What do they do when they’re still beating the same old drum — but the drum is broken? Lie about it.

What do they do when they’re still beating the same old drum — but the drum is broken? Lie about it. At least, that is the formula the MAGAs have settled on.

Here is an example:

It’s been two miserable years since the Biden-Harris Inflation Reduction Act. And it’s worse than you think
Opinion by notorious election denier, Jodey Arrington, and convicted-for-lying FOX News

Politicians love to spend other people’s money. That obvious truth has never been more clear than on this, the second anniversary of the Inflation Reduction Act (IRA).

Sold to the American people as a means of mitigating the rampant inflation unleashed by the Biden-Harris administration’s prior federal spending spree, the administration was – once again – acting as both arsonist and firefighter.

Arrington implies that federal spending causes inflation, a widely promulgated lie. Inflation always is caused by shortages of critical goods and services, not by federal spending.

We were sold under false pretense that spending more money we don’t have on federal programs we don’t need would somehow tame inflation.

Three lies in one sentence may not set a record for Trumpers — the Donald does it all the time — but it may seem repugnant to normal people.

The “money we don’t have” lie. The U.S. federal government is Monetarily Sovereign, over the U.S. dollar. It can create an infinite number of dollars at the touch of a computer key, and it can never unintentionally run short of dollars.

Statement from the St. Louis Fed: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.” You can find it in their publication titled “Why Health Care Matters and the Current Debt Does Not” from October 2011.

Having the infinite ability to create dollars, it never borrows dollars and does not use tax income to pay for things. It creates brand new dollars to pay for everything.

State and local governments levy taxes because they need income to pay for things. The federal government needs no income. The purposes of federal taxes are:

1. To control the economy by taxing what the government wishes to discourage and by giving tax breaks to what it wishes to reward.
2. To assure demand for the U.S. dollar by requiring taxes to be paid in dollars.

Yes, I know. This is not what you have been told: “The federal government is just like you, your city, your state, and your business.”

Wrong!

You, your city, your state, and your business are monetarily non-sovereign. You do not have the infinite ability to create dollars; you borrow and use income to pay for things.

Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency. There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody. The United States can pay any debt it has because we can always print the money to do that.”

The confusion is partly semantic. Federal Treasury bills, notes, and bonds are nothing like private sector bills, notes and bonds. The latter are certificates denoting debt, but the former — the Treasury versions, merely are evidences of deposits into accounts, wholly owned by the depositor.

The purpose of Treasury bills, notes, and bonds is not to provide spending money but rather to provide a safe place for dollar owners to store unused dollars—safer than banks or other money storage places.

This safe storage helps support the dollar’s value. Dollars deposited into T-security accounts remain the property of the depositor and are never used by the federal government for spending.

The “programs we don’t need” lie.

Here are some of the programs covered:

1. Clean Energy: The IRA allocates substantial funding to promote clean energy technologies, including wind, solar, and nuclear power. It aims to reduce carbon emissions by 40% by 2030.
2. Electric Vehicles: Incentives for electric vehicle (EV) purchases are expanded, including tax credits for both new and used EVs.
3. Prescription Drug Costs: The IRA allows Medicare to negotiate prices for certain high-cost prescription drugs, aiming to lower seniors’ out-of-pocket costs.
4. Affordable Care Act (ACA) Subsidies: The act extends enhanced subsidies for ACA health insurance plans, making coverage more affordable for millions of Americans.

One could argue endlessly about whether we “need” clean energy, electric vehicles, reduced prescription drug prices, or to make health care more affordable. Generally, Republicans hate giving these benefits to those who are not rich because the rich easily can afford them.

But one thing is beyond question: The IRA pumps dollars into the economy, and according to the formula (GDP=Federal and Non-federal Spending+Net Exports), those dollars grow the economy.

The “somehow tame inflation” lie.

The implication is that the title “Inflation Reduction Act” is misleading, which it is. Inflation reduction is not the primary purpose of the act.

