SPOILER: They Didn’t

One of the few benefits about me still being behind in my blogging. The Friday in question was last Friday. It’s now Tuesday.

Congress Seeking To Fund Government, Raise Debt Ceiling By Friday To Avoid Shutdown | The Daily Wire

Democratic leaders are attempting to juggle several objectives in the coming days — namely, passing the $1.75 trillion Build Back Better Act, approving the National Defense Authorization Act, and raising or suspending the debt ceiling.

Politico explained:

The House could vote as early as Wednesday to avert a shutdown, sending the stopgap measure to the Senate. While leaders have yet to settle on an end date, they are mulling mid to late January. That span would buy top lawmakers and the White House less than two months to hash out a bipartisan deal, which would include revamped spending totals for the military and all the other federal agencies that have been running on autopilot since the new fiscal year began on Oct. 1.

Democrats had originally eyed a short-term funding fix that would expire before the holidays, hoping to keep the pressure on Republicans to negotiate a broader funding deal before Christmas. But GOP leaders have shown no inclination to participate in those talks, leveraging the threat of sticking Democrats with non-defense funding levels established when Donald Trump was president.

This is not something any of the Democrats will accept. I doubt even Senators Joe Manchin (D-WV) and Krysten Sinema (D-AZ) are okay with that. So, something will get passed. Something that just about everyone hates, probably. The gamesmanship is a little interesting. Senate Majority Leader Mitch McConnell (R-KY) has made it clear that he’s going to force the Democrats to go it alone on the debt ceiling. I don’t think he’s going to back down on that, but he may have to give them something else in return.

I Think Yellen Just Told Us How to Stop Build Back Better

Yellen Says Biden’s $1.2 Trillion Infrastructure Bill Demands Raising Of The Debt Limit ‘As Soon As Possible’ | The Daily Wire

But as I recall, Senate Minority Leader Mitch McConnell (R-KY) said the Democrats were on their own for the debt ceiling raise. He gave them a temporary reprieve, but made it clear he wasn’t going to bail them out again. He gave them enough time to do it on their own. It does not appear to me that they’ve done anything, and time is once again running out.

“Yesterday, the President signed the Infrastructure Investment and Jobs Act, which appropriates $118 billion for the Highway Trust Fund,” her letter explained. “These funds must be transferred into the Highway Trust Fund within one month after the enactment of the legislation, and the transfer will be completed on December 15. Promptly thereafter, the funds will be invested in nonmarketable Treasury securities subject to the debt limit.”

“While I have a high degree of confidence that Treasury will be able to finance the U.S. government through December 15 and complete the Highway Trust Fund investment, there are scenarios in which Treasury would be left with insufficient remaining resources to continue to finance the operations of the U.S. government beyond this date,” she continued. “As the federal government’s cash flow is subject to unavoidable variability, I will continue to update Congress as more information becomes available.”

“To ensure the full faith and credit of the United States, it is critical that Congress raise or suspend the debt limit as soon as possible.”

Suspend. The Democrats always want to suspend it. Then they can pretend there is an infinite supply of money. Both sides do that really, but raising the limit every year allows them to at least pretend they care about it.

I’ve always maintained that the debt limit ceiling should be based on a percentage of GDP. And I would create a law mandating that and have the law set a pretty high percentage initially (because we’re over any sane amount already), and have it slowly drop to a more fiscally responsible number.

I Told You So on This Too

I’ll have to look up the posts. They’re at least a decade old.

Inflation Will Make Government Budget Problems Worse (reason.com)

We financed our debt with short term low-interest loans. Now we must refinance at substantially higher rates. That makes our debt worse, which further slows down the economy and makes it more difficult for us to pay off our debt.

Right now is the worst possible time to be adding to our debt.

Now consider the public debt—especially the federal debt that ballooned from large deficits in recent years. (In 2020, federal revenues were $3.4 trillion and spending was $6.6 trillion.) The interest cost of the national debt in 2008 was $253 billion and remained at about that level through 2015. Even though the debt doubled in those years, sharply falling interest rates and low inflation worked to contain costs.

But that was yesterday. With today's higher inflation and rising interest rates (perhaps with more to come), the Congressional Budget Office (CBO) estimates the interest cost of public debt to be $413 billion in 2021. Obviously, any dollar spent on interest cannot be spent on government benefits and services to taxpayers.

What's Next?

Looking ahead, the CBO expects much of the same. For 2026, the interest rate on the 10-year Treasury projects to 2.6 percent versus the current 1.5 percent, with the interest cost of the debt rising to $524 billion. For 2030, it's 2.8 percent and $829 billion, respectively.

Now, we are talking about real money. Just to put $829 billion into perspective, in 2020, the United States spent $714 billion on defense, $769 billion on Medicare, and $914 billion on all nondefense discretionary spending. Back-of-the-envelope calculations strongly suggest that some spending categories will have to give.

Yes, very soon the interest on our debt will be the largest part of our budget. That is unsustainable. Forget about the long term. That’s unsustainable in the very short term. We’ve been fortunate for the last 15 years that inflation and interest rates have been so low. Now we’re going to get slammed.

Be Careful. Republicans Are ”Seizing” Again.

McConnell seizes on debt standoff to undermine Biden agenda (apnews.com)

WASHINGTON (AP) — In the frantic bid to avert a default on the nation’s debt, Senate Republican leader Mitch McConnell held a position of unusual power — as the one who orchestrated both the problem and the solution.

McConnell is no longer the majority leader, but he is exerting his minority status in convoluted and uncharted ways, all in an effort to stop President Joe Biden’s domestic agenda and even if doing so pushes the country toward grave economic uncertainty.

All said, the outcome of this debt crisis leaves zero confidence there won’t be a next one. In fact, McConnell engineered an end to the standoff that ensures Congress will be in the same spot in December when funding to pay America’s bills next runs out. That means another potentially devastating debt showdown, all as the COVID-19 crisis lingers and the economy struggles to recover.

Notice how the AP does this. The Democrats control the White House, and both Chambers of Congress. They can’t get the debt ceiling raised, and it’s not the fault of any Democrats, but instead the fault of one man, a Republican, Senator Mitch McConnell (R-KY). This is nonsense.

Whenever you read or hear about Republicans “seizing” or “pouncing”, you know that the Democrats have screwed up, and the media is trying to distract you from it by talking about what the Republicans are doing.

Media Bias 101.

McConnell Channels His Inner Picard

Biden Warned In Letter Ripping Schumer’s Speech: ‘Even Democratic Senators Were Visibly Embarrassed’ | The Daily Wire

Senate Minority Leader Mitch McConnell (R-KY) wrote a scathing letter to President Joe Biden on Friday informing the president that Republicans would not bail out Democrats again if they failed to raise the debt limit by themselves.

McConnell’s letter also called out Senate Majority Leader Charles Schumer’s (D-NY) speech on the Senate floor on Thursday evening, which was widely criticized after Schumer attacked Republicans despite Republicans having thrown him a lifeline to get out of a situation that would have been bad for the Democratic Party.

