Tag: GOP Deficit Hawks

Is Default Preferable To Compromise?

The Daily Escape:

Wild Ocotillo blooms with Agave buds, Anza-Borrego Desert SP, CA – May 2023 photo by Paulette Donnellon

Yesterday, Biden met with the leadership of the Congress to discuss the debt ceiling and the dangers of default. Wrongo is writing this before we know what if anything concrete, comes out of that meeting.

This is the third time in twelve years that a Republican House majority has tried to use the debt limit to extort a Democratic president into adopting policies that the GOP failed to enact through normal political means. This time around, like the past two times, Republicans say they want spending cuts, but as Nate Cohn wrote in the NYT:

“The 2022 midterm campaign didn’t show evidence of a resurgent conservative passion for spending cuts either. The debt-deficit issue had such a low profile in the national conversation that a question about it wasn’t even asked in exit polling.”

But absent real news, let’s take a look at the Republican position as outlined in the bill McCarthy and the GOP passed in the House. They’re pushing to pair $4.5 trillion in spending cuts over a decade with a one year, one time, $1.5 trillion increase in the debt limit. Their plan achieves most of its savings with spending caps for discretionary spending — the part of the yearly budget that isn’t automatic (like Social Security payments) — but it doesn’t say which discretionary programs should be cut and which should be spared.

Their plan caps government spending at last year’s levels. This would be a decrease of ~ 9%. A yearly increase is capped at 1% annually for the next 10 years. This action would save approximately $3.2 trillion. They haven’t offered any detail about where the cuts would come from, and there is no inflation adjustment to the spending cap.

But since the GOP has said it plans zero cuts in the defense budget and that there will be no cuts for veterans or for border security, cutting everywhere else will be very deep. The NYT estimates that if those programs remained untouched, the GOP plan would cut the balance of federal spending by an amount of a 51% cut across the board.

Seems unrealistic.

Social Security checks could still be issued because a 1996 law provides a means of circumventing the debt limit. It allows the Treasury Department to pay Social Security benefits, along with Medicare payments, even if there is a delay in raising the debt ceiling. It allows for the Social Security and Medicare trust funds to be drawn down to keep those benefits flowing until the debt limit is raised, and the trust fund replenished. It also prohibits those funds from being used to pay for any other government programs.

In the past, the usual political rhythm of fiscal crises is that the GOP House stumbles around for a while, and then, right before the deadline, Senate Republicans and Mitch McConnell come off the sideline. They cut a deal with the Democratic president and pass the deal in the Senate with a big bipartisan majority. They then leave town with the hot potato squarely in the Speaker’s lap.

It’s questionable if this will happen in May, 2023.

Biden should address the nation after the Tuesday talks. How about an oval office address that lays out the facts, along with a call to action: Call your representatives and tell them to pass a clean debt limit bill. He could detail for the American people the cuts the GOP are demanding in return for raising the limit. He could also say that he is willing to negotiate in good faith on the budget with House Republicans as long as the debt ceiling is a separate matter.

The compromise might be to have a temporary debt ceiling increase to allow both to move forward together. Sadly, for McCarthy and the House Republicans, default seems to be preferable to compromise.

This is zero-sum politics with the highest stakes. At the end of the day, all paths lead to the same place: The US will need to find a way to pay the bills it has incurred as they mature.

The question is how much damage will have happened along the way.

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Keep Your Politics Off Of My Economy

The Daily Escape:

Rachel Carson National Wildlife Refuge, Kennebunk, ME – January 2023 photo by Eric Storm Photo

From the WaPo:

“The economy posted another consecutive quarter of steady expansion between October and December, with economic activity increasing at a 2.9% annual rate. Consumer spending contributed to the strong fourth-quarter showing, especially given the slumps in large parts of the economy, including housing and manufacturing.”

The latest GDP figures show we have a resilient but slowing economy. Some of the slowdown is intentional, brought on by the Federal Reserve’s aggressive increases in interest rates as a way to control our high inflation. The Fed raised interest rates seven times last year, expecting that higher borrowing costs would lead businesses and households to cut back enough to slow the economy and curb price increases.

