Yves here. For those of you who have friends and colleagues who would go on tilt if you tried educating them about MMT, a simpler approach to persuade them that Medicare for All is affordable is to sell them on another worthy goal, cutting the military-surveillance state down to size.
Even then, I still encourage you to set them up for a later conversation about MMT: “Even if you accept the idea that taxes pay for spending, which actually isn’t true for the Federal government, we can still get the money for Medicare for All by….”
Note also that the Pentagon has various black budgets, an “official” one and covert ones.
By Julia Conley, staff writer for Common Dreams. Originally published at Common Dreams
The Institute for Policy Studies on Thursday shared the results of extensive research into how the $750 billion U.S. military budget could be significantly slashed, freeing up annual funding to cover the cost of Medicare for All—calling into question the notion that the program needs to create any tax burden whatsoever for working families.
Lindsay Koshgarian, director of the National Priorities Project at the Institute for Policy Studies (IPS), took aim in a New York Timesop-ed at a “chorus of scolds” from both sides of the aisle who say that raising middle class taxes is the only way to pay for Medicare for All. The pervasive claim was a primary focus of Tuesday night’s debate, while Medicare for All proponents Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.) attempted to focus on the dire need for a universal healthcare program.
For months, we've been saying that we could fund plans like #MedicareForAll by cutting over $300 billion from the military budget.
Now, here it is: The breakdown of exactly what could be cut (with colorful graphics). (1/9)https://t.co/GQw9sqJSKj@lindsaykosh via @nytimes
— Institute for Policy Studies (@IPS_DC) October 17, 2019
At the Democratic presidential primary debate onCNNTuesday night, Sen. Elizabeth Warren (D-Mass.) was criticized by some opponents for saying that “costs will go down for hardworking, middle-class families” under Medicare for All, without using the word “taxes.” Sen. Bernie Sanders (I-Vt.), on the other hand, clearly stated that taxes may go up for some middle class families but pointed out that the increase would be more than offset by the fact that they’ll no longer have to pay monthly premiums, deductibles, and other medical costs.
“All these ambitious policies of course will come with a hefty price tag,” wrote Koshgarian. “Proposals to fund Medicare for All have focused on raising taxes. But what if we could imagine another way entirely?”
“Over 18 years, the United States has spent $4.9 trillion on wars, with only more intractable violence in the Middle East and beyond to show for it,” she added. “That’s nearly the $300 billion per year over the current system that is estimated to cover Medicare for All (though estimates vary).”
“While we can’t un-spend that $4.9 trillion,” Koshgarian continued, “imagine if we could make different choices for the next 20 years.”
Koshgarian outlined a multitude of areas in which the U.S. government could shift more than $300 billion per year, currently used for military spending, to pay for a government-run healthcare program. Closing just half of U.S. military bases, for example, would immediately free up $90 billion.
“What are we doing with that base in Aruba, anyway?” Koshgarian asked.
Other areas where IPS identified savings include:
- cancellation of current plans to develop more nuclear weapons, saving $20 billion
- a total nuclear weapons ban, saving $43 billion
- ending military partnerships with private contractors, saving $364 billion
- production cuts for the F-35—a military plane with 900 performance deficiencies, according to the Government Accountability Office—saving $17.7 billion
- a shift of $33 billion per year, currently used to provide medical care to veterans, servicemembers, and their families, to Medicare for All’s annual budget.
“This item takes us well past our goal of saving $300 billion,” Koshgarian wrote of the last item.
As Koshgarian published her op-ed in theTimes, progressive think tank Data for Progress released its own report showing that a majority of Americans support a “progressive foreign policy” far less focused on decades-long on-the-ground wars, establishing military bases around the world, drone strikes, and arms sales.
“The public rejects the predominant, fear-based framing and policies; instead, they want to see a revamped, demilitarized American foreign policy focused on international cooperation, human rights, and peacebuilding,” wrote Data for Progress.
“Voters want to see U.S. funding go to domestic needs such as healthcare, or to other national security tools like diplomacy, instead of to the Pentagon and more endless war,” according to the report.
Polling more than 1,000 ppl with YouGov, Data for Progress found that 73 percent of Democratic primary voters ranked numerous issues—including economic challenges and the climate—as more important to them than national security and military funding.
