Tag Archives: Government spending

Republican Fiscal Hawks Revolt Against Budget Deal, Suspension Of Debt Ceiling, by Tyler Durden

Democrats and Republicans have reached their time-honored budgetary “solution” to a legislative impasse: Democrats get more vote-buying social spending and Republicans get more vote-buying military spending. To their credit, there are a few Republicans who can’t stomach it. From Tyler Durden at zerohedge.com:

As more details emerged about today’s bipartisan Senate budget deal, which will lift spending caps by $300 billion above the current limit and which prompted today’s sharp Treasury selloff, it was revealed that the agreement would suspend the federal debt ceiling through March 1, 2019.

This, together with the generous spending terms which are sure to blow out the US budget deficit even more than recent troubling forecasts such as those from Goldman, which recently predicted  US debt issuance would more than double, rising from $488bn in 2017 to $1,030 billion in 2018…

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prompted a revolt among GOP conservatives against the massive bipartisan deal, who complained that the GOP could no longer lay claim to being the party of fiscal responsibility.

“I’m not only a ‘no.’ I’m a ‘hell no,'” snapped Rep. Mo Brooks (R-Ala.), one of many members of the conservative Freedom Caucus who left a closed-door meeting of Republicans saying they would vote against the deal.

According to The Hill, one of the Freedom Caucus leader, Rep. Dave Brat (R-Va.), called the budget “a Christmas tree on steroids.”

This spending proposal is disgusting and reckless — the biggest spending increase since 2009,” conservative Rep. Justin Amash Mich.) tweeted after the meeting. “I urge every American to speak out against this fiscal insanity.”

But the focal issue appears to be the debt hike, which is giving conservatives “heartburn,” said Rep. Dennis Ross (R-Fla.), a member of the GOP vote-counting team.

The swift backlash from fiscal hawks means that Speaker Paul Ryan (R-Wis.) and his leadership team will need dozens of Democratic votes to help get the caps-and-funding deal through the lower chamber to avert a government shutdown set for midnight Friday. At the same time, some Republicans predicted a majority of the majority would back the package.

To continue reading: Republican Fiscal Hawks Revolt Against Budget Deal, Suspension Of Debt Ceiling

 

Does Government Spending Create More Economic Growth? (Spoiler Alert: No, Silly!), by Frank Shostak

If government spending did create economic growth, couldn’t they just spend forever and ever and the economy would keep growing and we’d never have to have a recession or depression again? From Frank Shostak at mises.org:

After the 2007-2009 global financial crisis, fears of ballooning public debt and worries about the drag on economic growth pushed authorities in some countries to lower government spending, a tactic that economists now think may have slowed recovery. Note that in the United States the total debt to GDP ratio stood at 349 in Q1 this year.

In a paper presented at the Kansas City Federal Reserve’s annual economic symposium on August 26 2017, Alan Auerbach and Yuriy Gorodnichenko from the University of California suggested that “expansionary fiscal policies adopted when the economy is weak may not only stimulate output but also reduce debt-to-GDP ratios”. (Fiscal Stimulus and Fiscal Sustainability, August 1,2017, UC – Berkley and NBER).

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Some commentators are of the view that these findings may be welcome news to central bankers who face limited options of their own to combat a future downturn, given existing low interest rates and low inflation rates in their economies. “With tight constraints on central banks, one may expect — or maybe hope for — a more active response of fiscal policy when the next recession arrives,” the University of California researchers wrote.

These findings are in agreement with Nobel Laureate in economics Paul Krugman, and other commentators that are of the view that an increase in government outlays whilst the economy is relatively subdued is good news for economic growth.

Can increase in government outlays strengthen economic growth?

Observe that government is not a wealth generating entity as such — the more it spends, the more resources it has to take from wealth generators. This in turn undermines the wealth generating process of the economy.

To continue reading: Does Government Spending Create More Economic Growth? (Spoiler Alert: No, Silly!)

Save Liberty, Shut Down the Government, by Ron Paul

The title conveys a sentiment with which all thinking people can agree. From Ron Paul at ronpaulinstitute.org:

Congress ended the week by passing a continuing resolution keeping the government funded for one more week. This stopgap funding bill is designed to give Congress and the White House more time to negotiate a long-term spending bill. Passage of a long-term spending bill has been delayed over objections to Republican efforts to preserve Obamcare’s key features but give states a limited ability to opt out of some Obamacare mandates.

