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The MMT Grand Bargain: Raise Social Security Benefits and Suspend FICA

12/11/2012 11:39 am ET | Updated Feb 10, 2013
  • Warren Mosler Fixed income fund manager specializing in monetary policy; Founder, MMT

Fact: Every serious economic forecaster cuts his GDP and employment estimate with tax hikes and spending cuts. (AKA, the looming 'fiscal cliff'!)

Fact: Every serious economic forecaster would raise his GDP and employment estimate with tax cuts and spending increases.

Fact: All agree there would be no moral hazard or a waste and fraud issue with an increase in Social Security payments.

All agree that FICA is a highly regressive punishing tax on people working for a living, ideologically unacceptable to the 'left', and, of course, the 'right' is against any tax.

Fact: Even with the presumed "current unsustainable path of future spending" the Fed's long term CPI (a.k.a. "inflation") forecast remains at 2 percent, market participants via inflation indexed securities forecast equally low long term CPI increases, and there are no credible forecasts for any kind of "inflation" problem from excess aggregate demand.

Fact: The August 2011 debt ceiling debacle and downgrade of U.S. credit, at the "worst possible time," demonstrated that because the U.S. "prints its own money":

  • the U.S. government can't run out of dollars;
  • always has the unlimited ability to make any size dollar payment on a timely basis;
  • is not dependent on and can never be dependent on dollar funding from foreigners, the IMF, or anyone else;
  • pays interest rates based on rates voted on by the Federal Reserve; and
  • is in no way is at any kind of risk whatsoever of "becoming Greece."

Conclusion: The MMT Grand Bargain for Prosperity:

  1. Raise the minimum Social Security payment to $2,000 per month, and
  2. Suspend FICA taxes

What's so hard about this?

Feel free to distribute, particularly to your Congressmen!!!
And let them know that I am here to answer any of their questions.

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