Minnesota’s junior senator talks with the Jewish World about the debt ceiling debate in Washington, his plan to visit Israel and remembering Paul Wellstone
By MORDECAI SPECKTOR
The New York Times on Monday devoted a half page in its national section to the ongoing Minnesota government shutdown. At the bottom of the first column, reporter Monica Davey compared the situation in Minnesota — “the broadest shutdown in state history entering its second full week with no sign of a compromise on the horizon” — with the standoff in Washington, where President Obama and Republican leaders in Congress are locked in a tussle over raising the federal debt ceiling, and cutting spending as part of a deal.
The state and federal situations differ, the Times story noted; “but Minnesota’s essential impasse sounds familiar: Republican lawmakers who control [the Legislature] want to rein in state spending and have rejected calls from Mark Dayton the Democratic governor, to raise income taxes on the wealthiest Minnesotans.”
Sen. Al Franken, in his first interview with the American Jewish World since he took office two years ago, acknowledged the “tremendous parallels” between the debates in Minnesota and Washington.
Speaking by telephone on Monday from his office in the Capitol, Franken said that the nation is “faced with a potentially horrific crisis if we default on our debt; we just can’t do that. If we defaulted on our debt, it would downgrade our [Treasury bonds]; it would raise the interest rates at which we borrow at, which means that for every one percent increase in the cost of our bonds, it would cost [an additional] $1.3 trillion over 10 years to pay the debt that we owe.”
He decried the Republican tactic of putting a federal financial default on the table.
“It’s a very dangerous game of chicken that we are playing here in Washington; and in Minnesota, of course, there are lives being affected right now. This is playing with the full faith and credit of the United States government.” Franken mentioned that the Minnesota government shutdown already has led to a downgrading of the state’s credit rating.
AJW readers likely recall that Franken took office eight months after the 2008 elections, following a lengthy recount and legal challenge by Republican incumbent Sen. Norm Coleman. He emerged with a winning margin of 312 votes out of nearly 3 million votes cast — one of the great cliffhanger elections in Minnesota history.
Since taking office, Franken has endeavored to be a work horse rather than a show horse, after a career as a comedy writer for Saturday Night Live, and author of best-selling political satires, including Rush Limbaugh Is a Big Fat Idiot and Other Observations.
The St. Louis Park native started considering a run for the Senate seat held by his friend, Sen. Paul Wellstone, not long after Coleman’s victory in the 2002 Senate race. (WellstoneÂ died in a airplane crash, along with his wife, Sheila, daughter, Marcia, and four others, on Oct. 25, 2002, just days prior to the election; former Vice President Walter Mondale took Wellstone’s spot on the ballot.)
“He’s always an inspiration to me,” Franken said, regarding Wellstone’s legacy. “Whenever I think of Paul, I’m very humbled to have the same seat that he held, that Hubert Humphrey held, that Walter Mondale held. Of course, the seat belongs to the people of Minnesota, and my job is to work every day to improve people’s lives.”
Returning to the hot topic du jour, the debt ceiling/budget debate, Franken responded to a question about how the dispute will be resolved, given the changed political landscape after the 2010 elections, which ushered in a wave of Tea Party-sympathizing Republicans.
“I hope there are enough responsible members of the Rep. Party who understand… the special role of the dollar and of the Treasury note in our global economy, and how fraught with peril not raising the debt ceiling would be,” said Franken.
“I think they’re acting irresponsibly,” the senator added, while acknowledging that he understands their thinking: “They’re saying, ‘This is our chance to force the other side to make real concessions on spending,’” However, he repeated the charge of Republican fecklessness in promulgating a U.S. government debt default.
In the area of foreign affairs, Franken said that he was puzzled by the negative reaction from some Jewish quarters, following President Obama’s declaration that he would promote an Israeli-Palestinian peace deal based on the 1967 lines with mutually-agreed upon land swaps. He noted that the Obama administration’s position did not strike him as “so controversial,” given the proviso that Israel and the Palestinians would have to agree to a final demarcation of borders.
And Franken, who has traveled as a senator to Afghanistan and Pakistan, and to Vietnam and Laos (on behalf of his Hmong constituents), said, “My next official trip will be to Israel… that’s where I’m going next.”
(An expanded version of this story will appear in the July 22 print edition of the American Jewish World. To subscribe to the biweekly newspaper, contact Lori Bieda at 952.259.5237 or e-mail: firstname.lastname@example.org.)
You can’t pay debt with debt and get out of debt. Our current debt money system dooms us to financial failure.
The solution to our financial problem is in “The Minnesota Recovery Act” described below.
Leslie Davis 612/529-5253
“The Minnesota Recovery Actâ€ (SF65 â€“ HF610)
will cause the money supply to expand by
building all our roads and bridges with debt-free money.
Then MNDOT money could be shifted to balance the budget. In addition, the fuel, axle and registration taxes could be eliminated.
1. “The Minnesota Recovery Actâ€ will â€œmodify existing lawâ€ as encompassed in: “POWERS OF MINNESOTA STATE CHARTERED BANKS”.
2. The “modification” will require state-chartered banks to create debt-free money specifically for the construction and maintenance of all â€œapproved” public roads and bridges (state, county, city, and township) using the current bidding and building process.
3. Keep in mind that banks do not lend the depositor’s money. See quotes on page two.
4. When state-chartered banks make loans today, they simply create new money as electronic bookkeeping entries that are secured by a borrowerâ€™s collateral. The money is just numbers in their computers. Then when a check is used numbers (money) move into circulation and the money (numbers) move freely through the economy.
5. “The Minnesota Recovery Actâ€ will require state-chartered banks to create brand new money for roads and bridges. These will not be loans but final debt-free payment for approved production. This new money does not have to be paid back. It will cost the banks virtually nothing to issue this new money and they will get a fee for their service.
6. Since it is payment for production there is no price inflation. What causes price inflation is taxes and interest because they have to be added to the cost of doing business. “The Minnesota Recovery Act” money does not add to the cost of doing business. On the contrary, it allows prices to go down.
7. Fuel, axle and registration taxes would be eliminated thus saving individuals and businesses billions of dollars.
8. â€œThe Minnesota Recovery Act” will create thousands of high-paying jobs, provide for a well-maintained, state-of-the-art, road and bridge system, and help balance the budget.
9. When this brand new wealth-money goes into the economy it will turn over about 6-8 times and get taxed at many of its turns thus helping balance the budget.
10. â€œThe Minnesota Recovery Act” is no different then the way state-chartered banks already operate. The banks will provide this service because it will be the law (SF65 – HF610). And for their effort the banks will get a service fee, good-will, great roads, and a growing economy.
IMPORTANT QUOTES TO UNDERSTAND HOW MONEY IS CREATED
“The actual creation of money always involves the extension of credit by private commercial banks.”
Russell L. Munk, Assistant General Counsel International Affairs, US Treasury
“A private commercial bank…simply makes book entries for its loan customers saying, ‘You have a deposit with us.'”
Russell L. Munk, Assistant General Counsel International Affairs, US Treasury
“Money is created when loans are issued and debts incurred. Money is extinguished when loans are repaid. A loan from a bank creates a deposit which the borrower may draw upon for the payment of obligations. Some existing money in circulation must be acquired by the borrower to repay the capital of the loan. When that is returned to the bank it is withdrawn from circulation.”
John B. Henderson, Sr. Specialist Price Economics, Congressional Research Service.
“Money that one borrower uses to pay interest on a loan has been created somewhere else in the economy by another loan.”
John M. Yetter, attorney, US Treasury