McConnell began:

Last night, Republicans filled the leadership vacuum that has troubled the Senate since January. I write to inform you that I will not provide such assistance again if your all-Democrat government drifts into another avoidable crisis.

The Senate Democratic Leader had three months’ notice to handle one of his most basic governing duties. Amazingly, even this proved to be asking too much. Senator Schumer spent 11 weeks claiming he lacked the time and the leadership skills to manage a straightforward process that would take less than two weeks. Whether through weakness or an intentional effort to bully his own members, Senator Schumer marched the nation to the doorstep of disaster. Embarrassingly, it got to the point where Senators on both sides were pleading for leadership to fill the void and protect our citizens. I stepped up.

Or, in other words:

Read the whole thing. McConnell’s letter is quite brutal and makes it clear that the Democrats can’t count on the Republicans to bail them out again.

I am writing to make it clear that in light of Senator Schumer’s hysterics and my grave concerns about the ways that another vast, reckless, partisan spending bill would hurt Americans and help China, I will not be a party to any further effort to mitigate the consequences of Democratic mismanagement. Your lieutenants on Capitol Hill now have the time they claimed they lacked to address the debt ceiling through standalone reconciliation, and all the tools to do it. They cannot invent another crisis and ask for my help.

Schumer Delivers an Interesting Floor Speech After McConnell Gives Him a Temporary Rescue From His Own Stupidity

Notice Senator Joe Manchin’s (D-WV) reaction at about 1:10. I don’t think he approved.

In fact, that’s putting it mildly.

Manchin to Schumer: Your speech was "f*****g stupid" – HotAir

There was some last-minute drama, as well. Schumer went to the floor and harshly criticized Republicans for provoking the crisis. Schumer won this round of his never-ending battle with McConnell, and he made sure everyone knew it. But Republicans — and Sen. Joe Manchin (D-W.Va.) — didn’t like the tone of Schumer’s remarks. Senate Minority Whip John Thune complained personally to Schumer on the floor, while Sens. Mike Rounds (R-S.D.) and Mitt Romney (R-Utah) complained to reporters.

Manchin told Schumer the speech was “fucking stupid,” according to four sources. Then Manchin complained to reporters too. The incident doesn’t really signify anything, except to show how tense everyone is in the Senate these days. And it’s only going to get worse.

Well, that seems a slight blow to party unity.

Manchin is correct, though. Schumer needs to re-read How to Win Friends and Influence People. He’s been given a temporary respite, and there’s no guarantee that there will be another one. So, maybe, just maybe, the wise course is not to completely tick off those that you’ll need to rescue you next time.

A point Ed agrees with:

Furthermore, Schumer’s speech backfired in the sense that it further alienated not just some Republicans who are willing to collaborate in some policy discussions, but also Manchin — who still is the key to Schumer’s control of the Senate. Maybe this one tiff doesn’t “signify anything,” as Punchbowl asserts, but it does at least point out how unhappy Manchin is with his caucus at the moment, and how entrenched that division has become.

It will be interesting to see where this leads. Stay tuned.

Well, I Guess You and the Other Democrat Thugs on the Hill Better Get On This Right Away Then, Champ

Biden Admin Warns States That Federal Debt Crisis Could Trigger Recession | The Daily Wire

On September 17, CNN obtained a letter sent by the Biden administration to state governments warning that the policy would throw the economy into recession:

Raising or suspending the debt limit does not authorize new spending commitments. It simply enables the government to pay for obligations that Congresses and presidents of both parties have already approved. We expect Congress to act promptly to raise or suspend the debt limit and protect the full faith and credit of the United States — just as it did in a bipartisan fashion three times during the prior Administration and about 80 times since 1960.

Hitting the debt ceiling could cause a recession. Economic growth would falter, unemployment would rise, and the labor market could lose millions of jobs. City and state revenues often decline during a recession, as revenues fall due to declining incomes and spending… if the U.S. defaults on its debt — cities and states could experience a double-whammy: falling revenues and no federal aid as long as Congress refuses to raise or suspend the debt limit. This means critical state services will be at risk for budget cuts, from education to healthcare to pensions.

We’ve known this was coming for quite some time. Why haven’t you done anything about it?

My wife used to have a sign on her desk: “Poor planning on your part does not constitute an emergency on mine.”

That should be posted all over Washington, D.C.

Idiots.

CBO Says We’re Between a Rock And a Hard Place

Interesting report released yesterday by the CBO. While it still depends heavily upon the static analysis that I’ve criticized so often in the past, it does still show the hard choices we’re going to have to make in the very near future.

In short, the report says that if the Bush tax cuts expire on January 1, then we will have a short recession in 2013. I think they’re optimistic about the length of the recession, especially taking into consideration external factors such as the economic crisis in Europe, but it’s not a pretty picture regardless.

Under those fiscal conditions, which will occur under current law, growth in real (inflation-adjusted) GDP in calendar year 2013 will be just 0.5 percent, CBO expects—with the economy projected to contract at an annual rate of 1.3 percent in the first half of the year and expand at an annual rate of 2.3 percent in the second half. Given the pattern of past recessions as identified by the National Bureau of Economic Research, such a contraction in output in the first half of 2013 would probably be judged to be a recession.

However, the CBO says that if the Bush tax cuts are extended, then GDP growth for next year will be around 4.4%. That’s extremely optimistic, considering the current state of the economy and the pace of the “recovery” we’ve had so far. I merely present it as a data point from which to judge the rest of their projections.

Unfortunately, extending the Bush tax cuts is not all sunshine and rainbows, according to the CBO. Since they believe that such an occurrence will limit tax revenue, they see this as a problem down the road. I can’t say it any better than the CBO did, but I will bold some key points:

If all current policies were extended for a prolonged period, federal debt held by the public—currently about 70 percent of GDP, its highest mark since 1950—would continue to rise much faster than GDP.

Such a path for federal debt could not be sustained indefinitely, and policy changes would be required at some point. The more that debt increased before policies were changed, the greater would be the negative consequences—for the nation’s future output and income, for the burden imposed by interest payments on the federal debt, for policymakers’ ability to use tax and spending policies to respond to unexpected challenges, and for the likelihood of a sudden fiscal crisis. And the longer the necessary adjustments in policies were delayed, the more uncertain individuals and businesses would be about future government policies, and the more drastic the ultimate changes in policy would need to be.

The CBO is going to keep hammering this home (and so will I), until someone other than Congressman Paul Ryan (R-WI-01) gets it. The economic path President Barack Obama (D-USA) has put us on leads to financial ruin. And we are very far down the path. Every day we delay doing something about it a) makes it harder to solve, and b) makes the required solutions more drastic.

Now, the CBO thinks that we can avoid this financial ruin by raising taxes. But, unless we can raise taxes to 30% of GDP without destroying the economy (we can’t), then the CBO is wrong. We may need to raise taxes. But we absolutely need to lower spending. And, until we commit to doing the latter, there’s no point in even considering the former.