That’s happened in the real estate market, and to a lesser degree, in manufacturing. WaPo quotes Joseph LaVorgna, chief economist at SMBC Nikko Securities America:

“You may see [growth] and think the economy is out of the woods, but that would be entirely the wrong read….There are a lot of variables that are all pointing in the same direction: There’s a housing recession. Manufacturing looks like it’s approaching recession. We’re seeing weakness in temp hiring. And it’s doubtful we’ve felt the full effects of all of the Fed’s rate hikes.”

So Biden can take credit for an excellent recovery so far, but many major banks are still forecasting an economic downturn this year. As Diane Swonk, chief economist at KPMG says: (emphasis by Wrongo)

“Momentum has already begun to slow in response to rate hikes, but the bulk of the slowdown is yet to come….The Fed’s goal is to let growth stall out in 2023.”

So are we in for a bad downturn that will persist through the 2024 elections? It’s a possibility if we keep playing politics with the economy.

We need to let people know that inflation has been easing month after month while the unemployment rate has held steady at about 3.5%. The year-over-year change in the consumer price index peaked at just over 9% in June, and since then it’s fallen to just under 6.5%. Other inflation indicators like the producer price index (PPI) have trended lower from prior highs as well.

And the world’s biggest inflation scold, economist Larry Summers who has been saying for 2+ years that we need a deep recession to drive out high inflation is sounding less hawkish: (brackets by Wrongo)

“I still think it’s going to be hard…[but]…You have to recognize that the figures are better than somebody like me would have expected three months ago. It’s still a very difficult job for the Fed, but the situation does look a bit better.”

From prior experience, Larry knows how to prepare, cook, and eat crow.

Can the Democrats and Republicans get out of the way of our currently good economic growth? From Heather Cox Richardson:

“On Monday the Wall Street Journal reported that median weekly earnings rose 7.4% last year, slightly faster than inflation. For Black Americans employed full time, the median rise was 11.3% over 2021. A median Hispanic or Latino worker’s income saw a 4.8% raise, to $837 a week. Young workers, between 16 and 24, saw their weekly income rise more than 10%. Also seeing close to a 10% weekly rise were those in the bottom tenth of wage earners, those making about $570 a week.”

Overall, the economy seems to be on solid ground at least for now. But the average American probably doesn’t view it that way.

And who will the voter reward or blame in 2024? We’ve seen that the House Republicans want to hamstring Biden and the national economy by holding the debt limit increase hostage to budget cuts, possibly in Social Security and Medicare.

So the Dems countered by asking new Speaker McCarthy for a plan on what would be axed from the social services budget. Now, Roll Call is reporting that the GOP seems to be changing their strategy on the fly:

“House Republicans are mulling an attempt to buy time for further negotiations on federal spending and deficits by passing one or more short-term suspensions of the statutory debt ceiling this summer, including potentially lining up the deadline with the end of the fiscal year Sept. 30.”

They’re trying to time the engineering of a debt default crisis to coincide with the government’s new fiscal year, thinking this creates a “mega crisis” of default/government shutdown that will bring Biden to agree to the egregious spending cuts the MAGAs want.

But this should help Democrats. First, Democrats will be able to point to the MAGA cuts as being far outside the American mainstream. Second, the GOP reckless attempt at hostage-taking will be on display just as the election season ramps up.

Are the wheels of the Republican clown car already coming off?

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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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Sunday Cartoon Blogging – January 22, 2023

There’s a difference between America’s national debt and our debt limit. Without question, our national debt must be reduced. That can happen only two ways, or by a combination of the two. We can increase taxes, or reduce future spending, or do both.

The debt limit is how much in total the US government can borrow. It uses borrowing (issuing treasury notes and bonds) to meet obligations for previously contracted goods and services. This is what must be increased as soon as possible by both Houses of Congress.

But Republicans say they won’t agree to increase the debt limit without action to reduce the national debt. The national debt is the accumulation of all the annual deficits (and any surplus – thanks, Bill Clinton!) that various administrations have racked up. It currently sits at $31.4 trillion.

