Wednesday, January 25, 2023

McCarthy is threatening to hold our economy hostage for spending cuts that he won't identify

As we've seen over the last few weeks, Kevin McCarthy is an incredibly weak speaker who succumbed to the most extreme members of his caucus in order to gain power. And now those forces have laid down the gauntlet: they plan to refuse to raise the debt limit unless they get major reductions in spending. 

But as Catherine Rampell points out - the speaker has a math problem. 

Republicans say they want lower deficits — in fact, they have pledged to balance the budget (that is, no deficit at all) within seven or 10 years. But they have not laid out any plausible mathematical path for arriving at that destination. They promise to cut “wasteful spending” ... but can’t agree on what counts as “waste."...

In short, virtually every possible avenue available for reducing the deficit would be unpopular. Which probably explains why supposedly fiscally conservative Republicans chose not to take them when they controlled both houses of Congress during Trump’s presidency.

This is a breakdown of what Republicans have to work with:

  • 62% of federal spending is on "mandatory programs" like Social Security and Medicare,
  • 30% of federal spending is on "discretionary programs" - with military spending accounting for about half that amount, and
  • 8% of federal spending is on interest payments.
Within the Republican caucus there are disagreements among different groups about cutting mandatory and/or military spending. But there is no way the extremists can meet their goals without taking an ax to one or both of those items.  

On Tuesday, Mitch McConnell put the ball squarely in McCarthy's lap and today Chuck Schumer pilled on.  

For his part, McCarthy is spending his time whining about the fact that Biden won't negotiate with him. The Speaker might not be the sharpest knife in the drawer, but he's smart enough to know that he has zero consensus within his own caucus about where to cut spending and that, even if he was able to put a proposal on the table, the vast majority of voters would hate it. So he wants to pass that buck to Biden.

The bottom line is that McCarthy is threatening to hold our economy hostage for spending cuts that he won't identify. Oh wait...he did mention one thing.

“Does defense getting more than $800 billion, are there areas that I think they could be more efficient in? Yeah. Eliminate all the money spent on ‘wokeism.’ Eliminate all the money that they’re trying to find different fuels and they’re worried about the environment to go through,” McCarthy added. “I want our men and women trained to be able to defend themselves, to secure, to have the best weapons systems possible.”

That statement sums up the GOP agenda in a nutshell. When it trouble - use the word "wokism." Then hide behind "patriotism" to defend your ultimate constituency - the fossil fuel industry.  

It was during the Obama administration that DOD decided to "go green." That wasn't a political move, but a plan to address a national security threat. Here's what Lt Gen (ret) Norman R. Seip, USAF wrote about that in 2014:

Energy is the lifeblood of the military, and our armed forces remain heavily reliant upon fossil fuels. In combat zones, everything on a forward-operating base is powered by oil, including the heating and cooling of tents, the powering of vital communications equipment, and the patrol vehicles themselves.

In Iraq and Afghanistan, our servicemen and women were put at great risk in order to protect supply routes for the fuel convoys that provided vital power supplies to remote forward-operating bases. These convoys were quickly recognized as easy targets for the enemy. From 2003-2007, one in twenty-four fuel convoys resulted in a service-member killed or injured, claiming the lives of over 3,000 Americans.

The national security threat of our single-source dependence is not limited to the battlefield. As the largest institutional consumer of fuel in the world, the Department of Defense is extremely vulnerable to price shocks, which puts strain on the military’s budget...

The impacts of climate change – including severe droughts, record heat waves, extreme storms, food shortages, mass migration, and rising sea levels – will be felt worldwide. Destabilization in already weak states will exacerbate existing security threats and pose a serious threat to those whose mission it is to protect and serve.

For the reasons identified in that quote, the commitment to climate change mitigation and sustainable fuels is already deeply embedded at the Pentagon. McCarthy and his donors in the fossil fuels industry probably couldn't pry things loose, even if they tried. 

So that particular idea is DOA. But it's indicative of the kind of nonsense Republicans are putting out there about the federal budget. That's why McCarthy doesn't want to specify any actual cuts. If he did, even a simple-minded blogger sitting on her couch in Minnesota could see through the bullshit.

3 comments:

  1. It's sure nonsense, and anyone should be able to see through it. I wish I were confident it won't work, though. Guess we'll find out.

