for taxes, Modern Monetary Theory has shown and economists widely agree that the only limit on Federal so-called "deficit" spending is inflation. Stephanie Kelton has explained that Deficits Don't Matter in her book, The Deficit Myth. People like Bill Richardson and most liberal and conservative politicians need to study up on economics. Bernie Sanders and Alexandria Ocasio-Cortez are some of the few people that already have.

Off the Top of My Head

The Two Strands of Modern Economic Theory

by John Lawrence, February 12, 2021

Ellen Brown with her book Web of Debt pointed out that public banks could save states and municipalities millions in interest compared to Wall Street banks. She also pointed out that money is created by banks when they make loans with fractional reserve banking. They just create the money with keystrokes; it doesn't come out of deposits. Ergo, all money comes from debt, but that's only half the story. The other strand explains how the Federal Reserve just creates money by keystrokes. In The Deficit Myth, Stephanie Kelton explains how countries with sovereign currencies can create money that really is not debt, despite the fact that conventional thinking says it is. When households or states or countries in the Euro zone take on debt, they do have to pay it back. When countries with sovereign currencies create money, they don't have to pay it back. It's as simple as that.

When European countries gave up their sovereign currencies and adopted the Euro, they gave up the right to create the money they needed to pay bills so they need to borrow on capital markets which can charge them whatever interest they want. This is how Greece and Italy and other European countries got into problems. On the other hand the U.K. which never gave up its sovereign currency can just create the money it needs without going to the debt markets. In the same way Orange County and other US municipalities got into trouble with spiraling debt which had to be paid back. This can get out of hand because the more indebted a debtor gets, the higher interest rate they get charged so that in the worst case they are just borrowing money to pay interest. The US can never get in this debt trap because it never has to borrow money on the open market and the Fed can set interest rates however it wants. Once authorized by Congress and required by law Treasury bonds are issued and can always be paid because the Fed can just create the money to pay them.

Modern Monetary Theory (MMT) has established that deficit spending, whether that comes from tax breaks or government programs or currently for coronavirus relief, is just an accounting entry on the Fed's balance sheet. The national debt never needs to be paid off. Also any country that owns Treasuries - for instance, China - could have them paid off tomorrow if they chose to cash them all in by the Fed just debiting money from the savings account of the People's Bank of China at the Fed and crediting their cash account also at the Fed. Countries with sovereign currencies, ^i.e. the US dollar, the British pound, the Japanese yen etc, can all create money in this way by having their central banks do it with keystrokes on a computer. Greece, Italy, California and New York can't do this because they don't have sovereign currencies.

So there is a difference between debt acquired by households, firms and countries which don't issue their own sovereign currency and countries which have central banks that do. The US Federal Reserve can buy up Treasury bonds as necessary to provide as much money as is authorized by Congress to the US Treasury. By law they can't buy them directly from the Treasury but must buy them on the open market. However, US primary dealers - mainly Wall Street banks - are required to buy them and the Fed can buy them from the primary dealers by providing "liquidity" - dollars which the Fed creates with keystrokes - to the Wall Street banks. The Fed also controls interest rates which at this time are 0.25% or almost zero. So the $1.9 trillion relief package proposed by Biden is no problem either for the US Treasury or the Fed. That money could just end up on the Fed's balance sheet the way the trillions of dollars it created to bail out the Big Banks in the Great Financial Crisis of 2008 did. The fact is that, when the US government deficit spends, that adds money to the private economy, and right now the private economy is hurting because so many are out of work and not able to pay rent or mortgages or car payments. Money added to the economy by deficit spending (deficit being really a misnomer) can be readily absorbed by unemployed workers to pay their bills. The point is that taxes are not necessary for government spending.

So Web of Debt applies to the private economy and The Deficit Myth applies to the national economy. The first book advocates public banking which can save states and municipalities money on interest because they do have to pay their debts. The second book describes how governments with sovereign currencies can just create money which need never be paid off. However, this money creation facility should, like alcohol, be used responsibly; otherwise, inflation can occur. But when huge numbers of people are unemployed and states are having a hard time paying their bills, it is incumbent on the central government to help them. The same applies to European countries in the Euro zone. US lawmakers need to get up to date on how the real economy actually works. In truth Republicans have lost all legitimacy when it comes to their harping on deficit spending.

