Not Enough Yet, but House Bound to Cut More Spending
I argued on July 29 that the donkey had pinned the tail on itself. The donkey is already squirming and President Obama, following Senate passage of the bill, continued to call for more taxes on “the rich”:
“We can’t balance the budget on the backs of the very people who have borne the biggest brunt of this recession,” Obama said in appealing for measure to raise more revenue from the wealthy and corporations. “Everybody is going to have to chip in. It’s only fair. “That’s the principle that I will be fighting for in the next phase of this process.”
Recent events suggest that the donkey should not feel comfortable. On the day after the House approved the debt limit deal, the anticipated euphoria on Wall Street was dampened by fears of rising interest rates, presumably triggered by increases in interest the government will have to pay for new borrowing due to a credit risk downgrade or even a warning. On that day, the Dow closed down 265.87 points (-2.19%) and the NASDAQ closed down 75.37 points (-2.75 percent) — hardly auspicious signs. On August 1:
Obama administration officials were not sure if the initial cuts of $917 billion over the next decade, with an additional $1.2 trillion to $1.5 trillion coming in a second step, would be enough to avoid a downgrade.
“We certainly hope that that sends the signal that Washington is getting its act together and dealing with these tough issues,” Carney told reporters.
Standard and Poor’s has been rather less sanguine:
The firm indicated in July that it would downgrade the U.S. credit rating if a debt-ceiling deal did not cut spending by about $4 trillion over the next 10 to 12 years. For that reason, Rajadhyaksha said S&P could be the only major ratings agency to downgrade if the deal is approved.
Gary Schlossberg, senior economist at Wells Capital Management in San Francisco, agreed.
“If you took them at their word over the last couple of months, this clearly falls short of what they were looking for,” Schlossberg said.
The debt limit legislation does not come even close to approaching a $4 trillion cut. The United States will not become Big Rock Candy Mountain and Wall Street knows it:
Rasmussen reported on August 2nd:
On the morning after official Washington patted itself on the back for a deal to raise the debt ceiling, investor confidence has fallen to the lowest level since March 24, 2009.
The Rasmussen Investor Index, which measures the economic confidence of investors on a daily basis, fell five points on Tuesday. At 68.9, investor confidence is down seven points from a week ago, down 12 points from a month ago, and down 17 points from three months ago.
Just 16% of investors believe the economy is getting better while 63% say it is getting worse. At the beginning of the year, they were evenly divided on that question.
If the House refuses to appropriate funds needed for further implementation of obnoxious and wasteful schemes for fiscal 2012 and 2013, the Obama administration will have to discover ways, contrary to Article I, Section 9, to borrow lots of money within the new debt limit for those purposes. However, by doing so it is likely to bump up against another debt ceiling sooner rather than later, possibly before the 2012 elections — the main thing the Obama administration sought to avoid.
There are many targets for spending reductions. As I observed here in January of this year:
There are so many places to start that even to select a few for the defunding prize or even for “honorable mention” would be a Herculean task. Still, a few stand out. The Environmental Perversion Protection Agency (EPA), the Federal Statutory Abuse Communications Commission, the Department of Religious meddling Justice and now the Department of Obesity Reduction Agriculture would be good starts. So, to the extent that such is possible, would be the United in destruction of civilization Nations, which is about to have a conference supporting racism and has strayed so far from its course as anticipated by Winston Churchill that it resembles his dream less than does a horse resemble a snake.
Our major creditors demand to see sharp cuts in government spending. This puts the screws to the Democrats. They need money to bribe their key voters. Republicans are often hypocritical—but at the end of the day recognize the need to bite the bullet. Not so for most Democratic Party voters. At least half of them are marginally to functionally illiterate and expect the good times to continue forever. They can be compared to spoiled teenagers who refuse to accept the fact that their parents are broke and can no longer provide them with expensive cars and lavish allowances.
You may be playing a ten-year game, but they aren’t.