One final point: politicians, regardless of party, who are ignoring this problem or pretending it doesn’t exist are endangering the future of America. These people must be stopped. Quickly. This is what the elections this November are all about. It’s very simple. You can either vote for America, or against it. The time to choose is now.

What If the Unthinkable Happens?

A little different post from me today. Few numbers, just speculation about a possible result of having high government debt and ignoring our national resources.

I’ve pointed out endlessly the issues relating to the economic crisis in Europe. I’ve also mentioned the ongoing situation in the Middle East more than once. And I’ve discussed our own debt and who owns it constantly. The point I’m trying to make here is that there are high tension areas all over the world. And it’s not getting better. I haven’t even mentioned Korea, or Russia.

This kind of world wide tension is what led to both World Wars.

So, what if the unthinkable happens? What if there’s a protracted, conventional, World War? I won’t go completely unthinkable and discuss nuclear options. I’m just talking about conventional warfare with ships, planes, tanks and lots of young men (and women).

Can the United States win such a war? I don’t want to say that I’d bet against us. Americans have a long history of fighting hardest when our backs are against the wall. And we have an incredible military with the best trained soldiers and the best military minds in the world.

But the odds would definitely be stacked against us.

We certainly don’t seem to have the patience for a four year effort like WWI and WWII. Remember, after two weeks of the War in Iraq, the press was already using the word “quagmire”. It was such a huge issue in the 2004 Presidential race that the Democrats nominated an anti-war hero.

Conventional wars cost a lot of money. How will the United States finance the war effort? The countries that have been buying most of our debt are the countries we’re most likely to be at war with. We’d have to sell war bonds. But we’d still have to finance our existing debt. Which would mean more bonds. And we have a weakened economy. Who’s going to be able to buy the bonds?

What about natural resources? How are we going to power our ships and planes? The countries that have been selling us most of our oil are also the countries we’re most likely to be at war with. We’re not drilling enough here or refining enough here to do it on our own. And it would take money and time to get that infrastructure going again, particularly the refineries.

And it’s not just oil. Building refineries, ships, planes, weapons requires lots of steel. Steel production in the United States is barely a quarter of what it was in 1973. How long would it take to get steel production back up to the levels we’d need for a protracted war? And how much would that cost?

Could we win? I honestly don’t know.

Fortunately, there’s little to no chance of the unthinkable happening, right?

Right?

Grim Milestone

From USDebtClock.org, and presented without comment:

Path to Prosperity 2012 Version

Congressman Paul Ryan (R-WI-01) released this year's version of his Path to Prosperity this week. I give him credit for it, but it's really the work of the House Budget Committee, which he chairs. This will be the starting point for the 2013 budget prepared by the House of Representatives. The Senate is required to prepare their own budget, but they won't. The Senate Majority Leader is a spineless, lying, sniveling coward, who knows that a budget prepared by Democrats would destroy their party.

But, I digress.

This year's version shares quite a bit with last year's version. It greatly simplifies the tax code, and cuts the corporate tax rate to 25% (which is still 25% too high, sadly--but at least it's identical to the top marginal rate). And, based upon CBO's conservative growth estimates, it balances the budget around 2040. Which is far too slow, but I'll get back to that later. Obviously, it also assumes pretty much a complete repeal of ObamaCare.

The major differences lie in two areas: Medicare & Medicaid, and dealing with the sequester. The Medicare/Medicaid section is quite a bit different. Not sure if it's better or worse, but different. Ryan clearly understands the heat he & the Republicans took on this issue last year and is trying to address it in a more palatable way. This part is the same as what was released last year and is commonly called the Wyden-Ryan plan for Medicare, co-authored with Senator Ron Wyden (D-OR).

The heart of the Wyden-Ryan plan is to use competitive bidding to allow private insurers to compete with traditional, 1965-vintage fee-for-service Medicare. If you want to learn more about competitive bidding, see this piece I wrote about Mitt Romney’s proposal for Medicare reform. If that doesn’t quench your thirst, you can read the definitive book on competitive bidding:Bring Market Prices to Medicare, by Robert Coulam, Roger Feldman, and Bryan Dowd.

The basic idea behind competitive bidding is that, say, on a county-by-county basis, you let private plans and traditional Medicare offer plans with the same actuarial value compete, to see who can offer the same package of benefits the most efficiently. Each plan in a given county will name a price for which they are willing to offer these services, and seniors are free to pick whichever plan they want. However, the government will only subsidize an amount equal to the bid proposed by the second-cheapest plan. If you want a more expensive plan, you have to pay the difference yourself.

I have some concerns with this, like what happens when private insurers can't compete with an unfunded government plan, but overall, at least Ryan can't be accused of pushing grandma off a cliff. Also, this clearly is an arrow to the heart of IPAB ("death panels"), one of the most offensive parts of ObamaCare.

As for Medicaid, this section appears to be unworkable to me. Funds are fixed based upon an inflation and population index. That assumes that healthcare services remain static. Generally, not only have healthcare services increased in price, but also in quantity. You're offered a lot more healthcare choices today than you were 50 years ago. In other words, there are more opportunities for you to spend your hard earned dollars on healthcare related costs. This is one of the reasons programs like Medicare and Medicaid always expand beyond expectations. It doesn't seem like to me that the Ryan plan would deal with that, leaving further Medicaid burdens on the states. Maybe that's ok. But I know it'll be a criticism from the left.

Finally, the other significant change in the Ryan plan this year is dealing with the sequester. From the actual doc:

Reprioritizing sequester savings to protect the nation’s security:  The defense budget is slated to be cut by $55 billion, or 10 percent, in January of 2013 through the sequester mechanism enacted as part of the Budget Control Act of 2011. This reduction would be on top of the $487 billion in cuts over ten years proposed in President Obama’s budget. This budget eliminates these additional cuts in the defense budget by replacing them with other spending reductions.  Spending restraint is critical, and defense spending needs to be executed with effectiveness and accountability. But government should take care to ensure that spending is prioritized according to the nation’s needs, not treated indiscriminately when it comes to making cuts. The nation has no higher priority than safeguarding the safety and liberty of its citizens from threats at home and abroad.

As an aside, Ryan points out that the entire $400B of "savings" from President Obama's (D-USA) plan comes from shredding the military budget (emphasis mine).

Yet,  the defining characteristic of the President’s new defense posture is a reduction in the administration’s own defense plan from last year, bringing the total reduction to $487 billion over the next ten years. This number stands out as significant for several reasons. In the President’s latest budget proposal, total spending increases by $1.5 trillion and taxes increase by $1.9 trillion, for a total of around $400 billion of deficit reduction over ten years. A clear‐eyed look at the numbers reveals that American taxpayers and the Department of Defense are being asked to bear the entire burden of deficit reduction under the President’s budget.