Off the Top of My Head

Contrary to Larry Summers Biden's Relief Bill Will Not Cause Increased Inflation

by John Lawrence, February 8, 2021

Joe Biden's almost $2 trillion pandemic relief deal will not be inflationary despite Larry Summers' opinion. Inflation occurs when there is too much money sloshing around in the economy chasing too few goods, services and human resources. That is not the case here. First of all it will reemploy the unemployed. This is a presently unused resource. Secondly, it will suck up unused or unsold goods and services funding things that are currently unfunded like child care, and thirdly, it will serve to pay off debt and replenish savings. Any money going into savings or paying off debt is not inflationary. It's deflationary in the sense that the banks will lose money due to interest they won't collect if loans are paid off. The middle class that did have savings or credit in many cases has had to use those to survive the pandemic. That's why giving money to higher earning, but not wealthy, families is a good thing. To hear some people talk only money should be given to those who are desperate and living from paycheck to paycheck. Yes, those are the families most in need who should be given money first, but higher earning families who have depleted their savings or gone into debt need to be resuscitated also.

So here is what Larry Summers says about inflation:

"First, while there are enormous uncertainties, there is a chance that macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability. This will be manageable if monetary and fiscal policy can be rapidly adjusted to address the problem. But given the commitments the Fed has made, administration officials’ dismissal of even the possibility of inflation, and the difficulties in mobilizing congressional support for tax increases or spending cuts, there is the risk of inflation expectations rising sharply."

Summers fails to take into account the deflationary effects of the relief bill. Money going to states and municipalities will actually be deflationary because much of it will be used to pay down debts and loans. Many state budgets are in horrible shape and employees such as police, librarians and firemen have been laid off. People paying back rents and mortgages will have a deflationary effect on the economy. People on the lower end of the economic spectrum who are living paycheck to paycheck will be able to get a little ahead and also save. This will not add a lot to inflation. Also money can always be withdrawn from the economy by taxing the rich, those who actually added to their wealth and income during the pandemic. This is the only reason that taxes might need to be raised because the US government has the ability to spend without raising taxes. The only reason to tax would be to fight inflation and those taxes can be targeted towards wealthier families and individuals. The Federal Reserve has not been able to achieve its target rate of 2% inflation recently despite maintaining almost zero percent interest rates. It wants more money sloshing around in the economy.

There are other ways to suck money out of the economy to offset inflation. Modern Monetary Theory (MMT) recommends Medicare for All which would result in much less money spent on health care while providing better health outcomes. This would be deflationary which would counteract any inflationary propensities of government deficit spending. Conventional economic thinking is that there is a tradeoff between unemployment and inflation. The more people unemployed there are, the more inflation is diminished. Therefore, full employment as defined by economists is not really employment where everyone is employed. It is that level of unemployment which just keeps inflation in check. However, according to "The Trade-off between Inflation and Unemployment in an MMT World: An Open Economy Perspective" by Emilio Carnevali and Matteo Deleidi, MMT it is contended that inflation "occurs when the system reaches the point of full utilization of its productive capacity, both in terms of capital utilization and in terms of availability of workers. At this point, the government should curb inflation forces cooling down the effective demand. This is another fundamental task of taxes." As long as there is unused capacity in human or production terms, increased employment will not be inflationary. So Larry summers need not worry that putting all those unemployed people back to work will lead to inflation.

Biden's putting a $15.00 an hour minimum wage in the relief bill is also what MMT advocates in relation to a Federal job guarantee. Real full employment at a minimum wage of $15.00 an hour does not need to be inflationary especially if it is in areas that don't compete with already employed workers. Biden's relief bill will have the effect of putting almost everyone to work with at least an hourly pay of $15.00 an hour. People who are living paycheck to paycheck and employed at $15.00 an hour are not going to contribute to inflation since their demands on the economy are those that can be easily accommodated by existing production and easily increased production. Deficit spending is not a problem. Former Chair of the Federal Reserve Alan Greenspan said, "The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default." So the real limit on government spending is inflation which can be controlled by taxes on those sectors of the economy which are not easily upscaled to provide more supply.

There is much unused capacity in the current US economy both in human and material or physical terms. People should be put back to work with a minimum wage of $15.00 per hour. A follow-on bill that would address infrastructure rebuilding and a Green New Deal also needs to be done. Resources may have to be managed by government to control inflation, but the important thing is that work needs to be done in these areas and people need to be put back to work. Inflation can also be offset by the deflationary effect of withdrawing funds form a bloated defense sector.

Off the Top of My Head

The Left/Right Political Spectrum Is Irrelevant at This Point

by John Lawrence

The Extreme Right position on the pandemic is just to let it rip. This would mean ongoing disaster for the whole world into the indefinite future. The Extreme Left would advocate government spending as much money as necessary to defeat the pandemic and get the economy back to normal. The middle of the road would advocate doing half as much as necessary to sort of but not really get the pandemic under control. Result: the coronavirus would be mutating and popping back up for years just as SARS COVID-9 is a mutation of the original SARS virus and is related to the MERS virus. Whether the mutations occur in animals or in humans, it doesn't matter. Viruses mutate and doing a half ass job in getting rid of this pandemic which is the political "middle" insures that there will be more pandemics in the future. Not allocating increased funding for the study and research of viruses insures that there will be more threats to human lives and economies.