The four Republican presidents from Reagan to Trump are responsible for more than half of that debt; they added $17.46 trillion to it by running whopping deficits each year. Trump was responsible for nearly half of that, $8.2 trillion, in just four years. About $3.9 trillion was pandemic relief and $2 trillion was the big tax cut he gave to the wealthy.

Republicans can’t explain why they voted to increase the debt ceiling every year of Trump’s administration. Even as he was racking up trillions of dollars of debt by increasing the annual budget deficit from the $665 billion he inherited from Obama, to a whopping $2.1 trillion deficit in just four years  ̶   the highest in US history.

But in the past two years, Biden has cut that $2.1 trillion deficit by 33%, to $1.4 trillion. That isn’t stopping the GOP from screaming that spending has to be curbed because there’s a Democrat in the White House. On to cartoons.

A high-stakes game of chicken:

Their plan is to never have a plan:

Alec Baldwin’s on line one Mr. Speaker:

Truth is always in the eye of the beholder:

Floods in California have people looking for new places to stay:

David Crosby would be spinning in his grave:

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A MAGA Idea Wrongo Supports

The Daily Escape:

Sunset, Tucson, AZ – January 2023 photo by Leila Shehab

Sometimes your worst political enemies are on the same page with you. Axios reports that a:

“…threat of cuts to US defense spending has emerged as a flashpoint in House Republicans’ first week in the majority, widening the GOP’s isolationist fault line and exposing the fragility of Kevin McCarthy’s young speakership.”

The backstory here is that according to Bloomberg, among the concessions new House Speaker McCarthy made to secure the job was to agree to vote on a budget framework that caps 2024 discretionary spending at fiscal 2022 levels. Unless the Pentagon is exempted, that could result in a $75 billion drop in defense spending:

“National defense spending, which primarily funds the Pentagon, was about $782 billion in fiscal 2022 and rose $75 billion to $857 billion in fiscal 2023.”

The deal that McCarthy has apparently agreed to would have the House commit to passing bills that would cap all discretionary spending at fiscal year 2022 levels, or roughly $1.47 trillion.

But one of the big wins for Senate Republicans in last year’s budget talks was a bigger defense budget. Sen. McConnell might want to check in with the House MAGA Republicans, since they’re going in the opposite direction.

Wrongo agrees that the idea of cutting $75-$100 billion (or more) from the Pentagon should be up for discussion. Consider that in 2021, the Congressional Budget Office (CBO) released a study that outlined three options for saving over $1 trillion in Pentagon spending over the next ten years without damaging our defense capabilities.

All three options involved cutting the size of the armed forces, avoiding large boots-on-the-ground wars like Iraq and Afghanistan, and relying on allies to do more in their own defense.

Wrongo wrote about the 2021 CBO study here. The CBO report put the potential cut in historical perspective: A $1 trillion cut (14%) over a decade would be far smaller than the cuts to America’s military spending in 1988-1997 (30%), and the 25% cut we had in 2010-2015.

A $1 trillion saving isn’t chump change. Those funds could be used to prevent future pandemics, address climate change, or reduce economic injustice. These are all pressing American problems.

The MAGA’s ideas on defense spending cuts might find support from a few progressives in Congress, including Reps. Barbara Lee (D-CA) and Mark Pocan (D-WI), who pitched a $100 billion haircut for the DoD earlier this year. But this year’s Pentagon budget boost easily passed both the House and Senate on a bipartisan basis.

Both Republican and Democratic House war hawks will resist the idea of cutting defense spending. Some will cite the defense of Ukraine, which will only account for $45 billion of military spending in the coming year. Some will mention Taiwan, citing China’s aggressive military stance toward the island nation.

But how about developing a clear global military strategy along with the willingness to carry it out? Instead of simply talking about how many dollars we should spend.

And the CBO’s proposed strategic shifts don’t account for what could be saved by streamlining the Pentagon by reducing its cadre of over half a million private contractors, many of whom perform tasks at prices higher than it would cost to do the same work with government employees.

The likely outcome is that House Republicans will fail to cut defense spending while sticking to their plan of holding the 2024 discretionary spending flat. So Republicans will focus on social spending to reduce the fiscal 2024 budget to 2022 levels. But if you ask Americans what spending they want to see cut, they will never say that we ought to cut people’s retirement security.

