Tag Archives: spending

Hype that Deadline

Posted on by
Reply

Even The Wall Street Journal is in on the artificial…excitement…act. Congress has just a few days to pass a bill before June 5 deadline goes the subheadline.

It’s not much of a deadline, with revenue flowing in under existing tax laws that’s more than sufficient to pay as scheduled the principal and interest on our nation’s debt, and then the scheduled payments for our soldiers and veterans, and then the scheduled payments for Social Security and Medicare along with the scheduled transfers to the States for Medicaid, and then the scheduled payments for HHS, then DoT (for good or ill), then DoEd (for good or ill), then….

You get the idea.

There are only a couple of things of note should a debt ceiling deal not be enacted by 5 June (or whatever becomes Yellen’s deadline du jour). One is that much of the Federal government would have to shut down. That amounts to a big so what.

The other is that a number of Federal government contracts with private businesses would have their payments HIAed, to the detriment of those businesses. The failure to pay on time also would strongly negatively affect our economy and to a large extent our reputation around the world.

That last is a consideration worth taking very seriously, but not at the expense of enacting a debt ceiling deal, any deal. Republicans and Conservatives in the House need to stand firm. The present deal isn’t all that, but, to coin a phrase, think of the (Progressive-Democratic Party’s) alternative.

The deal also shouldn’t be stand-alone.

Some conservatives in the House and Senate have said they would oppose the deal because it doesn’t go far enough to limit federal spending….

One way to show they’re serious about that is via the as yet undeveloped Federal budget for the next fiscal year. Beginning Thursday (assuming today’s vote is up rather than down), the House—which is to say, the Republican caucus, since they’ll get no cooperation from the Never-and-Nothing-Republican Progressive-Democratic Party caucus—needs to begin work on that next Federal budget, a budget that codifies reduced Federal spending, reduced Federal tax rates, and reformed Social Security, Medicare, and Medicaid transfer payments, and have that budget passed and ready to send to the Senate the day after that body votes on the debt ceiling bill.

And then the House—the Republican caucus—needs to get to work on the dozen separate appropriations bills that are due by this fall.

There’s no need to wait on a President’s budget proposal (what President Joe Biden (D) tossed over the House’s transom this winter is not one that can be taken seriously) or to put up with Progressive-Democrat obstructionism and knee-jerk “No.”

Press ahead.

“We Object”

Posted on by
Reply

Last month, against the backdrop of the Federal government approaching the debt ceiling, the House passed a bill that raised the debt ceiling along with some small steps toward controlling Federal spending.

Members of the Progressive-Democratic Party object and are trying to blame Republicans for the debt ceiling imbroglio.

Congresswoman Zoe Lofgren (D, CA) when asked who would be to blame:

It’s Congress’ job, only Congress can raise the debt limit.

Umm, the Republican-led House did. Where are the Progressive-Democratic Party-led Senate and the Progressive-Democrat who occasionally sits in the Oval Office?

Congressman Seth Moulton (D, MA):

It’s pretty obvious who to blame here—the extremist Republicans who control Kevin McCarthy. …we raised the debt limit three times under Trump because it’s the right thing to do for the country.

Umm, the Republican-led House did this time, too.

Congresswoman Alexandria Ocasio-Cortez (D, NY) insists that Republicans must

agree to raise the debt limit because, frankly, this is a very serious situation that nobody wants[.]

Umm, the Republican-led House did.

Congressman Jason Crow (D, CO):

The Republicans and Speaker McCarthy in particular need to come to the table in good faith and get this done….

All together now: umm, the Republican-led House did.

And, according to Crow:

We have a Republican-controlled House, and it’s a Republican-controlled House that’s brought us to the brink[.]

Passing a bill that raises the debt ceiling brings us to the brink. Sure.

Progressive-Democrat politicians would complain about being hung with a new rope, if the rope were offered by Republicans. Their intransigence regarding raising the debt ceiling is just the much more dangerous extension of their childish temper tantrums of holding their breath until they’re blue in the face if they can’t have their way.

A Telling Graph

Posted on by
Reply

This one via The Wall Street Journal in an article positing three scenarios regarding our economy and the existing debt ceiling negotiations. The graph, which the WSJ sourced to the Bipartisan Policy Center, is especially dispositive given the backdrop of Progressive-Democrat President Joe Biden refusing to negotiate over an already House-passed bill that raises the ceiling along with some initial, and small, spending reforms. That backdrop also includes Biden’s, his Progressive-Democratic Party Congressional cronies’, and journalism’s shrill panic-mongering over default if the debt ceiling isn’t raised.Notice that. Interest on our nation’s debt is tiny compared with the revenue flowing in for June; that means there’ll be no default if Biden and his Treasury Secretary obey our Constitution, the latter which makes the situation plain in the Preamble to Article I, Section 8:

The Congress shall have Power…to pay the Debts and provide for the common Defence and general Welfare of the United States….