The Extreme Right position on global warming is to do nothing about it. That includes encouraging consumption of fossil fuels and not caring how many greenhouse gasses are emitted into the atmosphere. This virtually guarantees that the earth will become uninhabitable in 50 years or less. The Extreme Left position would be to do as much government spending as necessary to reduce greenhouse gas emissions to zero in about 10 years. This would prevent global temperatures from rising more than the amount that would destroy the habitability of the earth. The middle position would be to spend a piddling amount to combat global warming. The result would be that the earth would become uninhabitable in a slightly longer time frame.

Republicans want to limit Federal government expenditures to solve problems while maximizing the private sector in the economy. Problem is that dealing with the pandemic and climate change are problems private enterprise is not capable of solving or even leading the way. Is there a role for private enterprise? Certainly, but government must play the leading role or these major problems as well as a number of others will not be solved. Private enterprise won't engage in any activity for which there are no profits to be made. Some problems like the pandemic and global warming are not likely to yield much in the way of profits. Ergo, private enterprise will not be interested in dealing with them.

The COVID relief package that Biden has put forward is totally dependent on Democrats controlling both Houses of Congress. That in turn was totally dependent on the Georgia runoff elections for two Senators which produced two Democrats. Otherwise, there would be no COVID relief package or follow on projects to deal with global warming because not enough Republicans will be voting for any of Biden's projected spending to solve these problems. So the Extreme Left position of these issues which are totally necessary if they are to be dealt with successfully would not have been possible. Even successfully dealing with these two existential problems was hanging by a thread because the election of two Democratic Senators from the state of Georgia was heretofore unheard of. But now there is a chance.

What really needs to happen with regard to government spending is that the public, and that includes Senators and Representatives, need to be educated on how the economy really works. Deficit spending is not really a problem. Read The Deficit Myth by Stephanie Kelton. Republicans rely on the ignorance of the public while suggesting that adequately dealing with global warming or the pandemic will raise their taxes. It does not have to increase taxes which is the conventional understanding about it. The Federal government does not need to pay back Federal deficits because the US dollar is a sovereign currency. The Federal Reserve can just "print" the money - although it doesn't actually print it - it creates it by a few keystrokes on a computer. A household or private firm must pay back its loans. Even US states must pay back loans usually by raising taxes. Th Federal government does not have to raise taxes nor does it have to pay back loans. Treasury bonds can just end up on the Fed's balance sheet where in fact most of them do end up. So a government, any government, which has a sovereign currency can create as much money as necessary to solve any problem. The only caveat is that money creation under certain conditions can induce inflation.

Too much money sloshing around in any sector can produce inflation in that sector. What the US economy has created recently is asset inflation but not inflation in the real economy. Tax breaks for the rich has resulted in the bidding up of assets. Take the stock market, for example. Major corporations have used their tax breaks not to build production facilities but to buy back their own stock. This raises the stock price: ergo, asset inflation. The same holds for the real estate market. People, with more money than they are willing to put to productive use, use it to bid up the value of real estate. Ergo, inflation. This makes housing less affordable. The real economy has under utilized capacity in terms of all the unemployed and underemployed labor. Government spending which soaks up this capacity and puts it to productive use in converting to a reusable energy economy and upgrading to green infrastructure should not produce inflation. Neither will more government money spent on research on viruses produce inflation. What else produces asset inflation is money spent on the military-industrial complex. Think $600 toilet seats.

The US public needs to be enlightened on how the economy really works at the macro level. That being understood would take all the wind out of the sails of Republican objections to government spending. It does not have to raise your taxes because the US government can never run out of money. An understanding of Modern Monetary Theory leads to that understanding.

Off the Top of My Head

Republicans' New Definition of Socialism: Any Government Program That Would Help Black People

by John Lawrence, February 2, 2021

Republicans are worried that the US will become a socialist country. The public sector will come to dominate the private sector. Well, the private sector has been helpless at solving the big outstanding problems: global warming and the pandemic. If the private sector could solve these problems, well, that would be great, but they're not capable of doing it. Therefore, government is left by default to deal with global warming and the pandemic as well as a host of other systemic problems like health care, poverty, economic inequality and racism. So what does capitalism stand for at this point: fossil fuel dependency and business as usual which means more and more income and wealth inequality. With capitalism there is no "we" there, only an accumulation of "I"s.