Wrongo has little hope that this 118th Congress will work to solve the three great problems that face America: Our revenue problem, our social spending/cost inflation problem, and our defense spending problem. As Jennifer Rubin says in the WaPo:

“The danger for the GOP has always been that a short stint in irresponsible governance will wake up the electorate to their manifest unfitness, thereby dooming the party’s chances in 2024. The danger for the country is that, in the meantime, the MAGA extremists will do permanent damage to the U.S. economy and national security.”

The hard Right MAGAs and the anti-democracy Republican Party must be made into a permanent minority, as it was during the Roosevelt years, and for decades thereafter.

The battle for 2024 starts now.

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Sunday Cartoon Blogging – January 8, 2023

On the fifteenth ballot of the new year, the House finally selected Kevin McCarthy (R-CA), as its new Speaker. What ended the impasse? In addition to the list of “concessions” that we know about, what other promises did McCarthy make to Freedom Caucus?

When selecting a new Speaker, the House operates more like a parliamentary system than America is used to or expects. When the Party in power has a slim majority, and if there is contention within that Party, coalitions must be built, promises are made, and concessions are extracted.

It seems that McCarthy relinquished all the power and authority of the office in order to win the title of Speaker. But a weak Speaker leading a fractured caucus is actually dangerous. The Republican House can frustrate Biden’s legislative agenda. It can conduct endless oversight hearings and investigations. It can restrict government spending.

When you look at the demands of the 20 anti-McCarthy holdouts and consider what he conceded to them, the next two years will be fractious. Over the past four days, they made demands in four areas. First, they object to funding Ukraine. They also object to the size of the omnibus spending bill that passed at the end of the last Congress. Third, they don’t want the US debt ceiling extended. Lastly, they want to hold investigations. Many investigations.

Since the bill funding Ukraine and the omnibus spending bill passed with bi-partisan support in both Houses, any action they try to take on those two are likely to fail. But they have the right to investigate anything and everything, so we need to be prepared for that.

The debt ceiling is a problem. There will be bi-partisan support in both Houses for increasing it, but McCarthy will control whether a clean debt ceiling increase ever gets to the House floor for a vote. There will be a bi-partisan group of House members to support that bill, but if McCarthy goes to Democrats for the needed votes to pass a debt ceiling increase, the anti-McCarthy faction will attempt to remove him from the Speaker position.

It’s very possible that McCarthy will be successfully deposed if Democrats aren’t inclined to save him. It was this kind of behavior that convinced John Boehner to retire.

McCarthy almost certainly made concessions about Ukraine and the debt ceiling and government spending in order to win the job. He will either break these promises, or he’ll lead the country to financial ruin. Or the moderates in the House GOP will try to kick him out. The Republicans have a majority but it’s not a functional one. On to cartoons.

McCarthy’s headaches are just beginning:

He’s a weak GOP Speaker, not a Pope:

It’s way past time for the GOP to hit the target:

Last week was deja vu of Jan 6 two years ago:

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Monday Wake Up Call – December 12, 2022

The Daily Escape:

Oak Creek in snow, Sedona, AZ – November 2022 photo by Ray Redstone Photography

What is it with our national politicians? There are only a few days left for the House and Senate to increase the country’s debt limit, but both Parties have been screwing around, and now it looks like they may punt the problem to the incoming Congress.

From the NYT:

“Congressional leaders have all but abandoned the idea of acting to raise the debt ceiling this month before Democrats lose control of the House, punting the issue to a new Congress when Republicans have vowed to fight the move, and setting up a clash next year that could bring the American economy to the brink of crisis.”

The plan had been for Democrats to act during the lame-duck post-election session to increase the legal borrowing limit. That would take advantage of the Dems’ final month of control of both Houses of Congress. It would head off a pissing contest with Republicans when they take over the House in January. Republicans have threatened to block the increase once they are in charge of the House. They plan to hold it hostage until the Democrats agree to substantial cuts to domestic spending and Social Security, Medicare, and Medicaid.