Progressive national security proposals proved popular with respondents, including closing Guantanamo Bay, ending arms sales to Saudi Arabia, and leveraging military aid to Israel to force it to adopt better human rights policies toward Palestinians.
“There is a clear appetite for progressive reforms to U.S. foreign policy,” wrote Data for Progress.
In her op-ed, Koshgarian acknowledged that remaking the U.S. military as a truly “defense-based institution, rather than a war machine and A.T.M. for private contractors, will require major changes.”
But, she wrote, “that’s no excuse for continuing to spend hundreds of billions in ways that make our world more dangerous and deny us the ability to seriously invest in things like jobs, healthcare, education, and all that makes our lives better.”
I would love to see it, but I strongly doubt this would happen in my lifetime. The Pentagon budget seems to be one of those political “third rail” issues like Social Security.
Many people are so paranoid that I think it constitutes a mass hysteria; others are propagandized into 24×7 jingoism. I’m not talking concepts here, I deal with pro-military people almost daily. Its the glorifying and fetishizing of the military that bothers me.
Most if not all pro-military types are also deeply conservative; bring up *any* social program and they will wonder how to pay for it.
I don’t know, how many “third rail” type taboos has Trump danced on and become more popular because he did? I think the average voter would be *extremely* receptive to a well-crafted message promoting the redirection of resources away from forever foreign wars and bases to concrete material benefits for Americans. I don’t even think it’d be a hard sell, once the pearls had been gathered up.
It was done before starting in 1990.
Defense Base Closure and Realignment Act.
An amazing process.
Always be careful to see the difference between ‘most people’ and ‘most time and space in the media.’ It’s debatable which is more important in the end, but they are certainly two different spheres.
The national debate has been framed to make the military budget seem like it’s not discretionary, like some legal obligation. It’s not at all. Change the strategy and change the budget. Even those who’ve fallen for one of several sales patters for the Forever War can think things through.
What’s so maddening about this question is the fact that we know that the military budget is probably much more than 750 billion per year, but we can never know how much more, because the government is expressly allowed to hide and even fake spending totals.
Here is an example of unbridled government spending and it is happening right this minute on wall street. It seems the military budget is chump change compared to this:
Why do we worry about money more than anything else?
All money is easy; it comes out of nothing and is just numbers typed in at a keyboard.
Zimbabwe found it all too easy to create so much money they caused hyper-inflation.
Alan Greenspan tells Paul Ryan the Government can create all the money it wants and there is no need to save for pensions.
What matters is whether the goods and services are there for them to buy with that money, and this is where real wealth lies.
Governments can create all the money they want, but if they create too much you will get inflation, or hyper-inflation if they type in too many zero’s when creating money.
Money has no intrinsic value; its value comes from what it can buy.
Banks create money from loans and that’s easy too, just type the numbers in.
They can dash wildly into the latest fad, like the dot.com boom, and finance it with money they create out of nothing.
What could possibly go wrong?
Bankers do need to ensure the vast majority of that money gets paid back, and this is where they keep falling flat on their faces.
Banking requires prudent lending, that is all there is to it.
If someone can’t repay a loan, they need to repossess that asset and sell it to recoup that money. If they use bank loans to inflate asset prices they get into a world of trouble when those asset prices collapse.
“It’s nearly $14 trillion pyramid of super leveraged toxic assets was built on the back of $1.4 trillion of US sub-prime loans, and dispersed throughout the world” All the Presidents Bankers, Nomi Prins.
When this little lot lost almost all its value overnight, the Western banking system became insolvent. Wall Street can turn a normal asset price bubble into something that will take out the global economy using leverage.
Bankers create money out of nothing and the monetary system requires that nearly all that money they loaned out gets paid back.
Bank credit is a claim on future prosperity, and when you realise all that debt can’t be paid back, a financial black hole opens up, as it did in 2008.
When governments create too much money you tend to see it in consumer price inflation.
When banks create too much money you tend to see it in asset price inflation.
We see inflation in asset prices as good and consumer price inflation as bad.
The asset price boom will crash the economy, but no one realises while it’s happening.
Asset price inflation.
Financial assets are limited in supply.
