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GOP Fiscally Responsible Only with a Democrat in the White House

 

Budget 2018Republicans 2010: Elect us! We are the only true advocates of reducing federal spending and not raising the federal borrowing limit.

Republicans 2014: Elect us! The Republican-led House will enforce austerity measures against this free-spending President!

Republicans 2016: Elect us! We will be the voice of mounting public disgust against an irresponsible fiscal policy that has doubled the national debt in eight years!

Ahh, the halcyon days of Conservatism.

Last year the U.S borrowed $519 billion. Granted, this was a continuation of budgets created under Obama. This year, with the GOP running the whole danged show, the US will almost double it’s borrowing to just under a trillion dollars ($955 billion). The $4 trillion (plus) budget was reported by a breathless CNN:

The colossal bill, which lawmakers have been negotiating for months, is a game-changing piece of legislation, clearing the decks for Congress in dealing with major spending issues as well as doling out disaster relief money and hiking the debt ceiling which was set to be reached next month.

Trump tweeted that the bill, which gives the Pentagon an additional $165 billion, was a “big victory” for the US military. But he said Hill Republicans were “forced to increase spending” in order to attract Democratic votes.

So, this Republican President with a Republican House and Republican Senate increased the budget by the tune of $300 billion. It also allowed for no debt ceiling limit until March 2019. I’ll repeat that one: No debt ceiling limit!

Jennifer Grossman of the Atlas Society states:

This is like a credit card company agreeing to postpone the repossession of all that stuff you “bought” on credit and giving you the green light to keep using your card, and racking up more debt, while they happily debit your ledger with outrageous interest charges every month — charges, and principal, that you’ll someday be legally liable to repay.

“We can ignore reality,” Ayn Rand once famously observed, “but we cannot ignore the consequences of ignoring reality.’”

Here is the hard reality: In just over a half a decade, all government revenues will be entirely consumed by the costs of Medicare, Medicaid, Social Security and interest payments on our rapidly ballooning debt. Despite this glaring threat to our fiscal health, no one in Washington seems to be doing anything about it. In fact, they seem to be only adding to the problem, as the recent budget deal demonstrates.

Mr. McConnell, you obviously know the fiscal constraints that happen when interest rates increase, as they will. Mr. McConnell, why did you allow Senate Minority Leader Chuck Schumer to get everything he wanted?

The original budget proposal showed fiscal responsibility by committing to cut spending. Trump even included his promise to end federal funding for the Corporation for Public Broadcasting. But the GOP establishment types that go along to get along forgot everything they promised on the campaign trail. In a whirlwind couple of days negotiating, Republicans sided with liberals. They sided with growing government bigger. They sided with the media. They sided with bankrupting not just our kids and grandkids, but ourselves.

There were 67 House Republicans who broke with leadership and voted against the budget deal. Most of whom are in the Freedom Caucus; Jim Jordan and this group should each be rewarded by being re-elected. All others who voted for this monstrosity double-crossed those who elected them. They cannot be trusted.

From a 30,000-foot overview, it appears “Conservative, Inc” only used the power of the purse to win elections and fight a Democrat President to appease their base. Now they have power, they showed a lack of courage in making tough choices. They showed a total disregard for those who voted for them to decrease the debt and reduce deficits. They did exactly what they campaigned against.

Conservative voters who voted for fiscal responsibility have no home.

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There are 72 comments.

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  1. Member

    My question is, if neither party cares enough about the deficit and the debt to do anything about it, why even bother to keep track? No kidding, what is the purpose of knowing what the deficit and/or debt is if it has no effect on fiscal decisions? Why not just adopt the attitude of: “We want certain things and they cost what they cost.”

    We might as well keep track of the temperature on Pluto.

    • #1
    • February 12, 2018 at 11:52 am
    • 5 likes
  2. Member

    Poindexter (View Comment):

    We might as well keep track of the temperature on Pluto.

    We do.

    • #2
    • February 12, 2018 at 11:55 am
    • Like
  3. Member

    Does this necessarily follow from McConnell’s refusal to end the filibuster?

    • #3
    • February 12, 2018 at 11:56 am
    • Like
  4. Contributor
    Dave Sussman Post author

    Poindexter (View Comment):
    My question is, if neither party cares enough about the deficit and the debt to do anything about it, why even bother to keep track? No kidding, what is the purpose of knowing what the deficit and/or debt is if it has no effect on fiscal decisions? Why not just adopt the attitude of: “We want certain things and they cost what they cost.”