There are several problems here. The debt ceiling which the US will reach sometime next year; the expiration of the last stopgap funding bill that expires on Dec. 16; and passing an overall budget for the current fiscal year.

The Dems had planned to attach a series of other priorities to the big funding package, including the reform of the Electoral Count Act (ECA), a critical reform that helps prevent election denier shenanigans in 2024. On December 3, Wrongo warned that this was a high risk gambit: (emphasis by Wrongo)

“…the Democrats need Mitch McConnell and other GOP Senate leaders to agree to attach ECA reform to a spending bill and enlist the 10 GOP Senators to support it. That means the GOP controls whether this bill is enacted.”

Now we’re hearing that the leadership of both Parties can’t get to an agreement on the big package. More from the NYT:

“Republicans and Democrats remain at odds over how to split funding between military and social programs. Talks are set to continue through the weekend ahead of the Dec. 16 deadline, though aides said lawmakers could pass a one-week stopgap bill to give negotiations additional time.”

So America’s Christmas present from Congress will be no Electoral Count Act reform and no new budget, and no debt ceiling increase. Instead, we’ll get another Continuing Resolution that will fund the government until early in 2023 when the Republicans will try once again to toss the US credit rating off a high cliff with their far Right ideological theories on US government debt.

Under the last debt limit increase passed late in 2021, the federal government can borrow $31.381 trillion. Total national debt has been slightly above that level, but since a small portion of the debt is exempt from the debt ceiling, we’ve stayed in compliance. As of last week, total debt subject to the debt limit got as close as $31.345 trillion.

The consequences of failing to extend the debt limit are immediate and bring great risk. For example, it could force the government to choose between paying Social Security checks or paying the interest due on the country’s debt. That happened in 2011, when Congressional Republicans pressured President Obama to accept similar spending cuts in exchange for raising the debt limit.

That standoff led to downgrading the credit rating of the US. It rattled American investors and the US economy. This time, it could have global economic implications, given that the world is facing a global recession.

Before you say: Well, these birds learned this lesson back then, so they surely will make a deal this time. Consider that Goldman Sachs reports that less than a quarter of Republicans and less than a third of Democrats who will serve in the House in 2023 served there in 2011.

Time to wake up, Congress! Sure, some of you are very old, and want to go home for the holidays. But we pay you to fix things, not to make them worse. Schumer and Pelosi should make them all stay in DC until they vote on what the country needs.

To help them wake up, watch, and listen to a live version of the Allman Brothers’ “Midnight Rider” with Vince Gill, Gregg Allman and Zac Brown from a 2014 performance at the Fox Theater in Atlanta. One of the wonders of live music is what happens when artists collaborate in a live setting:

We’re also seeing Chuck Leavell on keyboards and Kenny Aronoff on drums.

Sample Lyric:

And I don’t own the clothes I’m wearing
And the road goes on forever
And I’ve got one more silver dollar
But I’m not gonna let ’em catch me, no
Not gonna let ’em catch the midnight rider

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Sunday Cartoon Blogging – Christmas Eve 2017

(The Wrongologist is taking a brief holiday break. Blogging will resume on Wednesday, 12/27. In the meantime, Merry Christmas!)

The Daily Escape:

Jingle Bell Jog – Ft. Lauderdale FL, 2017. Better for ya than SantaCon.

A final Christmas Eve word about the unwanted gifts the Trump tax cut is foisting on us. In the short term, it will stimulate consumer demand. The economy may “grow”, but our tax receipts cannot.

Soon, these tax cuts will place our government on a fiscally precarious footing. Expect the credit rating agencies (Moody’s, Standard & Poors) to start wagging their tongues, warning of their concerns about the country’s overall debt levels. It is possible that the repatriation of some of the massive off-shore profits that American firms have hoarded may come home. To the extent that they return, and some taxes are paid on them, this (one time) tax receipt will likely make the 2018 and 2019 annual budget deficits somewhat smaller than the colossal ones to follow.

After that, the government’s income will fall, and we will hear bi-partisan calls for deficit reduction, and lower spending targets will be the norm. The effects of tax legislation can take a long time to shake out, and there often are unintended effects.

