The Non-Existent Spending Cuts…Except for Defense

Yesterday, we observed the unique spectacle of a socialist president threatening to veto any bill that reinstates higher levels of spending.  Did Obama just experience an epiphany?

No.  We are merely talking about cuts in defense spending.  Those are the good kind of cuts.

Throughout the entire supercommittee imbroglio, whenever Democrats or members of the media referred to spending cuts – to the extent that they exist – they were referring to baseline cuts.  In other words, the cuts in discretionary spending will still enable the spending levels to rise each subsequent year, albeit at a slower pace.  Welfare and entitlement spending is exempt from all cuts, even baseline reductions.  Defense, on the other hand, will actually incur real reductions in 'actual dollar' spending in subsequent years.

House Armed Services Committee Republican Staff

The Supercommittee of Super Insanity

As the tumultuous year of 2011 winds down, Congress will be facing a number of crucial budget deadlines.  Aside for the supercommittee deadline to find $1.2 trillion in deficit reduction (over ten years), they must contend with the December 31 expiration of three provisions of the 2010 tax extenders deal; payroll tax cuts, unemployment benefits, and ethanol subsidies.  Now the Washington Post is reporting that the supercomittee might attempt to extend unemployment benefits and payroll tax cuts as part of the final deal.  The rubber is meeting the road, and conservatives need to mobilize rapidly.

By my count, the supercommittee's final report gives us five issues to deal with; oppose the three extensions, fight tax hikes, and push for real spending cuts (cuts that will make 2013 spending levels below 2012 levels).  Over the past year, the GOP has caved on virtually every budget battle.  They are now slated to pass every one of Harry Reid's appropriations bills – bills that allocate more funds for programs than requested by Obama; that jettison all Republican policy provisions; that expand the role of Freddie/Fannie.  Is there a single issue where GOP leaders will hold the line and coalesce around a coherent conservative policy?

Thanks to the inane and insane debt ceiling deal, which many other conservative outlets supported wholeheartedly, we are confronted with a double-edged sword.  We must either accept tax increases and nebulous spending cuts as part of the supercommittee report, or we face sequestration – a process that will kill the military and cut funding to healthcare providers, as well as the border patrol.  And guess which programs are exempt from the automatic cuts?  Yup – Social Security, Medicaid, S-Chip, Temporary Assistance for Needy Families (TANF), public housing, Food Stamps, SSI, Child Nutrition, refundable tax credits, Pell Grants, and federal employees' retirement.  Those programs easily amount to over $1.4 trillion, and when coupled (as it should be) with the inviolable veterans’ programs (roughly $140 billion), we have about 55% of the non-defense budget (roughly $2.85 trillion) off limits.

Now Boehner is offering to compound the problem by passing an extension of the payroll tax cut and 151 weeks of unpaid unemployment compensation.  How do they plan to pay for that?  With $700 billion in phony war savings, of course.

The Debt Rises, The Economy Sinks

Not even a debt increase cheered by Wall Street can override the debt-induced economic stagnation. 

Despite being dispirited by the one-sided nature of the debt ceiling deal, most of us were looking forward to reaping the rewards from its only ancillary benefit; the impending stock market rally.  Much to our chagrin, the Dow dropped precipitously, losing over 600 points since the opening bell on Monday.  After the initial euphoria from the debt ceiling hangover began to subside, people have been forced to confront an inconvenient reality.  The problem with the economy is not the debt ceiling; it is the debt – and all that it represents; overbearing and job-killing government.

Late Sunday night, Republican leaders forged a bipartisan deal with the president to raise the debt ceiling another $2.4 trillion without any preconditions for the second tranche.  Despite pretentious claims that we were entering a new era of austerity, the debt deal has charted us on a trajectory to incur $7 trillion more in debt, even considering the unrealistic baseline projections of economic growth and revenue.

Well, the Treasury wasted no time utilizing its new credit card and devouring the spoils like the starved beast that it has been for the past few months.  On Tuesday, Treasury Secretary Tim Geithner issued $239 billion in new debt, almost 60% of the entire $400 billion increase in borrowing authority that Congress granted for the first round of the debt limit hike.  To put that in perspective with the “austerity side of the debt deal,” it will take 4.5 years to achieve a commensurate degree of savings from the discretionary caps imposed in the bill.  I guess that is one way of measuring dollar-for-dollar cuts.