Reducing inflation requires reducing the shortages that cause inflation. Today’s inflation was caused by COVID-related scarcities of oil, food, shipping, labor, computer chips, metals, wood, paper, and other goods and services.

Curing inflation requires curing the scarcities, which the federal government does by spending to make scarce items available to the economy. Federal support for clean energy helps reduce oil prices, the most potent inflation-inducing factor because oil prices affect the prices of all other products and services.

By contrast, here is the relationship  (or “non-relationship) between federal inflation and federal deficit spending:

Thus, contrary to popular wisdom, federal deficit spending does not cause inflation, but it can cure inflation by acquiring and distributing scarce goods and services.

Federal spending to support electric vehicles also reduces oil prices. Medicare negotiates prices for high-cost prescription drugs, which reduces healthcare prices.

How does that work? It doesn’t. According to the Wharton School at the University of Pennsylvania, the IRA had a statistically insignificant impact on inflation and may have even exacerbated it.

“Statistically insignificant.” “May have.” In the unlikely event that Arrington quoted the vaunted Wharton School correctly, they have no idea whether the IRA or other factors successfully reduced inflation.

Apparently, Arrington wishes to quibble about the title of the program, not its positive economic effects. Later in this post, you will read Arrington’s claims that the“statistically insignificant” IRA caused inflation.

He uses the same data to prove two opposing points.

Inflation Falls Below 3% for First Time Since 2021

Consumer prices rose 2.9 percent in the year through July, a downtick from the prior month. The report keeps the Federal Reserve firmly on track to cut interest rates next month. NY Times August 14, 2024

When the Republican fearmongers lose their inflation and immigrant fears to promulgate, they have nothing positive to offer the voters.

Their notorious Heritage Project 2025 (that Trump claims he has no knowledge of (just as he “never met” the women he attacked) is a playbook for enriching the rich, impoverishing the middle and poor, and establishing a dictatorship.

As the COVID-related scarcities disappear, Arrington desperately continues to ignore the reality that inflation is ebbing, and with it, go Trump’s chances in the 2024 election.

Setting aside the question of what impact, if any, its massive spending had on inflation, the IRA contains an array of atrocious provisions.

The measure’s tax increases on businesses large and small undermine American competitiveness, dampen economic growth, and reduce U.S. employment – now at its highest rate since October of 2021.

Yes, Mr. Arrington, employment is at a very high rate. And it didn’t happen by accident. It’s the result of the Biden administration’s policies. And as for “dampening economic growth,” have you looked at the data?

The labor market is actually as good as it’s been in decades.

The share of working-age Americans with jobs is the highest it’s been since 2001, fewer people than expected have been filing for unemployment, and the layoff rate is low compared to history.

And that’s before the Fed’s highly anticipated rate cuts, which should boost the economy further. (Lisa Ryan, Insider Today.)

Whose bright idea was it to expand Obamacare subsidies for the wealthy, needlessly providing billions in taxpayer dollars directly to large health insurance companies?

Or to hand out hundreds of billions of dollars in wasteful tax breaks to green energy corporations?

It’s not just that these new subsidies will cost three times as much as originally projected. It’s that these green energy giveaways have heaped enormous cost on Americans already struggling to pay their bills.

The above paragraphs promulgate the lie that federal spending is funded by federal taxes. As we’ve said, all federal spending is financed by new-dollar creation. Federal taxpayers fund nothing.

Even the most “wasteful” federal spending you can imagine still benefits the economy by adding to GDP. Remember that formula, GDP =  Federal Spending + Nonfederal Spending + Net Exports.

To add insult to injury, this completely partisan bill, peddled as inflation-reducing, funneled $80 billion to expand the Internal Revenue Service (IRS), including the hiring of 87,000 new enforcement agents which will result in more audits for middle- and low-income families.

More fear-mongering from the right wing.

The $80 billion allocated to the IRS through the Inflation Reduction Act targets high-income earners, large corporations, and complex partnerships.

Audit rates for individuals earning less than $400,000 annually won’t increase.

The focus is on ensuring that wealthy individuals and entities pay their fair share of taxes while also improving customer service and modernizing technology.