What Modern Monetary Theory (MMT) has shown is that the Republican accusation of Democrats - "tax and spend" - is a discredited misnomer because US government spending does not depend on taxation. In fact a Green New Deal and Medicare for All could all be accomplished without increasing taxes on anyone. That's because the US central bank aka the Federal Reserve can just create money with a few keystrokes on a computer the way it did to save the banking industry during the Great Recession when it gave the Big Banks several trillion dollars without any consequences whatsoever for deficit spending or increased taxes to pay for it. This facility should be used responsibly, however, just like the use of alcohol. Used irresponsibly this money creation facility could increase inflation.

So what is the responsible use of government spending? Obviously, during a pandemic and incipient global warming, it would be responsible for the government to spend money to solve these huge worldwide problems which not only affect the US, but affect the whole world. One of the lessons of this situation is that, if we want to contribute to the solution of global warming, we must become friends with the world's biggest GHG emitter which is China. China and the US are the world's first and second largest GHG emitters and the first and second largest economies. We can't afford not to be partners in the solution of this problem. China and US continued rivalry even amounting to a Cold War will guarantee that the earth is destroyed as a habitable living place for humans. So we have no other choice. Either we can continue our petty squabbles with China or we can cooperate with them to solve problems. We are truly all in this together. Either we hang together or we hang as nations separately.

The second lesson of MMT is that Medicare for All (M4A) could be part of the solution for global warming. If M4A were to be implemented, the US could have a much better health care system with better outcomes health wise at a far cheaper price. This has been shown in study after study. What's more M4A would be deflationary in financial terms. Deflation as well as inflation is bad for the economy. The fight against global warming would be inflationary because of the huge expenditures that must be made so it could offset the deflation caused by M4A. In fact we find in How to Pay for the Green New Deal, working paper 931 by Yeva Nersisyan and L. Randall Wray:

"To be clear, we do recognize that implementation of the GND will shift spending from the private sector to the government sector. However, unless there is an a priori reason to believe this would—by itself—be inflationary, we take the position that in the general case it makes no difference in terms of inflation whether the dollar spent to hire resources comes from the government or from the private sector, which is also the method used by Keynes. As Stephanie Kelton says, cash registers do not discriminate. Indeed, as we report below, there is strong evidence that at least in the healthcare sector a dollar of government spending buys more care than a dollar of private spending—so shifting toward government as the single payer would produce disinflationary pressure."

So while the US government can create as much money as it needs for a GND by means of the Federal Reserve's money creation powers without increasing taxes, the need to forestall inflation could be offset by M4A which would in addition provide a health care system with better outcomes for Americans at a lower price. The only reason then to raise taxes would be to diminish economic inequality which could be ameliorated by only taxing the rich.

Off the Top of My Head

Taxing the Rich Will Lessen the Need for Deficit Spending

by John Lawrence, January 29, 2021

Billionaires are upset because their hedge fund ploys in the Wall Street casino went awry when a group of average Joes countered their short sales of GameStop. Oh the tears that were shed. Billionaires losing millions gambling? Outrageous! Bernie Sanders tweeted: "Oh look, another billionaire is mad that he might have to pay more taxes while children in America go hungry and veterans sleep on the street. Cry me a river," Joe Biden's $1.9 trillion COVID relief bill will mean a lot of deficit spending which can be offset, however, by taxing these billionaires. A financial transaction tax would raise $2.4 trillion over the next decade—"enough to make public colleges tuition free and cancel student debt."

Casino Capitalism Lesson 1: Selling short. Here's how billionaire hedge fund managers planned to make a killing. They knew that GameStop was losing money and probably going out of business. GameStop closed 321 stores in 2019 alone and planned on closing even more stores by the end of 2020. So knowing that GameStop's stock was going down (it didn't take a big brain to figure that out), they sold its stock short. What that means is that they "borrowed" the stock from people that already owned it. Then they sold the stock at its value at that time. Some time later when they would have to "return" the stock to those they borrowed it from, they planned to buy it back at a lower price (it having gone down in the meantime) and pocket the difference. One might ask why the original owners of the stock would loan it in the first place since they must have known that the stock would be worth less when it was returned to them.

However, a group of "amateur" investors foiled the plans of the billionaires by buying GameStop stock thereby bidding up the price making it worth more when the short sellers had to return it, not less. That would mean that the short sellers would lose money instead of making money. That's when the billionaires cried, "Ouch!" Then the "amateurs" who bid up the stock could sell it at the higher price and make money. Woo Haa! Leon Cooperman, whose net worth is estimated to be around $3 billion, sniffed that "the reason the market is doing what it's doing is, people are sitting at home, getting their checks from the government, basically trading for no commissions and no interest rates." In other words average people trading stocks are making the money that billionaires like him should have made. Boo Hoo!