Overall, as I said last year, the Ryan plan is a good start. But it still has areas that concern me. In no particular order:

1. There's no way to bind future Congresses to his plan. So, really, any budgetary saving after FY2013 must be taken with a grain of salt. However, with our baseline budgeting, it would establish the "baseline". So, future Congresses would have to explain why their future budgets differ from the baseline. For once, baseline budgeting could play in our favor. Maybe.
2. Spending vs. GDP (based on CBO forecasts) is still too high. It's still over 20% GDP through 2030. That is unacceptable. The President's "plan" never drops below 25% GDP and is nearly 40% GDP in 2050. As I have mentioned numerous times in the past, the President is ignoring our impending financial crisis. The best you can say about his plan is that it may kick the can down the road a bit. Let me repeat this for what seems like the thousandth time. Our impending financial crisis is real, huge, and unavoidable. And the longer we wait to deal with it, the worse it's going to be. We can do something now and maybe have a soft landing, that won't be too terrible. Or we can destroy the economy for a generation or more. The President has chosen the latter. That last statement is not hyperbole. It's not even opinion. It's demonstrable fact..
3. It takes too long to balance the budget (based on CBO forecasts). The budget isn't balanced until 2040. That is also unacceptable. And unrealistic. And disappointing. But it shows the depth of the 2008 financial crisis and how much worse the current White House occupant has made things. It may take decades to undo the damage that he has done to America.
4. Finally, a minor quibble, but I don't think Path to Prosperity is a good name for the document. It's truthful, but not a powerful enough statement. It should be called. Path From the Brink or something. Perhaps even Saving America From Bankruptcy.

Ok, that's the bad news. There's some good news. All of the economic projections are based on low growth estimates from the CBO. That includes the spending vs. GDP projection and the deficit projections. Ryan has released a supplemental document called "The Budgetary Impact of The Path to Prosperity Under Alternative Growth Scenarios". The tax reform and budgetary reform outlined in the plan should act as a giant shot in the arm to the economy. Also, moving towards deficit and debt reduction will make investors less skittish and increase economic investment, which will also boost the economy. Finally, corporations with profits sheltered outside of the U.S. will be allowed to invest this money back in the U.S., further stimulating economic growth.

Currently, U.S. companies have an estimated $1.4 trillion parked offshore and are reluctant to repatriate those funds back home due to the significant taxes that could be incurred under the current U.S. tax system.7 A worldwide tax system essentially locks this money out of the U.S. economy, where – if it were repatriated – it could be used to fund investment, business expansion and job creation in the United States. Policymakers on both sides of the aisle have proposed a temporary repatriation tax holiday in order to give businesses an incentive to send these funds home and put them to work in the U.S. economy. A switch to a territorial tax system would give U.S. businesses a permanent incentive to do exactly that.

This three pronged economic stimulus package (and it actually really would be one), makes the CBO's low growth estimates far too limiting.

In its range of estimates, CBO found that the economy under The Path to Prosperity could be 1 percent larger in 2030, 3 percent larger in 2040 and 6 percent larger in 2050 relative to its long-term base case. By contrast, under the path implied by the extension of current tax and spending policies, the econ0my would shrink by as much as 10 percent in 2030 and 28 percent in 2040. In other words, the difference in outcomes between these two trajectories could sum to as much as 11 percent of total economic output in 2030 and over 30 percent of output in 2040.

[...]

A larger and faster-growing economy leads to significantly higher revenue than the base case. This higher amount of revenue, when compared to the spending levels outlined in The Path to Prosperity, leads to a much-improved fiscal path. Assuming higher growth within the range cited above – percentage-point increases of 0.5 (lower-bound AGS), 0.75 (mid-point AGS), and 1.0 (upper-bound AGS) – the budget could achieve balance in the mid-to-early 2020s, with the upper-bound growth assumption producing budget balance within the ten-year budget window – much sooner than CBO’s estimated balance date of 2039.

In the spirit of a picture painting a trillion words, see below. The red line is the President's "plan". Based on his plan, you can expect total economic collapse sometime between 2030 and 2050. By "total economic collapse", I mean that you should consider an event like the Great Depression as a best case scenario.

I have a couple more posts on this plan coming up. I think they'll be a bit shorter. I want to hit a couple sections of the document and point them out specifically, as I think Ryan makes some incredibly important points that aren't being made elsewhere, or at least aren't being made loud enough.

Serious Question: Why Would You Vote For Obama?

 

I assume if you’re planning on voting for President Barack Obama (D-USA) in 2012, that you voted for him in 2008. Furthermore, I would hope that your vote in 2008 actually had something to do with what he campaigned on. So, let’s roll the tape, shall we?

Major campaign issues from 2008:

• The Economy. Well, with now a record 37 months at 8% or higher unemployment, you’d be hard pressed to argue that he’s turned around the economy, despite a $787 billion stimulus package (hey, where’d that money go, btw?)
• Close Gitmo. Last I checked, Gitmo is still open.
• Get us out of Iraq and Afghanistan. No. And…no.
• Maybe you’re a supporter of gay marriage. Well, how much progress has been made here by the Obama administration? Err…none. In point in fact, I do expect Obama to make a serious push on this front later this year, closer to November. But remember, from January 2009 to January 2011, Obama had both chambers of Congress in his pocket. He could’ve passed anything he wanted to pass related to gay marriage. In a snap. But he didn’t. Remember this post when something doesn’t pass this year and he blames it on the Republicans. If you don’t, I will. And I’ll remind you. Again.
• High gas prices. Ooops.
• The federal deficit and exploding debt. He was going to cut the deficit in half. Last Thursday, Obama passed President George W. Bush’s deficit total. It took him 38 months to pass Bush’s 96 months of out of control spending. Yes, the economy exacerbated that. But I’ve discussed this before. And, surely, if that matters to you, then you’re upset about the fact that our credit rating has been downgraded? And you’re upset about the Democrats failure to pass a budget? But wait, that’s not Obama’s fault, you say! Well, is he, or is he not the leader of the Democrat party? If he pressured Senate Majority Leader Reid (D-NV) to pass a budget, would one get passed? Bet the farm on it.
• Improve race relations. Well, I think we can all agree that hasn’t happened. And isn’t going to as long as that racist thug runs the Department of Justice.
• Tax cuts for 95 percent of working families. Never happened.
• No new taxes for middle class. Well, sure, as long as you don’t count cigarettes, healthcare, or don’t own a small business.
• Improve foreign relations, particularly with the Middle East. Based on this search, that doesn’t appear to have happened.
• He did get ObamaCare passed, but let’s be honest with ourselves. This is not the law that even liberals wanted or were promised. It costs more, does less, and pretty much ensures that every single conservative criticism is going to come true.

Did I miss something? Did something really, you know, awesomely awesome occur in the last 3 years? Or are you just too stupid to realize that the man is a liar who hates America, wants to destroy it, and will say anything to get your vote?

The CBO’s Long Term Budget Outlook

In June, the CBO released their Long Term Budget Outlook (LTBO) for the United States. It does some guesstimating on our fiscal future through the year 2085. It made the papers because it had some scary numbers, but some that weren’t so scary. People talked about it for a few days, and then forgot about it.

After a few minutes of looking at it, I determined that it might be the scariest financial document ever released by our government. Three days of in depth study on the details have not changed my mind.