They are playing an 15-month game. If they win in 2012, it’s game over.
They could care frigging less about the debt or our creditors. If they are able to firmly get their hands on the American military, the world will bow and scrape, no matter what the debt it.
Don’t make the mistake of thinking that they are in any way aiming for the results 95% of Americans would like to see.
How long do you think the military will stick around without getting paid (or getting paid in worthless money)?
The clash of capitalism vs. small c communism …game on.
The 25 million that Bill Ayers wanted to kill and the Journolistas wanted to throw through a plate glass window…are standing tall and firm against the Shadow Party.
But make no mistake, the Democratic Party is in no mood for democracy. They are owned by Soros, fueled by the Workers Party(called unions in America), have the strongest propaganda arm in the world…they dominate the news and pop culture, as well as academia.
The inroads into the black community are very deep and with Obama as the figurehead…rock solid support is virtually unshakeable.
Messaging is blocked, distorted and overwhelmed by the huge disadvantage borne of this coalition. With the lapdog distortionists, Hollywood and academia in their pockets…getting the truth through the haze and maze of lies, propaganda and distortion is a mountain to scale and an ocean to cross. Worse, the Republicans suck at it.
This leaves the independents vulnerable to misdirection, bad facts, and outright Big Lie campaigns…with the Republicans feckless and feeble responding…much less overcoming.
NOBODY effectively combats the nonsensical class warfare attack. In fact, it actually plays well in some CONSERVATIVE circles…as ridiculous as that may seem at first blush.
Money is politics and politics is money. The “automatic trigger” may be the last nail in the coffin of the free market system…wipe out our military and sacrifice the elderly…wiping them out through “accelerated attrition” (Robert Reich and Bill Ayers dream of “letting you die, only faster”)…a small c communist’s dream.
Nancy Pelosi gets three people on the Gang of Twelve. If they “oops, can’t agree”…there goes the Pentagon…and Medicare for Bill Ayers 25 million he wanted to get rid of anyway.
Read the chessboard. Look ten moves ahead, not just one at a time.
Your posts have been right on the ‘money’, cf (both literally and figuratively).
Read the chessboard. Look ten moves ahead, not just one at a time.
I doubt we have anyone close to a Bobby Fischer or Garry Kasparov in the running (or currently elected reps).
The clowns are all packed into their ‘eco’ clown cars steering us into oblivion.
Honestly, I wish I could be less pessimistic. I just don’t see how this could possibly end well at all.
Larry Grathwohl on Ayers’ plan for American re-education camps and the need to kill millions
http://www.youtube.com/watch?v=HWMIwziGrAQ&fe…
Most Afro-Americans are going to remain loyal to the Democratic Party for the foreseeable future. That is unfortunate—but also cold reality. However, Obama needs to continue bribing them! Too many will stay home if their hands are not greased in some way. This is why the Democratic Party is experiencing an existential crisis.
“Wouldn’t it be better — for our CongressCritters themselves — if they were to cancel or truncate the recess, pleading the press of getting spending under control, as a productive way to avoid being ridden out of Washington on rails by voters mad as hell when they venture back to face them?”
The main stream media just doesn’t get it. The keep saying that Americans “Just want Congress to negotiate an agreement, or a budget.” The media is portraying the American public like a bunch of housewives trying to stop a group of little children from fighting. What the main stream media is not saying is that we are probably facing the biggest Congressional struggle since the Civil War.
This is a titanic battle, in which the Democratic Party, taken over by far-left liberals, is going up against Tea Party conservatives. The liberals want to spend us into oblivion, while the conservatives want to save what is left of this country by stopping the horrific spending that’s going on in Congress.
The liberal Democrats know that this is their last stand and that all of the money they’ve been pumping back to unions and to special interests in their home state is now in danger of being cut, while the Tea Party Conservatives are trying to stop the financial bleeding, regardless of who “loses” their payoffs or kickbacks.