This type of brinkmanship has become standard operating procedure on Capitol Hill. The drama inevitably ends with a spending bill being crafted behind closed doors by small groups of members and staffers and then rushed to the floor and voted on before most members have a chance to read it. These “omnibus” spending bills are a dereliction of one of Congress’s two most important duties — allocating spending. Of course, Congress long ago abandoned another primary duty — preventing presidents from launching military attacks without first obtaining a congressional declaration of war.

The uncomfortable question raised by Congress’s abrogation of these two key functions is whether a republican form of government is compatible with a welfare-warfare state. The answer seems to be “no.”

Congress’s dysfunctional spending process is an inevitable result of the government’s growth. It is simply unrealistic to expect Congress to fund the modern leviathan via a lengthy and open process that allows individual members to have some say in how government spends their constituents’ money. The dysfunctional spending process benefits the many politicians eager to avoid accountability for government spending. The rushed process allows these politicians to say they had to vote for the spending bills. Often, these big spending bills include a promise to cut spending in the future. Like tomorrow, the promised spending cuts are always a day away.

To continue reading: Save Liberty, Shut Down the Government

New Poll: Record number of Americans want MORE government in their lives, by Simon Black

Here’s a poll that could ruin your whole day. From Simon Black at sovereignman.com:

In a poll conducted a few days ago by NBC News / Wall Street Journal, a record 57% of Americans responded that they want MORE government in their lives, and that the government should be doing more to solve people’s problems.

That’s the highest percentage since they started asking this question in 1995.

In fact, 57% is nearly double what people responded in the mid-90s.

Furthermore, the number of Americans who feel the opposite, i.e. responded that the government is doing too many things that should be left to private businesses and individuals, fell to a near record-low 39%.

Bottom line: people want more government.

It’s hard to even know where to begin with this.

First- more government is nearly an impossibility.

As I’ve written several times in the past, the US federal government already spends almost all of its tax revenue on mandatory entitlements like Social Security, and interest on the debt.

They could literally cut nearly everything we think of as government– national parks, Homeland Security, even the IRS– and still not make a dent in paying down the national debt.

According to the US government’s own financial statements, their net operating loss in 2016 was an unbelievable $1.05 TRILLION.

Think about that– they lost more than a trillion dollars in a completely unremarkable year.

They weren’t waging world war, funding a major infrastructure project, or dealing with an economic crisis.

It was just business as usual. And they STILL lost over a trillion dollars.

More government is going to cost even more money that they don’t have… which means even more debt and even more pain in the future.

The usual refrain is to pay for more government programs by raising taxes on the rich, or big corporations, or whoever the evil villain du jour is.

Anyone who thinks this actually works needs to study history.

Simply put, RAISING TAXES DOES NOT RAISE TAX REVENUE.

To continue reading: New Poll: Record number of Americans want MORE government in their lives

Of course Donald Trump’s tax cuts are in trouble, by Brett Arends

There’s No Fooling the numbers. From Brett Arends on a guest post at theburningplatform.com:

Older Americans don’t want benefits slashed — and they vote

Wall Street has been betting that Donald Trump will get his big tax cut plan through Congress — which would be supposedly good for stocks and the people who own them.

But those tax cuts were always a long shot — even before the health-care debacle.

The political pundits can jawbone all they want. But the logic is painfully simple:

1. Even with tax rates as they are, the U.S. budget is heavily in deficit and the national debt is predicted to keep spiraling upwards — as the Congressional Budget Office has confirmed.

2. Tax cuts will increase that deficit still further. (No, tax cuts do not “pay for themselves,” unless maybe you are cutting them from those ridiculous 70%-90% levels seen after World War II. Cutting taxes today might in theory stimulate enough extra growth to clawback some of their cost, but they will not generate a net gain.

3. Republicans cannot credibly push a plan that increases the deficits, because most of them — including Donald Trump — ran on a platform of saying the deficit, and the spiraling national debt, is a disaster.

4. Therefore, if Republicans want to pass the tax cuts, they will need to cut federal spending.

5. Trump is already pushing to raise spending on defense and infrastructure, making the challenge even greater.

It is impossible to cut spending overall without cutting Social Security and Medicare as well as Medicaid.

6. Mathematically, it is impossible to cut spending overall without cutting Social Security and Medicare as well as Medicaid. Along with debt interest, which cannot be cut, they already take up 58% of the budget and that figure is rising. Throw in defense and veterans and we’re talking about 77% of the budget now, and an estimated 83% in 10 years.

To continue reading: Of course Donald Trump’s tax cuts are in trouble