After my review, I can say one thing for certain. No one in Washington examined this report in detail. No one. Had anyone done so, S&P would not have downgraded our credit rating as there would have been no need. Congress and the President would have come up with a better plan.

You think that statement is naïve? Wait until I get finished.

This will be fairly long, so for those without the patience to read the whole thing, here’s the spoiler ending. The CBO projects two scenarios, one of which is like being doused with gasoline and lit on fire, and the other is more like being covered in barbecue sauce and slow roasted.

The other point I have to make before I get started is this. CBO Director Doug Elmendorf should be embarrassed that his office put this thing out. Part of the reason it’s taken me a while to get around to writing this blog post is because there’s so much in the spreadsheet that is either nonsensical or impossible. I’ve spent the last three days trying to reconstruct where all their numbers came from, what they mean, and determine where exactly the problems exist. It has not been fun.

The LTBO examines our fiscal situation and projects it out 75 years. Of course, this should be examined with a high degree of skepticism. Economists aren’t generally very good at projecting things out even 1 year, much less 75 (and Reuters’ economists can’t even project out next week—but I digress).

The CBO makes no attempt to guess at future law changes or new programs or the possibility of some unforeseen economic boom or bust. It merely attempts to project the effect of current law and current policy.

The LTBO examines two fiscal scenarios, one they call the extended baseline which is based on current law, and one they call alternative which is based more or less on current policy.  In short, the alternative is the doomsday scenario and the extended one is the “good” version, if you can call it that.

The differences between the two scenarios amount to two significant things: continuation of the Bush tax cuts, and continuation of changes to the AMT. The AMT is is the liberals way of making sure our tax code is more “fair”. Basically the AMT says that if you make enough money, you aren’t allowed to take any deductions. It’s a fairly flat tax set around 25%, and you’re required to pay the greater of it or whatever you calculate as your regular income tax using all the deductions available to you. Your income has to reach a certain threshold for the AMT to apply to you. The problem is that the threshold is not indexed, so every couple of years, Congress has to change the AMT law so that it still only affects the high income people and not the middle class.

Neither scenario envisions any sort of entitlement reform. Both scenarios assume an average of somewhat anemic 2.28% GDP annual growth over the next 75 years. That’s disturbing enough itself. That’s the best case scenario. There are some additional tables that assume even lower economic growth down to an average of 1.33%.

The alternative scenario projects that the Bush tax cuts will remain in place for the foreseeable future and that Congress will keep adjusting the AMT. The extended scenario assumes the opposite.

In both scenarios the CBO projects GDP growth, growth of U.S. debt held by the public, and makes projections of government receipts and outlays.

Ok, enough preamble. You with me so far?

Ready for the bad news now?

We’ll start with the alternative scenario. It assumes revenue vs. GDP at roughly 18.4% throughout.

I said the report goes out to 2085, remember? Well, that’s not completely true. Under the alternative scenario the CBO stops projecting the U.S. debt after 2037, 26 years from now. There’s no point in continuing past that point. We’re at 200%. Those are end-of-the-country type numbers. The weight on the economy from that would be so high that it’s hard to see how the country would ever recover. We’d have to just default and start over. It’s likely this would happen long before 2037, and that’s a mere 26 years away. This is the douse yourself with gasoline and light a match scenario. We’ll almost certainly experience riots like what we’ve seen in Greece, Italy, and now the UK this year, only possibly worse.

Remember the alternative is the scenario that I consider far more likely. Cheery news, huh?

Then there’s the extended baseline. This is the Keynesian good news scenario and it assumes that none of the bad things that you’ve ever heard about Keynesian economics are true. It assumes that there’s a 1:1 relationship between taxation and revenue. The CBO has never heard of the Laffer curve, apparently. It’s also never heard of Hauser’s Law, either.

The extended baseline looks much more encouraging, at first glance. Publicly held debt never exceeds 87% of GDP. That’s great news. But outlays reach a mind boggling 34.1% of GDP. Huh? How is it possible to keep the debt down, then? Well, revenues under the extended baseline scenario reach 30.6% of GDP. This is where the CBO begins to engage in outright fantasy. I’m sure that most people who glanced at the CBO report saw that if we don’t make any changes to existing law that things stabilize, and it’s not that awful a situation, and didn’t look at the details.

The details show that it IS an awful situation. Possibly worse than the alternative baseline.

But there’s missing data in the spreadsheet for this one as well. And there’s no mathematical reason for this data to have been scrubbed. The tab containing the data on the AMT stops in 2035. There’s no good reason for this. The other tables show the tax revenue projections out to 2085, which means that AMT had to have been calculated out that far. Yet, for some reason the CBO elected not to show it. The only reason I can see that it was left out was to keep from terrifying people. So, I’m going to let the cat out of the bag and terrify you.

The last year for which AMT calculations are shown, 2035, estimates that 49.5 of all American households will be affected by the AMT. This would hit household income levels at about $50,000 in 2008 dollars. When I attempted to extend this table out to 2085, it becomes quickly apparent why they stopped. Based on my calculations, sometime after 2050, depending on inflation, the AMT reaches all the way down to the poverty level. And that’s how they blast through Hauser’s Law and get to 30.6% revenue.

Let me show you what this means with a simple chart showing about what you’d pay in Federal income tax. This is just the income tax, not social security, Medicare, state & local taxes. And I’m going to base it on the quintiles used by the Census Bureau and the CBO. The data is from a June 2010 CBO report that includes tax data through the year 2007.

Quintile	Effective Tax Rate Now	Avg. Income	Tax $ Paid	Effective Tax Rate ~2050	Tax $ Paid (2007 dollars)	Growth
1st	-6.4%	$18,400	$(1,178)	-6.8%	$(1,178)	0%
2nd	0.1%	$42,500	$425	20%	$8,500	1900%
3rd	4.1%	$64,500	$2,645	25%	$16,125	505%
4th	7.0%	$94,100	$5,834	25%	$23,525	303%
5th	19.0%	$264,700	$50,293	25%	$66,450	32%

Gulp.

There are some assumptions in this table. I assumed that no matter what the AMT would never dip into the 1st quintile. That’s probably optimistic. It looks like to me that it would hit the very top end. Also, the AMT isn’t completely flat. There is an exempt level. That’s the reason for the 2nd quintile’s effective rate only going up to 20%. Yes, that’s mostly a guess, but if anything I feel I’m on the low side here. Also, I would’ve preferred to use median income over average income, but I was unable to obtain that data.

Here’s the same chart including social security and federal excise taxes, assuming those rates stay at constant 2007 levels.

Quintile	Effective Tax Rate Now	Avg. Income	Tax $ Paid	Effective Tax Rate ~2050	Tax $ Paid (2007 dollars)	Growth
1st	4%	$18,400	$736	4%	$736	0%
2nd	10.6%	$42,500	$4,505	30.5%	$12,750	183%
3rd	14.3%	$64,500	$9,224	35.2%	$22,704	146%
4th	17.4%	$94,100	$16,373	35.4%	$33,311	103%
5th	25.1%	$264,700	$66,440	31.1%	$82,322	24%

 

Ok, imagine you’re a politician running for office. Go tell the guy making $42,500 that his total federal taxes are going to nearly triple. Tell the guy making $64,500 that his will more than double. Same for the guy making $94,100. Let me know how those conversations work out for you. I’m guessing you’re not going to get elected. This scenario isn’t happening. Thank God.

