Tag Archives: spending

Nominations

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Here are three and their positions on various matters of some import.

Chuck Hagel, Secretary of Defense:  President Barack Obama has put him up to forward Obama’s defense policy of global retrenchment and defense cutbacks.

Hagel thinks it’s appropriate to negotiate with terrorists—Hamas, for instance—and he refused to join a US Senate letter to the EU calling on them to label Hamas a terrorist organization.

In a 2006 op-ed for The Washington Post, he called for a troop withdrawal in Iraq—right before the successful surge, which he also opposed when it came up.

In response to current SecDef Leon Panetta’s statement that the present sequester would gut Defense, and while the Joint Chiefs of Staff were telling Congress that the sequester would lead, variously, to “a severe and irreversible impact on the Navy’s future,” “a Marine Corps that’s below the end strength to support even one major contingency,” and “an unacceptable level of strategic and operational risk” for the Army[,]” Hagel insisted that the “Defense Department, I think in many ways, has been bloated….  So I think the Pentagon needs to be pared down.”

I won’t go over his anti-gay verbal assault on a Luxembourg ambassador nominee, except to note that his attitude will impact Defense’s (repealed) Don’t Ask Don’t Tell policy.

John Brennan, Director, CIA: Obama selected Brennan to put forward Obama’s policy of no intel collection, just kill them with drones:

Brennan is closely identified with the Obama administration’s expanded policy of using drones…to strike at suspected militants in countries such as Yemen, Somalia, and Pakistan.  The Washington Post refers to Brennan as “the principal architect of a policy that has transformed counterterrorism from a conventional fight centered in Afghanistan to a high-tech global effort to track down and eliminate perceived enemies one by one.” The Post adds that Brennan is at the “core” of the White House centered effort to use drones and that “when operations are proposed in Yemen, Somalia or elsewhere, it is Brennan alone who takes the recommendations to Obama for a final sign-off.”

In truth, there’s much to be applauded about this policy; however, like all things, it can be overdone—and it is here, through the blind, unconsidered application of drone strikes.  The biggest symptom of the policy’s failure?  The utter lack of intel coming out of these strikes.  Dead men, after all, tell no tales.

Brennan compounded this failure, though, with this lie:

There hasn’t been a single collateral death because of the exceptional proficiency, precision of the capabilities we’ve been able to develop.

On top of this, Brennan has no understanding of the fundamentals of terrorism: he’s called jihad a “legitimate tenet of Islam,” insisting instead that these poor, misguided violent extremists are victims of “political, economic, and social forces.”

Jacob “Jack” Lew, Secretary of the Treasury: Obama selected him to continue Obama’s policy of extended (and extensive) borrowing and spending.  But he, too, cannot be trusted.

When Lew was Obama’s Director of OMB, he testified before Congressional committees on Obama’s budget proposals:

Our budget will get us, over the next several years, to the point where we can look the American people in the eye and say we’re not adding to the debt anymore; we’re spending money that we have each year, and then we can work on bringing down our national debt.

President Obama’s budget proposals then added at least $600 billion to the deficit every year.

As Senator Jeff Sessions (R, AL) puts it

[Lew’s] testimony before the Senate Budget Committee less than two years ago was so outrageous and false that it alone disqualifies him.

There’s more.  Lew claimed that the reason the Democratic Senate hadn’t adopted a budget is that it was being filibustered by Republicans.  This demonstrates breathtaking ignorance of the Congress, or further dishonesty, or both.  Budgets cannot be filibustered—they get up or down votes and the majority carries the outcome.  He also misrepresented the fact that the House (led by Republicans) has passed a budget every year since 2010, and the Senate (led by Democrats) have refused even to debate them.

And there’s this exchange between Bernie Sanders (I, VT) and Lew [emphasis added]:

When asked by…Sanders…at a Senate confirmation hearing in 2010, when Lew was nominated to be head of the Office of Management and Budget, whether the deregulation pushed by Rubin and former Fed Chairman Alan Greenspan had “contributed significantly” to the banking crisis, Lew responded:

“Senator, I don’t consider myself an expert in some of these aspects of the financial industry.  My experience in the financial industry has been as a manager, not an investment adviser.  My sense, as someone who has generally been familiar with these trends, is thatthe problems in the financial industry preceded deregulation.  There was an increasing emphasis on highly abstract leveraged derivative products that got us to the point, that, in the period of time leading up to the financial crisis, risks were taken, they weren’t fully embraced, they weren’t well understood.

