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The rascals did it again. Last December, Congress passed a gigantic spending bill that digs the debt hole deeper, using a devious process intentionally designed to be opaque. Americans, never that fascinated with budget issues, were well into the holiday season. Media attention was focused on impeachment and the perpetual horse race.
So, non-nerds may not yet realize that late at night on December 16, Congress released a 2,313-page bill with a cool $1.4 trillion in spending and another $500 billion in tax cuts and favors for special interests.
The bill was developed entirely by a small group of leaders without debate or examination by a committee. Two-and-a-half days later, after a floor debate limited to 90 minutes, the bill was passed. It was one of 16 votes taken that day, one day before government funding would expire.
Threatening government shutdown has become a regular leadership stratagem to force rushed votes on spending bills. Although these “shutdowns“ are structured to ensure that no government employees or beneficiaries are harmed, they are still feared by politicians.
Republicans know the media will blame them no matter what and Democrats don’t need coaxing to vote for more spending, so the cynical ploy worked again. Bogus threatened shutdowns cumulatively have resulted in trillions of dollars added to the federal debt.
This corrupt process inevitably results in terrible policy. The Center for Responsible Federal Budget puts the price tag of this one bill at 5% of total GDP (!) by 2029. The tax cuts, instead of stimulating growth, repealed levies intended to help pay for Obamacare.
The “Cadillac tax“ on health insurance was ended, a sop to unions whose members can still enjoy lavish health insurance policies with no incentives to limit health spending. The tax that insurance companies agreed to pay to reap the blessings of Obamacare was also repealed.
No other funding sources were raised nor were any spending offsets included. Obama’s claim that his plan “wouldn’t add a dime“ to the national debt turned out to be just another lie.
This is what you get when critical, complicated legislation is crafted by four people negotiating in a room, just before government funding expires. Congress should pass reforms like the bipartisan Prevent Government Shutdowns Act, which would ensure that when spending bills aren’t passed before deadline, the previous year‘s budget continues intact.
But the harsh reality is that there’s little interest in budget reform or restraint because federal deficits are a spent force politically. The federal debt is an incomprehensible $22 trillion, up over $2 trillion during the Trump years of much-touted prosperity. Yet nobody cares. Few politicians any longer even pay lip service to slowing the rate of growth. Nothing to see here, folks.
Instead, Democrats now propose fantastical new spending plans and play gotcha games, combing through each other’s records for evidence of such indiscretions as past support for Social Security reform. For fiscal conservatives, when Donald Trump announced his disinterest in deficit reduction, interest immediately dissipated.
Who wants to be castigated for supposedly hating minorities, children, students, and grandmas when there is zero chance for success anyway? Meanwhile, millennials stand idly by as if none of this could possibly affect them.
In the Wall Street Journal, advocates of Modern Monetary Theory claim to have discovered a bright new approach. They argue that for currency-producing governments, the national debt is never a reason to limit budget deficits. Unlike individuals and businesses, governments can “always make payments as they come due” and can “never be forced to default” since the debt can always be paid simply by creating more money. Their conclusion is that we should “worry about fighting climate change and injustice,” not the debt.
Apparently, this is what now passes for genius in some quarters. Yet inflation would be the obvious result, then hyperinflation as debt service costs grew. Ask Zimbabwe, Venezuela, or any other country that has tried it how that plan worked out. Untold misery and societal breakdown lay down that path.
We have a problem. We want more stuff from government than we are willing to pay for. When interest rates rise, which they will eventually, it won’t be pretty.Published in