These are economy killing numbers. Very very few of the people would have any disposable income under this scenario. That means people who earn their livings based upon products and services paid for with disposable income would have no jobs. These are easily Great Depression type scenarios. At the very least. It’s easy to envision a Great Depression here as a best-case outcome.

And yet the CBO envisions near 4% annual growth in wages, 2.25% GDP growth, and 5% unemployment. These things are quite literally impossible.

So, which scenario is worse? Hard to say. I’d probably prefer the alternative baseline, because at least we get through the pain quicker and can move on. The truth is that both of these scenarios are beyond awful. Anyone, whether you’re a member of the Democrat, Republican, or even The Rent is Too Damn High Party should look at this and realize we need to make significant changes. Now.

I may have issues with President Barack Obama (D-USA), House Speaker John Boehner (R-OH-08), Senate Majority Leader Harry Reid (D-NV), and the rest of the gang up on Capitol Hill, but I do think they’re as good at panicking as the next guy. Anyone studying this report should be panicking. They aren’t. Therefore I stand by my earlier statement that they didn’t read it.

How Big Is Our Debt? Do We Really Have A Spending Problem?

Yes, I know our debt $14.580 trillion as I write this, but how big is that?

No, I’m not going to do some cutesy pictures. I’m going to do some math. Scary math, but simple. Even a Democrat Senator could understand it.

The entire tax revenue in the history of the United States through fiscal year 2010 is $49.531 trillion. Tax revenue so far this year is $2.201 trillion. Simple addition gives me the number $51.732 trillion. That’s it. That’s the sum of the entire tax revenue in the history of the United States. For the rest of this post I’m going to call that ETR to avoid repeating myself endlessly.

$51.732 trillion.

Our debt is $14.580 trillion.

14.580 / 51.732 = .2818.

Our debt is 28.18% of ETR.

This year we will spend $3.7 trillion.

3.7 / 51.732 = .0715

We will spend 7.15% of ETR this year. That’s about 1/14th of the total. 1/14. In one year.

When the Democrats took control of Congress in 2007, our combined tax revenues were $42.740 trillion. Since then, the Democrats have managed to spend $13.563 trillion.

13.563 / 42.740 = .3173

In the last four years, the Democrats have spent 31.73% of the entire amount of revenue we’d collected before their spending binge.

I can be nicer and include revenue up until now, but it doesn’t get much better.

13.563 / 51.732 = .2622

In the last four years, the Democrats have spent 26.22% of ETR.

You think I should only include President Barack Obama’s (D-USA) numbers? Ok.

Outlays for FY 2010 and 2011 (generously giving 2009 to President George W. Bush (R-USA), even though budget wasn’t passed until after he left office) total $7.063 trillion. Total revenue before FY 2010 = $47.369 trillion.

7.063 / 47.369 = .1491

Obama has spent 14.91% of the entire revenues preceding him.

7.063 / 51.732 = .1365

Obama has spent 13.65% of ETR. About 1/7th of ETR. In two years.

If you’ve forgotten since the beginning of this post, ETR means “entire tax revenue in the history of the United States”. Now go back and reread the statement above.

In fairness, so we can see how much it’s grown, if I go back to FY 2007, I get the following: $42.740 trillion gross receipts & total debt of $9.008 trillion.

9.008 / 42.740 = .2108

Before the Democrats took over, our debt was 21.08% of the ETR at the time. That’s bad. No denying it. But, in four years, it has grown from 21.08% to 28.18%. This is why S&P downgraded us. That kind of growth is obscene.

America has a spending problem. Anyone who says otherwise falls into one of four categories. 1) They’re lying, 2) they’re not in possession of the facts, 3) they’re incapable of understanding basic arithmetic, or 4) they’ve lost their minds.

It’s one of those four. There are no other options.

Can We Please Stop Calling It ‘Austerity’?

I’m sick of people using the word “austerity” regarding the GOP budget plans and the recent debt deal. Even Nate Silver (www.fivethirtyeight.com) used it recently, and he’s a numbers guy. He should know better.

From Webster:

Definition of AUSTERITY

1: the quality or state of being austere

2a : an austere act, manner, or attitude
 b : an ascetic practice

3: enforced or extreme economy

Obviously it’s definition 3 that applies to our budgeting. I suppose “enforced” qualifies, but I’m pretty sure that liberals are implying “extreme”. That’s certainly what I hear in my head when someone says “austerity” to me, and I am pretty sure I’m similar to the average Joe in this regard. In fact, since liberals also use the word “extreme” when describing GOP budgetary plans, I’m certain that this is their intention.

Is the debt ceiling deal really so extreme?

Based upon the January 2011 baseline from the CBO, our government will spend just a bit over $46 trillion through 2021. The debt ceiling deal reduces that spending by about $1 trillion, or about 2.2%. Our total deficit spending in that same time frame is right at $7 trillion. That means that we will be spending about 118% of our revenue over that time frame. I’ve mentioned this before, but these are extremely optimistic projections (revenues at 20%+ of GDP starting in 2015, +2.6% average GDP growth). We’re currently spending about 140% of our revenue, and honestly I don’t see any reason to believe at this point that number is going to shrink significantly over the next ten years.

However, assuming the 118% number is correct, then we’d lower spending to 115% of revenue. So, if I tell my accountant that for every $1 I take in, I’m going to spend $1.18, but then I rework my budget and realize I can get it down to $1.15, do you think my accountant is going to call that “austere” or “extreme”? No, me neither.

And it becomes even less extreme if you don’t adopt the CBO’s rosy projections. If we actually spend 130% of revenue, then this debt deal will only cut it to about 127-128%. Yippee.

How about the Ryan plan? It reduces spending by $5.8 trillion through 2012, or about 12.6%. However, it also only drops that 118% down to 115%. That’s because the Ryan plan assumes much less revenue, almost $5 trillion less, due to somewhat more realistic assumptions about economic growth (but I think the Ryan plan is too optimistic also).

In fact, the only plan that has been presented that may deserve the austerity tag is Cut, Cap, & Balance. I don’t believe that CCB has ever been scored by the CBO, but I can do some guessing based upon the January CBO data. I assumed the same optimistic GDP and revenue numbers as given in the CBO baseline, and used the spending caps as defined in the bill. It appears to cut spending by $6 trillion, much like the Ryan plan. The number works out to be about 13.1% reduction in spending. However, it does reduce spending over the next decade to a mere 102% of revenue, increasing the debt by about $1 trillion. That is significantly less than the 118%. I’m still not sure I’d tag it as extreme, though, since we still spend more than we’re bringing in. That’s in total, I should point out. CCB starts running an annual surplus in 2017, assuming the CBO’s optimistic revenue projections. My guess is that if the CBO scored CCB they’d reduce the GDP growth and revenue projections, which might make things worse.