Pour more money in and the price goes up.
1929 – Inflating the US stock market with debt (margin lending)
2008 – Inflating the US real estate market with debt (mortgage lending)
Bankers inflating asset prices with the money they create from loans.
They believed in the markets and neoclassical economics in the 1920s and after 1929 they had to reassess everything. They had placed their faith in the markets and this had proved to be a catastrophic mistake.
This is why they stopped using the markets to judge the performance of the economy and came up with the GDP measure instead.
In the 1930s, they pondered over where all that wealth had gone to in 1929 and realised inflating asset prices doesn’t create real wealth, they came up with the GDP measure to track real wealth creation in the economy.
The transfer of existing assets, like stocks and real estate, doesn’t create real wealth and therefore does not add to GDP. The real wealth creation in the economy is measured by GDP.
Inflated asset prices aren’t real wealth, and this can disappear almost over-night, as it did in 1929 and 2008.
Real wealth creation involves real work, producing new goods and services in the economy.
Banking requires prudent lending, that is all there is to it. Sound of the Suburbs
100% private banks with 100% voluntary depositors means we (the general public) wouldn’t have to give a flip if banks lent prudently or not since we would have an additional but risk-free payment system consisting of debit/checking accounts for all who want one at the Central Bank (or Treasury) itself.
Moreover without government privileges and without captive depositors and unable to hold the economy hostage via a SINGLE payment system that must work through them, you can rest assured that banks WOULD lend prudently or go under, like they should, if they don’t.
So what is required is 100% private banks with 100% voluntary depositors and that situation has NEVER before existed in history so it cannot be said to have failed.
When governments create too much money you tend to see it in consumer price inflation. Sound of the Suburbs
Because the DEMAND for fiat is suppressed in that only depository institutions may use it in the private sector.
Fix that injustice and eliminate all other privileges for banks and then government should be able to create much MORE fiat for the general welfare since banks would be much LESS able to create deposits for the private welfare of themselves and for the so-called “worthy” of what is, currently, the public’s credit but for private gain.
if they [governments] create too much you will get inflation
Is this true, or is it an economist’s assumption? Here’s the other thought:
Capitalism embraces borrowing for investment. Real estate development is an example. Borrowing involves an assumption of paying back more than was borrowed, but at a future date. When that future date arrives, it is in the borrower’s best interest if the face value dollars are wroth less in spending power that the face value of the loan. You stated that, but the link to inflation is fuzzy.
Bank credit is a claim on future prosperity
Rather than the government’s causality, and a nebulous prosperity, it may be the borrower’s CFO who then decides to raise consumer prices to keep up with expenses. The borrowed dollars came from a banker-created asset, but the inflation is tied to a direct result similar to the so-called “wage-price spiral.” In this case, the “interest-price spiral” that is not visibly tied to the supply of money.
I’ve got a new disconnect. I understand and appreciate how MMT works. It is the only way, imo, for a sovereign country to pay for the social costs of a good society. And, of course, the government does not charge itself interest, does not expect to be “paid back” at all. The tradeoff for the government is the betterment of society. So if your neighbor loans you $500 and you tell him you’ll pay him back as soon as your check comes in and with some interest that seems fair bec. you’re dealing with two private budgets. But when a licensed bank loans you money for a new house under the terms that you pay it back over 30 years with interests that amounts to triple the original cost of the house – then you are not dealing as one private person to another. You are then dealing with usury. Made legal by the private financial industry. This private industry does not use its own money – it uses the government’s money by a computer click. And the government then lets it profiteer on this tiny transaction of apples and oranges to the degree that over time the money “earned” by the private bank accumulates and topples the steady state of the economy. At that point there’s no place left to invest that “private” profit and the whole financial system goes haywire in a panic not to “lose” money. Money that should never have been given to them in the first place. It’s an oxymoron – demanding that money be paid back with interest when it’s not your money in the first place and you do nothing to stabilize your profligate profiteering. Nothing. Just a thought.
Zimbabwe found it all too easy to create so much money they caused hyper-inflation.
Yes, after destroying their Ag Industry, and having no Ag products to export, because Mugabe and his party assumed all the white farmers just sat around drinking beer while the dark farm workers did all the work.