There’s also plenty of revenue with which to make the scheduled principal payments on our debt. In addition to the lack of default, there’s provid[ing] for the common Defence: DoD, military salaries , and veterans’ benefits together, along with Homeland Security, are similarly tiny compared to the revenue coming in. Biden’s lies about cutting those veterans’ benefits in particular are exposed. Then there’s the general Welfare: these comprise the biggest share of that revenue—and there’s plenty of revenue with which to cover Medicare and Social Security as scheduled and with which to make the Medicaid transfers to the States.

The hard numbers will vary from month to month, but the revenues will be there to make the Constitutionally required payments.

What’s necessary to resolve the current situation are two things: Republicans need to stand firm on passing a debt ceiling increase only with spending reforms in order to reduce the need for future ceiling increases (along with, separately and subsequently, passing out of the House, where such things originate, a budget that reduces spending in the out years. There’s no need to wait for Biden’s foolishness of a sham budget proposal, ever), and for Biden and his Party cronies to get serious about negotiating specifics within that framework instead of blindly following an angry old man’s stubbornness.

Debt Limit Extensions

Posted on by
Reply

James Freeman quoted Capital Alpha Partners‘ James Lucier’s prediction concerning reaching the current debt limit and Congress’ response to it:

We think that Congress will pass a temporary extension of the debt limit deadline for 30, 60, or 90 days.

The House already has passed a temporary debt limit extension—of ~365 days.

The sad fact is that all debt limit extensions, of however many years, are merely temporary, and that will continue to be the case until Congress quits spending more money than the Federal government takes in. The most efficient way of achieving that end is to cut spending—not merely reduce its rate of growth.

That efficiency will take We the People getting off our duffs and electing Representatives and Senators—and Presidents—who have the courage to do the cutting.

Debt and Spending

Posted on by
Reply

Here’s a fun fact, one that every child from three years old and up who gets an allowance clearly learns, one that’s made explicit in any high school basic economics class, and one that’s driven home in junior college and college Econ 101 classes: when you spend more than take in, you owe the difference, either explicitly by borrowing separately to make up the arrears or implicitly by the existence of the deficit resulting from spending more than is taken in.

There are two outcomes that are absolutely critical to successfully resolving such a situation: pay the debt that has been incurred, and reduce spending to fit within income in the subsequent years so as to not incur that debt again.

So it is with our nation’s Federal budget.

We have, for decades, but especially with the Obama administration’s overwrought response to the Panic of 2008, again during the Trump administration’s overwrought response to the Wuhan Virus situation, but especially with the Biden administration’s deliberate explosion of spending in response to no particular “emergency,” and without any regard for actual Federal intake under its Grove of Money Trees Modern Monetary Theory foolishness. This is coupled with a statutorily set debt limit, a limit that stops the Federal government from borrowing at all when the amount of debt already incurred reaches that limit. The bar on further borrowing forces a complete stop in spending above current Federal income—which represents a significant spending cut.

Those spending cuts include not paying on existing Federal contracts, reductions in or complete halts of welfare program payments, reductions in Social Security and Medicare payments, and reductions in payments on Federal debt, the latter which would be reductions in principal payments. Payments at least of the interest owed are Constitutionally required, which especially drives reductions in or complete withholding of any or all of those other payments in order to be able to make the debt interest payments.

Which brings us to the Federal government’s only solutions to the current debt ceiling crisis: pay the debt and reduce spending to fit within Federal intake in the subsequent years. These must be done together, or we’ll just keep needing to raise the statutory limit on Federal debt accrued.

That, in turn, brings us to the current situation vis-à-vis debt and spending. For months Republicans and Conservatives in the House have sought negotiations with President Joe Biden (D). (Republicans and Conservatives in the Senate have been remarkably silent. Some of that is driven by the Constitutional requirement that revenue and spending bills must originate in the House, but some of it, also, is driven by the timidity of those Senators.) For months, Biden has refused to negotiate, refused to talk with House Republicans and Conservatives at all.

Lately, Speaker Kevin McCarthy put forward a bill that would raise the debt ceiling by enough to support excess spending for a year while clawing back various appropriated but unspent monies, cutting spending in other areas, and capping non-defense discretionary spending at 1% growth for each of the next 10 years. Associated with that is a proposal to use that year to negotiate serious spending reductions for the next budget year and subsequent years.

Biden has ignored the proposal. Biden’s stubbornness—a stubbornness that is born of the man’s ego-driven pride—is threatening our nation with default on our debt. Such a default will be Joe Biden’s doing, and no one else’s.

McCarthy wants a different outcome:

…Biden [to] return to the negotiating table for debt ceiling negotiations….
I think as president and the leader of the free world, this is one of the problems. We have challenges around this country, around the world. He needs to show leadership and come to the negotiating table instead of putting us in default. This is risky, what he’s doing.

Biden needs to get past his ego and stoop to negotiating.

Full stop.