It figured: New Speaker Johnson’s first act is to propose austerity. Anyone surprised?

With a new House Speaker who is an extreme right-winger, a leader in attempts to overturn the election, and who justifies everything by his conversations with God, you could only expect idiocy.

Johnson has not disappointed. He even receives plaudits from Libertarian Eric Boehm, further evidence of his woolyheadedness.

Here are some excerpts from Reason.com, aka “Nonsense.com.”

New Speaker Mike Johnson’s First Good Idea: A Debt Commission
A debt commission won’t solve any of the federal government’s fiscal problems, but it’s the first step toward taking them seriously.
ERIC BOEHM | 10.27.2023 1:10 PM

Just moments after picking up the gavel, newly elected Speaker of the House Mike Johnson (R–La.) endorsed an idea that manages to be both eye-roll-inducing and really important.

“The greatest threat to our national security is our nation’s debt,” Johnson said during his first speech from the speaker’s dais in the House chamber.

It isn’t the most stupid comment any politician ever has made, but it’s right up there with “Global warming is a Chinese hoax” and “COVID is like the common cold. It’ll just go away.”

Not only does the statement omit Russia and China as threats to our national security, but says the national debt is more to be feared. Johnson won’t tell you:

1. It isn’t “national.” It’s T-securities owned by private citizens and by governments.
2. It isn’t even “debt.” It’s deposits into accounts wholly owned by the above-mentioned private citizens and governments, not by the U.S. government. The federal government, which never borrows U.S. dollars, neither needs nor even touches those deposits.
3. It isn’t a threat to anything or anyone. It’s just deposits easily paid back by simply returning the deposits. That is how the federal government always pays back T-security deposits.

“We know this is not going to be an easy task, and tough decisions will have to be made, but the consequences—if we don’t act now—are unbearable.”

What exactly are the “unbearable consequences”? Johnson, like all the other debt nuts, never says, probably because there are zero consequences to the government accepting deposits into T-security accounts. Zero.

There are consequences to large deficits, from which the “national debt” evolves, but those are good consequences, including economic growth and more benefits to Americans (health, infrastructure, military security, etc.)

Federal deficit spending grows GDP.

Then, Johnson promised to “establish a bipartisan debt commission to begin working on this crisis immediately.”

This is, in some ways, a pretty silly idea. After all, Johnson is the newly elected leader of Congress, a group of elected officials from two political parties with the constitutionally granted power to control the federal government’s fiscal policies like borrowing and spending.

Congress is, quite literally, a bipartisan commission tasked with managing the debt.

Within Congress, there’s also a Budget Committee, which is, of course, a bipartisan group of lawmakers tasked even more explicitly with determining how much the government can afford to spend, what it should spend tax revenue on, and when there’s been too much borrowing.

Anyone who understands Monetary Sovereignty knows that the federal government’s ability to “afford to spend” is infinite.

Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

So, yes, the very notion of a new and special bipartisan commission that’s going to do the thing Congress is already supposed to be doing is a little funny and more than a little redundant.

And yet, it’s obvious that something new has to be tried. “In the time it will take me to deliver this speech, we’ll go up another $20 million in debt. It’s unsustainable,” Johnson pointed out on Wednesday—and it wasn’t a very long speech.

And there’s the favorite word of the debt nuts: “Unsustainable.”

Why is it unsustainable? The debt nuts never say. The so-called, misnamed “debt” (deposits) has been growing for over 80 years, and still, we sustain it.

“Unsustainable” falls into the same category as “unbearable consequences.” It’s a frightening term that has no basis in reality.

Even if it were a debt (which it isn’t), our Monetarily Sovereign government services any obligation of any size simply by creating dollars, which it has the infinite ability to do.

And no, the “debt” doesn’t cause inflation, recession, depression, crime, poverty, or disease. About the only thing the debt-that-isn’t-debt causes is muddle-brained thinking by Libertarians and other debt nuts.

As an oft-given reminder to our readers, here is what happens when the “debt” is reduced by cutting deficits and running surpluses:

1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.

The above happens when the federal deficit is eliminated and becomes a federal surplus.

And this is what happens when the federal deficit simply is reduced, not eliminated.

Economic growth, by its definition, requires the economy to have more money. When the federal government isn’t adding dollars by running deficits or even adding too few dollars by adding too-small deficits, we have recessions.

What can a bipartisan commission on the debt accomplish? The Committee for a Responsible Federal Budget (CRFB), which has been advocating for such a commission, argues that special congressional task forces can focus discussions, generate greater public awareness of major issues, and create the opportunity for lawmakers to put all ideas on the table.

You can’t discuss “issues” and “ideas” when the starting point is, “All deficits and debt are bad.” It’s like discussing ideas for curing thirst when your starting point is, “Water is bad for you.”

