Tag: Deficit Spending

What’s The GOP Plan For Negotiating On The Debt Limit?

The Daily Escape:

Dream Lake, Estes Park CO – January 2023 photo by Rick Berk Photography

(Wrongo and Ms. Right send healing thoughts to friend and blog reader Gloria R.)

We’re all aware that House Republicans are refusing to lift the debt ceiling unless Biden gives them well, something? And Republicans still haven’t decided what they want. The GOP also wants a balanced budget, but they can’t say what should go, or what should stay.

From the WaPo: (Brackets by Wrongo)

“They [GOP] say they want to reduce deficits — but meanwhile have ruled out virtually every path for doing so (cuts to defense, cuts to entitlements, wiping out nondefense discretionary spending, or raising taxes).”

The fact that Republicans are up in the air about what to do highlights the likely Democratic strategy is against their threats about the debt ceiling. Again, from the WaPo:

“Sensing Republicans are on the verge of a blunder in their schemes to use the debt ceiling to hold the economy hostage and try to extract draconian spending cuts, the White House has developed a two-part response strategy.

Part 1: Lay out the simple argument that Republicans are recklessly inviting an economic meltdown even by talking about a possible default.

Part 2: Force House Republicans to put forward a plan on the table and watch as they struggle with the fallout.”

The Democrats along with Senate Minority Leader McConnell (R-KY) are daring Republicans to put forward a plan. Senate Majority Leader Schumer (D-NY) said:

“If House Republicans are serious about taking the debt limit hostage in exchange for spending cuts, the new rules that they adopted require them to bring a proposal to the floor of the House and show the American people precisely what kind of cuts they want to make….”

Everyone who follows politics knows that Republicans never take much interest in fiscal sobriety when their Party is in control. They agreed to raise the debt limit three times while Trump was in power.

It seems that Republicans are doing the Democrats’ job for them. They are asking for an economic catastrophe and seeking draconian cuts that their base doesn’t want.

Consider the Republican desire to reduce our deficits. They have pledged to balance the budget (that is, to have a zero annual budget deficit) within 10 years. But they haven’t laid out any plausible mathematical path for getting there. And of the current debt ceiling, 90% of it was committed before Biden took his job.

Some Republican House members want to cut military spending, an idea that both Speaker Kevin McCarthy (R-CA) and Rep. Jim Jordan (R-OH) are on board with. But others, including House Appropriations Chair Kay Granger (R-TX), have said defense spending cuts aren’t on the table. Rep. Michael Waltz (R-FL) said:

“We’ve got to get spending under control, but we are not going to do it on the backs of our troops and our military,”

Waltz thinks Republicans should focus on “entitlements programs,” such as mandatory spending programs like Social Security, Medicare, and Medicaid. But the bi-partisan popularity of these programs makes them hard to cut.

And last Sunday, Rep. Nancy Mace (R-SC) was asked to name one thing she was willing to suggest as a spending cut. She instead stated things she wouldn’t put on the table:

“Well, obviously no cuts to Medicare or Medicaid or Social Security….That’s a nonstarter for either side.”

Wrongo has repeatedly suggested tax increases which would help lower deficits, but Republicans have ruled that out.

Instead they’ve changed the House rules so tax cuts will be much easier to pass, and tax increases harder to pass. The House’s rules package now says that any increase in taxes would require a three-fifths vote (60%) rather than a simple majority as previously.

They’ve also proposed doing away with income taxes, payroll taxes, estate taxes and even the IRS itself in favor of a supersized sales tax that would provide most revenue to the government. Republicans would substitute a 30% sales tax on all purchases and in exchange, do away with income, Social Security and Medicare taxes.

That means workers would keep the gross amount of their paychecks. But it also means that buying everything from groceries to automobiles would be hugely more expensive. It also provides a big tax cut for the wealthy and businesses.

The result is a smaller tax burden for the highest earners and a bigger one for people in the middle.

Once you reject trimming entitlements or defense spending and bake in the cost of the GOP’s proposed tax cuts, you’re left with an additional $20 trillion hole in the Federal budget over the next decade.

OTOH, the White House is expected to release its detailed budget in early March. It will build on budgets it has released previously. Republicans want Biden to negotiate on what to do about money we’ve already spent.

Try doing that with YOUR creditors.

