Tuesday, February 26, 2019

Michael Rainey — Chart of the Day: High Tax, High Service

The echo chamber.
One school of thought that’s been the focus of strenuous debate, known as Modern Monetary Theory (MMT), holds that worries about increases in public debt are misplaced, and that the federal government can easily take on much larger spending in some key areas without raising revenues through higher taxes. But at least one progressive policy wonk has his doubts about that increasingly popular approach. Matt Bruenig of the People's Policy Project accuses MMT supporters of “using word games to make people believe that the US can have Northern European levels of government spending without Northern European levels of taxation.”
No model. "Proof" by chart. Et non est ostensum est, quod demonstrandum instead of QED.

The Financial Times
Chart of the Day: High Tax, High Service
Michael Rainey

1 comment:

Konrad said...

Today (26 Feb 2019) Federal Reserve Chair Jerome Powell testified to Congress that the sky is falling.

That is, the amount of money deposited in Fed savings accounts (i.e. the so-called “national debt”) is “unsustainable” because…well…it just is.

Powell spoke on behalf of the insurance industry, which is increasingly worried about the rising call for Universal Medicare. He told Congress that the “single biggest thing” that drives the “unsustainability” is health care delivery, which would become “unsustainable” if the US government paid for it.

A former U.S. budget official also recently warned that America’s $22 trillion deficit could come back to bite in a big way. (These liars don’t know the difference between a debt and a deficit. The US government does not have a “$22 trillion deficit.”)

Aarthi Swaminathan of Yahoo! says, “The highest level of public debt ever was in 1946, when former president Harry Truman took office after World War Two. The public debt as a percentage of GDP was 106%.”

Swaminathan has no idea what this means. Let’s help him...

During World War II the U.S. government controlled inflation by getting money out of the economy. One way the government did this was by imposing taxes. Another way was by selling Treasury securities called “War Bonds,” and encouraging all Americans to buy them, thereby depositing money in Fed savings accounts, rather than spending it. Money deposited in Fed savings accounts becomes reserves which do not circulate.

The CBO is warning that if income taxes are not increased on the lower classes, there will be bigger than ever increases in the national debt because…well…just because.

The bottom line is that social services for average people must be cut, and taxes must be raised.

Meanwhile spending must be increased for ear, weapons makers, and corporate Subsidies.