In 1983, for example, Social Security was approaching insolvency—a problem that sounds familiar today—when a commission of congressional leaders and presidential appointees worked out a series of potential fixes. Afterward, Congress enacted many of those reforms, making Social Security solvent for another five decades.

Social Security, being an agency of the U.S. federal government, is as solvent as the government itself, i.e., infinitely solvent. The so-called insolvency comes from the lie that FICA funds Social Security.

Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”

FICA funds nothing. All FICA dollars originate in the M2 money supply measure. When they reach the Treasury, they cease to be part of any money supply measure because the Treasury has infinite dollars.

Thus, FICA dollars effectively are destroyed. No federal agency can go bankrupt unless Congress and the President want it to go bankrupt. That includes such agencies as the White House, Congress, the Supreme Court, and the military branches.

The so-called reforms meant making Americans pay more and receive less. It’s like solving the hunger problem by making poor Americans pay more for less food and calling that a “reform.”

More recently, there was the National Commission on Fiscal Responsibility and Reform, formed by President Barack Obama in the aftermath of the 2008 recession. It produced a plan that could have reduced the debt by $4 trillion over 10 years by raising taxes, cutting spending, and selling off federal property.

Translation: Obama’s plan would have taken dollars from the economy, given them to the federal government that doesn’t need them, and plunged America into a recession if we were lucky, but more likely a depression.

Even though most of those proposals were never enacted, the CRFB points hopefully to the fact that 11 of the 18 commission members supported the final recommendations, including five Republicans and five Democrats.

It is sad that 11 of the 18 commission members either were ignorant of economics or deliberately hoped for a recession or depression.

The idea for another commission on the deficit has been kicking around for a few years but has recently gained steam. The moderate lawmakers in the bipartisan Problem Solvers Caucus have endorsed the idea.

Polling by the Peter G. Peterson Foundation, which advocates for balancing the budget, shows that majorities of both Republican and Democratic voters support the formation of a commission.

As history shows, a balanced budget may be necessary for monetarily non-sovereign entities like cities, counties, states, businesses, and individuals; it unnecessarily will cause recessions and depressions in Monetarily Sovereign nations.

How would it work? Reps. Bill Huizenga (R–Mich.) and Scott Peters (D–Calif.) have introduced a bill to establish a 16-member commission that would include four experts from outside Congress (to be appointed by party leaders from both the House and Senate).

The commission’s recommendations would receive priority consideration by Congress and would be scheduled for a final vote during the lame-duck session after the 2024 election.

The problem is the commission, no doubt, will be as ignorant as Congress. Obama had his commission. Fortunately, its recommendations did not become law, so we avoided the depression.

That timing reveals something about the real reason why members of Congress like this sort of idea: because it allows them to avoid accountability for doing the thing they’re supposed to be doing in the first place.

It allows Congress to avoid economic facts and to do the bidding of the very rich, who grow when federal benefits to the poor are reduced. This widens the Gap between the rich and the rest, making the rich richer.

Recall what Johnson said on Wednesday: this will be a process that requires “tough decisions.” There’s nothing all that complicated about balancing the federal budget.

Members of Congress don’t need notable experts or a bipartisan commission to tell them that closing the deficit will require raising taxes or cutting spending (or some combination of the two). That’s literally all there is to it.

A prime measurement of the economy is the Gross Domestic Product. Raising taxes and/or cutting spending reduces the amount of money in the economy, which, by mathematical definition, reduces GDP.

A reduction in GDP is known as a “recession” or a “depression.”

That’s literally all there is to it.

But those decisions become tough because politicians know that voters don’t like having their taxes raised. They also know that cutting even the most useless and wasteful government spending will spur outrage from whatever particular interest group benefits from it.

Imagine that. Voters don’t like money being taken out of their pockets. Who would have guessed that?

In the end, the right way to think about a bipartisan commission on the debt is as a sort of political suicide pact.

No, a commission to lower the debt or balance the budget is an economic suicide pact.

It means that members of both parties are committed to, at the very least, proposing ideas for balancing the budget—and that, in turn, should limit some of the partisan screeching that makes it so hard for Congress to make these decisions under normal circumstances.

Why do they assume that balancing the federal budget should be a goal? How about a commission to propose ideas for improving the lives of Americans? 

Both sides will have to take responsibility for ending the government’s addiction to borrowing.

The article began with a lie (“The greatest threat to our national security is our nation’s debt”), and now it ends with a lie (“The government’s addiction to borrowing”). The U.S. federal government does not borrow.

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.”

Will it work? Probably not, but nothing else seems more promising right now. Johnson’s got his work cut out, but this is a worthwhile effort.

If this indeed is Johnson’s goal, he will be remembered as the most ignorant, traitorous, damaging Speaker in American history — a man who tried to overturn our democracy and now hopes to cause America’s first depression since 1929.

Rodger Malcolm Mitchell
Monetary Sovereignty

Twitter: @rodgermitchell Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

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

MONETARY SOVEREIGNTY