After Mugabe took the land, there was no collateral for the farmers to get loans for the next planting season.
Who knew that managing the farm was so much work? /s
Inflation in Zimbabwe first came from shortages, especially food, as things looted rhe country of 4x and mismanaged the economy, like farm price controls under cost of production.
Historically shortages cause high inflation.
“In her op-ed, Koshgarian acknowledged that remaking the U.S. military as a truly ‘defense-based institution, rather than a war machine and A.T.M. for private contractors, will require major changes.'”
Interesting. Beyond cost cutting, what exactly would it take to remake the military into a true defense-based institution ? How would assets be deployed? What weapons systems would be prioritized and ultimately receive funding? What doctrines would need to change to flip from an offensive mindset to a defensive mindset? What alliances would we maintain and what alliances would we discard?
I see that the article offers some examples, but I think crafting a progressive foreign policy would entail answering these kinds of more fundamental military questions. Cost cutting is a laudable goal but it strikes me that there’s much more to it if real transformation is desired.
aybe ask Russia – their military policy is based on defensive posture rather than offensive.
As a civil servant working for the Department of Defense, I can tell you that this would be a difficult shift in priorities for Congress to accept. It all comes down to the defense industry political donations they receive year after year, and the jobs the defense industry provides their constituents (no matter how meager or sub-optimal). Since defense spending is basically this nation’s sole industrial policy, I think that finding employment for displaced workers (whether defense civil servants or contractors) is the biggest hurdle to address; a green new deal would solve the problem. We’d also need political campaign reform to force Congress off of the teet of defense industry political contributions.
Finding employment for displaced defense civil servants or contractors? We’ve done that before . . . we tell them to train for the jobs of the future as we did for manufacturing workers and leave it at that. The same goes for the parasites working in health insurance companies, pharmacy benefit management and healtcare administration when M4A becomes a reality.
I have no sympathy for those people nor care for their well being as they deliberately, and with malice aforethought, make life meaner for us all.
I remember when the defense/aerospace industry collapsed in Southern California in the early 1970’s as the Vietnam war was winding down.
Tech jobs were scarce.
The political sphere is well aware of potential job loss due to defense cutbacks.
I have mentioned before, the relatively liberal CA Senator Barbara Boxer fought to preserve Mare Island Naval Shipyard, in Vallejo, CA, when it was slated to be shut down in the 1990’s.
One could suggest that Vallejo has not fully recovered.
It is a tragedy of immense proportions, as I believe a future historian will remark that the USA, a nation that in its 200 + year history had only one large deadly war on its soil (the internal Civil War), re-titled its WWII “War Department” as “Defense Department” and then consumed tremendous resources in its purported defense for the next 70+ years.
A recent discussion with someone, that I regard as a “Northern California Liberal”, about Trump’s pullout of Syria further re-enforced that the resistance to ANY change in the MIC in the USA is formidable.
He was sure that Trump would be deservedly impeached because he was pulling out of Syria and abandoning our allies, the Kurds.
And he is old enough to remember Vietnam.
The USA news media and entertainment industries (big sports/Hollywood) are fully on board with the righteous USA “war is good” meme.
Given how the USA economy has restructured much employment and lifelihoods in costly sectors (finance, education, medicine, military) it is difficult for me to see how there would be political will to downsize the military to any extent as “good paying” jobs of politically powerful people would be lost.
Many of the manufacturing jobs have been moved overseas.
It is far easier to “kick the can down the road”.
There is some hope for policy redirection in the Administration’s recent Turkey-Syria-Kurd action. If there really is a shift away from foreign nation building and away from endless wars over endless enmities, then that could lead to redirection and reduction of military budgets. Watching the defenders of those engagements fall all over themselves recently has reconfirmed my notion that they are not acting in the best interests of their constituents. Meanwhile, the sun rose today.
The current defense spending and growth of national debt
more or less “prove” the validity of MMT. This has supported the channeling of resources and energy into military activity (and profits for enterprizes). Something similar is happening with healthcare; maybe it’s inelastic
demand. (The similar something is ever-increasing costs.)
Healthcare at the moment seems to be outside of
the scope of current uses of MMT. But there are major
cost-control issues with it nonethess.