Modern Monetary Theory maintains that all the money for the COVID relief bill could be raised from deficit spending because deficits don't matter without any need for increased taxation. Yet it would be prudent to raise taxes on the mega rich in order to decrease economic inequality which represents an enormous chasm between the billionaire class and everyone else. A new report found that the world’s 2,153 billionaires have more wealth than 4.6 billion people, underscoring the degree of global inequality. This would also offset any decrease in the value of the dollar that large deficit spending might bring about. In The Deficit Myth by Stephanie Kelton, she points out that the Federal Reserve which creates US dollars can never run out of money since the US dollar is a sovereign currency, but there is a concern about inflation if too much money is created which doesn't have a productive purpose in the economy. Since so many are unemployed and since there is a huge infrastructure deficit, this is not in danger of happening any time soon. There is no lack of money for government programs since they don't depend on tax flows, and money created by the Federal Reserve that ends up on the Fed's balance sheet never has to be paid back.

While the Fed can create as much money as it likes to bail out the banks without Congressional approval, which it did during the 2008 banking crisis, money created for government spending, such as the $1.9 trillion COVID relief bill, must have Congressional authorization. Fortunately, there is a process known as budget reconciliation which only requires a majority vote and the Democrats have the majority in the Senate. Therefore, the COVID relief bill cannot be filibustered by Republicans which they surely would do if they were in the majority. So it's clear that Republicans only represent the interests of the rich who will contribute to their campaigns and enrich them in return as long as they vote to nullify everything that might help the average person or raise taxes on them.

Off the Top of My Head

Mitt Romney Doesn't Want to Go Into More Debt With China: Is This a Problem?

by John Lawrence

In short: No. The trade deficit with China means that US consumers' dollars ended up in the People's Bank of China's account at the Federal Reserve. The PBOC has two accounts at the Fed which amount to a checking account and a savings account. The savings account consists of Treasuries which pay a small interest. Since the Fed controls the interest rate which is approximately zero, interest charges are very low. The US is not like Greece which had to borrow money on the open market which is subject to interest rate fluctuations. Greece, unlike the US, does not issue its own currency. It is part of the Euro Zone so when it borrows money it cannot just issue the money like it could have when it has its own sovereign currency, the drachma. Therefore, it got itself in a debt trap in which the more it borrowed, the higher interest rates it had to pay. The US can never be in that position because the US is a sovereign currency issuer.

China needs to keep US dollars in its account because the Chinese currency is pegged to the dollar. Therefore, it is pledged to exchange Chinese yuan for dollars in much the same way that the US dollar formerly had pledged US dollars to gold at the rate of $35 dollars to an ounce of gold. The US dollar, on the other hand, is now a fiat currency with a floating exchange rate so a dollar is worth a dollar and that's it. No one can demand that the US government exchange a dollar for something else. So the Chinese government needs to keep a lot of dollars on hand. So when China buys US debt (Treasury bonds), what happens is that China's checking account at the Fed is debited and its savings account at the Fed is credited. The money never leaves the Federal Reserve! Stephanie Kelton writes in The Deficit Myth: "To pay back China, the Fed simply reverses the accounting entries, marking down the number in its securities [savings] account and marking up the number in its reserve [checking] account. It's all accomplished using nothing more than a keyboard at the New York Federal Reserve Bank."

So what would happen if China or Japan refused to buy any more US Treasuries? If Treasury bonds cannot be sold to investors, domestic or foreign, they end up on the accounts of the "primary dealers", mainly big Wall Street banks, which are obligated to buy them. If this takes too much liquidity out of the system, meaning those banks don't have enough cash on their balance sheets because they have so many Treasuries, the Fed merely steps in and adds liquidity to the system meaning that they take the Treasuries onto the Fed's balance sheet and exchanges the Treasuries for cash paid to the banks. So by a roundabout process the US debt ends up on the Fed's balance sheet where it can stay forever. And don't worry about the interest paid on those Treasures. Any interest the Fed makes is remitted to the government which means that it is paid to the US Treasury account at the Fed by means of a few keystrokes. So it amounts to interest free debt. Those Treasuries may be sold back into the market at some time or they could stay on the Fed's balance sheet forever. There is absolutely no urgency for the Fed to get rid of them.

So Mitt Romney's concerns that the US might add more debt to China is unfounded. He should probably, like a lot of politicians, study up on Modern Monetary Theory and try to understand how the Federal Reserve, which is the US' central bank, really works. It is the loaner of last resort to the banks and, by a roundabout process, to the Federal government. It has the ability to create money by a few keystrokes on a computer because the US currency is a sovereign fiat currency. It is the loaner of last resort to the banking system, and, since the primary dealers are obligated to buy Treasury bonds, effectively, it is the loaner of last resort to the Federal government. The import of cheap products from China, which adds to the trade deficit, keeps the consumer price index low in the US. If those same products were produced in the US with higher priced labor, prices for US consumers would go up considerably. On the other hand, Chinese investors have been the biggest purchasers of U.S. residential real estate for six consecutive years. This drives up the asset price of US real estate and makes housing more expensive. This is the downside of the Chinese accumulation of dollars, but the same is true for trade deficits with other countries.