 

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Funding The Revolution

The Daily Escape:

Lake Louise, Alberta, Canada in snow – photo by Yan Gao

When the President and the incoming Speaker of the House get into a televised shouting match over whether we have enough money to fund Trump’s wall, you know that things have to change in America. They’re fighting over use of a limited resource, the US government’s funding.

We now have within our means the ability to feed, clothe, shelter, and educate everyone. But, as a country, we are unwilling to do so, because we buy into neoliberal economic theory. Never in history have we had the ability to make our species as secure as we do now, but we choose instead to make as many as insecure as possible.

Until about 1980, economic growth created a level of prosperity that earlier generations of Americans could only dream about. But, economic growth no longer makes people more economically secure. We’ve become prisoners in a system that promotes permanent growth, where wages stagnate, schools decay, and Goldman Sachs sits inside our government.

The question we should be asking is: How can our politics provide an answer to our people’s need for economic security? We know that neoliberalism has reduced many of our people to states of economic insecurity. We know that our economic and social order must change, and profoundly, or face an eventual revolution. This isn’t an option, it’s a certainty.

That means that only state funding will create the (peaceful) change we need.

Here’s a big idea from Richard Murphy, a UK tax accountant:

…To put this another way, what may be the biggest programme of change ever known in human history is required in very short order. We need new energy systems; transformation of our housing stock; new transport infrastructure; radically different approaches to food that might even require rationing if we cannot create change any other way; different ways of working and new ways of using leisure time.

Murphy goes on to say:

But this must be done in a way that increases certainty. Jobs must be created on the ground…And I mean, in every constituency….but the transport and other infrastructure must be provided in that case and that does not simply mean more roads. The social safety net must be recreated. That means a job guarantee. It also means a universal basic income. And business must be transformed. Since that process will be incredibly expensive this requires capital and if that means state investment and co-ownership, so be it.

Murphy says that if this was wartime, our government would find the money to fund radical change. He says that we can no longer just extract higher taxes from the rich to solve our funding requirements, we need to create a vision, a plan and funding to achieve the change required.

One way to fund a portion of these requirements may be to restrict funding for the military, to eliminate tax breaks and subsidies for corporations. More from Murphy:

The time for pussy-footing is over. We know what we need to do. We know the scale of the issue. We know the reasons for acting….and we know we can pay for it. This is not left or right as we know it. And any party not addressing it is part of the problem and not the solution.

He’s suggesting deficit financing for societal gain. What are the chances that revolutionary change can happen? Almost zero today. Left to our political class, we’re just going to keep on doing what we’re currently doing, that is, until we can’t.

As we said yesterday, people say, “It’s the system, we can’t change it”.

But, in the Middle Ages, the exact same thing could have been said about feudalism. That institution was deeply entrenched, it was “how things are, and were meant to be.” It was inconceivable that something like democratic government could ever succeed feudalism, yet it did.

Today, our revolutionary task is to allow democracy to express its full potential to reshape and revitalize our social and economic life.

We must begin by setting priorities, taking resources from areas that drain the economy. Then we need to devote those resources to things that will make for a healthier, more secure economy.

One example is to adjust the priority that military defense spending has in our economy. Let’s stop being the world’s policeman, nobody wants us to do it. Then, use the excess resources to build infrastructure, and renewable energy systems.

Everything else we need then will become easier to build.

It’s a matter of deciding what our priorities are, and voting for those who agree with that vision.

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Sunday Cartoon Blogging – November 27, 2016

Are you sick of all the winning yet?

You have probably heard that Fidel Castro died yesterday. Wrongo was in college in October 1962, at the time of the Cuban missile crisis. We were glued to TV waiting for a nuclear attack that never came.

That Castro survived JFK by 53 years is remarkable, particularly since at least two American Presidents tried to kill him. At the time, Kennedy offered two things in exchange for Soviet removal of the Cuban missiles: (1) the US would pledge never to invade Cuba and (2) the US would secretly withdraw missiles from Turkey. The removal of the nukes from Turkey was delayed several months, so that the US would not appear weak in the face of the Cuban missile threat. The Soviet Union accepted this offer the next day.

After the fall of the Soviet Union, their archives of the Missile crisis showed that Castro wanted the USSR to fire the missiles at the US. Khrushchev came to regard Castro as a lunatic, bent on war. We came very close to invading Cuba, and the Soviets never fully trusted Castro again.