    We might as well keep track of the temperature on Pluto.

    You mean besides the whole law of economics thing? The older I get, I become more disillusioned with those who I once assumed were clever simply due to their position.

    • #4
    • February 12, 2018 at 12:30 pm
    • 6 likes
  5. Contributor
    Dave Sussman Post author

    Aaron Miller (View Comment):
    McConnell’s refusal to end the filibuster?

    He doesn’t want to set precedent as Democrats will do the same once they take back the Senate, whenever that happens, completely reversing all of Trump’s policies.

    But giving up the ability to do continuing resolutions took away a valuable tool by budget hawks. No bueno.

    • #5
    • February 12, 2018 at 12:36 pm
    • 3 likes
  6. Member
    TES

    I would love to see the game theory on how McConnell gets 60 votes in the Senate on a budget(no reconciliation available until October 1st) with no DACA fix, increases military spending, reduces the deficit, and avoids a shut down.

    • #6
    • February 12, 2018 at 12:40 pm
    • 2 likes
  7. Contributor
    Dave Sussman Post author

    TES (View Comment):
    I would love to see the game theory on how McConnell gets 60 votes in the Senate on a budget(no reconciliation available until October 1st) with no DACA fix, increases military spending, reduces the deficit, and avoids a shut down.

    This is the problem. These people have ignored sane fiscal policy for so long that only way they can now pass a budget is by forcing through some Frankenstein deal when facing a government shut down. Congress got to review 700 pages of legislation for less than 24 hours. I promise you none of them read it. So they constantly pass this stuff in crisis mode because they can’t govern and in the process remove the tools budget hawks use (like reconciliation).

    They had to pass it because they didn’t allow themselves any other options. Total abdication of their duties. Any company that was managed like this would have the banks calling in their loans, employees laid off and the bankruptcy judge would distribute the remaining assets.

    • #7
    • February 12, 2018 at 1:06 pm
    • 6 likes
  8. Member

    Ricochet would have a cow, but I wish Dave would interview David Stockman about this topic. I don’t think you can really control spending under a discretionary central bank regime.

    • #8
    • February 12, 2018 at 1:09 pm
    • 2 likes
  9. Contributor
    Dave Sussman Post author

    RufusRJones (View Comment):
    Ricochet would have a cow, but I wish Dave would interview David Stockman about this topic. I don’t think you can really control spending under a discretionary central bank regime.

    Haven’t spoken with Stockman (the perennial bear) but have met with Steve Forbes and fellow journeyman Jim Rogers. Here’s Rogers talking about the debt.

    https://ricochet.com/archives/jim-rogers-biggest-financial-collapse-lifetime-overdue/

    • #9
    • February 12, 2018 at 1:21 pm
    • 5 likes
  10. Coolidge

    RufusRJones (View Comment):
    Ricochet would have a cow, but I wish Dave would interview David Stockman about this topic. I don’t think you can really control spending under a discretionary central bank regime.

    Stockman drives me nuts!

    Its not what he has to say, I largely agree with him on the deficit. (although I find his recollections of his role in the Reagan Administration to be self serving revisionist. I would love for Peter Robinson to speak up about his recollections for David Stockman, from back in the day – maybe I am being unfair to him)

    What really drives me bonkers about Stockman is how says dates. For example he says “November two oh seven” when he means “November two thousand and seven” … drives me nuts every time he gives a date like that!

    • #10
    • February 12, 2018 at 1:45 pm
    • 1 like
  11. Member

    My point is, I think David Stockman has the actual structure of the economy just nailed. I don’t see how conservatism or libertarianism can work unless the GOP listens to him.

    I think GOP Representatives Jason Lewis Steve Scalese and Tom Emmer, are quietly pushing for the types of changes he’d like.

    • #11
    • February 12, 2018 at 2:04 pm
    • 1 like
  12. Inactive

    Dave Sussman: Conservative voters who voted for fiscal responsibility have no home.

    I’m beginning to wonder if we’ve ever had a home. These days I feel like Harry Potter, living under the Dursley’s stairs.

    • #12
    • February 12, 2018 at 2:22 pm
    • 5 likes
  13. Coolidge

    RufusRJones (View Comment):
    My point is, I think David Stockman has the actual structure of the economy just nailed. I don’t see how conservatism or libertarianism can work unless the GOP listens to him.

