Budget Battle Drama


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There are reports that an April 8th government shutdown may be inevitable due to an impasse in negotiations over spending cuts between Democrats and Republicans.  On February 19th, the House passed a bill with $60 billion in spending cuts, but there has been no action in the Senate on that bill, or any alternative offered by Democrats.  As a result, the government has been kept open via the passage of continuing budget resolutions (CRs), a process which is running out of steam.  How we will move forward is unclear, but more than just overt partisan politics is in play: “sub-dramas” within the overall battle will ultimately determine whether or not America will point itself towards fiscal sustainability, or inevitable bankruptcy.

First, some perspective.  Ten years ago, former president Bill Clinton’s last budget was submitted and approved for fiscal year 2001.  That budget was $1.9 trillion dollars.  The budget submitted by Barack Obama for fiscal year 2011 was $3.7 trillion, meaning in just over ten years, spending by the federal government has virtually doubled. Democrats consider $61 billion in spending cuts — $39 billion lower than the Tea Party faction of the Republican party promised to implement during the 2010 election campaign — dead on arrival.  They have countered with the $10 billion dollars of cuts which have already been implemented via the two CRs approved to prevent a government shutdown so far, along with an additional $20 billion proposed by the White House, for a total of $30 billion.

Thus, the political impasse between the two parties, the one which threatens to shut down the government on April 8th if no agreement is reached, is over a $31 billion difference in cuts between the two parties.  Putting it as charitably as possible, such negotiations are virtually meaningless, because they are utterly removed from reality.

Here’s reality: the projected deficit for this year is $1.6 trillion, and the federal government will be borrowing over 40 cents for every dollar it spends.  Furthermore, the deficit for the month of February alone was $223 billion, which is almost four times the “unreasonable” cuts Republicans are proposing and almost eight times what Democrats have proposed for the entire year.

Need more perspective?   Imagine a miracle happened, and every House and Senate member in Congress suddenly became a Rand Paul (R-KY) devotee.  He’s the senator who proposed making $500 billion worth of spending cuts in one year. For that, he has been ridiculed, vilified and sent packing to the outer boroughs of political discourse.  Yet, if Mr. Paul’s cuts were enacted, America would still be $1.1 trillion dollars in the red.  Still more perspective? That’s $3,333 of additional debt piled onto every man woman and child in the nation.

So what’s the budget battle really all about? Enter sub-drama number one, aka the battle for the heart and soul of the Republican party.  This battle was reflected in the current three-week CR designed to prevent a previous government shutdown which 54 House Republicans rejected in order to express their disgust with their party’s refusal to play fiscal hardball.  This left House Speaker John Boehner in the unenviable position of needing several Democratic votes in support of the CR to prevent the shutdown.  As luck would have it, he got them:  85 Democrats supported the measure.

Chuck Schumer (D-NY) and other Democrats believe that painting the Tea Party as “extremist” is the key to exploiting Republican disunity heading into both the budget battle and, by extension, the 2012 election season.  In fact, Mr. Schumer was caught outlining this strategy to fellow Democrat Senators Barbara Boxer (D-CA), Benjamin Cardin (D-MD), Thomas Carper (D-Del.) and Richard Blumenthal (D-CT.) in what he thought was a private conference call on Tuesday.  Unfortunately for Mr. Schumer, reporters were also listening in.  This is what they heard:  “I always use the word extreme, that is what the caucus instructed me to do the other week. Extreme cuts and all these riders and Boehner is in a box. But if he supports the tea party there will inevitably be a shutdown. What we are trying to do here…”  at which point Schumer realized they were listening.

Damning?  Only if one naively believes politicians don’t collectively strategize.  Yet there is a level of cynicism here that is daunting.  It would appear that Mr. Schumer’s primary concern is putting House Speaker John Boehner “in a box,” rather than coming up with a responsible budget, something House Majority Leader Eric Cantor (R-VA) was quick to point out.  “We have seen what the motive is behind Mr. Schumer,” Cantor (R-VA) said. “He says every spending cut is unreasonable.”

