Kevin McCarthy’s proposal for federal spending going forward – which he claims is THE thing his GOP colleagues need to raise the debt ceiling – is now largely on the street. And its the usual nibbling around the edges we’ve come to expect from the alleged fiscal hawks who just want a different looking big government then we have now.
As usual though, the GOP has a fundamental math problem – their cuts won’t really do much to limit the deficit, but do endanger social programs that enjoy wide support. Rescinding the IRS funding from the Inflation Reduction Act will greatly reduce tax revenue collections, though it is another swipe at the regulatory state that the GOP loathes. Nickle and diming the food aid and work requirements proposed in the bill will directly hurt MAGA GOP base folks, which of course McCarthy will be happy to not speak about.
But the more fundamental flaw in his math is that his proposal only take the deficit down by $4.5 Trillion over a decade. Which seems huge, except it is set against a $7.8 Trillion increase to the debt from the Trump administration’s policies over most of that same period. Now Math may not always be my strong suit, but I read that to say that McCarthy’s coalition – even if they were to get their own senate colleagues to support this (unlikely) and then peel off enough Democrats to pass it (well nigh impossible) is still short $3.3 trillion dollars. Which happens to be approximately the Federal Appropriation for a single fiscal year, including mandatory Earned Benefits. And since the federal government spends roughly 1/3rd more then it takes in across all programs and all revenue sources, he’s not actually proposing much change.
And to top it off, this forward looking appropriations negation for future year spending is tied to raising the debt ceiling – which is all about money already appropriated by Congress, which the federal government is legally obligated to spend as Congress directed. The Constitution says so. The Constitution also says the full faith and credit of the United States shall not be placed in question, which is the pickle barrel McCarthy and House Republicans are trying to tie President Biden over by linking debt ceiling increases to negotiations for the budget.Â
My question to the Speaker is what are you going to do when you ram this through and Senate Republicans can’t carry it anywhere? Do you really think taking the US to the credit brink is best way to do this? And why oh why do you believe that threatening the entire economy is a good way to show off how much better people will be under the GOP?
It’s hard for me to be worried about the GOP threatening the economy when the Fed is actively tanking it as I type.Report
They sure seem to be trying, and yet unemployment remains historically low, wages are growing, and inflation appears to be backing off.Report
Keep raising the prime interest rate and see what eventually happens.
The Fed incompetently blew their inflation call and now seem hell bent on overcorrecting. These people should not be entrusted with so much power. But I digress,..
To your article, I don’t recall one of these debt ceiling mexican standoffs ever tanking the economy. They temporally tank the markets, but as you know, the markets are not the economy.Report
I don’t claim to know what would happen in a default but I think the situation with the fed is the natural result of a situation where the other major lever of controlling inflation, i.e. tax increases, are off the table everywhere and anywhere for… reasons.Report
Well, obviously so far the mexican standoffs have, historically, mostly ended in one side or the other knuckling under before the hostage was shot. In most cases the right knuckled under though Obama, in what is likely his absolutely worst decision as President ever, ended up giving them the sequester in exchange for a debt ceiling hike* and that turbo charged the problem.
*Via a series of miscalculations and gross political misreading of his opposition coupled, possibly, with drinking the kool-aid of his own campaign rhetoric.Report
This is what I meant about how the “MSNBC Republicans” are now in the Democratic party, at least here in California.
My wife manages a small business and was just invited to one of those business networking events, where Mayor Karen Bass is the featured speaker. The event stresses how this is a chance for business leaders to hobnob and get face time with Bass and other city officials.
Meanwhile, the California Republicans in the inland red areas are frothing at the mouth and rolling on the floor ranting about secession and drag queens.
It isn’t just that they lack power- they do, in plenty of cities and counties in California. Its more that they just have no effing clue how to make the buses run on time or the electricity flowing or the basic machinery of government and business operate.
If you’re a business owner, what point is there in getting a meeting with Margerie Taylor Greene or Louie Gohmert? What are you going to do, try to talk to them about import tariffs while their eyes roll back in their head and they babble about Satan worshipping pedophiles?Report
Maybe we could get some people to argue that the economy isn’t tanking.
Question the definitions of “recession” and whatnot.
“Two consecutive quarters of negative growth? Where in the hell did you hear that?”Report
Maybe it isn’t. But it sure will if the government defaults.Report