I can’t point this out too many times. Liberals win when they define the argument. When they call these plans austerity measures and we let them, we lose the argument before it ever begins. The only plan above that might deserve that tag is CCB, and I personally wouldn’t even call it austere. Even CCB would increase our current debt from $14.5 trillion to $15.5 trillion at a minimum over the next ten years.

Next Time

I’ve been giving the debt deal more thought, and I have decided there are three things that are still giving me angst. In fact, two of them frustrate me more and more each time I think of them.

Here are the three things we need to be working towards every time we get a chance:

1. Zero-based budgeting. This is vital. We keep patting ourselves on the back, saying “Hey, we finally got some cuts out of Washington. Hooray for us!” Bullhockey. We reduced the trajectory of growth. Real cuts were minimal, and perhaps non-existent. We have to get back to zero-based budgeting and get rid of this idea of baseline budgeting. That’s the only way we can change the language of the debate and make a cut be an actual cut. I think we could have gotten this on this last debt deal and it’s infuriating to me that we didn’t even try. Until we get this, it’s hard to make the case that any progress towards shrinking government is real.
2. Real matching cuts for debt limit increases. Speaker John Boehner (R-OH-08) and others on the GOP side are trumpeting that we now have the Boehner rule on debt ceiling hikes: “In the future, no debt ceiling increase will occur without a matching level of cuts”. Big effing deal. First of all, see point one about “cuts”. Second, we gave President Barack Obama (D-USA) a debt ceiling hike that will last about 20 months. The “cuts” we got are over the next 10 years. If the timeline doesn’t match, the cuts don’t match. In the future, if we raise the debt ceiling for 20 months, then the matching cuts should come from the next 20 months as well. I’m willing to give a little on this, but it has to be close. It can’t be 20 months and 120 months, which is what we got this time. I know this one is going to be hard to achieve, which is why I’m willing to compromise, a little. But this needs to be a goal.
3. Balanced budget amendment. Sure, everyone on the right is screaming about this, saying we didn’t push hard enough for it. I’ll add my voice to the chorus, but forgive me if it’s not a scream. This is a big deal, but as I said earlier in the week, it takes too long to help us turn the corner now, which is what we need to be doing. I’d rather work on 1 & 2 first, because they can have immediate impact.

Don’t mistake my frustration here as frustration with the GOP. Other than not working on #1, which I do think was a winnable issue, I don’t fault our GOP leadership. This is a war, and to win it, we need to start winning battles. Every battle should have some goals. These are the goals I want to start working on in the upcoming battles.

A Few More Depressing Thoughts About The Debt

The plan that will be approved by the Senate today and signed by the President projects debt growth of $7 trillion over the next 10 years, or a 50% increase in our debt.

That’s the bad news. The worse news is this.

That’s based on the rosy economic projections of +3% GDP annually, and interest rates holding the line where they are.

Each .1% on annual GDP works out to be about $50-$100 billion on our government’s balance sheet. So, what happens if we only get to +2.5 GDP annually over the next ten years? That would add about $3-$5 trillion in debt. If interest rates go up a couple points, that could also add $2-$3 trillion in interest payments. Or more.

So, that $7 trillion in debt increase over the next ten years could easily double. We owe $14 trillion now, and could owe another $14 trillion in 2021.

How’s that make you feel?

You understand all my posts from the last couple months saying that we may already be at the tipping point now?

It is no exaggeration to say that the 2012 election is the most important election of my lifetime. Not just for the White House, but the House and Senate as well. The Democrats are trying to destroy America and the American dream. I’ll give them the benefit of the doubt (that they probably don’t deserve) and say that they’re not doing it deliberately, but their policies certainly will. There is now no doubt on that matter.

Math trumps politics.

I keep saying that and I will continue to say it until November 2012, and probably beyond.

Debt Ceiling Deal—Good or Bad?

Of course it’s bad. It came from the federal government. Do you really need to know more than that?

However, it’s not as bad as it could have been, and frankly better than most of us had any right to expect.

A summary can be found here. You should read the summary, or you may not understand the rest of this. You can also see Speaker John Boehner’s (R-OH-08) slides on it here.

Here are my thoughts in a nutshell.

The good:

• The deal gets us into early 2013. Many people think this should fall under the bad list, but I disagree. It will certainly be a campaign issue now, particularly since it’s going to come up so early in the next President’s term. But, since it won’t happen before the election, that will keep President Barack Obama (D-USA) from deliberately sabotaging the talks to win votes. And yes, I believe he’s capable of that.
• The first round of cuts comes from the Boehner bill, not the Reid bill. That means that they’re real cuts (or at least as real as Washington, D.C. ever gets), and not number fakery.
• I’m sure some on the right are annoyed that it doesn’t require a BBA, but nothing with a BBA requirement was ever coming back from the Senate. You’re fooling yourself if you think otherwise. Still, the fact that there’s BBA language in it at all is surprising. It also has some strength, as Congress has to accept the BBA if they can’t come to an agreement and don’t want across the board cuts. No, the BBA isn’t going to happen, but it is still a pretty big bargaining chip, even in the final deal.
• The super committee has hard deadlines to come up with proposals that will pass Congress, and they have to pass the current Congress.
• I mentioned previously that I like sequesters. I’m not particularly in love with this one, but again, its presence forces Congress to move. I like that.
• There’s little doubt, that for now anyway, the Tea Party was the big winner. No, they’re not going to get all they wanted, or even very much of what they wanted, but they forced the movement of this entire debate to the right, and forced the solution to the right as well. They forced both sides to admit that we have a spending problem and a debt problem. As I’ve said previously, it’s going to take a while to turn this boat around. The Tea Party is making slow but steady progress in this direction.

The bad:

• $350 billion of the cuts in the first tranche are from defense. That’s a lot. I’m not saying that we don’t overspend in defense, but in terms of GDP and size of budget overall, we’re at near historic lows, as the chart below shows:
  
• The sequester tranche is unbalanced. 50% of the savings must come from defense. Medicaid and Social Security are excluded. Based upon my calculations earlier, this year’s budget breaks down this way: Social Security, 19.1%, Defense, 18.5%, Other, 18.4%, Unemployment & Welfare (estimated), 16.8%, Medicare, 12.9%, Medicaid, 7.8%, Interest, 6.5%. If you think it’s reasonable that defense should have to bear half the burden, while Social Security & Medicaid, which combined for 27% of the budget, should play no part, then you aren’t thinking clearly. By the way, that 50% for defense adds up to about $600 billion over the 10 years. On top of the $350 billion already in the first tranche. So, basically a trillion dollars. Unrealistic and unsafe.
• The deal assumes the expiration of the Bush tax cuts on 1/1/2013. In fact, it appears to make that almost a requirement.
• There’s no entitlement reform in the package. We weren’t going to get that with this President, but it still bears mentioning. Without entitlement reform, we can’t even claim to have taken a reasonable first step on solving our debt woes.
• I’m not sure if this is enough to make the credit agencies happy. Actually, I know it’s not enough to make them happy. I’m not sure if it’s enough to keep them at their current level of unhappiness. This deal may not avert a credit downgrade. I think it will, but I wouldn’t be the farm on that. We’ll certainly still be on a watch list, and anyone who hasn’t at least dropped our outlook to ‘negative’ will almost certainly do so.