I don’t personally know the extent to which deregulation drove it, but I don’t think deregulation was the proximate cause.”

That is a statement of such profound (faux) ignorance that it’s awe-inspiring that Lew would say such a thing out loud.  Moreover, he was one of the senior economic advisors working for President Bill Clinton when Clinton signed the legislation making all of those “derivative products” exempt from the reach of any existing government regulation or regulatory agency.

National Default on the National Debt

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President Barack Obama and his Senators keep saying that House RepublicansCongress must raise the debt ceiling or the US will go into default.  The latest example of this claim came when Obama, through his White House Press Secretary, Jay Carney, said in response to the idea that the administration could simply mint a $1 trillion coin and then spend that,

There are only two options to deal with the debt limit: Congress can pay its bills or it can fail to act and put the nation into default[.]

Here’s what the Constitution says on the matter (you might recall that bit of paper—a document that Progressives insist ought to be scrapped or that already is useless and non-binding; maybe its inconvenient limits on government are why).  From Article I, Section 8, in relevant part:

The Congress shall have Power…to pay the Debts…;

To borrow Money on the credit of the United States;

Thus only the Congress can borrow—or create the conditions for paying what it has borrowed.  The President, as with all laws (nearly all of which, by the way, have his signature on them—he’s actively agreed with them, except in those very rare cases where his veto has been overridden), has only to execute them—here, to spend the money authorized, to collect the taxes authorized, to borrow according to the Congress’ budget and borrowing limit.  He’s Constitutionally, and by his oath of office, required to faithfully execute those laws.

(Incidentally, a later clause in that Section 8 says this:

To coin Money, regulate the Value thereof….

Thus, only Congress can mint a $1 trillion coin, not Treasury.)

The 14th Amendment, which some Progressives like to cite as a means for Obama to bypass Congress on the national debt, says in relevant part:

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.

Notice that confusing part—it being more than 100 years old—”authorized by law.”  The clause not only says that the US’ debt must be paid—no getting around that—but the only debt that must be paid is that authorized by law—that budget thing (from an even older and apparently even more confusing part of the Constitution), which must be passed by Congress and signed by the President or his veto overridden.  The president cannot (not may not—cannot) create debt on his own recognizance.

On the first part above, then, Obama has it right—Congress can agree to continue spending and borrowing, or it can decide not to act (or anywhere between the two extremes: cut spending enough to fit it into current revenues, thereby eliminating the deficit and stopping the growth in borrowing altogether, or cut spending to fit within projected revenues and raise the debt ceiling somewhat, with a view to gradually reducing spending, eliminating the deficit over time, and ultimately stopping the growth in borrowing altogether, for example).

What are the practicalities of the matter?  Say the debt ceiling is not raised; what results?

The interest on our current national debt (some $16+ trillion at the end of 2012, an explosion of 60% in Obama’s first four years) ran to $220 billion.  Total revenue collected from various tax sources (including payroll taxes for Social Security, et al.,) by the Federal government was $2.5 trillion—a shade over 10x those interest payments.

In short, there is no risk of default from Congressional inaction.  There is plenty of money with which to pay the interest, thereby keeping our debt current and not in default.  There’s plenty of money with which to roll existing debt that’s coming due—essentially to refinance by paying off that old debt with new borrowing—within the current debt ceiling.  This is the same as us refinancing our homes, which we must do within our own debt ceilings, values our lenders determine based on our credit rating.  There’s even plenty of money with which to begin in aggregate paying down that debt, reducing it below those $16 trillion, and to reduce it further in subsequent years.

Thus, if Congress declines to raise the debt ceiling at all, there would be spending cuts, but no default.  Federal spending in 2012 ran to $3.7 trillion, rather more than those $2.5 trillion in collections.  Progressive (and Conservative) favored programs would be drastically curtailed.  Welfare programs like food stamps, subsidies for “green” energy companies, farm price supports, and the like would be severely curtailed.  Entitlement programs like Social Security, Medicare, and Medicaid transfers to the States would be greatly circumscribed.  Withal, no default, and not even very many existing programs eliminated.