    You can see why they're trying it. Talk about balanced budgets and spending cuts has worked in the past, however often economists explain that deficits aren't like household debt. It works with people who might be in debt themselves, so that at least big gummint will stand up for virtue. It works with those who depend on government programs but who can still imagine that government spending goes to immigrants, nonwhites, and the undeserving. Even now, we're seeing in polls that actual cuts are unpopular but cuts in the abstract still are. Actual cuts are even more unpopular if they include social security and Medicare. So no wonder Republicans hope they can get away with insisting on cuts while avoiding the issue.

    Can anything Democrats say make a difference? A lot of people, between centrist and leftist pundits who find them cowardly or just lousy at messaging, think so, although both characterizations seem to be circular: if they're messages aren't working, they somehow must be at fault. Could the mainstream press make a difference? I wish we count on the NY Times coverage to try seriously. But they're too busy owning the fake Biden document scandal. Well, I hope people will catch on and I'm just wrong.

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  2. They don't want any particular cuts in federal spending. They want to end the federal govt, or at least every bit of it that is not mentioned as an enumerated power of the federal govt in Art I, sec 8. Of course that would be unpopular. It would be revolutionary. Lots of oxen gored in revolutions, even peaceful ones.

    Because of the unpopularity of this agenda, they can't go about it directly, by proposing big cuts in govt programs.

    The indirect method they have used for decades, but which has really ramped up now that they have six Federalist Society apparatchiks on SCOTUS, is to chip away at the "administrative state". We have allowed over the centuries SCOTUS to acquire, as a matter of norms rather than law law, an unreviewable discretion to dictate results over any issue you might imagine, so no worries over the unpopularity of this agenda as carried out by SCOTUS.

    What we are seeing with the debt ceiling fight is a second indirect approach to destroying the power of the federal govt, an approach that promises much more dramatic and sweeping results all at once. These people don't really want any particular budget cuts. What they want is to make deficit spending impractical as a means of funding the federal govt.

    The US is not like Greece during its recent debt crisis. It can and has financed the federal govt through the extensive borrowing needed to fund the govt without austerity or the heavy tax burden that might strangle economic growth. The US can do this, while Greece couldn't, because the US gets much nicer terms in its borrowing than Greece, which had to accept loan shark terms. The US also can defend itself against pressure on it because it controls the world's leading reserve currency.

    Any doubt cast on the full faith and credit of the US, and to the related but wider concept of the rule of law being respected in the US, tends to make us more like Greece. We're not going to achieve Greece status overnight no matter how egregious the default, and the absence of immediately obvious catastrophe is going to have a similar discrediting effect that we saw with Remainers talking about immediate catastrophe after Brexit.

    The full effect of default is going to be an insidious self-feeding process that will grow over time even if no further breaches of the rule of law or full faith and credit occur. These idiots scream that the US is exactly like Greece, that we can't borrow our way into the future. Not keeping up with debt service, much less repudiating debt, will directly affect credit terms, but defaulting on any of our spending obligations is going to do is to erode confidence that the rule of law is respected in the US. We have a process, the annual spending bills plus the pre-existing mandatory spending, for determining what the US is obligated to pay, and to whom. Things like this prioritization law the Rs are proposing to supposedly ameliorate the effects of breaching the ceiling, would break that process, would issue to any single leg of the trifecta a license to overturn the law that all three had to agree on to create our spending obligations.

    As the risk of lending to the US goes up, the interest rates we will be charged will have an ever-growing risk premium added to them. If one leg of the trifecta can overturn settled law at its sole discretion, how can a creditor be sure one of them might not do it again? Higher rates mean that we become more like Greece, because growing debt service actually will make what is now a manageable expense into an expense that the US can't control. The process will feed on itself, and the US will be forced into austerity, like Greece.

    Unlike a govt shutdown, these effects of default will not be obvious immediately, and therefore no immediate blame will attach to the party that caused default. Then, as interest rates on our borrowing increase, the Rs will be able to deflect the blame onto the deficit spending they have long screamed is surely going to kill us someday. Their view of deficit spending will seem vindicated.

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  3. Just like he "Magic Asterix" that was placed in Perjurer papa's budget.
    We can aicheve the goals of the budget and all we have to do is cut x billion dollars from spending. We decided how much congress ( Democratic) has to decide where those cuts should come from.
    Rerun of same failed strategy.

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