Off the Top of My Head

Problems of American Democracy

by John Lawrence, January 16, 2021

My Dad taught a course once with the above name. The major problem now is social media. Social media allows like minded folks to find each other, and, if they are the type that wants to overthrow the government, social media allows them to organize. In addition the First and Second Amendments enable them. Free Speech must be limited and those limitations need to be made clear and evident. As for the Second Amendment, it has to be made clear that this doesn't give gun owners carte blanche. It's ridiculous that they should be able to open carry inside a state Capitol. As for social media, their algorithms encourage the gathering of like minded domestic terrorists in the same way it allowed ISIS to conspire and attract disaffected Muslims.

Facebook in particular has allowed white supremacist and domestic terrorist groups to find each other, conspire and flourish. They encourage like minded people to "friend" as many people as possible. Then if one of them makes a cleverly hateful or conspiratorial poster, they can "share" it with everyone in their group of friends. Even a Russian hacker could put up a hateful poster and share it among hundreds or thousands of people. The more people it's shared among, the more Facebook brings eyeballs to their app, and the more money they make. Facebook's profits are predicated on an advertising model in which they get paid every time a person clicks on their app. People are routinely notified by email and other means that one of their "friends" has posted something even though their friend may only have "shared" it. Empty headed sympathizers of domestic terrorists or white supremacists have only to share someone else's original creations. Meanwhile, Facebook doesn't want to diminish their profits by either changing their highly profitable algorithms or hiring more people to police their site and take down hate speech, untruthful conspiracy theories or the organizing of domestic terrorists. That would diminish their profits.

Time magazine reported:

"At a hearing of the House Committee on Homeland Security in September 2019, Soufan urged lawmakers to take the threat more seriously. The following month, 40 members of Congress signed a letter calling—unsuccessfully—for the U.S. State Department to designate Azov [ a right wing group based in Ukraine] a foreign terrorist organization. “Azov has been recruiting, radicalizing, and training American citizens for years,” the letter said. Christopher Wray, the director of the FBI, later confirmed in testimony to the U.S. Senate that American white supremacists are “actually traveling overseas to train.”

"The hearings on Capitol Hill glossed over a crucial question: How did Azov, an obscure militia started in 2014 with only a few dozen members, become so influential in the global web of far-right extremism? TIME, in more than a dozen interviews with Azov’s leaders and recruits, found that the key to its international growth has been its pervasive use of social media, especially Facebook, which has struggled to keep the group off its platform. “Facebook is the main channel,” says Furholm, the recruiter.

"In a statement to TIME, Facebook defended its recent attempts to deal with the proliferation of right-wing extremists, saying it has banned more than 250 white-supremacist groups, including Azov. “As they evolve their efforts to return to the platform, we update our enforcement methods with technology and human expertise to keep them off,” the statement said."

Well, I guess Facebook isn't trying hard enough. It doesn't want to change its lucrative model and the lucrative and profitable algorithms that have made them billions of dollars. What was purportedly supposed to be a platform for sharing family pictures among real actual friends and perhaps original free speech has become a model that's used by groups seeking to organize to overthrow governments. Facebook and YouTube played a role in creating, aiding and abetting ISIS. As the story continues:

"[Azov adherents] were not the only extremists to embrace social media in 2014. When the Islamic State declared a caliphate in the Middle East that year, it began posting propaganda on social networks—mashing together memes, religious verses and scenes of gratuitous violence. The approach took the platforms by surprise, and for a time the caliphate was able to lure a class of disaffected young Muslims to fight. But by 2017, both Facebook and YouTube had developed algorithms to detect Islamic extremist material, after facing significant pressure from Western governments to act.

"No government, least of all that of the U.S., put similar pressure on social media platforms to stamp out white supremacy. One legacy of the 9/11 attacks was that many counter-terrorism agencies equated terrorism with Islamic extremism, allowing white supremacy to fly under the radar just as social media platforms like Facebook were giving the movement access to a bigger audience than ever before. “In a way, Facebook tracked the failed counter-terrorism policies of the Western world,” says Heidi Beirich, the director of an advocacy group called the Global Project Against Hate and Extremism.

"In its statement to TIME, Facebook said it began using its algorithms to detect Azov content after designating it a dangerous organization in 2016. But well after that date, members of white-supremacist groups, including Azov, were still able to evangelize on the platform.