In what direction will things head if healthcare is
swept under the government MMT umbrella in the form of medicare for all? Will the government negotiate prices
with providers (hospitals, staff, pharma)? Certainly military procurement is no leading light.
While cutting the bloated Pentagon’s budget is a very good idea, why is no one talking about the fringe benefit that is employer provided healthcare? I do believe a sizable fraction of folks on private insurance (maybe 40%?) get their health coverage through a fringe benefit from their employer. If that coverage is no longer necessary under universal coverage, it seems contractually that the money spent on the fringe benefit should go to the employees. That money is enough to pay for their insurance under universal coverage, so the employer pays it to the employee, the government taxes part of that to pay for the universal healthcare and everyone is better off. The employee, due to savings in the system, ends up with more money in pocket. The employer is out from under the ever increasing costs of the fringe benefit (plus can now claim to be paying higher salaries), and, well, the insurance companies are left behind to pick up “expanded coverage” for those wanting to pay for it.
This and “defense” spending cuts could pay for the whole system easily, no?
The relative value of small business based jobs would increase with a functional health care system. There would be an outflow of employees from jobs with healthcare benefits.
With single payer, looking for a less stressful job becomes an alternative. Big employers know this.
It also means people may retire earlier if they don’t need their employer-provided health insurance.
Health insurance becomes a minor consideration in selecting which employer to work for.
Companies and state/local governments that provide health care coverage in retirement should see their liabilities for that plummet as healthcare costs drop and public insurance improves.
What contract? Unless you’re in a union you don’t have one.
Medicare for all makes self-employment, gig employment, and starting/running a small business much less terrifying.
COULD employers give the surplus to employees?
WOULD employers give the surplus to employees?
Not in this age of activist stockholders seeking new sources of “revenue.” Everywhere. Benefits are simply a “cost.” Human Resources is a “cost center.” Defined benefits that averaged out the risk among many have segued to defined contribution that is no more than a tax-abated savings account. Risk has monetary value, but risk invisibly is shifting more and more to the individual.
After the last Democratic debate, it is safe say anti-war Progressivism is dead. Everyone was frothing at the mouth to prove how much they care for the Kurds, and our nation’s honor, and that we should stay in the ME. Except Tulsi, but her response fell flat with the audience, and judging by my Left friends/family on Facebook, fell flat with them too. Having the same position as Trump is a death sentence. My faith in my fellow citizens is at quite a low ebb.
Cheer up. No matter what you used to think of Lindsay Graham, he is setting the pace for a representative to think for him/herself. Commentators reported surprise that he was “formerly in Trump’s corner.” Think about how easily we accept that the future is secured by a majority in either house. The outrageous president is inspiring elected Republicans to analyze issues (imagine!). Even if it is cold and calculated to influence their own voters, let’s begin to applaud and encourage those who seem to think for them/ourselves.
We don’t suffer from a lack of ideas in this area; no, we lack the ability (political will) to accomplish it. Thus, another exercise in mental masturbation.
we lack the ability (political will) to accomplish it. Carl
A Citizen’s Dividend would be the camel’s nose under the tent since the less wasted by government, the more that could be distributed to citizens to counter price deflation.
And it’s only justice that all fiat creation, beyond that created for government to spend for the general welfare, be in the form of an equal Citizen’s Dividend.
Give me a shout if that ever happens. I’ll be over in Europe enjoying low cost, high quality healthcare and not going bankrupt to pay for it.
Funny you should mention Europe since an equal Citizen’s Dividend for all Euro zone citizens would be a way to eliminate austerity that even Germany might not object to since Germans would receive it too.
For example, Italy gives the unemployed 500 euros per month and tries to find them any sort of job. I think you’re a little behind. But by all means, keep tilting at windmills.
But making it conditional on unemployment is nearly the most perverse incentive imaginable. Loss of benefits is viewed by rational actors as a marginal tax.
i was just thinking about that this am while finishing my fence…like in alaska.
i figger that after 40+ years of declining or stagnant wages, a majority of us are owed some frelling back-pay.
but “dividend” works just as well.
a majority of us are owed some frelling back-pay. Amfortas the hippie
The Citizen’s Dividend would vary as required to counter price deflation but during the period when the banks are progressively de-privileged, it would have to be quite high to provide for the conversion of bank deposits to fiat deposits at the Central Bank – with the banks, by necessity, having to borrow the needed fiat from citizens.
