Tag Archives: spending

Debt Limits and Spending

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The Congressional Budget Office is out with its projection for our nation’s economic future.

As for the much-discussed federal debt, the nearby chart shows how fast it has grown in the last several years. Debt held by the public—the kind we have to pay back to creditors like the Chinese and Japanese based on contracts—is now 97% of the economy, and will soon rise to 100% and keep going to 118.2% in 2033. How high can it go before creditors stop lending? No one knows, but it will be ugly if they do.

Here is that nearby chart:

This illustrates the tight relationship between spending and debt limits, and why future spending cuts must be part of negotiations related to raising today’s debt ceiling limit. It’s barely possible to see any effect from the 2011 debt limit increase that was agreed in exchange for some “freezing” of Federal spending levels, a pseudo-freeze that in the end ended rather quickly.

There need to be real reductions in Federal spending, not just a reduction in spending growth or even a pretend freeze. There’s plenty of room in welfare spending, for instance, for cutting. Furthermore, all Federal spending is discretionary, the bad habit of calling some spending mandatory notwithstanding. Finally, to put a legitimate floor under spending (which doesn’t contradict the forgoing because it’s a floor not a mandatedly ever-increasing level), there’s a Constitutional requirement to spend adequately on national defense and debt repayment.

In the end, too, tax rate cuts, leaving more money in the hands of private economy actors—us average Americans and our businesses—leads to increases in Federal revenues. This has been empirically demonstrated by every tax rate cut since President John Fitzgerald Kennedy’s reduction of the top rate from the neighborhood of 90% to the region of 70%.

Federal spending cuts coupled with Federal tax rate cuts—they’re win-win for our economy and our nation, if only the Progressive-Democratic Party politicians in Congress and the White House would get out of the way.

Debt Ceiling “Negotiating”

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In a Wall Street Journal op-ed centered on ways to “save” Social Security and Medicare, Progressive Policy Institute‘s Director of the Center for Funding America’s Future, Ben Ritz, opened with this bit for his lede:

The Biden administration has sensibly rejected attempts by some far-right Republicans to hold the full faith and credit of the US hostage in exchange for spending cuts. The administration now must show it will be open to good-faith budget negotiations after the impasse over the federal debt limit is resolved.

Leave it to a Left-winger to say, once again, “Trust us.”

No. Debt limits are reached and need lifting because of prior spending excesses.  And continued spending excesses because there follow no “good faith” budget negotiations from the political Left after the impasses. The current debt-ceiling is no exception.

It is the Progressive-Democratic Party politicians, from the White House on into both houses of Congress, who are holding our nation’s credit-worthiness and our economy as a whole hostage against their demand to continue their profligate spending.

The debt ceiling cannot be lifted, sensibly, without being paired with actual spending cuts (not reduced rates of increase) as part of the package so as to obviate future need to raise the limit once again.

If the Progressive-Democrats were serious about our credit-worthiness and our economy, they’d get out of the way of serious negotiations.

Mistaken?

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In a Fox News article centered on Congressman Chip Roy’s (D, TX) proposed legislation that would bar Federal funds from going to schools that teach critical race theory (the foolishness doesn’t deserve capitalization), Cato Institute’s Colleen Hroncich had this in objecting to Roy’s proposal:

For starters, the federal government has no constitutional role in education[.]

Plainly, the Federal government does have a role, Constitutional or otherwise, in education—hence the existence of those federal funds to schools that Roy’s proposal would block.

Alternatively, Hroncich is correct, and all Federal funds transfers to schools should stop.

Federal Debt Ceiling

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The Progressive-Democratic Party says they’ll refuse to negotiate on raising the debt ceiling. Not at all. Those politicians are looking to hold our nation’s weal and our national security hostage against their demand to spend, spend, spend.

Republican Party politicians—at least those in the House and some of them in the Senate—insist that the debt ceiling can’t be raised without agreement on spending cuts in the next and subsequent budgets: not agreement to talk about cuts, but actual, specific cuts.

These Leftist politicians insist that the debt ceiling is solely about current bills that must be paid and that future spending questions—cuts or otherwise—are separate questions and must be negotiated separately. This is badly mistaken.

Today’s debt ceiling problem is the result of past failures to cut spending: failures to agree to do more than just talk about cuts and, where cuts actually were agreed, failures to honor those agreements. The next budget’s spending will impact the next debt ceiling and create pressure to raise the ceiling again. Failure to accept, or even to recognize, the relationship between a debt ceiling and budgeting just leads to functionally automatic debt ceiling raises and so functionally automatic debt increases.

Current debt ceilings and future spendings are inextricably intertwined. The Republicans in the House need to stand tall and not allow any debt ceiling increase without agreement to specific, measurable cuts (not reductions in increases) in future budgets’ spending on specific programs. Senate Republicans need to find backbone and stand tall on this pairing, also.

Progressive-Democrat refusal to negotiate on this puts our nation’s debt crisis squarely on their backs, and no place else. Their refusal to negotiate is just their demand to continue spending us average Americans‘ money in ever increasing amounts, their demand to drive our nation ever more deeply into debt—demands born of the irrational concept that money can be created out of the æther with no economic consequence.

Rules and Defense Spending Cuts

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The House—in particular, the majority Republicans—along with too many so-called defense journalists are having trouble with a rule that potentially leads to defense spending cuts, a particular anathema in today’s environment of a Russia at war and a People’s Republic of China threatening war.

However, the fact is defense spending has always been vulnerable to cuts, particularly by the Progressive-Democratic Party and its predecessor Democratic Party. The proposed rule just makes the potential explicitly stated. But it does not mandate defense spending cuts; it mandates spending cuts in one (or more) places if there are to be spending increases in other places. Quoting from the proposed rules:

Initiatives to Reduce Spending and Improve Accountability. Subsection (a)(1) replaces current “pay-as-you-go” requirements with “cut-as-you- go” requirements. The provision prohibits consideration of a bill, joint resolution, conference report, or amendment that has the net effect of increasing mandatory spending within a five-year or ten-year budget window. This provision continues the current practice of counting multiple measures considered pursuant to a special order of business which directs the Clerk to engross the measures together after passage for purposes of compliance with the rule and provides a mechanism for addressing “emergency” designations.

And

Subsection (e)(2) establishes a point of order against consideration of a bill or joint resolution reported by a committee (other than the Committee on Appropriations) or an amendment thereto, or a conference report thereon, which has the net effect of increasing direct spending in excess of $2,500,000,000 for any of the four consecutive 10 fiscal year periods beginning with the first fiscal year that is 10 fiscal years after the current fiscal year. The levels of net increases in direct spending shall be determined based on estimates provided by the chair of the Committee on the Budget.

And

Spending Reduction Amendments in Appropriations Bills. Subsection (f) provides for spending reduction account transfer amendments and requires a spending reduction account section to be included in all general appropriations bills.

There’s nothing in there that mandates cuts in defense spending. All spending, though, needs to be up for discussion in light of the current Progressive-Democratic Party-driven economic condition of our nation, as Freedom Caucus Founder, Congressman Jim Jordan (R, OH) has pointed out. That I—and lots of others—disagree with not continuing to increase defense spending in these parlous times simply means that we need to make our case instead of relying on inertia to carry it. And refreshing the case is entirely good.

In the event, the rules package was passed without significant change.

The rules as proposed can be read here.