However, if Obama and his Senators truly are concerned about “not paying for our spending on the backs of our seniors and the middle class” (and the poor—that group these Progressives have been ignoring right along), they’ll get serious about spending cuts, the deficit, and the debt.  The cuts then could occur in a deliberate, controlled manner, across programs about which Conservatives and Progressives compromise on curtailing.

Obama and his Senators know what the Constitutionally mandated priorities are.  They simply are lying when they make their claim of debt default, and the NLMSM are complicit in the claim’s spread.  What these Progressives really mean is that, absent a debt ceiling increase, they will default on their vote buying promises.  And that terrifies them, since among those to whom they “owe” their vig are unions.

What Are They Prepared to Do?

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Kimberly Strassel asked this, and three specific questions, in a Wall Street Journal op-ed last week.

Her questions:

Question one: Do they mean it?  In the abstract, the debt ceiling is a powerful tool for forcing the president to give in to spending cuts. …

In the non-abstract, failure to raise government borrowing limits means US default—and with it potential credit downgrades, market panic and resulting economic distress.  Is the GOP willing to inflict that on the economy?  If Republican members instead run for cover, as they did with the cliff, the GOP will have been exposed as bluffers, and the administration will never again have to fear the debt ceiling.

Then,

Question two: What do they want?  Throughout the fiscal-cliff negotiations…the GOP shrunk from laying out its specific demands on Medicare, Social Security and Medicaid.

Do House Republicans have the courage to lay out big demands (say, premium support for Medicare or block grants for Medicaid), send a bill to the Senate, and sell entitlement reform to the public?  If they can’t face the demagoguery that Democrats will use against them for making substantive proposals on entitlements….

Finally,

Question three: What other hostages are Republicans willing to see shot?  Knowing he has lost his tax trump card, Mr Obama seamlessly moved on this week to the defense budget.  …Mr Obama intends to make further tax hikes the price….

Are the GOP’s defense hawks willing to stomach those cuts as a price for entitlement reform?  Having publicly campaigned against this slashing of the military, can the party stare down the president with a unified position?  Mr Obama is betting they can’t….

It’s pretty clear from the Republicans’ past performances in showdowns with Obama that all they’ll do is run for cover—too much of the party consists only of bluffers.  During the just concluded tax cliff matter, hey could have put up big demands concerning tax structure and tax rate reductions—just putting forward the Romney tax plan would have sufficed—but they quailed at the thought and shrank from their duty.  They also could have put up big demands concerning spending cuts—just putting forward the Ryan plan would have sufficed on entitlements—and big demands concerning so-called discretionary spending (so-called because all government spending is at the discretion of the Congress).  After all, Obama was publicly willing to conclude such a “grand bargain;” the Republicans should have held him to his word.  But they failed here, also.

On the matter of selling their position to the public, it’s pretty clear the Republicans have no capability for that, even if they had an actual position to sell.  They’re still not talking to us.

Vernon Pinkley, on walking the Republican halls of the House (or of the Senate), might ask, “Very pretty, Speaker/Minority Leader. Very pretty.  But, can they fight?”  The answer is, “No.”

I pointed out nearby the necessary and encouraging words of a rookie Republican Senator from Texas.  Unfortunately, there’s no reason to believe there are enough more Republicans like him to accomplish much of anything.

What He Said

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Senator Ted Cruz (R, TX) has some thoughts in a Washington Post op-ed on the needed direction of the Republican Party, if it’s to recover its roots, and the mechanics of achieving that new direction.

Herewith, some excerpts.  RTWT.

Free-market policies expand opportunity, produce prosperity and improve lives, especially for those working to climb the economic ladder.

And

On the flip side, widespread economic redistribution places enormous burdens on small businesses, kills jobs and rarely helps the recipients of government largess.

Dependency is corrosive. Ask any abuela if she wants her grandchildren dependent on government. Dependency saps spirit and diminishes self-respect.

And

Americans want to stand on their own feet, and Republicans need to champion policies that enable us to do so: ownership, choice and individual responsibility.