And that is why the Republicans, the party of the rich, hate the IRA. It will collect from the rich, not “middle- and low-income families.” It will help to narrow the income/wealth/power Gap between the rich and the rest.

Shortly after Joe Biden assumed the presidency in 2021, the Congressional Budget Office (CBO) forecasted that the federal government would spend $5.3 trillion in Fiscal Year 2024. After more than three years of unbridled spending from the Biden-Harris administration, that figure has ballooned to more than $6.8 trillion—an increase of 29.4 percent—or nearly $216,000 per second.

In other words, federal spending will add more than 6.8 trillion growth dollars to the U.S. economy.

In fact, the deficit has more than doubled, our interest payments on the debt have tripled, and we have a higher level of indebtedness than we did during World War II. 

All that spending, which costs taxpayers nothing, has grown the economy. Without that federal spending (i.e., money creation), we would be in a permanent depression.

Meanwhile, CBO expects federal revenue will total $538 billion more this year than it forecast three years ago. Had the Biden-Harris White House not led Democrats in Congress to increase spending, the federal budget would be nearing balance.

While “balanced budgets” are good for you and me and even for state and local governments—we are all monetarily non-sovereign—they are an economic disaster for the federal government.

A “balanced” federal budget, meaning no new dollars would be created, would cause the nation to fall into the worst depression since the 1930s.

Mr. Arrington continues to spew abject ignorance about the Monetary Sovereignty of our federal government.

But the federal government increased spending by three dollars for every dollar of additional revenue, and, as a result, this year’s budget deficit will likely be $1 trillion or 100% larger than anticipated when Biden first took office.

That’s an additional $1 trillion of economic growth.

It gets worse. The Biden-Harris administration’s policies have increased the cumulative, ten-year federal budget deficit by $11.6 trillion.

Make that $11.6 trillion of economic growth.

Legislation enacted during Biden’s presidency added $4.8 trillion to the deficit. Executive actions imposed unilaterally by the president—that is, without congressional approval—added another $2 trillion. And even more maddening, spending-induced interest rate hikes increased projected net interest costs by $4.8 trillion over ten years.

Apparently, it isn’t enough for the Biden-Harris administration that the federal government is currently set to spend a projected $84.9 trillion for the coming decade. No, they believe we just can’t get by with spending anything less than $86.6 trillion!

It’s difficult to know whether Mr. Arrington is truly ignorant about federal finances or intentionally lies.

All those “shocking” figures actually benefit the American economy. The more deficit spending by the federal government, the richer we become.

And that’s just the financial side. It doesn’t include all the benefits those dollars will buy for us.

SUMMARY

Federal taxes do not fund federal spending. All federal spending is financed by new money creation, which costs taxpayers nothing. Even if the federal government collected $0 taxes, it could continue spending trillions forever.

Federal spending does not cause inflation, which results from shortages of key goods and services. Instead, federal spending prevents and cures inflation by preventing and addressing the shortages.

The shills for the Republican party hate federal spending that benefits the middle- and lower-income groups because those benefits narrow the Gap between the rich and the rest. Benefits to you make the rich less rich.

So they confuse Monetary Sovereignty with monetary non-sovereignty, i.e. federal spending with non-federal spending, to get you to vote against benefits for you.

They never complain about tax breaks for the rich, only about spending that benefits the rest of us.

Now, as the economy emerges triumphantly from the COVID-induced inflation/recession, and the Democrats’ spending is the proven catalyst for that recovery, the MAGA Republicans are reduced to spreading fear via lies about federal finances.

Rodger Malcolm Mitchell

Monetary Sovereignty Twitter: @rodgermitchell

Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell;

https://www.academia.edu/

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The Sole Purpose of Government Is to Improve and Protect the Lives of the People.

MONETARY SOVEREIGNTY

Source: https://mythfighter.com/2024/08/19/what-do-they-do-when-theyre-still-beating-the-same-old-drum-but-the-drum-is-broken-lie-about-it/