Would Congress and the President Try to Cut Federal Spending If . . .?
August 6, 2011 - 12:57am ET
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This one is a message intended for all progressive organizations, especially those who have worked so hard to derail the drive for cuts in Social Security, Medicare, and Medicaid, or are working hard to protect other valuable discretionary programs.
There's another hostage-taking coming in the next three months over the 2012 Budget legislation. You know it! I know it! Everyone knows it!
So ask yourselves these questions:
1. Would Congress and the President be trying to cut Federal spending if the Treasury General Account (TGA) at the Fed had more than $50 Trillion in it?
2. Would Congress and the President be trying to cut Federal spending if the President has already paid off roughly $50% of the national debt?
3. Would Congress and the President be trying to cut Federal spending if the national debt was scheduled to be almost entirely paid off by September of 2014 and they knew that the Treasury had the money already to make the necessary payments?
4. Would Congress and the President be trying to cut Federal spending if they knew that the US could never become insolvent and never had to borrow back its own dollars?
5. Would Congress and the President be trying to cut Federal spending if they knew that all four of these conditions was true?
So what if I told you that by the time the hostage-taking is likely to happen all of these conditions can provide the background for budget negotiations, and whether they do or not depends on what the President, alone decides to do?
Then shouldn't it be the highest priority of those who are opposed to austerity and cutting the social safety net to carry out a strong campaign to make the President take the few simple steps needed to create these conditions and head off the hostage-taking?
Here are the steps:
A. Mint a platinum coin with face value of $60 Trillion, deposit it in the U. S. Mint's Public Enterprise Fund (PEF) Account at the Fed, then have Treasury “sweep” the difference between the cost of minting the coin and its face value into the TGA.
B. Immediately pay off the $6.2 trillion owed by the Federal Government to the Federal Reserve Bank, the various Government Agency Trust funds, among them Social Security and debts to other Government Agencies.
C. Pay off the non-Government sector debt, as it comes due using Proof Platinum Coin Seigniorage (PPCS) revenue when necessary. Since the estimated cost is about $300 Billion paid off per month; we can expect another $1 Trillion to be paid off by the end of the year leaving a national debt of about $7.1 Trillion, with a bit less than $53 Trillion still left in the TGA.
D. Pay for any 2011 spending not covered by taxes between now and the end of the year, estimated at about $600 Billion, using the credits in the TGA, rather than issuing debt.
The function of minting the high face value proof platinum coin, filling the Federal purse using PPCS, and beginning to pay off the national debt quickly, is to demonstrate dramatically that there is no US solvency problem, nor any debt and/or deficit reduction problem.
Issuing the coin and getting the Fed to issue $60 Trillion in credits to Treasury, will demonstrate exactly that, and blow any justification for austerity and spending cuts out of the water. The Republicans won't be able to spin that; and without a plausible claim that austerity is necessary, the drive to take hostages and force austerity on America will evaporate. Within a few weeks we will have a new political discourse, and hostage-taking will no longer be part of it.
(Cross-posted from Correntewire.
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