This is a struggle for the ages, one that should not be minimized and certainly one that should not be ignored. We are in a big battle here, folks, and if you expect to have anything left to hand your kids and grandkids, you should be on the right side of it and throw as many liberal Democrats out of office in 2012 as possible. This is the only power we really have and we’d better start using it if we want some real hope and change.
If in 2012 America changes Washington, and America begins a real fix to Washington’s spending disease, the world will be very afraid. America will once again be on top.
The world ( China, Soros, Un, etc. ) does not want this. Like in the movies, everyone wants the BIG bad guy to fall.
2012 is going to get very ugly and fast. Smoke em if ya got em.
At American thinker, they have an article explaining how the new law past gives the president the power to borrow above the debt ceiling if it is “necessary”. Of course I don’t understand what all this means (but then I doubt that most the people who voted on it understand either). Does this mean we are in worse shape than what we were in before this bill passed?
http://www.americanthinker.com/2011/08/the_budget_control_act_of_2011_violates_constitutional_order.html
The principal issue raised in the linked article is that the process for additional debt limit increases up to the amounts specified by the debt limit legislation is unconstitutional: in essence, the Congress has delegated its legislative authority to raise the debt limit up to those specified amounts to the President, subject to a 2/3 veto by the Congress. It seems very unlikely that both the current House and the Senate would “veto” such an increase.
The debt limit legislation does to that extent delegate authority held by the Congress under the Constitution to the President. Unfortunately, that sort of delegation has become very common. Over the years, the Congress has delegated legislative authority to the executive and to the various administrative agencies to the point that they have “enacted” more rules and regulations than even a very “productive” Congress has enacted laws, generally without significant legislative oversight over the agencies. Due to the size and complexity of the country, the Congress would have an impossible task of garnering the requisite expertise to do many of the things the agencies have been authorized to do; some but not all such delegations are necessary. Such delegations have generally been upheld by the courts and agency actions have generally been upheld as well if, by liberal interpretations, those actions have not exceeded the authority granted by the Congress.
The agreed upon debt limit increase cannot be breached by the President under the debt limit legislation and it is too late to change it to modify the delegations of which the author of the article complains.
The Congress had better get busy, cut spending and make further borrowing pursuant to the debt limit legislation unnecessary. That it must do so is the principal point of my article.
Excellent explanation, Mr. Miller.
Thank you.
Ben Bernanke gets drunk and tells the truth: (REALLY)!!!
http://www.theonion.com/articles/drunken-ben-bernanke-tells-everyone-at-neighborhoo,21059/
Can someone help me out? I’m trying to think of a major problem whose genesis is not the U.S. Congress. I’m sure there is such a thing; I just can’t seem to come up with it.
Yep, Iran.
That one was caused by little Jimmah, all by himself.
But I also have a slightly different perspective on your overall point.
I think it is less Congress (and the other branches, I think you would agree) than it is subversion.
Congress is the finger pulling the trigger, but the gun was placed in their hands by a 60+ year, planned and concerted effort by radicals to bring down the United States. At this point in time, something like 50% of the democrats and some lesser number of Republicans are the spawn of those radicals, but even they don’t really know it. They just think they are geniuses who were born to rule.
And there is another mega-trend as well. The unimaginable wealth that politicians control nowadays attracts people who would otherwise be running major crime syndicates. Harry Reid is a perfect example. For that part of it, I agree with you that Congress is 100% responsible.
We need to send many of them to jail for life and strip them of all of their assets. I often say they should be guillotined, but realistically, that will never happen. But there is some chance to send them to jail.
If We the People don’t wake up, read and understand our own Constitution, and start forcing our legislators to actually follow it, we are doomed. Follow it, and eliminate all the unConstitutional Fed bureaucrazies, including EPA/OSHA/Depts of Labor/Education/FDA/SocSec/Medicare…the list goes on. Do so, and watch business boom, wealth spread, the poor benefiting as employment opportunities they have long been unjustly denied skyrocket, freedom reign.