The ugly:

• The whole tax hike situation definitely falls under ugly. Mostly because I can’t decide whether it’s good or bad. Boehner says that it will be almost impossible for the super committee to raise taxes. Others say that’s not true. First, the word “almost” makes me nervous. Second, the mere fact that we can’t figure out if Boehner is right means this part is definitely ugly. Here’s the description from the GOP.

  
  It has an undefined mandate of deficit reduction but the way that is constructed would essentially make it impossible to raise taxes. Anything scored by CBO is based on current law. Current law assumes that taxes are going to go up by three-and-a-half trillion dollars next year [over ten years].  So anything you do to the tax code, unless it starts off with a $3.5 trillion tax increase, it’s going to be adding to the deficit  … It’s almost impossible for them to touch taxes because if they do, almost anything will be scored as a tax cut, making it that much more difficult to reach the $1.5 trillion that they need to get to.

  If you're scratching your head over that, you're not alone.
• The whole process has been beyond ugly. However, there may be a silver lining to all of this. Democrats are like Muslims. They never forget when they feel they’ve been wronged. Witness the number of Democrats who still complain about President Bill Clinton’s (D-USA) impeachment or Vice President Al Gore’s (D-USA) Supreme Court loss to President George W. Bush (R-USA) regarding the FL vote in 2000. This means that any Republican President requesting any kind of debt ceiling increase will face even stiffer opposition than President Barack Obama (D-USA) has had to face.  My interpretation of the Senate Rules (someone will correct me if I’m wrong) is that a debt ceiling increase bill would still require cloture, and therefore a 3/5 majority. Good luck getting any Democrats on board, Mr. Republican President. Even a Democrat President will face, at best, something similar to what we just went through. So, if you’re a Tea Party person, and trying to get our debt ceiling frozen, we may be nearing the point where that dream is a reality.
• The entire BBA sideshow was a pointless distraction. Yes, it was nice to pass Cut, Cap & Balance, but afterwards there were better ways to focus our attention. As I said, I’m surprised that any BBA language has ended up in the final bill. But, even if it were to pass both chambers (two chances: slim and none), it still has to be approved by 2/3 of the states. My 7 year old daughter may be finishing med school by the time that happens. Not that a BBA wouldn’t be a good thing. But I’d rather concentrate on items that we can do now and have an actual chance of being enacted, like zero-based budgeting.  If anything has shown the necessity of going to that, it has been this process. Both Boehner and Senate Majority Leader Harry Reid (D-NV) were made to look silly by the CBO when their bills didn’t do what they said they would. Why? Because they were using the wrong baseline to compare against. And if that doesn’t make your head spin, nothing will. Again, I’m not saying that I’m opposed to a BBA. In fact, I think we should continue to push for it. But we also need to push for solutions that will make things better until (and if) it gets passed.

Marco Rubio Hits One Out Of The Park

If you haven’t watched this video yet, please do so.

 

Poor Senator John Kerry (D-MA) entered a battle of wits against Senator Marco Rubio (R-FL), and he was unarmed.

Supporting Speaker Boehner, Again

Wow, once again I’m forced to support Speaker Boehner (R-OH-08). I guess I’m ready for my RINO card.

There’s this from Dr. Krauthammer:

Consider the Boehner Plan for debt reduction. The Heritage Foundation’s advocacy arm calls it “regrettably insufficient.” Of course it is. That’s what happens when you control only half a branch. But the plan’s achievements are significant. It is all cuts, no taxes. It establishes the precedent that debt-ceiling increases must be accompanied by equal spending cuts. And it provides half a year to both negotiate more fundamental reform (tax and entitlement) and keep the issue of debt reduction constantly in the public eye.

I am somewhat biased about the Boehner Plan because for weeks I’ve been arguing (in this column and elsewhere) for precisely such a solution: a two-stage debt-ceiling hike consisting of a half-year extension with dollar-for-dollar spending cuts, followed by intensive negotiations on entitlement and tax reform. It’s clean. It’s understandable. It’s veto-proof. (Obama won’t dare.) The Republican House should have passed it weeks ago.

And this from one of my twitter friends (@AG_Conservative):

The House Republicans are facing off against a Democratic Senate and the most left wing president in American history on a daily basis.  They are not only fighting them at a huge disadvantage and with a media that has an evident bias, but they are actually winning by any standard.  Are they perfect or have they accomplished everything I want them too? Of course not.  However, they have accomplished a lot and for that they deserve praise and not scorn.  Republicans like Paul Ryan have taken great political risks in order to do what is right and put the country first and it’s time we start rewarding them for it.  The grass roots movements are vital to defining and expanding conservatism, but the Republicans that are now in control in Washington (at least in the house) are our friends and not our enemies.  That is not to diminish the people who are opposing the current plan, who are also doing vital work, but I for one salute Speaker Boehner, Paul Ryan, Eric Cantor, Allen West and others for fighting for our country’s future.  They truly are heroes of the conservative movement.

But my reasoning is even simpler. Look, you can argue that the Speaker should’ve never introduced a new bill and stuck with Cut, Cap & Balance. I might even agree with you. There’s no doubt it’s a better bill than the current one. By orders of magnitude.

But that’s not what happened. We’re not a place where we can say “it’s no bill or this bill”. It’s “this bill or a far worse one”. Those are our two choices.

Now that the new bill has been introduced, and is up for a vote, the Speaker needs our support. If he loses on this one, the Tea Party wing of the party will have cut him off at the knees. He becomes a mute voice at the negotiation table. He’s done incredibly well at negotiation so far. Until today I would’ve said it’s a guarantee that we’re going to get a small debt ceiling increase (which is what we need) with no tax increases, and a decent amount of cuts to baseline funding. Those are HUGE wins. And they’re good PR wins as well. It’s definitely not what the President has wanted.

Now, I’m not so sure. No matter what we end up with, it’s almost certainly going to be to the left of Boehner’s bill, because that bill is going nowhere in the Senate. But if it fails, the debate moves even farther to the left. Senate Majority Leader Harry Reid (D-NV) and President Barack Obama (D-USA) will know that Boehner has lost support of the Tea Party wing of the party. Thus any bill that passes in the House is going to need significant Democrat support. That means the bill moves even further to the left.

I fail to see how that’s a good thing. In my opinion, Congressmen voting no on the Speaker’s bill are snatching defeat from the jaws of victory.

That’s my opinion. If you don’t share it, that’s fine. I understand wanting to stick to principles. Normally I’m right there with you. Read back in this blog, if you think I’m lying. I respect your opinion if you disagree. Please respect mine as well.