Which brings us to sub-drama number two, and the reason there are continuing resolutions being voted on instead of an overall budget.  Again, a little background first.  The 111th Congress, led by Nancy Pelosi and Harry Reid, started the CR ball rolling last year when they refused to pass a federal budget before the 2010 midterm election.  This was the first time that occurred since 1974, when the current rules for the budget process were enacted.  The reason was obvious: heading into what already looked like a bloodbath for Democrats, Ms. Pelosi, et al, did not want another trillion dollar-plus deficit such a budget would have contained being used as a club in the 2010 election campaign.

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  • Watchman

    Obama and Bernake are the key men destroying America. But let's not leave out the other progressive leftist marxist and the RINO's as well. They either push Obama or applaud his tactics.

    • Jim_C

      Nope.

      Mr. Obama, and credit where it is due, Mr. Bush, pretty much saved America and the Western world by saving the banking system. There's no doubt Obama saved the auto industry. We haven't gained many jobs, but we've kept a whole lot of people from losing theirs.

      And we're going to have to keep spending in order to turn this economy around. I don't know if anyone has the political courage to do it, amidst inane cries to slash the budget. Not that we can't use the cuts, eventually–but they'd be extremely poor timing.

  • Numerian

    I keep hearing the assertion that "restoring fiscal sanity is impossible without major reforms of Social Security, Medicare and Medicaid" but for some reason the people making that assertion don't bother to explain it in depth. Social Security and Medicare have their own separate income stream – why not simply operate them separately and limit spending to what they take in?

  • Stefan

    Numerian, the problem is that current revenues to SS, Medicare, and Medicaid will not be enough to meet the obligations of these programs.

    For example, people who have paid into Social Security for forty years would then see expected retirement benefits cut back… their "contribution" has already been spent. Social Security holds only IOUs, which have to be made up in additional taxes on people still working.

  • Jim_C

    We could go back to the tax rates under Reagan. We have an incredibly small portion of the population sitting on obscene amounts of money they've accumulated since Reagan and they've accumulated it BY DESIGN. In fact one might say they "redistributed it" to themselves, thanks to the way we do elections in this country.

    Now somehow this magically failed to create jobs and facilitate investment like we were told it would. But if we dare to say to these Great Wealth "Producers" (ha!) 'howzabout paying for the privilege of belonging to the country that allowed you to accumulate this absurd amount of wealth?' they'll say 'We never gave a rip about this country and we're buying an island somewhere where the natives will work for pennies.' And they'll get some Fox News shill to talk about how they're being "victimized" and "coerced" so you'll say "Ooo, those dirty democrats!"

    Is Obama part of the problem? Sure–the man is obviously beholden to his donors–but don't kid yourself he's the only one.

  • Jim_C

    Budget, schmudget, I could care less–what are these bozos going to do to create jobs? How bout spend some money getting people back to work, infrastructure stuff. I don't care if its tax and spend or borrow and spend.

    We know one thing: nothing gonna happen by cutting spending–a highly unserious and very possibly dangerous way to go about gutting the economy further

  • JosephWiess

    Shut down the government, stop paying the congress to screw us. While we are at, shut down the IRS, shut down the ATFE, shut down the Czars, and shut down Obama.

    We don't need a government in order to survive, and if the government weren't stealing our money, we'd be able to create new jobs and end this stupid Obama insanity.

  • kafirman

    Jim, I suspect you're highly educated…, but government doesn't create jobs and grow economies. Government kills them. The best government can do is to link the currency to Gold (through a gold window where you can get the same amount of gold for cash over decades), lower regulations and lower taxes. Read Gold (Nathan Lewis) & Wealth and Poverty (Gilder).

    The best government can do is minimizes taxes so that the principle of liberty is not violated. Why must I be a slave to another man's medical bills? Why does my work serve as an incentive for others to not work? That is tyranny, not freedom.