"In some cases, Facebook’s algorithms actually nudged users into joining these groups. In an internal presentation in 2016, its analysts looked at the German political groups on the platform where racist content was thriving. They found that within this segment of Facebook, 64% of the people joining extremist groups were finding them through the platform’s own recommendation tools. “Our recommendation systems grow the problem,” the analysis states, according to a report in the Wall Street Journal that cited the internal document. In its statement to TIME, Facebook said the report was limited in scope and suggested the findings were misleading. It said it had adjusted its algorithms to stop pushing people toward known extremist groups."

Facebook has allowed right wing hate groups to proliferate on its platforms while doing too little, too late to eliminate their presence. It and other social media giants need to be regulated by government in order to rid the world of the threats to domestic order and constitutional government that they represent. “Because this material was allowed to proliferate so long, in particular on Facebook, we now have thousands, millions of people who have been sucked into the world of white supremacy and other forms of extremism,” says Beirich. “That problem now exists. That’s the fallout from not having acted originally.” Meanwhile, social media allows "friends" to schedule "events" that may or may not be gathering places for domestic terrorists and white supremacists. Friends, indeed!

Off the Top of My Head

Is Full Employment Possible or Even Desirable?

by John Lawrence, January 14, 2021

The important and crucial consideration is what kinds of jobs does the full employment society consist of? The type and quality of the jobs is something to be concerned with. After all Hitler had a full employment society. Everyone had a job in his full employment society. Ditto for Mussolini. Once the US got involved in the Second World War, the US had a full employment society. That ended the Great Depression. Trump bragged about presiding over a full employment society pre-COVID. The question is fully employed at what? Our infrastructure is crumbling, approaching Third World status. Republican economists don't give a hoot about the composition of jobs in the US as long as they're all in the private sector and not in the public sector. Meanwhile, China has built 24,000 miles of high speed rail in its own country and a $4-billion, 470-mile-long rail line, the first electrified cross-border rail system in Africa, Ethiopia-Djibouti Railway.

Modern Monetary Theory (MMT) favors a Federal Job Guarantee. The answer to the grievance that many Americans have about the disappearance of good paying jobs is to guarantee them a job. In The Deficit Myth, Stephanie Kelton writes:

"The MMT solution to involuntary unemployment is to introduce a federal job guarantee that establishes a legal right to a good job at good wages with good benefits. This would address one of the most pernicious effects stemming from trade - the unemployment that is too often visited upon whole communities as jobs are lost to foreign competition. It's not enough just to provide training and other temporary forms of assistance to workers whose jobs are lost to foreign competition. ...something more is needed.

"That something is a federal job guarantee. By no means is it a panacea, but at a minimum, it begins to tackle the problem of unemployment directly (as opposed to subsidizing the effects of unemployment). Through the thick and thin of the business cycle, we leave tens of millions of Americans idle in the belief that this makes political, economic and social sense. ...

"The benefits of a federal job guarantee not only include the production of goods, services and income. The guarantee also features on-the-job training and skill development; poverty alleviation; community building and social networking; social, political and economic stability; ... With a program like this in place, the government would have mitigated the localized devastation of communities that directly experienced the loss of well-paying US industrial jobs.

"It may be hard to imagine an economy that doesn't allow millions to fall by the wayside. But that's because America has almost never achieved anything like true full employment. It's something we've rarely experienced outside of wartime. One of the most important features of a job guarantee program is that it maintains a form of full employment by immediately hiring the unemployed into public service work, providing them with income and the retraining required when they are displaced by trade shocks. In this way, the job guarantee can can serve as the core of a response to both "free trade" and the "trade war." With a job guarantee, free trade is no longer a threat to full employment, and trade wars are no longer necessary to prevent unemployment."

Many of the grievances of right wing workers and Trump supporters can be tied to the fact that their communities have been destroyed as good decent paying union jobs have been moved overseas where labor costs are cheaper. MMT argues that those disenfranchised workers should be automatically reemployed especially when their labor is greatly needed to build green infrastructure in order to combat climate change. That's the real war we face right now - not against an imagined enemy - but against the fossil fuel economy which, if left unchecked, will surely destroy the habitability of the planet. It should be obvious that more workers are needed to fight the pandemic and other public health crises likely to happen in the future. It's also obvious that instead of spending a trillion dollars a year on a military-industrial complex which has to instigate another cold war to justify its existence, we should be spending money subsidizing jobs that are really necessary to make the lives of Americans and others around the world better as we move forward.

