Tag Archives: budget process

We Need Fiscal Responsibility In Washington

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On Friday, The Washington Examiner posted an article about this year’s budget deficit. One of the conclusions that can be drawn from the numbers is that so far electing Republicans to the House of Representatives has not had any impact (actually that’s because the lame-duck Democrat Congress passed bills that limited the 2023 Congress’ ability to curtail spending). However, now we have a speaker who seems to be less likely to continue previous shenanigans. The next few weeks are going to be very interesting in terms of the budget process.

The article reports:

The United States is increasingly losing the war against red ink.

Per new Treasury Department figures, the U.S. government is courting a worsening fiscal crisis. Officially, Treasury Secretary Janet Yellen said the federal government ran a $1.7 trillion deficit for fiscal 2023, which ended Sept. 30. That’s up from a $1.4 trillion federal budget deficit posted in 2022.

But as highlighted by the Committee for a Responsible Federal Budget, Yellen’s math ignores another $300 billion in debt incurred by President Joe Biden’s student debt cancellations, bringing the actual total of the deficit under the president to a full $2 trillion. Fix that adjustment for fiscal 2022, and that year’s deficit amounted to a little less than $1 trillion.

This means that in just one year, sans recession and sans war, the federal government under Biden managed to double the deficit by more than $1 trillion. And in large part, it’s all thanks to his embrace of inflation, or at least inflationary spending.

Broadly speaking, the explosion of our national debt, which is now the size of the nation’s annual GDP, is primarily driven by our growth of government spending. While the rest of the nation pays handsomely for inflation with their paychecks, reduced in real terms of purchasing power, our wealthiest generation profits from the pockets of taxpayers. Thanks in large part to the cost-of-living adjustments for our entitlement programs, the three greatest categories of federal budget outlays — Social Security ($1.4 trillion), Medicare ($848 billion), and Medicaid ($616 billion) — grew by 11%, 12%, and 4%, respectively, from just last year.

The article concludes:

The stratospheric surge in bond yields should serve as a warning to Washington that even if the Fed won’t force the government to slow down the spending, the nation’s creditors will not continue to bankroll Uncle Sam without him paying a hefty premium for the privilege. While underlying demographic trends and the inherent, gerontocratic structure of entitlements predestined the nation to a certain fiscal fiasco long before the pandemic, the bipartisan embrace of wartime borrowing, and then Biden’s decision to double down on inflationary policy, have put the country on the path where not even the Fed can fight the deficit disaster on its own.

If Washington won’t listen to the Fed, perhaps it will begin to listen to creditors as the coffers continue to run dry.

We can’t afford to fund wars all over the world. The defense contractors love it, but the country will be destroyed by the debt incurred.

Will Fiscal Sanity Return To Congress?

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On Thursday, Breitbart posted an article illustrating the path to fiscal sanity for Congress (assuming Congress actually wants fiscal sanity).

The article reports:

On Wednesday’s broadcast of the Fox Business Network’s “Kudlow,” Rep. Byron Donalds (R-FL) stated that the best way Congress can fix the economy is to get back to the regular appropriations process…

…Donalds said, “[I]f our economy doesn’t get back on track, we’re all in trouble. And the number one way we can do that from Capitol Hill is…we’ve got to get back to regular order in Congress. We have to have real appropriations, not smoke-filled room foolishness. We’ve got to get all that COVID money out that was appropriated, still not spent. Our economy can’t take it. And then, you have to get to the hard stuff. Yes, we have to have border security. You can’t have fentanyl in our streets. Yes, we’ve got to make sure our military is strong because the Chinese are…a clear threat to global security, especially in Taiwan. All these things are happening at warp speed. We’ve got to get serious. No more games.”

Congress has not followed the regular budget process since 2009. The chart below shows what has happened since then:

The second column is revenue; the third column is spending; the fourth column is the  surplus or deficit. The chart represents trillions–not billions.

How much is a trillion?

Let’s get back to a budget process that works.

 

 

The Wrong Solution

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The coronavirus has devastated America’s economy. Small businesses have closed while certain large businesses have prospered–Amazon, WalMart, Loews, etc. Many restaurants are holding on by a thread. So how do you undo the damage? There seems to be some disagreement on the answer to that question.

Issues & Insights posted an article today about the stimulus package proposed by the Democrats. Simply put, the proposed package is nothing more than a bunch of goodies unrelated to the coronavirus. The package represents a wish list of spending the Democrats have wanted for years. The Republican attempts at reaching a compromise have been rebuffed.

The article reports:

In rejecting compromise, Biden gave Congress a green light to totally ignore Republican input by passing a stimulus package through reconciliation, not the normal budget process. That will require a simple majority of 51 senators, not a supermajority of 60, to pass.

Senate Democratic Leader Chuck Schumer confirmed this Tuesday, saying: “Joe Biden is totally on board with using reconciliation” to pass the bill.

So, just as with Obamacare, the fix is in on the Democrats’ all-or-nothing bill, loaded with goodies for far-left interest groups, teachers unions and Blue State governors.

But a few points need to be made here, not just about this bill, but about stimulus in general.

First, the economy is already recovering. It grew 33.4% in the third quarter and 4% in the fourth, following 2020’s disastrous 31.4% second quarter plunge. Unemployment peaked a 14.8% last April, but fell to 6.7% in December, far better than any official forecasts.

We’ve already committed $4 trillion in spending on COVID-19 over the past 10 months, but still have an estimated $1 trillion left unspent. Add another $1.9 trillion, and you see that COVID-19 adds to our already massive pile of federal debt, which, at $28 trillion, amounts to well over $200,000 per family.

Such reckless stimulus spending will impoverish the next generation. Yet, the fact is, the pandemic didn’t shut down the economy. Politicians did. Now they’re preening over their own generosity while piling up more debt that you, your kids, your grandkids and your great-grandkids will be paying off for decades to come.

Worse still, much of the Democrats’ “stimulus” bill will actually damage the economy.

The damage to the economy will be in the form of lost jobs due to the increase in the minimum wage. The Democrat plan will also extend unemployment benefits, which historically decreases the incentive for Americans to look for work.

The article also notes:

Helping fiscally troubled states is a huge mistake. Most are Blue States that have spent and taxed their way into trouble, and now want to use the pandemic as a cover for a bailout. It was bad policies by elected officials and bad decisions by voters that got these states into trouble, not the Chinese virus. Bailing out profligate states only encourages more of the same behavior.

And, sure, increased spending on schools sounds great, but that money won’t go to students. It will line greedy teachers unions’ pockets. Meanwhile, education standards and test scores will continue to slide as schools remain closed.

Instead of indiscriminately spending more money on bogus stimulus with checks for all, and irrelevant spending on Democrats’ far-left wish lists, we should target aid to the truly desperate and needy in our economy, those who were blindsided by some states’ destructive lockdowns and are now jobless.

So how do we grow our economy? First of all, we open up the country. Secondly, we do what President Trump did–cut taxes, decrease regulation, follow the rule of law, and protect property rights. Those things will get us back on track.