And some mechanics for achieving that:

Republicans shouldn’t just assail excessive financial and environmental regulations; we should explain how those regulations kill jobs and restrict Americans’ ability to buy their first home.

Don’t just say no to new taxes—fundamentally reform the tax code so that every American can file his taxes on a postcard.  Eliminate the corporate welfare and complexity that enrich only accountants and lawyers.

Don’t just criticize union bosses; explain how closed shops confiscate wages and make it harder for low-skilled workers to get jobs.

Don’t talk generically about education; advocate school choice to empower parents and expand opportunity for children struggling to get ahead.

Don’t just dwell on the long-term solvency of Social Security; promote personal accounts to allow low-income Americans to accumulate wealth and pass it on to future generations.

Republicans ought to view, and explain, every policy through the lens of economic mobility.  Conservative policies help those struggling to climb the economic ladder, and liberal policies hurt them.

What he said.

Some Thoughts on a Pseudo-Wonk’s Thoughts on the Coming Fiscal Cliff

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I don’t ordinarily take guys like Ezra Klein seriously.  He is, after all, the pseudo-wonk who claimed in all seriousness, during a December 2010 interview on MSNBC’s “The Daily Rundown,” that our Constitution doesn’t matter; it’s just an inconvenient scrap of paper too often in the way of the Progressives’ Proper Way:

[The Constitution of the United States] has no binding power on anything.  …the text is confusing because it was written more than a hundred years ago….

However, since he is taken seriously by so many on the Left, and he’s just written another tendentious piece of misunderstanding, I find myself drawn to comment.  In writing for Newsday just after Christmas, he made the remarks described below.

I’ll begin by briefly addressing Klein’s windy argument concerning Conservative distrust of Democrats’ spending cut promises.  Klein insists that welching on such promises is a good thing:

The point of austerity is to solve a deficit problem, not yoke the future to the imperfect forecasts of the past.  Once the deficit problem goes away, so too does the reason for austerity.

He also makes his view of the moral appropriateness of breaking promises explicit:

After 1997, spending rose.  But by then, the economy was roaring, and within a few years, we were at surpluses.  So why shouldn’t Congress have been a bit looser with the purse?

And

But if the economy in eight years is far better than we expect it to be today, Congress should change course.  If the cuts to spending don’t need to be so deep, then huzzah! Ratchet them back.

Because—well, Klein never offers a reason.  For him, Big Government spending Americans’ money is the Natural Order.  Big Government is its own raison d’être.

I’ll address his disingenuousness in claiming that leaving more money in the hands of Americans, rather than those of Big Government—reducing government spending, making possible reducing taxes—is somehow austere later.  First, I’ll talk about his outright lie:

[Conservatives’] goal isn’t to reduce deficits.  If it was, they’d be open to tax increases.

And

[Conservatives’] real goal: Not smaller deficits, but smaller government.

Because raising taxes is the One True Way to reduce deficits.

Actually, on one level, Klein’s charge isn’t a malicious slur, at all: Conservatives aren’t interested in reducing deficits; they’re interested in eliminating them altogether.  But Klein wasn’t going there.  Here’s the thing: Conservatives are interested in…reducing…deficits, by cutting spending.  Conservatives also see the optimal long-term path to this—especially in light of Progressives’ view that breaking promises is morally sound—as being to shrink government back to a small, limited entity that the Sovereign people can better control.  The existence of these alternate paths proves the lie in Klein’s charge.

Interestingly, Klein makes his lie as if he believes, in all sincerity, that smaller government is somehow bad.  But one of his movement’s founding forebears, Herb Croly, has already enshrined that concept in the Progressive religion:

To be sure, any increase in centralized power and responsibility, expedient or inexpedient, is injurious to certain aspects of traditional American democracy.  But the fault in that case lies with the democratic tradition; and the erroneous and misleading tradition must yield before the march of constructive national democracy….  [T]he average American individual is morally and intellectually inadequate to serious and consistent conception of his responsibilities as a democrat.

Klein argues, to return to the question of austerity and to questions of spending, taxes, and Big Government:

The point of austerity is to solve a deficit problem, not yoke the future to the imperfect forecasts of the past.  Once the deficit problem goes away, so too does the reason for austerity.