Right now the US dollar is the world's reserve currency, interest rates on Federal debt are around zero, and there is no reason why the Federal Reserve cannot issue the money necessary to implement a federal jobs guarantee if there is not enough tax money available to cover it, the way it created the money with a few keystrokes on a computer to bail out the Big Banks during and after the Great Recession. The Federal Reserve is the loaner of last resort to the banks, and, since the US dollar is a sovereign currency, as much money as necessary can always be created to support a federal jobs guarantee. Taxes should function as a means to reduce economic inequality but they are not necessary to fund the government as MMT has shown. As long as productive resources in human or material terms are idle, putting them to work will not cause inflation.

The trillions created and spent by the Federal Reserve to bail out the banks have not caused inflation nor have they caused a depreciation of the dollar which is still in great demand by other nations around the world. The old thinking is that the government has to fund itself out of taxes or go into debt which it has to pay back. That certainly applies to households and states, but, with the ability to print its own sovereign currency, the US is in the position that the national debt is just an accounting entry on the Fed's balance sheet. The provision of a good paying job as a guarantee will help to ameliorate the grievances of Trump supporters and move them to the other side of the political spectrum.

Off the Top of My Head

Instead of Sanctioning Foreign Actors Sanction Domestic Terrorists

by John Lawrence, January 12, 2021

The best development so far post insurrection is taking away Trump's twitter account permanently. The FBI, CIA and other law enforcement are rounding up the insurrectionists and they should get lengthy jail sentences and sanctions. The biggest threat to American democracy is not out there; it's in here. Their gathering places on social media such as Parler have been taken down or will be taken down soon. If the terrorists can't meet to spout their vitriol as well as plan future insurrections, we'll be making progress. Rush Limbaugh and other domestic terrorists should be sanctioned. Anyone egging on, benefiting from, taking advantage of the poor mental health or encouraging hatred and violence of the American people needs to be sanctioned. The fact that these terrorists could overwhelm the Capitol Police was a huge security failure. The fact that it took the Pentagon three hours to supply troops shows the fact that we are wasting huge amounts of money on a worthless military establishment that does not confront the real threats to this country. Perhaps these domestic terrorists need to be reeducated. We don't have the moral authority to mock China any more for doing this with its domestic terrorists.

Right now security forces in the US are on high alert. The National Guard is out in force. There are more forces on the streets of Washington, DC now than there are in Afghanistan. They should stay on high alert for the time being. I think the situation will get under control. Massive arrests and the total deplatforming and isolation of Donald Trump and domestic terrorist social media sites needs to be carried out. If they don't have gathering places on social media, they won't be able to organize. That's important. There needs to be a recognition that the militarization of the mindsets of young Americans which happens in the military and the glorification and seeming ubiquity of war as the only way to deal with other nations is a cause of the recent problems. Instead of funneling all non-college bound youth into the military, there needs to be an upsurge in funding and encouragement for young people to go into the Peace Corps and AmeriCorps. We need to demilitarize the mindsets of the American people.

Terrorist and threatening phone calls need to be traced and the perpetrators brought to justice. No public official should have to live in fear for their lives and their family's lives because of death threats on phone calls or on social media. Social media is a big problem. They have gotten rich off the fact that their algorithms have encouraged, aided and abetted the domestic terrorists. Their business model showed that there was a lot of profit in encouraging conspiracy theories and other activities detached from reality. It's good that it has become evident by reporting on legitimate news outlets that social media is not subject to the First Amendment because that only applies to government hindrance of free speech. Social media platforms are private entities and they do not have to honor so-called free speech. Private entities also don't have to honor the Second Amendment so that there is space to restrict guns on private property which is probably 99% of the property in the US.

The next administration has its work cut out for them. Good leaders and good people will prevail. Deplatforming all right wing media and groups that espouse conspiracy theories and outright lies will be an important step. Sober analysis and critical thinking must replace narcissistic fantasy and entertainment values. This starts with children in school. They need to taught how to distinguish truth from lies. They need to be taught the value of peace and harmony not only in their daily lives but in the pursuit of that status among and between nations. They should be taught that the US has not always been but should aspire to moral and ethical behavior with regard to other nations and within its own country.

Money must be drained from the military establishment which is oriented towards either non-existant or phony threats and reoriented towards the real threats and funded at appropriate levels rather than be treated to carte blanche amounts of superfluous cash. Budgets both military and domestic need to be appropriate to their realistic needs. Right now the greatest need is in overcoming the pandemic and responding to the economic needs of the lower half of the population. Also eliminating energy production from fossil fuels needs to proceed post haste. It's obvious that the private economy can not do this at the rate necessary to save the planet from the ravages of global warming. Only big government programs in conjunction with the programs of other countries can possibly achieve the reality of zero carbon emissions by 2030.

The last word is that Trump must be denied any post Presidential influence or following by any and all legal means. This is the greatest thing that can be done to heal and deradicalize the country. America also will pay a heavy price if it doesn't get its promotion of gun culture under control.