But make no mistake, the GOP will start talking about the Coming Debt Apocalypse next month.

On to a few cartoons. Here is the difference between the parties:

 

Trump’s year in review:

War is the answer to any question:

Trump’s touting of something terrific slides downhill:

Congress flies home for Christmas:

Congress gives empty present to our kids:

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What Will Dems Do When The GOP Says: “The Deficit Matters”?

The Daily Escape:

Big Ben being cleaned. In order to clean the four clock faces, every 5-7 years, skilled climbers hang down from the belfry on ropes, and they clean the front of each clock face. There is one removable panel of glass on each face, which is removed during the cleaning so that the clock maintenance staff can talk to the cleaners while they’re working. (“you missed a spot?”) Hat tip to Wrongo’s friends at the Goodspeed Opera House!

Yesterday we pointed out that there is a very large program that the country needs to fund if we are to maintain our position in the global superpower competition. The issue at hand is the stunning thought that we might lose up to 75 million jobs to automation in the next 13 years, and that we need to train the out-of-work unfortunates for new jobs in a different economy.

It’s highly unlikely that we would need to train that many, but it could be 25 million Americans. And we have no idea where the money would come from to accomplish that. After all, the Republicans now plan to reduce tax receipts bigly, thus adding to the deficit and thereby, to the total debt of the country.

We know that as soon as the new tax cuts begin accruing to their patrons, the GOP will start talking about reducing the budget deficit by cutting non-military expenses. Ron Brownstein conceives the Republican tax plan correctly:

Gaius Publius observes: (brackets and editing by the Wrongologist)

As they did in the 1980s, Republicans are laying a “deficit trap” for Democrats. As they did before, they’re blowing up the budget, then using deficit [fear] to force Democrats to “be responsible” about cutting social programs — “because deficits matter.”

In the 1980s Republicans ran up the deficit, then insisted that Democrats work with them to raise taxes on the middle class to over-fund the Social Security (SS) Trust Fund. This converted SS from a pay-as-you-go system that increased revenues as needed via adjustments to the salary cap, to a pay-in-advance system. That allowed any excess SS money to be loaned back to the government, partially concealing the large deficits that Reagan was running up.

Today, Republicans are expanding the deficit again, and are already starting to talk about deficits to argue for cuts in what they call “entitlements” — Medicare, Medicaid, and eventually Social Security, even though Social Security can be self-funding.

Fear of deficits is the go-to Republican ploy to try to maim or kill the FDR and LBJ-created social safety net. To the extent that Democrats are willing to accept the GOP’s argument that both parties need to be responsible to decrease the deficits, they will support cuts in social services. Even Obama was willing to consider doing just that in the name of “bipartisanship”. More from Gaius:

The reality — Deficits aren’t dangerous at all until there’s a big spike in inflation, which is nowhere near happening and won’t be near happening for a generation…

Do we want the US government to shrink the money supply year after year after year, by running budget surpluses, or do we want to grow the amount of money in the private sector, making more available for use by the middle class?  The trillions spent on the current GOP giveaway to the already-rich could have been given to college students in debt, or people still underwater in their mortgages since the Wall Street-created crash of 2008. It could have been used to build better roads, airports, seaports or a national high speed internet backbone.

What would be the effect of that re-allocation of money?

Back to Gaius Publius for the final words. Which of these three options would you rather the government choose:

  • Spend money on the already-rich?
  • Spend money on you and the country’s needs, ignoring the pleas of the already-rich?
  • Hoard as much money as possible in a vault and spend the least possible?

The first is the GOP’s current tax plan. The second is a plan for the many, an FDR-style economic policy. The third is the GOP’s wet dream, one that they will ask Democrats to help them accomplish once the already-rich have banked their share of our tax money.

Wrongo’s fear is that at some point down the road, a compromise will be offered up: Cuts to social programs in exchange for a repeal of some of the more onerous tax cuts. The only issue will be the extent of the cuts to social programs.

It will be celebrated as bipartisan sanity returning to Washington.

Our system is revolting. Why aren’t we?