    Instead government is promoting class warfare, increasing regulations and failing to assert its moorings of natural law and Judeo-Christianity.

    • Jim_C

      The only sense in which government is promoting class warfare is in the systematic way it has been used to concentrate wealth in the hands of the few. And they get ALL the tax breaks, cuts, incentives they ask for. They have been, now, for quite some time. So where's the jobs?

      In a perfect world, the extremely small portion of the private sector that has lobbied and infiltrated its way into public policy would at least act ethically if not with some sense of reponsibility toward the democratic republic that has provided the soil for its success. Unfortunately, that has not been the case.

      If you want to talk natural law and "judeo-Christianity," I'll talk "social contract" and the notion that freedom is not, in fact, free. One should have an obligation to the country which provides your standard of living–but our captains now make noise of "moving elsewhere" because we aren't bending over backward for lower wages and benefits.

    • Jim_C

      btw thanks for the reading tips.

      • kafirman

        "The only sense in which government is promoting class warfare is in the systematic way it has been used to concentrate wealth in the hands of the few."
        By reducing barriers to wealth creation and lowering disincentives, government does the opposite of what you claim. If that is not self-evident to you, than you must have studied Keynsian economics and we should stop wasting our time.

        " And they get ALL the tax breaks, cuts, incentives they ask for."
        Couldn't disagree more. The lower 50% pays <2 % of the taxes. Progressive income tax lowers the tide for all boats.

        • Jim_C

          The simple fact that 40% of the nation's wealth is concentrated in the top 1%, and yet somehow jobs are not magically appearing, should paint a fairly harrowing picture for anyone not in that rarified realm. How did it "get" there?

          Being fiscally responsible is not always the same thing as being conservative. I respect my conservative friends on economic matters–but most of y'all are wrong these days and enamored of matters of faith, not matters of fact.

  • Supreme_Galooty

    Some people (many people) function out of a grand Envy. They moan, whine, yammer and snivel here and there around the back-streets of productive society all while castigating the obscenely, filthy, rich and blaming THEM for their mediocrity. What we need in this country – indeed, in this WORLD – is more RICH people. Thousands more. Millions more.

    Trying to achieve some sort of fantasyland eutopian ideal by bringing rich people down and depriving them of their wealth is a vice that springs straight out of Envy. And it walks hand in hand with Greed. Help the poor by teaching them to produce a SURPLUS. All that other Marxian claptrap is, well… claptrap.

    • Jim_C

      Your adolescent utopianism has its charm, Ms. Rand. It's also about as quixotic as Karl Marx, minus the pragmatism.

      What's particularly charming about your breathless fantasy is the notion that somehow poor people are to blame for the wonderful "producers" (ha) having made money exponentially while middle class wages have stagnated (economic FACT). Coincidence? Middle-class slackers sucking up dollars while the great producers (ha) "innovate" their way to greater wealth by dint of sweat and intelligence?

      Or by dint of buying their way into your government and rigging the system to their benefit alone while convincing dupes like you there are 1-10% "productive" people in the workforce, and what must be, according to you, 90% freeloading bums?

      You may call this "claptrap;" the difference is, I have facts, while you have wonderful gossamer fantasy.

  • Supreme_Galooty

    You have the facts, and facts are pesky things indeed. As Sir Francis once said, "A little philosophy inclineth man’s mind to atheism; but depth in philosophy bringeth men’s minds about to religion." It is painfully obvious that you have spent a great deal of time in your life to acquire a but a paucity of facts. Take them and run with them my good fellow, and may they serve you well in spite of their inabiltiy to completely inform.

    As I inquired of you earlier, how do you KNOW when you are misinformed – or even MAL-informed?

    You research extensively. My suggestion to you (although I know that it is akin to casting pearls before swine) is to read the Austrian economists and compare them to Marx – your "pragmatist." After having read Hayek, von Mises, Marx, and the uber-charlatan Keynes, one can make a reasonable determination of economic ideas and how they may play out in a reasonable world. That would be a world that has NOT been "educated" by the American public school system.