Of course, it should go the other way, too. The Bush tax cuts, which were passed to pay down a surplus, should be rescinded now that deficits have returned.  But Republicans don’t see it that way.

Based on what theory, exactly, should taxes be increased?  Klein declines to offer any support at all for this bald, unsubstantiated claim.  Not the first particle of a fact, not a single line of logic.  Part of his failure, though, stems from his misunderstanding that the Bush tax cuts were intended to “pay down a surplus” (has there been a more cynically offered non sequitur—”pay down a surplus?”) rather than to leave more of Americans’ money in their own hands.  But this is symptomatic of Klein’s blinders (yes, that’s contradictory.  Deal with it).  Big Government is such an obviously positive wonder that explanation seems contained in the statement.

He adds to his curious remark above this:

Rather, austerity is one of many arguments marshaled toward the long-term end of shrinking the size of government.  That’s why a deal that solves the deficit problem and then sees government spending rise in its eight year is a failure rather than a success—it betrayed the actual goal of shrinking the size of the government, even if it succeeded in the putative goal of balancing the budget.

Here’s the cynicism of his austerity claims.  Klein conflates austerity with reduced government spending, austerity with leaving more money in the hands of the individuals otherwise taxed—as though more money in private hands makes somehow for a more limited existence.  No, what is austere is taking money away from those who already are paying far more than their share by raising taxes on them; or taking money away from anyone by raising taxes in the middle of a failed recovery or while deficit spending remains out of control.

He does states a truth, yet fails to recognize it.  A budget that grows government is, rather tautologically, a failure.  One of the points of the goal of shrinking the size of government (beyond facilitating the preservation of individual freedoms and duties) is to exercise better control over its budget—so as to eliminate deficits (not just reduce them), so as to pay down (if not eliminate, from time to time) the debt and keep it under control.

Moreover, Conservatives don’t see the effectivity of raising taxes in times of deficits.  Of course, they don’t—spending cuts also reduce/eliminate deficits, and more efficiently so.  Spending cuts are immediate and direct (note that I’m talking about actual cuts, not the accounting games that both parties play, wherein they claim a reduction in the rise in spending rate is a cut).  Tax increases, though, however well-intended, get diverted into funding another neat program—there’s always a neat program waiting for money—rather than get used to reduce deficits.

But Klein, like all pseudo-wonks of the Left, simply can’t conceive of spending cuts.  He can’t conceive of letting Americans see to their own ends without (his) Big Government hanging over their shoulder making sure that the ends are appropriate and that their satisfaction is via an approved means.

Klein concludes

There’s little doubt that a mixture of tax increases and spending cuts could bring deficits to manageable levels within a few years.  Add in some stimulus and we could even protect the recovery between here and there.  Moreover, since the discretionary spending cuts have already been made, the next set of spending cuts will likely focus on entitlements.

“Add in some stimulus….”  So much for the spending cuts.  He just doesn’t understand the whole premise of reducing spending.  But economics also is more than 100 years old, and so confusing to someone who finds it inconvenient.

And, yes, Ezra, there is considerable doubt that “a mixture of tax increases and spending cuts could bring deficits to manageable levels.”  That’s why there’s this debate in DC.

Finally: shrinking government would accomplish all of this, too, and it would make the manageability of the deficits more permanent.  But Klein ignores the larger point (I’m confident that he sees it, for all his confusion): even a manageable deficit represents debt growth, and our current debt of $161/3 trillion and growing already is at unsustainable levels—interest payments alone currently run to $220 billion/year and that’s only going to get worse as the coming Bernanke Inflation begins to take hold, driving up interest rates.  Imagine the precious entitlements that could be funded with that money were it not wasted on the debt of the profligate.  Imagine the national defense capability that could be had for that kind of money (which would represent a one-third increase in the 2012 DoD budget).  Imagine the real stimulus our economy could have were that money committed to a $220 billion reduction in the taxes Americans pay to Klein’s bloated government.

Spending cuts, though, as the means to eliminate deficits in order to enable paying down national debt, and shrinking government to a proper size so as to maintain that reduced spending and taxation, is inconceivable to today’s Progressives.