Tag Archives: spending

Economic Incompetence Continues

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We must increase our debt limit so that we can pay our bills.

This is the thrust of President Barack Obama’s insistent demand that our debt ceiling be raised, and that it be done with no strings attached.  The graph below, via Zero Hedge, however, illustrates the foolishness of continually expanding our country’s debt.  It shows government debt as a percentage of GDP compared to the annualized rate of change in economic growth.

It’s hard to get any clearer than this demonstration of the inverse relationship between government debt growth and economic growth.  It’s not just that growing debt impedes economic growth; the reverse is true, also: reducing government debt (not just reducing debt growth rate) allows the economy to grow.

If you borrow money to pay your bills, you aren’t paying your bills, you’re just changing creditors.  I’ve said it before, and I’ll say it again: it isn’t sufficient simply to raise our debt ceiling.  Any raise must be coupled with commensurate real spending cuts—that is, cuts in current year spending, not pseudo-cuts in the out years.  It’s only by reducing current spending below current revenues that the current deficit can be reduced—which by itself still isn’t enough.  The current deficit must be reduced to the point it disappears, and a current surplus is generated.  Year after year.

Current deficits, after all, are current borrowings, and these only add to existing debt.  The only way we can reduce our country’s debt, and so to eliminate the need to raise the debt ceiling—the only way—is to cut current spending to levels below current income.  Any junior high student on an allowance understands that.

A Thought on Government Spending

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I’m prompted by Treasury Secretary Jack Lew’s testimony before the Senate Finance Committee Thursday.

The Wall Street Journal paraphrased him, in part, with this:

Given current spending and tax levels, the government would probably have to cut spending by at least 30%—or $100 billion—a month if the borrowing limit wasn’t increased.

This is an excellent argument for Congress getting spending under control.  Think about that: the Federal government, by Lew’s own claims, is saying it spends $100 billion per month more than it collects in tax (and other) revenues.  The Federal government, this year alone, is spending $1.2 trillion dollars more than it’s collecting.  That $1.2 trillion deficit goes right to our national debt; we borrow to cover that shortfall.  Getting this profligacy under control—eliminating that profligacy—is the only way to get rid of budget deficits, and the elimination of those deficits—not their reduction, but their elimination—is the only way to avoid having to repeatedly increase the amount of our borrowing, the only way to eliminate the “need” to repeatedly raise the debt ceiling—which is no ceiling, no limit at all, if it’s always raised for the asking.

Along these lines, Lew also said this (direct quote, no paraphrase):

I don’t believe there is a way to pick and choose on a broad basis.  The system was not designed to be turned off selectively.  Anyone who thinks it can be done just doesn’t know the architecture of our multiple [payment systems].

This is proof of our need to rationalize and streamline our payment systems, and the ideal time to do this is while we’re reducing and reforming our spending as a whole.

What the Democrats’ Shutdown is Demonstrating

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Following is a partial list, in no particular order, of Federal Cabinets and agencies whose leadership has deemed significant majorities of their work force nonessential.  There are more listed over at Slate:

Office

Per Cent Nonessential

White House

74

Treasury

82

Labor

82

Interior

81

EPA

94

NASA

97

Housing and Urban Development

96

Education

94

Commerce

87

Smithsonian

84

There are others, also, with a different per centage of nonessentials:

Office

Per Cent Nonessential

U.S. Commission of Fine Arts

100

U.S. Interagency Council on Homelessness

100

USDA Risk Management Agency

100

Federal Maritime Commission

100

Economic Development Administration

100

Minority Business Development Agency

100

And in a telling comment on the Obama administration’s attitude, over at the Ag Department all of the employees—every one of them—in the Office of Ethics have been deemed nonessential (along with those of the Offices of the Assistant Secretary for Civil Rights and of the Chief Economist).  Go figure.

Plainly, all of these Cabinets and agencies could do with some serious downsizing.  Sure, sure, a significant per centage of these nonessentials really are essential over a long run—the admin assistants, for instance, who are the true heart of any office in which they work—but plainly another significant per centage of these nonessentials are nonessential, over any time frame.