    I think GOP Representatives Jason Lewis Steve Scalese and Tom Emmer, are quietly pushing for the types of changes he’d like.

    David Stockman is not a man wondering the wilderness alone. Peter Schiff, James Rickards, John Williams (economist, not the composer) Nomi Prins, Danielle DiMartino Booth… Lots of people share his views.

    Not to oppose David Stockman, he’s a good guest.

    • #13
    • February 12, 2018 at 2:24 pm
    • 2 likes
  14. Member

    @occupantcdn The thing that separates Stockman is, he’s extra good at describing how regressive our policies have been down to the individual level and how it affects the political system. Listen to his Tom Woods and ContraKrugman interviews around 9/2016.

    People want their cut of the Keynesian graft or they want it fixed. Trade is killing people more than it has to due to bad government and Fed policy.

    • #14
    • February 12, 2018 at 2:31 pm
    • Like
  15. Inactive

    So…question: when I saw the news about this budget deal and I thought about our debt and deficit I couldn’t help but wonder what the medium term (2-5 years) effect is on the economy of not dealing with the problem. Jim Rogers, mentioned above, seems to think we are headed for catastrophe, and I guess my gut instinct is that this is the case, just because I don’t think anyone can, for any long period of time, sustain debt fueled operation without coming to collapse. What I don’t fully understand, however, is how or why this effects the whole economy. I am not trained in economics so I don’t have the knowledge a lot of you have.

    Why does government debt cause the economy to suffer? Is it just because we, the consumers, have to pay more for our government than it is worth (much the way a TV paid for on a credit card costs us more than if we paid cash)? I’ve always said (write or wrong), that if you pay more than you should for a thing than you should, that’s a drag on the economy, since you aren’t spending that money on something else.

    Is it just that investors get spooked when there’s too much debt?

    How concerned at this point should I really be about the health of the company I work for and the health of small businesses around me?

    • #15
    • February 12, 2018 at 2:39 pm
    • 2 likes
  16. Member

    Spin (View Comment):
    Why does government debt cause the economy to suffer?

    The economy is hooked on credit growth no matter what it’s invested in but at some point it can’t pay for the interest. Government spending unless it’s just on actual public goods is misallocated capital. It’s bad for growth.

    • #16
    • February 12, 2018 at 2:45 pm
    • 2 likes
  17. Coolidge

    RufusRJones (View Comment):
    @occupantcdn The thing that separates Stockman is, he’s extra good at describing how regressive our policies have been down to the individual level and how it affects the political system. Listen to his Tom Woods and ContraKrugman interviews around 9/2016.

    People want their cut of the Keynesian graft or they want it fixed. Trade is killing people more than it has to due to bad government and Fed policy.

    We seem to be having an argument while in agreement. I am aware of David Stockman. I am not a fan, but largely agree with his views. If you’re unfamiliar please look up John Williams from http://www.shadowstats.com, he’s an economist.

    the most recent interview I could quickly find from him is in December:

    • #17
    • February 12, 2018 at 2:45 pm
    • 1 like
  18. Member

    Spin (View Comment):
    Is it just that investors get spooked when there’s too much debt?

    Yes, and the economy is slowing down due to aging issues.

    • #18
    • February 12, 2018 at 2:46 pm
    • Like
  19. Member

    My peeps say John William’s methodology isn’t that great. The numbers he comes up with for inflation are too high but they agree with him in spirit. The Boskin Commission was a scam. The CPI is really just a statist disinformation tool and rip off system. Also, we’re a million steps away from hyperinflation.

    • #19
    • February 12, 2018 at 2:48 pm
    • 1 like
  20. Member

    Marc Faber would be a great interview. He’s very educational on what a fair, libertarian economy looks like. Very gifted in that sense.

    ***EDIT***

    Rep. Jason Lewis would be really great, too, but I’m not sure how frank he can be now that he holds political office. Minnesota was so lucky to have him on the radio.

    • #20
    • February 12, 2018 at 2:57 pm
    • 1 like
  21. Coolidge

    Spin (View Comment):
    Why does government debt cause the economy to suffer? Is it just because we, the consumers, have to pay more for our government than it is worth (much the way a TV paid for on a credit card costs us more than if we paid cash)? I’ve always said (write or wrong), that if you pay more than you should for a thing than you should, that’s a drag on the economy, since you aren’t spending that money on something else.

    Is it just that investors get spooked when there’s too much debt?

    How concerned at this point should I really be about the health of the company I work for and the health of small businesses around me?