In most ways, Castro’s death is anticlimactic. He retired, and appointed his brother Raul to head the government years ago, and recently, the Obama administration has been effective in improving relations with Cuba. Had Fidel died during a period of greater tension, it might have signaled the possibility of a positive change in relations between our two countries. Sadly, it is probable that the next great change in Cuban/American relations will move us backward under a Trump Administration.

Onward to cartoons. Thanksgiving and Trump’s staffing plans dominated the week.

Many avoided politics at the family repast:

cow-i-survived

Democrats weigh their strategy with Trump:

cow-turkey-talk

Trump meets with the New York Times, tells them how to cover the news:

cow-trumpy-times

Our Orange Decider has yet to decide a few things:

cow-the-decider

Paul Ryan is locked and loaded for 2017:

cow-paul-ryans-targets

Many who voted for Trump have little or no retirement savings, or regular savings for that matter. Ironically, a majority of them will be reliant on Social Security, Medicare and Medicaid in later life. Sadly, they can’t seem to connect the dots between Ryan’s Ayn Randian dreams of privatization, and how it will affect their lives. It may be too late for many of them.

Deficits are part of the Art of the Deal:

cow-white-house-puppy

Those “responsible Republican deficit hawks” wanted to restore earmarks the week after the election, but Ryan is making them wait until the new Congress is seated. That way, they won’t destroy the PRETENSE of budget deficits mattering.

The GOP really can’t wait to take off the debt girdle:

cow-deficit-girdle

 

 

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Monday Wake-Up Call – October 19, 2015

Page A21 of Friday’s New York Times carried the news that our budget deficit for the fiscal year that ended on September 30th was $439 billion, or $44 billion less than the prior year, and nearly $1 trillion less than its peak during the Great Recession. Oh, and it equaled just 2.5% of Gross Domestic Product (GDP). The Wall Street Journal reported that the budget shortfall was 9% lower than last year, and at its lowest level since 2007.

If the “paper of record” buries this story, don’t expect to see it on the nightly news, or the Sunday bloviator shows. Yet, it was not very long ago that the media was obsessed with the budget deficit, egged on by Republicans who returned incessantly to Talking Points 101 from their slash Social Security and Medicare playbook . The WSJ provides a history of recent deficits:

Deficit History

The surplus on the top graph occurred during the Clinton administration. That would be about the same time that “spending” began exceeding “revenue” on the second graph.

The budget deficit is less of a problem than it has been since 2007, and since our economy is larger, it is also even less as a share of US GDP. Indeed, at 2.5% of GDP, our current deficit is less than the average of the past 40 years. The increase in tax receipts from higher tax rates, an improving economy (and stock market), combined with marginal cuts in federal spending (the Sequester) have all helped drop the deficit by almost 75% from its 2009 high.

So the deficit is falling, but the total debt of the US government is still increasing.

The debt is the total amount of money the US government owes. It’s the amount borrowed to cover all the deficits over the years. When the fiscal year ended on September 30, the US government owed $13.124 trillion to the public (a measure that includes Treasury securities held by the Federal Reserve.) To see the current tally, see the Treasury’s “The Debt to the Penny and Who Holds It” website.

To increase our debt, we have to increase the debt ceiling. But, once again, Congress can’t agree to increase the debt ceiling unless the Tea party faction of the Republican Party can score a few political points about Medicare, Social Security and Planned Parenthood.

Why does the Beltway media continue to fall for the Republican trope that they are the fiscally prudent party? We now have 35 years and five Presidents of proof that Republican Presidents spend like teenagers with their parents’ credit card.

But the “meh, so what?” emoji from the Beltway media after we cut $1 trillion from the deficit is truly disappointing. So today’s wake up is for the media who think that cutting the deficit is a low value target for our collective consciousness.

Today’s Wake Up is “For What It’s Worth”. Even though it is associated with Vietnam and Kent State, it isn’t an anti-war song. It was written about the “Sunset Strip riots” in November, 1966. From Wikipedia:

On one evening, 1,000 demonstrators gathered to protest against the enforcement of the curfew laws. Although the rallies began peacefully, trouble eventually broke out among the protesters and police. The unrest continued the next night and periodically throughout the rest of November and December forcing some clubs to shut down within weeks.

Here are Buffalo Springfield with “For What Its Worth”:

50 years later, this song is still relevant. That speaks to the song’s genius.

Unfortunately, we can’t say the same for our media and politicians.

For those who read the Wrongologist in email, you can view the video here.

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