There’ve also been some small moves to eliminate/privatize Fannie Mae and Freddie Mac, the two Federal Agencies Government Sponsored Enterprises whose misbehaviors contributed so heavily to the housing market bubble and burst that occurred on the front end of the Panic of 2008.  Now we see, courtesy of the Democrats’ shutdown (maybe these guys are doing us a favor, after all) another Federal housing agency that’s in the way of our economy:

Housing-industry officials, for example, predict a lengthy shutdown could make it tougher for home buyers to secure mortgages, in part because of reduced staffing at the Federal Housing Administration.

This is another Federal facility that’s plainly in the way of our economy.

Debt Default Redux

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Senate Majority Leader Harry Reid (D, NV) continuing his meme of refusing to negotiate, says

We not only have a shutdown, but we have the full faith and credit of our nation before us in a week or ten days[.]

Never mind that this could have been settled much earlier in the year, but for Democrats’ and President Barack Obama’s intransigence:

Reid and other Democrats blocked numerous attempts…to approve House-passed bills reopening portions of the government.

And there’s that whole “Presidential” series of “veto threats against GOP spending bills” thing.  The “GOP” part is the kicker.

In the end, it’s clear that, having gotten the government shutdown for which the Democrats have fought so hard, they’re now bent on default.

Again, I ask, why?  I also ask against this backdrop: from Section 8 of our Constitution we have

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States….

Paying the national debt isn’t just one of only three purposes for which the Federal government is permitted to “lay and collect Taxes;” it’s the first purpose.

And from the 14th Amendment we have

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

The Federal government collects in tax revenue roughly 10 times the amount of money required to make the payments on the national debt as they come due.  Suggesting that that’s in danger, that debt default is a risk, is dishonest.

Government Funding

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When I got up this morning, I found in my inbox the following email (reprinted in its entirety, including the link he provided for his short floor speech) from Senator Mike Lee (R, UT).  He makes some valid points; please read his email carefully.  After that, I have a couple of minor points.

We shouldn’t have to fund everything in order to fund anything

Why won’t Democrats take “yes” for an answer on Vet funding

Today, in an effort to move forward and end the government shutdown, I asked for the Senate to pass a bill that had already been passed by the House to fund veterans’ benefits.  The motion was quickly shot down by Democrats who provided little explanation for their opposition to funding veterans’ benefits.

Following proper regular order, Congress would vote on and ultimately approve a dozen or so separate, segmented appropriations measures to fund each area within the federal government.  Each program or function area would have to stand on its own merits in order to get funded.  In a big government that spends between $3.5 and $4 trillion a year, and it’s important that we break spending decisions into pieces.  Unfortunately, over the last 4 1/2 years, we’ve been funding government on the basis of back-to-back continuing resolutions. The problem with these measures is that they basically require us to fund everything or fund nothing at all.

The Republicans in the House of Representatives are quite wisely saying that we should start funding bills within those areas where there is broad-based bipartisan consensus.  I agree  that we should immediately start funding the government in those areas where there is obvious and overwhelming support including programs like veterans’ services, national parks, cancer research, and the National Guard and Reserves.

Republicans and Democrats came together in the House and approved bills overwhelmingly. I think we owe it to the country to show that we can do the same thing in the Senate.  In a matter of hours the vast majority of the government could be funded.  It was the president himself who asked Congress to fund a list of priorities in a speech to the nation a few days ago.The House of Representatives has courageously delivered a series of bills that will do exactly what the president asked.  Now President Obama and Democrats in the Senate are having a hard time taking “yes” for an answer.

I continue to work around the clock with my staff and my colleagues in both houses of Congress to fund the government and protect the people from the harmful effects of Obamacare.  I am confident we can do what is best for Utahns and for the future of our country.

Now, my lesser points.  First, finally, Republicans are talking to us directly.  This is good.  Second, look at the tone of his email, and compare it with the tone of the emails many of you may have gotten from Democrats—usually fund-raisers (none of that in Lee’s email).  If not, the folks at Power Line get missives from Democrats and reprint them.  Which party actually is making an argument for their case, and which cannot and so is limited simply to attacking the other party?