madfranks
29th November 2016, 11:22 AM
http://www.garynorth.com/public/15926.cfm
Deeply Unified Americans: Untouchable Federal Budgets
Reality Check
We are told that the United States is deeply divided today. If only it were true.
Let's talk about some real divisions in American history.
The nation was deeply divided in 1775-81, when the non-Canadian North American colonies of the British Empire had a civil war over secession. It produced the only hyperinflation in American history. It had begun with a tax revolt, when total Empire taxes constituted about 1% of GDP. The tax rate never again was this low in America.
The nation was deeply divided again in 1787-88, when the Anti-Federalists warned that the proposed Constitution, written by an assembly of rich men during a secret convention that was closed to the public, would become an instrument for a vast centralization of power.
The nation was divided again in 1791, when Alexander Hamilton got the Federalist Party-dominated government to grant a central bank monopoly to the privately owned Bank of the United States. He also persuaded Congress to establish a system of massive federal debt in order to subsidize a handful of big-money investors. In 1811, Congress failed to re-charter the bank by a single vote in the Senate. But the former anti-Bank politician and President, James Madison, changed sides in 1816 and supported the grant of a central bank monopoly to the richest man in the colonies, immigrant Stephen Girard: the Second Bank of the U.S..
The nation was deeply divided in December 1860, when South Carolina seceded, taking the South with it. A civil war began over two issues: federal control over tariffs (Lincoln) and slavery (Davis).
That's what serious division does.
If you want to find unity, look at government budgets. Where budgets rarely change, there is unity. Where it is considered politically suicidal or eccentric to call for a 20% budget cut -- let alone 100% -- there we find unity.
THE UNTOUCHABLES
1. Social Security, Medicare, and Medicaid. These three programs constitute 50% of the U.S. government's annual budget. There is an old political slogan: "Social Security is the third rail of American politicians. Touch it, and you die." No one is allowed to say on the campaign trail that these programs are over $200 trillion -- present value -- in the red. Prof. Lawrence Kotlikoff has been warning about this for a decade. No one in Congress pays any attention. These programs will literally bankrupt the government. No one in Congress dares call for the massive cuts in spending and increases in taxes required to keep these programs remotely solvent.
2. The Pentagon. The Pentagon funds the American Empire. The U.S. government has about 800 military bases in 70 foreign nations. The military budget is generally treated as non-discretionary. It runs about 15% of the budget. Any attempt to close bases, either inside the United States or outside, is met with immediate resistance in Congress. The war in Afghanistan is only the tip of the iceberg. It has been going on since 2001.
3. The spying agencies. Americans have supported the CIA ever since Harry Truman created it out of the remnants of the OSS. The NSA -- "No Such Agency" -- has an untouchable budget for spying on Americans. Edward Snowden exposed how large these "black-ops" budgets were in 2013: $52 billion. Congress had never asked. "Don't ask. Don't tell." Congress has made no move to reduce these expenditures, or report on them. If Snowden ever leaves Russia, he will be kidnapped by the CIA and returned to the United States for trial as a traitor. No one ran for Congress this year on an amnesty for Snowden platform. The American public is agreed: our privacy does not count. Fighting an invisible terrorism does.
4. Tax-funded education. The public schools are America's only established church. There is a hierarchical priesthood: the PTA (impotent), teachers, administrators, local school boards (impotent), federal judges, and the U.S. Department of Education. Does the public have any power? Yes: the power of the purse. Does it use this power to de-fund the schools. No. Is anyone elected to any school board on this platform? "Stop all school funding. Vote no on all school bond issues. Repeal all compulsory attendance laws." No. Massachusetts was the last state to abolish tax support of churches. That was in 1833. In 1837, it set up a state school board to replace the churches. The schools took over moral education. For a century, they have taught good citizenship. Good citizenship begins with a statement of faith: "Franklin Roosevelt saved capitalism from itself." The schools have Monday through Friday training -- accurately called indoctrination. The humanist Left has controlled the textbooks, especially American history textbooks, ever since the first edition of David Saville Muzzey's textbook in 1911. He was a Progressive and a Social Gospel liberal Presbyterian. He controlled the American history textbook market until 1966. No one knew who he was. Americans meekly turned their children over to him for over half a century. (I was one of the victims.) He was the most important historian in history, and still no one other than Frances FitzGerald has read all of the editions -- maybe. That was in 1975-79.
5. The Federal Reserve System. This is America's only openly anti-democratic organization that is praised in every college textbook in history and economics as legitimately independent of political control. No other agency of the government is praised as of necessity being beyond political control. The FED has all the characteristics of a cartel, yet economics textbooks do not include it in the chapter on cartels, nor does the chapter on the FED make any reference to the chapter on cartels or vice versa. Some things are off limits. The federal court system is regarded as semi-autonomous, but every Presidential election is said to be important because of the Supreme Court appointments involved. Rarely do we hear of the importance of the Presidency because of appointments to the Board of Governors of the Federal Reserve. And, of course, no one mentions the 12 presidents of the Federal Reserve's regional banks, who are elected by -- no one really knows. The Federal Reserve System is the only government agency that the government does not allow to be audited by the Government Accountability Office. The Federal Reserve alone among federal agencies sets its own budget, and then voluntarily gives back all money to the Treasury that is not used for its budget. It returns this money only because Greenbacker Congressmen Jerry Voorhis (California) and Wright Patman (Texas) in 1943 threatened to introduce a bill to abolish the FED.