    Government debt causes the economy to suffer for a couple of main reasons. First, all government spending is consumption not investment – there is no return on consumption. Secondly government borrowing crowds out private investment, consuming savings that could have been invested in the private sector. Third, because government is always less efficient than private business, everything it does is highly cost ineffective.

    We dont know when there will be debt crisis. Greece didnt have a debt problem until it suddenly did. At some point the western world will have also have a problem – not just the US, but Canada, UK. almost the entire western world are upto their eyeballs in debt.

    I dont know – I work for a multi-billion dollar media/telecom conglomerate (Canada). We’re worried about looming job cut backs. We had cuts last year – took an hours cut, and continue to get squeezed – just a few weeks ago, they took away our paid lunch breaks. Your experience will be different, being in a different industry and country.

    • #21
    • February 12, 2018 at 3:05 pm
    • 2 likes
  22. Member

    The big problem with Stockman is, if he isn’t interviewed by the right guy, he will never, ever take a freaking breath. It’s like drinking from a fire hose.

    • #22
    • February 12, 2018 at 3:13 pm
    • 1 like
  23. Coolidge

    RufusRJones (View Comment):
    My peeps say John William’s methodology isn’t that great. The numbers he comes up with for inflation are too high but they agree with him in spirit. The Boskin Commission was a scam. The CPI is really just a statist disinformation tool and rip off system. Also, we’re a million steps away from hyperinflation.

    Yes, CPI is a scam to rip off social security COLA increases. Thanks to Alan Greenspan.

    A million steps? When they instantly print billions of virtual dollars, that a computer springs into existence – as they say “they’re not worth the paper they’re not printed on”

    I dont think we’re very far at all from disaster – I think so much cash has been sequestered into bank recapitalization and in the virtual asset markets – chasing assets that dont exist or are claimed by dozens if not hundreds of times over. one little thing and the whole house of cards vaporizes.

    • #23
    • February 12, 2018 at 3:18 pm
    • 1 like
  24. Member

    OccupantCDN (View Comment):
    A million steps?

    The problem is, the dollar would have to lose reserve status. Also globally there is an insane amount of debt denominated in dollars which keeps a bid under it. This thing has to end with pretty severe CPI inflation not just asset inflation but it could be a while.

    • #24
    • February 12, 2018 at 3:20 pm
    • Like
  25. Coolidge

    RufusRJones (View Comment):

    OccupantCDN (View Comment):
    A million steps?

    The problem is, the dollar would have to lose reserve status. Also globally there is an insane amount of debt denominated in dollars which keeps a bid under it. This thing has to end with pretty severe CPI inflation not just asset inflation but it could be a while.

    The dollar’s status has been under attack for years, but I dont think it needs to loose its status to be hyper inflationary – or just steeply inflationary. IF the holders of dollars decide that they’d rather hold anything but dollars that’ll be it. China, Japan and a few of the largest bond holders have already been net sellers for a few years. They’re trying to have an orderly liquidation of their US assets. IF that liquidation becomes disorderly then the dollar is done.

    • #25
    • February 12, 2018 at 3:36 pm
    • 1 like
  26. Contributor
    Dave Sussman Post author

    Spin (View Comment):
    So…question: when I saw the news about this budget deal and I thought about our debt and deficit I couldn’t help but wonder what the medium term (2-5 years) effect is on the economy of not dealing with the problem. Jim Rogers, mentioned above, seems to think we are headed for catastrophe, and I guess my gut instinct is that this is the case, just because I don’t think anyone can, for any long period of time, sustain debt fueled operation without coming to collapse. What I don’t fully understand, however, is how or why this effects the whole economy. I am not trained in economics so I don’t have the knowledge a lot of you have.

    Why does government debt cause the economy to suffer? Is it just because we, the consumers, have to pay more for our government than it is worth (much the way a TV paid for on a credit card costs us more than if we paid cash)? I’ve always said (write or wrong), that if you pay more than you should for a thing than you should, that’s a drag on the economy, since you aren’t spending that money on something else.

    Is it just that investors get spooked when there’s too much debt?

    How concerned at this point should I really be about the health of the company I work for and the health of small businesses around me?

    Spin, great questions. Line up 50 economists and you’ll get 100 answers. No one can predict, although we can look at history for clues. Here’s my perspective, which I’m sure can be argued with.