Our total cumulative debt (including the intragovernmental share) now stands at $14.58 trillion, approaching 100% of out GDP for the first time.  We have joined the failed socialist experiments of Europe in this ominous distinction.

Nevertheless, at the very least, we should have enjoyed the inevitable market rally that was so eagerly anticipated by the bipartisan cheerleaders on Wall Street.  After all, our borrowing authority is inviolable, as we are slated to borrow trillions more over the next few years.  Hey, a few billion dollars of debt a day keeps the default away – and will forestall the greatest market crash ever.  Won’t it?

Party Loyalty Trumps Ideology for Cardin and Mikulski

While the debt ceiling deal contains very little in real spending cuts, for socialists like Maryland's two senators, the bill cuts too much.  As such, one would have expected them to join the likes of Bernie Sanders - and oppose the bill.  However, after vacillating back and forth Cardin decided that if his party leaders needed his vote, by George, they were getting his vote.  The Baltimore Sun has the report:

Sen. Benjamin L. Cardin rarely embraces drama, but as the denouement of the debt ceiling debate played out Tuesday, the Maryland Democrat became something of a mystery — undecided up until the very last minute on how he would vote.[...]

Cardin said he supported the measure in part because it includes language that protects Social Security, Medicare and Medicaid beneficiaries from direct cuts.
He noted that the automatic cuts, if triggered by inaction, would also fall on defense spending, traditionally a priority for Republicans.

And that, Cardin said, would put Democrats and Republicans on more equal footing than they have been all year.
"I know the base is angry," Cardin said. "I've been through enough tough votes to know that a few weeks from now, a few months from now, maybe, it'll be a little bit different."

Then again, what can you expect from someone who sees no connection between the debt ceiling and spending?

Thank You Congressman Andy Harris

It is quite inspiring to have such an unvarnished conservative like Andy Harris representing Maryland.  In this blue oligarchy, we are lucky to elect any Republican, let a along a true conservative.  Yesterday, Congressman Harris opposed his own leadership and joined 65 other members in opposing the bill to raise the debt ceiling.  This bill handed Obama his full lifeline until after the election, without imposing any enforceable and transformational change (other than cutting defense and creating a 19th debt commission).

Most people don't appreciate how hard it is to oppose one's leadership, especially at such a pivotal time.  It is all the more inspiring that Harris is a freshman member who is willing to expend his political capital standing on principle.  Harris was also part of the select group of congressmen that opposed the CR deal in April.  Keep fighting on, Congressman Harris.

Now, if only we had people in leadership who exhibited such intrepid determination to limit the size of government!

9 Reasons to Oppose Boehner 4.0 Debt Deal

1) Obama gets his full lifeline, long-term debt limit increase that will take him beyond the election ($2.1-2.4 trillion), without making any transformational concession.  There is no realistic roadmap to entitlement reform; not a single agency or program, domestic or mandatory, will be eliminated; Obamacare is off limits; there will be no balanced budgets, ever.  We will still add trillions more to the debt over the next ten years.  Yes, there is a second tranche that will trigger the latter $1.2-1.5 trillion increase, but unlike previous versions of Boehner's plan, Republicans have no control over that trigger to use it as a precondition.

2) The only real cuts will be in 2012, when we cut $21 billion in outlays (just $7 billion in budget authority).  The rest of the $917 billion will be baseline cuts that permanently lock in the fundamentals of the Obama era.  This will overwrite and override the House-passed budget that remanded spending to pre-Obama levels.  In addition, the extra faux cuts create self-fulfilling fake interest savings, thereby double counting total savings.  Furthermore, how much of the discretionary cuts agreed upon for the first tranche of the debt increase will be from defense?  The White House put out a memo saying that "the discretionary savings are spread between both domestic and defense spending."

3) What about the $1.2-$1.5 trillion in savings and entitlement reform from the super duper debt commission 19.0?  Does anyone really believe that this commission will be more successful than Simpson-Bowles?  That blue-ribbon panel identified policy changes that both parties liked and hated; it called for some cuts and entitlement reform – and more taxes; nevertheless, Obama threw his own commission under the bus.  We are really to believe that Obama would approve a commission report that calls for the good entitlement reforms without tax hikes?  Oh, but then there would be an automatic sequestration that would cut a commensurate amount of spending.  Really? See #4