BUDGETARY DISCRETION AND POLITICAL CONFLICT
If you want to find political agreement, follow the money. See which agencies' budgets are immune from public criticism.
The American welfare state's largest budgets are immune from abolition or even major revision: Social Security, Medicare, and Medicaid. The Pentagon's budget is immune. The budgets of the spy agencies are immune, if they are even discussed. They are known only because Snowden leaked the information, and is called a traitor for having done so. Search Google for "Snowden" and "traitor." See what you get. The public school budgets are close to immune. The Federal Reserve sets its own budget and creates money out of nothing to buy federal debt, which generated $113 billion in 2015 from interest payments by the government. It then skimmed its self-determined operating expenses off the top: $13 billion.
Please, spare me the rhetoric about a divided America. America is divided over chump change: those portions of the budget that are discretionary, i.e., about 16% of the budget.
The Punch and Judy show that is Presidential politics is held every every four years and is all about divvying up 16%. It is performed in order to keep the voters excited because they think something major is at stake. In three years out of four, the voters go back to sleep: sports, TV, and social media.
If something is major, it will have a non-discretionary budget. Everything else is either noise or else deliberate illusions designed to keep the voters occupied one year out of four, and in hibernation during the other three.
CONCLUSIONS
With respect to the budgets that matter, the government will kick the can. This is what the voters want.
There is no agreement on any alternatives. The default setting is to kick the can.
My advice: do not be fooled by discussions of disintegration inside the elite. There is just the same old jostling for marginal advantages. It has gone on ever since the election of 1928.
Real change always involves significant budgetary changes: up or down.
What does not change is the percentage of revenues collected to GDP. Spending ratios change; revenue ratios don't. Deficits rise and fall. Revenues don't. Revenues are 20% of GDP.
When revenues fall in terms of GDP, we will at long last have the disunity we keep reading about.
When discretionary budget percentages shrink, and non-discretionary budgets grow, it will be time for disunity.
Until then, sit back and enjoy the show.
Deeply Unified Americans: Untouchable Federal Budgets
Reality Check
We are told that the United States is deeply divided today. If only it were true.
Let's talk about some real divisions in American history.
The nation was deeply divided in 1775-81, when the non-Canadian North American colonies of the British Empire had a civil war over secession. It produced the only hyperinflation in American history. It had begun with a tax revolt, when total Empire taxes constituted about 1% of GDP. The tax rate never again was this low in America.
The nation was deeply divided again in 1787-88, when the Anti-Federalists warned that the proposed Constitution, written by an assembly of rich men during a secret convention that was closed to the public, would become an instrument for a vast centralization of power.
The nation was divided again in 1791, when Alexander Hamilton got the Federalist Party-dominated government to grant a central bank monopoly to the privately owned Bank of the United States. He also persuaded Congress to establish a system of massive federal debt in order to subsidize a handful of big-money investors. In 1811, Congress failed to re-charter the bank by a single vote in the Senate. But the former anti-Bank politician and President, James Madison, changed sides in 1816 and supported the grant of a central bank monopoly to the richest man in the colonies, immigrant Stephen Girard: the Second Bank of the U.S..
The nation was deeply divided in December 1860, when South Carolina seceded, taking the South with it. A civil war began over two issues: federal control over tariffs (Lincoln) and slavery (Davis).
That's what serious division does.
If you want to find unity, look at government budgets. Where budgets rarely change, there is unity. Where it is considered politically suicidal or eccentric to call for a 20% budget cut -- let alone 100% -- there we find unity.
THE UNTOUCHABLES
1. Social Security, Medicare, and Medicaid. These three programs constitute 50% of the U.S. government's annual budget. There is an old political slogan: "Social Security is the third rail of American politicians. Touch it, and you die." No one is allowed to say on the campaign trail that these programs are over $200 trillion -- present value -- in the red. Prof. Lawrence Kotlikoff has been warning about this for a decade. No one in Congress pays any attention. These programs will literally bankrupt the government. No one in Congress dares call for the massive cuts in spending and increases in taxes required to keep these programs remotely solvent.
2. The Pentagon. The Pentagon funds the American Empire. The U.S. government has about 800 military bases in 70 foreign nations. The military budget is generally treated as non-discretionary. It runs about 15% of the budget. Any attempt to close bases, either inside the United States or outside, is met with immediate resistance in Congress. The war in Afghanistan is only the tip of the iceberg. It has been going on since 2001.
