More media nonsense about the gov't needing our tax money to fund spending

Here's an article that appeared today online at (where else?) Bloomberg. Bloomberg has, by far, the most economically ignorant journalists in all of journalism and they are the most dangerous because of the fact that Bloomberg is widely considered to be a very serious and respected news outfit.

My comments are in italics.

Taxman Seeking Cash Means U.S. Filers May Move Income to 2009 Share Business By Margaret Collins Nov. 5 (Bloomberg) -- The U.S. government is spending $787 billion to stimulate the economy, the deficit is $1.4 trillion and Congress is debating costly changes to health care. The taxpayers’ bill to pay for it isn’t far behind. Government spending is not constrained by tax revenues. The government only accepts its own money for taxes anyway, so by definition it must spend it into existence in the first place in order for anyone to be able to get it to satisfy their tax liability. Deficit spending means the gov't spends more of its own money than it takes back from the non-government. It couldn't do this if it first had to collect revenue from somewhere. On a gold standard or fixed exchange rate this could be a problem, but not under a floating FX/non-convertible currency system such as the one we are on. “Something is going to have to be done to raise revenue unless entitlement spending is cut,” said Gerald Prante, senior economist for the Washington-based Tax Foundation. Again, this guy is clueless. Cutting spending means, once again by definition, that less of the Government's money is available to the non-governmental sector, making the payment of taxes more difficult because it reduces incomes and savings of the non-governmental sector. The only way for the government to "save" is for the private sector to "dissave." Federal tax rates may rise in 2011 to as high as 39.6 percent, up from 35 percent, for those earning more than $373,650. The House version of the health reform bill sets an additional 5.4 percent surtax on adjusted gross income for high- income individuals. Long-term capital gains rates may reach 28 percent, from 15 percent today, Prante said. Tax rates will rise because Obama is going to let the Bush tax cuts expire, however, that is not a necessary requirement to "fund" new or existing spending, nor is it wise because it will increase fiscal drag at a time when the economy is, hopefully, recovering. The decision to let tax cuts expire stems from sheer ignorance of our monetary system and nothing more, but Obama displays his ignorance almost every day when he says things like, "the government is out of money." Too bad for us all.

With people like this running things we barely have a chance. God help us all!