    The problem with government is that it’s so huge that even a small increase in spending can have real ramifications on the economy. Starting in 2009 Ben Bernanke (followed by Janet Yellen) implemented several rounds of quantitative-easing which flooded banks with cash. Much of that cash stayed on the sidelines due to the lack of confidence in the economy. To incentivize consumer spending the Fed kept rates artificially low (ZIRP), often threatening to raise them to offset inflation (only to be answered by a temper tantrum in the equities markets) but essentially kept the broader economy out of a technical recession (we had a sporadic few quarters of negative GDP).

    Meanwhile, as governments around the globe were implementing cost-cutting (and in some cases austerity measures) the U.S. printed money to keep cash (bloodflow) moving through the arteries of the economy. Certain Keynesian economists would point to this as being insufficient (we need to borrow more!) while more free-market thinkers wanted to throw-up.

    Fact is, these measures did keep America out of a technical recession or worse, but when you plan to rob a bank never forget to include an exit plan.

    You go from approximately $10 to $20 Trillion debt in 8 years and there must be ramifications.

    Lower interest rates have essentially kicked the can down the road. Like musical chairs, when interest rates increase (as they are starting to creep up now to hedge inflation in a good economy), the President who is standing at the time the music stops, loses. The Obama Admin, in alliance with the Fed managed to get out alive.

    The economy is a living, breathing entity. Like lungs, it expands and contracts. Growth periods and recessions. Typically we see a recession every 7-10 years, on average. Most of them are speed bumps, and some, like 1929, 1981 and 2008 are shocks to the entire economic system.

    The problem now is that the political intervention to delay a normal recession has ensured the balloon in equities, real estate and some commodities hasn’t had a healthy contraction in a decade. It’s been manipulated. But you can’t fool math. No matter how much you tilt the table, water will always find it’s own level. We’ve been delaying a correction which only makes it worse when it happens.

    The normally healthy amount of debt historically as a share of the economy is around 40 percent. Today’s gross debt is roughly 105 percent of GDP. The cost of the debt must be paid through revenues which impact discretionary spending on actual economic benefits like infrastructure. Also, it reduces readiness to quickly respond to a crisis like another financial collapse, war, etc. When interest rates rise, so does the cost of the debt, and it’s huge.

    It is not necessary to pay off the national debt entirely to restore our nation’s fiscal health. Tax reform was a good first step, but the second was to REDUCE SPENDING. Deficits will only increase the debt. Debt ceilings are obliterated meaning blank checks for more government largesse. A good economy and tax reform must be matched by a reduction of spending. This isn’t going to happen with the current budget. What just took place on Friday essentially threw a monkey wrench into the machine.

    • #26
    • February 12, 2018 at 3:40 pm
    • 2 likes
  27. Member

    Supposedly China is starting both a gold and oil futures contract system and this has some potential to screw with the dollar. The problem is, they effectively have no property rights and crappy capital markets.

    • #27
    • February 12, 2018 at 3:41 pm
    • 1 like
  28. Contributor
    Dave Sussman Post author

    OccupantCDN (View Comment):

    RufusRJones (View Comment):
    @occupantcdn The thing that separates Stockman is, he’s extra good at describing how regressive our policies have been down to the individual level and how it affects the political system. Listen to his Tom Woods and ContraKrugman interviews around 9/2016.

    People want their cut of the Keynesian graft or they want it fixed. Trade is killing people more than it has to due to bad government and Fed policy.

    We seem to be having an argument while in agreement. I am aware of David Stockman. I am not a fan, but largely agree with his views. If you’re unfamiliar please look up John Williams from http://www.shadowstats.com, he’s an economist.

    the most recent interview I could quickly find from him is in December:

    Been reading ShadowStats for years. He has consistently provided the best explanation how UE#’s are a political manipulation. True measures (UE6 & 12) should be the barometers reported.

    • #28
    • February 12, 2018 at 3:44 pm
    • 1 like
  29. Member

    Great post @davesussman I think is only takes 4% on the ten year treasury and we have serious budget problems.

    Kyle Bass said he’s talked directly to various congress people and he was shocked at how naive they are about this.

    • #29
    • February 12, 2018 at 3:46 pm
    • 1 like
  30. Member

    IMO, central banking is about geopolitical power and war first, and secondarily the ruling class, political class, the. government and financial system get side benefits from it. We really would be better off without them if they don’t operate on “harder” policy and just simply back up the banks in a punitive way.

    • #30
    • February 12, 2018 at 3:53 pm
    • Like
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