Or sell their assets to citizens at a discount.
In other words, a Citizen’s Dividend PLUS de-privileging the banks can easily be a means to re-distribute wealth.
Oh please, in what universe is this going to actually happen? You sound like you’re running for office.
Its still the wrong set of arguments. The problem in the US is not that Medicare-for-All would require new taxes that need funding. The problem is that the US spends twice per capita on healthcare what the average OECD country spends. The US spends more public tax money on healthcare per capita than Canada does, and Canada insures the entire population.
We can pay for our entire military budget as it exists if we simply drop our per capita healthcare spending to less than what Switzerland pays. Name one other thing that costs more in the US than in Switzerland.
Americans simply cannot comprehend how exorbitantly expensive and unequal the US healthcare system is compared to the rest of the developed world.
While I gladly accept the results of these surveys, I question the reasons they seem to have garnered from the public. To most citizens, lower taxes mean much more than non-aggresive foreign policy and peaceful diplomacy. If the question was phrased in such a way that respondents were replying to the lower cost AND the concomitant peace-oriented habits that should (would?) come from it, then it is an issue whether they agreed with both statements. Further, this reorientation of spending would have to be bully-pulpited quite strongly to educate the US as to its long-term benefits since most of us have been prepped to be anxious about foreign nations and the paranoia of saving us from the evil dictator “X”. Oh, yes, peace should come, but compare the Syria brou-ha-ha to what would descend upon us when peace broke out. The elites won’t disappear.
Bizarre. The question is: How can we afford something that’s half as expensive as what we’re already paying? I wouldn’t expect that level of insanity from someone in a straitjacket…yet it’s a commonplace in these discussions.
Even worse: the argument that government is financially constrained. It’s not “tax & spend,” it can’t be. Where would taxpayers get dollars to pay those taxes if government didn’t spend them first?
So it must be “spend first & then ask for some back in taxes.” This is how reality works. And what do we call the dollar financial assets left in the economy, not retrieved by taxes? a) The dollar financial assets of the citizens, i.e. their savings…or (same thing) b) National ‘Debt’…
National ‘Debt’ is completely unlike household debt. It’s like bank debt. If you have a bank account, that’s your asset, but to the bank, it’s a liability. It’s the money they owe you. It’s their debt.
Now imagine a mob of depositors marching down to the bank to demand it reduce the size of its debt (i.e. make their accounts smaller)… Crazy? Yes, but that’s the austerian line of talk.
Finally, the inflationistas: “If you just print money, you’ll have [gasp][hyper-]inflation!” This is the finest quality bullshit, and people spout it practically without prompting. The truth: The Fed extended $16 – $29 trillion in credit to cure the frauds of the financial sector in 2007-8. I defy anyone to find a measurement of inflation that says there was any then.
Was there central-bank-run-amok inflation in the classical cases (Weimar, Zimbabwe). Nope. Not even there. Yes they did print lots of Deutchmarks and Zimbabwe currency, but only after a shortage of good occurred that actually caused the inflation. Just printing money, especially if there’s spare capacity, does not cause inflation. You need a bidding war for some commodity that’s become scarce (like oil in the ’70s). So Weimar had the burden of war reparations, a balance of payments problem, and when they delayed sending some telephone poles to France, the French military shut down the German equivalent of Ohio (the Ruhr). Shortages led to the hyperinflation. Similarly, the Rhodesian colonists left Zimbabwe, which had previously fed itself, and food shortages led to the hyperinflation.
The Cato study of 56 hyperinflationary episodes in human history also validates the above. In *no* case did a central bank “run amok” and print too much to kick off the hyperinflation. Always the cost push of a shortage of goods drove it.
Gosh, it’s all so simple. We just need to take on the military industrial complex, the medical industrial complex, and our corrupt political system all at the same time.
Researchers Detail How Slashing the Social Security and Medicare Budgets Could Pay for More Pointless Wars While Creating the Progressive Wall Street Bailouts Americans Want.