Fail to do so, try to ‘fix’ things by some combo of tax raises and spending cuts, and we will continue to languish. This does not end well.
If we left SS and Medicare alone but returned to the liberal heyday of 2000 and adjusted discretionary spending for inflation since then, government spending would be 1.1 Trillion less than today.
But of course, look at everything our beloved politicians have given us since 2000.
Isn’t it worth it?
There is an interesting article here on how the debt limit legislation could damage key parts of ObamaCare.
While the linked article focuses on potential cuts if others are not made as required by the debt limit legislation, there does not appear be anything in the legislation to prohibit cuts beyond those it requires. Fortunately, we have not yet reached the stage where everything not expressly required is prohibited.
Don’t the cuts have to be recommended by a majority of the unconstitutional committee?
If so, there is no chance that a cut in Obamacare, or any other non-military program will be recommended. The Dems will immediately demand that all cuts be made in the military or by raising taxes, and nothing will move them.
Even if Republicans hold firm (not likely) there will be a deadlock and the doomsday scenario will kick in.
Isn’t that the whole purpose in the first place? The make believe media will then work 48 hours a day to put the blame squarely on the Tea Party. The screaming will go on for weeks.
As I understand the legislation, the committee is to ensure that cuts at least in the amounts specified will be made. I have found nothing to usurp the authority of the House, when it funds continuing operations such as those involved in ObamaCare, to spend less than enough to fund them as contemplated. As I have argued previously, if the House does not fund activities for specific agencies and prohibits the spending of other funds for those purposes, the Senate can refuse to go along. Then those activities get no further funding. If the Senate goes along but the President vetoes the bill, same result.
These things should have been done as soon as the current Congress was seated. However, that is not a reason for failing to do them now.
Dan, I probably wouldn’t understand the legislation even if I read it, but you seem to have the expertise.
If you answered my basic question just above, I don’t understand the reply.
1. What happens if the committee has an impass? I believe one is inevitable, but perhaps you know why an impass would be impossible.
2. If an impass is possible and occurs, what happens then?
3. I’m under the impression that automatic actions are triggered (which in my previous post I called the doomsday scenario)?
4. If automatic actions are triggered, do they include Social Security? That is the situation I’m afraid has been setup, so the Democrats can demagogue it.
5. Or alternately, after an impass, are automtic tax increases triggered?
Thanks.
As I understand the situation, an impasse is likely. If the rest of the Congress fail to agree on adequate cuts the automatic cuts go into effect unless “vetoed” by 2/3 vote in both houses.
However, and regardless of that, I have found nothing in the legislation that eliminates the authority of the Congress to come up with cuts greater than those required. Using the procedures suggested in the previous Pajamas articles linked in my reply, the House can still refuse to provide any more additional funding than it wishes for ObamaCare, the EPA, the NLRB and other purposes. The Senate can agree or disagree. If the Senate agrees, President Obama can veto the appropriations. If he does, or if the appropriations die in the Senate without being sent to President Obama, the affected agencies and departments will get no funding.
President Obama has provided talking points to his supporters.
No details, just fluff; people may think President Obama’s supporters are President Obama himself because He answers questions the same way. That’s cool. Pounding on the table works pretty well too.
For anyone who hasn’t heard, today the DOW closed down 512.68 points (4.31%) and the NASDAQ closed down 135.63 points (5.08%). It has been noted that
Clearly, the recovery must be well underway and there remains no need to be concerned about excessive spending; there’s nothing to fear but fear itself. Right? After all, President Obama never told us when the change in which we can believe would occur.
Don’t believe it for a second. Not with 2012 campaigning about to start. The Super Committee will fail (due to self-internet in their campaigns) and Obama is already talking about more government investment with the FED’s idea of QE3.
http://www.intellectualtakeout.org/library/budget-deficits/united-states-national-debt-budget-deficits