December 21, 2012

Morning Line: Some modest proposals

Sam Smith - While I realize that logic has nothing to do with the current debate over the budget, in brighter times here are a few things that might help us get out of this mess:
  • Leave Social Security and Medicare off the table. Whatever problems they have, making them pawns or players in this debate makes no sense. Their trust funds have a decade or two life in them, time for us to come to our senses, for example, and support Medicare with a single payer system.
  • Cut defense spending to the level it was at the end of the Cold War. That would save you about $150 billion next year.
  • Where personnel cuts are required, use natural attrition combined with retraining and reassignment of existing personnel to reduce the effect of these cuts.
  • If it comes down to giving the ultra rich a tax cut or cutting Social Security or food stamps, give the top its undeserved break and fight that battle later.
  • Recalculate all expenditures into operating and capital categories as any business would. Start printing interest free money to pay for capital expenditures. Wild as this seems, it works, in part because wise capital expenditures are not inflationary, as Bob Blain explained in the Review back in 1994:
    Guernsey is an island state located among the British Channel Islands about 75 miles south of Great Britain. In 1816 its sea walls were crumbling, its roads were muddy and only 4 1/2 feet wide. Guernsey's debt was 19,000 pounds. The island's annual income was 3,000 pounds of which 2,400 had to be used to pay interest on its debt. Not surprisingly, people were leaving Guernsey and there was little employment.

    Then the government created and loaned new, interest-free state notes worth 6,000 pounds. Some 4,000 pounds were used to start the repairs of the sea walls. In 1820, another 4,500 pounds was issued, again interest-free. In 1821, another 10,000; 1824, 5,000; 1826, 20,000. By 1837, 50,000 pounds had been issued interest free for the primary use of projects like sea walls, roads, the marketplace, churches, and colleges.
    This sum more than doubled the island's money supply during this thirteen year period, but there was no inflation. In the year 1914, as the British restricted the expansion of their money supply due to World War I, the people of Guernsey commenced to issue another 142,000 pounds over the next four years and never looked back. By 1958, over 542,000 pounds had been issued, all without inflation.

6 comments:

Capt. America said...

A huge money saver would be to forbid any local, state, or federal govt agency from paying for software except to develop it themselves or to buy it outright, at which time it would automatically become public domain. Billions are wasted on companies like Microsoft, which exploit the work of others but contribute next to nothing themselves and which monopolize the marketplace by extortion and conspiracy.

Dan Lynch said...

The author is not an economist, but the economic system he describes on Guernsey was called "chartlatism," or now days "Modern Monetary Theory" (MMT).

MMT is currently taught at the University of Missouri at Kansas City, but not at the Ivy League schools.





Anonymous said...

WE need a NEW, additional, DEDICATED "military protection tax" on ALL INCOME and this revenue should be restricted for use only by the US military.. that is the ONLY way t o save social security and medicare, which are also funded by dedicated taxes , the revenue of which has been and still is being diverted for other purposes, mostly to fund our many WARS.

BARBBF said...

I wonder how many seniors on Social Security or Federal government employees would have been so willing to vote Obama back into the White House if they'd paid attention to his plan to cut their pensions by using a fraudulent method to calculate their COLAs?

From BlackAgendaReport:

Obama’s scheme to cripple Social Security is to change the way inflation is measured, resulting in a drastic scale-back in cost-of-living increases in recipients. According to Dean Baker, of the Center for Economic and Policy Research, the cuts would amount to 3 percent over 10 years, 6 percent over 20 years, and 9 percent over 30 years. In dollar terms, Black Minneapolis Congressman Keith Ellison says retirees would lose [7] $6,000 in the first 15 years of cuts and $16,000 over 25 years.

And that’s just the beginning. Once the untouchability of Social Security has been breached, it becomes just another social program to be carved up on austerity chopping blocks. President Obama’s true legacy will be to have begun the destruction of the crown jewel of what’s left of the nation’s social safety net.

Anonymous said...

On another subject, the reason why there are two right wing major parties has a lot to do with Joe McCarthy and Mayor Daley. The attack on the left leaves unions, feminism and minority power groups all needing to be rebuilt. In a left McCarthyism, the far right would be outed as the national threat that it is. Secessionists might be a good place to start. If an antifascist front can take out the far right infrastructure, then there opens up a future for the unfolding New Deal over the next 60 years.

abrady said...

"The author is not an economist,"
hmmmmm.

I would suggest this article is taken out of the context of some odd 1/4 million pages that would argue against your comment.