3. The spying agencies. Americans have supported the CIA ever since Harry Truman created it out of the remnants of the OSS. The NSA -- "No Such Agency" -- has an untouchable budget for spying on Americans. Edward Snowden exposed how large these "black-ops" budgets were in 2013: $52 billion. Congress had never asked. "Don't ask. Don't tell." Congress has made no move to reduce these expenditures, or report on them. If Snowden ever leaves Russia, he will be kidnapped by the CIA and returned to the United States for trial as a traitor. No one ran for Congress this year on an amnesty for Snowden platform. The American public is agreed: our privacy does not count. Fighting an invisible terrorism does.
4. Tax-funded education. The public schools are America's only established church. There is a hierarchical priesthood: the PTA (impotent), teachers, administrators, local school boards (impotent), federal judges, and the U.S. Department of Education. Does the public have any power? Yes: the power of the purse. Does it use this power to de-fund the schools. No. Is anyone elected to any school board on this platform? "Stop all school funding. Vote no on all school bond issues. Repeal all compulsory attendance laws." No. Massachusetts was the last state to abolish tax support of churches. That was in 1833. In 1837, it set up a state school board to replace the churches. The schools took over moral education. For a century, they have taught good citizenship. Good citizenship begins with a statement of faith: "Franklin Roosevelt saved capitalism from itself." The schools have Monday through Friday training -- accurately called indoctrination. The humanist Left has controlled the textbooks, especially American history textbooks, ever since the first edition of David Saville Muzzey's textbook in 1911. He was a Progressive and a Social Gospel liberal Presbyterian. He controlled the American history textbook market until 1966. No one knew who he was. Americans meekly turned their children over to him for over half a century. (I was one of the victims.) He was the most important historian in history, and still no one other than Frances FitzGerald has read all of the editions -- maybe. That was in 1975-79.
5. The Federal Reserve System. This is America's only openly anti-democratic organization that is praised in every college textbook in history and economics as legitimately independent of political control. No other agency of the government is praised as of necessity being beyond political control. The FED has all the characteristics of a cartel, yet economics textbooks do not include it in the chapter on cartels, nor does the chapter on the FED make any reference to the chapter on cartels or vice versa. Some things are off limits. The federal court system is regarded as semi-autonomous, but every Presidential election is said to be important because of the Supreme Court appointments involved. Rarely do we hear of the importance of the Presidency because of appointments to the Board of Governors of the Federal Reserve. And, of course, no one mentions the 12 presidents of the Federal Reserve's regional banks, who are elected by -- no one really knows. The Federal Reserve System is the only government agency that the government does not allow to be audited by the Government Accountability Office. The Federal Reserve alone among federal agencies sets its own budget, and then voluntarily gives back all money to the Treasury that is not used for its budget. It returns this money only because Greenbacker Congressmen Jerry Voorhis (California) and Wright Patman (Texas) in 1943 threatened to introduce a bill to abolish the FED.
BUDGETARY DISCRETION AND POLITICAL CONFLICT
If you want to find political agreement, follow the money. See which agencies' budgets are immune from public criticism.
The American welfare state's largest budgets are immune from abolition or even major revision: Social Security, Medicare, and Medicaid. The Pentagon's budget is immune. The budgets of the spy agencies are immune, if they are even discussed. They are known only because Snowden leaked the information, and is called a traitor for having done so. Search Google for "Snowden" and "traitor." See what you get. The public school budgets are close to immune. The Federal Reserve sets its own budget and creates money out of nothing to buy federal debt, which generated $113 billion in 2015 from interest payments by the government. It then skimmed its self-determined operating expenses off the top: $13 billion.
Please, spare me the rhetoric about a divided America. America is divided over chump change: those portions of the budget that are discretionary, i.e., about 16% of the budget.
The Punch and Judy show that is Presidential politics is held every every four years and is all about divvying up 16%. It is performed in order to keep the voters excited because they think something major is at stake. In three years out of four, the voters go back to sleep: sports, TV, and social media.
If something is major, it will have a non-discretionary budget. Everything else is either noise or else deliberate illusions designed to keep the voters occupied one year out of four, and in hibernation during the other three.
CONCLUSIONS
With respect to the budgets that matter, the government will kick the can. This is what the voters want.
There is no agreement on any alternatives. The default setting is to kick the can.
My advice: do not be fooled by discussions of disintegration inside the elite. There is just the same old jostling for marginal advantages. It has gone on ever since the election of 1928.
Real change always involves significant budgetary changes: up or down.
What does not change is the percentage of revenues collected to GDP. Spending ratios change; revenue ratios don't. Deficits rise and fall. Revenues don't. Revenues are 20% of GDP.
When revenues fall in terms of GDP, we will at long last have the disunity we keep reading about.
When discretionary budget percentages shrink, and non-discretionary budgets grow, it will be time for disunity.
Until then, sit back and enjoy the show.