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Trump’s Tax Proposal Silences the GOP’s Deficit Hawks

The Daily Escape:

African Elephants – photo from Nature Photography

African Elephants clearly are not deficit hawks. But, neither are most Republicans in Congress, despite all their complaining about spending that adds to the deficit. Trump’s tax proposal is out. It’s interesting that the administration decided it was a good idea to put a vague blueprint laying out big tax cuts on a single sheet of paper.

It could take some time to process Trump’s “proposal”, but as the NYT says, it will bring a reckoning for Republican deficit hawks:

As President Trump’s top economic advisers faced a barrage of questions on Wednesday about the tax plan they had just unfurled, there was one that they struggled most to answer: how to keep the “massive tax cuts” they proposed from ballooning the federal deficit…Republican budget hawks will need to decide whether they want to stick to the arguments of fiscal responsibility that they used to bludgeon Democrats during the Obama era.

More from the NYT: (emphasis by the Wrongologist)

Mick Mulvaney, director of the Office of Management and Budget, who was a fierce critic of deficits when he was a member of Congress, offered a glimpse of the rationale his former colleagues might embrace. “As a conservative, that bothers me a little bit,” he said Tuesday on CNN of the possibility that Mr. Trump’s tax plan would increase the deficit. “But we also look at deficits through sort of a different lens.”

While we haven’t yet seen definitive estimates of the cost of Trump’s one-pager, it will certainly add to the deficit, and the negative numbers range up to an additional $6 Trillion over the next 10 years.

And when Treasury Secretary Mnuchin says that Trump’s tax plan “will pay for itself,” he isn’t credible. He also told ABC News that he couldn’t guarantee that middle-class families wouldn’t pay more under the proposal:

I can’t make any guarantees until this thing is done and it’s on the president’s desk. But I can tell you, that’s our number one objective in this…

Word salad. Helping the middle class is the furthest thing from their minds. Trump, Mnuchin, Ryan and the rest want to give a targeted stimulus to the rich and corporations.

They disguise tax cuts by calling them “tax reform”. Whatever they call it, they want the biggest tax cut for rich people that they can push through the House and Senate. Calling it “tax reform” is useful because “yuuge tax cuts for the rich” won’t be all that popular politically.

It’s inevitable that “middle class families” will end up paying more. Somebody’s got to pay for that massive military buildup. And the GOP cries of deficit piety are a shell game. Here is Kevin Drum:

When does this nonsense stop? Republicans aren’t deficit hawks. They haven’t been since the Reagan era. Republicans used to be deficit hawks, but the whole point of the Reagan Revolution was that tax cuts were more important than deficits. Their only concern about the deficit these days is as a handy excuse for opposing any increase to social welfare programs.

Trump’s tax plan is the same old Republican orthodoxy that has been around for decades.

Wrongo recommends this article from Fortune Magazine in 1955: “How Top Executives Live”. The GOP constantly says that if the 1% are forced to pay high taxes, they won’t work as hard to innovate and create jobs. This article, from the time when personal tax rates went from 40%-75%, shows they didn’t need low taxes back then to work hard:

The successful American executive, for example, gets up early–about 7:00 A.M.–eats a large breakfast, and rushes to his office by train or auto. It is not unusual for him, after spending from 9:00 A.M. until 6:00 P.M. in his office, to hurry home, eat dinner, and crawl into bed with a briefcase full of homework. He is constantly pressed for time…

Wrongo is cranky about the GOP’s desire to always shift the tax burden downward, and about their success in doing it. What Trump will get passed is another round of debt-financed upper-class tax cuts.

That will suit Trump and Ryan just fine.

Let’s go out with some music that references the life and times of Jonathan Demme, director of “Silence of the Lambs” and “Philadelphia”, who died on Wednesday. Demme also directed the best Rock movie ever made, “Stop Making Sense” featuring the Talking Heads. Here is “Life in Wartime” live, and that’s Parliament – Funkadelic’s Bernie Worrell on keyboards. This isn’t the first time Wrongo has posted this video:

https://www.youtube.com/watch?v=obAtn6I5rbY

Those who read the Wrongologist in email can view the video here.

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