Capitol Hill GOP Spending Like Obama Is Still President
I was not going to comment on this until I see what actually gets enacted but all the comments I have seen from others miss an important point. Obama and the Donks made an amazing discovery: At least for the USA, you can spend all you like without raising taxes and nothing bad happens! According to conventional economic theory, Obama & Co. should caused a roaring inflation that made the greenback as worthless as the Venezuelan Bolivar. It didn't happen. Inflation remained within normal low bounds.
Why did it not happen? There has been much scratching of heads about it among economists of both the Right and the Left and various theories have been put up. I have put up attempted explanations myself. But basically no-one knows. It's a mystery on a par with the Holy Trinity.
And Trump has pushed the mystery even further. He is betting that you can actually CUT taxes and still spend as much as you like. On form, he will almost certainly get away with it, if only because his spending will increase employment and hence tax revenue.
So, basically, while we seem to be in this happy state of suspension from reality, Trump and the GOP are saying "Let the good times roll. Why should Obama have all the fun? Let US get credit for looking after all sorts of special interests with all of this magic money".
Unless there's a whole new economic truth somewhere that we have not yet discovered, the whole show has got to come down to earth some time but when that will be nobody knows. But Trump and the GOP are right to take advantage of our strange new fiscal state while they can.
In the aftermath of the 2010 Tea Party wave that returned Republicans to the majority in the House conservatives proposed a plan to reduce spending and balance the budget called “Cut, Cap and Balance.”
The plan would have cut and capped spending and brought the budget into balance after a period of time, and it federal debtwould have worked – except the Republican leaders in the House and Senate never gave it their support or a vote.
Instead they championed a plan worked out between Mitch McConnell, Harry Reid and Barack Obama that put spending caps in place through a process known as “sequestration” that placed most of the spending cuts on the defense budget.
Fast forward to 2018 and the three-day government shutdown over amnesty for illegal aliens that was a PR disaster for the Democrats.
Claiming to want to avoid another government shutdown, the Senate’s Republican leader Mitch McConnell and Democratic leader Chuck Schumer announced a bipartisan deal to increase defense and domestic spending by roughly $300 billion over two years, according to administration and congressional sources quoted by Politico's Burgess Everett and John Bresnahan. The deal will also lift the debt ceiling through the election and include tens of billions of dollars in disaster aid.
Everett and Bresnahan report the agreement would increase defense spending this year by $80 billion and domestic spending by $63 billion beyond strict budget caps, according to a summary of the deal they obtained for POLITICO. Next year, defense spending would increase by $85 billion and domestic funding by $68 billion beyond the caps. The deal also includes $140 billion for defense and $20 billion for domestic in emergency spending over two years.
President Trump quickly announced his support tweeting, "The Budget Agreement today is so important for our great Military," he wrote. "It ends the dangerous sequester and gives Secretary Mattis what he needs to keep America Great. Republicans and Democrats must support our troops and support this Bill!" However, conservatives were equally quick to pan the Schumer – McConnel deal.
Our friends at The Club for Growth issued a statement saying, “…now that the BCA spending caps are busted under this deal yet again, it’s clear that McConnell and the GOP establishment want to speed up the big government freight train with the help of big spending liberals on the other side of the aisle. As if that’s not bad enough, this deal also includes $80+ billion in so-called disaster relief spending, cronyist tax extenders, an expansion of farm subsidies, and another suspension in the debt ceiling, conveniently timed to expire after the mid-term elections.”
Nowhere in this deal, the Club for Growth noted, are the $54 billion in spending cuts outlined in President Trump’s budget. Instead, the big government freight train is running out of control.
The deal ends sequestration caps on the Pentagon without acceding to Democratic demands for equal boosts to domestic spending, but it still raises spending by nearly $300 billion over the next two fiscal years.
That was a bridge too far for the Freedom Caucus reported Victor Morton of The Washington Times.
The principled limited government constitutional conservatives of the House Freedom Caucus tweeted Wednesday night that they officially oppose the budget deal struck by McConnell and Schumer earlier in the day.
“Official position: HFC opposes the caps deal. We support funding our troops, but growing the size of government by 13 percent is not what the voters sent us here to do,” the conservative group posted on Twitter.
The loss of the Caucus, which is believed to have a membership of almost 40 representatives, basically ensures the Senate deal cannot pass the House without significant support from House Democrats.