View Full Version : Economics The phony-as-a-$3-bill debt deal

08-02-2011, 02:26 PM
Aug 1, 2011 11:55 EDT

debt ceiling | u.s. debt | US Politics

Maybe Washington can start paying invoices with $3 bills — because the “dramatic” agreement to “reduce the national debt” is as phony as a three dollar bill.

Weeks of nearly round-the-clock negotiations among the White House, House and Senate have led to an “historic” debt deal that consists almost entirely of fluff, doublespeak and empty promises.

The politicians involved get to claim victory, and presumably will be rewarded with votes and campaign donations from the special-interest groups that, pretty much across the board, were spared any pain. Young people of the United States once again are hammered. If the deal becomes law, the national debt will rise again dramatically, while there’s no guarantee any cut will materialize — and the bill for this recklessness will be passed along to those under age 30.


* The closest thing to a tangible “saving” in the agreement is $1 trillion in caps on discretionary programs, spread over 10 years. The new national-debt ceiling allows borrowing to rise by $2.4 trillion, with a plan to pay back less than half that amount over 10 years.

Get it? A huge surge in spending now is called a “spending cut,” while actual cuts don’t take effect for up to a decade. And that’s setting aside that inflation means the present value of money spent today sharply exceeds the value of smaller cuts many years in the future.

* In December 2010, the White House and Congress agreed to $930 billion in fresh deficit spending, as the fourth stimulus plan enacted since the 2008 recession. When special-interest groups say they want a “second stimulus,” remember, we’ve already had four. So $930 billion in extra borrowing right away is followed by a plan for about the same amount in savings years in the future. This is what Democrats and Republicans alike today are calling “fiscal discipline” or “draconian cuts.” If you emptied your bank account today but declared you would become careful about money 10 years in the future, people would laugh at you.

* By projecting the only tangible savings — which aren’t even specified, but are merely caps — into the future, the plan allows Congress to cancel them. In 2012 or any future year, Congress will say, “We can’t have caps this year because of the [INSERT ANY WORD CHOSEN AT RANDOM] crisis. We are postponing action till next year.” Rinse and repeat.

* The deal raises the federal borrowing ceiling by $2.4 trillion. This means Congress will immediately spend another $2.4 trillion. That basic point is being overlooked.

You’ve got a debt ceiling on your credit card. The ceiling is there for emergencies, and all responsible borrowers work to stay below their credit ceilings. Experience with the national debt ceiling, by contrast, shows that every dollar of available debt is always spent. Announced in doublespeak as a “savings” plan, this deal guarantees the national debt will rise another $2.4 trillion. The moment the deal becomes law, members of Congress from both parties will see an added $2.4 trillion in the cookie jar and begin raiding.

* A new “joint bipartisan committee” will be charged with identifying another $1.5 trillion in cuts. Doing nothing today, while appointing a committee that will make the tough decisions later, is one of Washington’s worst traditions of pure phoniness.

The president, Speaker of the House and Senate Majority Leader just negotiated nearly round-the-clock for weeks and they couldn’t even agree to cut programs that are transparent boondoggles. So bring in the special committee! This is total abdication of leadership by the president and both political parties.

* Will the bipartisan committee have the stones to impose cuts? Since January 2007, Congress has already been operating under Paygo rules, which specify no more deficit spending — unless waivers are issued. Waivers are always issued! The national debt has increased by $6.6 trillion since Paygo “discipline” was “imposed.” Likely outcome: the bipartisan committee holds somber meetings and recommends cuts, then Congress issues waivers, citing the [INSERT ANY WORD CHOSEN AT RANDOM] crisis.

It’s been a mere nine months since the last bipartisan deficit commission issued its recommendation, and those findings have been totally ignored by the White House and Congress. In a postmodern touch of humor, the last bipartisan deficit commission titled its findings “The Moment of Truth.”

* Won’t the proposed balanced-budget amendment fix the problem? Assuming such an amendment passed Congress, it must be ratified by three-fourths of the states. There’s no chance of this — because the states love deficit spending! Nearly 40 percent of state and local government spending is financed by the federal government — Washington borrows, then ships money to the states. If a federal balanced budget amendment went into effect, the states would have to fund themselves, rather than rely on Washington for free cash (all the while denouncing “the big spenders” in D.C.).

Calling for a balanced-budget amendment is classic political delaying tactics, since even a successful amendment would require many years to ratify. Nothing stops Congress from balancing the budget right now.

* Congress continues to drive the nation deeper into debt when there are many problems but no national emergency, and before the Baby Boomer retire. Extra borrowing sure hasn’t fixed the economy. Japan’s example shows that undisciplined borrowing slows economic recovery by causing business to think the nation is going downhill, and thus to hoard cash rather than invest. That’s precisely what is being observed in the United States right now.

* The worst aspect of the phony-as-a-$3-bill national debt deal is that the middle-aged men and women who run Washington are acting irresponsibly, then passing the problem along to their children. What kind of adult harms the future of his or her own offspring?


08-02-2011, 02:27 PM
Opponents Of Debt Hike to be Barred From “Super Congress”

Fiscal conservatives like Rand Paul will be omitted to ensure unconstitutional body can fast track tax increases

Paul Joseph Watson
Prison Planet.com
Tuesday, August 2, 2011
Opponents Of Debt Hike to be Barred From Super Congress 2011%5C123%5C2011 05 03T163853Z 01 WAS705 RTRIDSP 0 USA

Senators who voted against the debt ceiling hike will be barred from being on the panel of the unconstitutional “Super Congress,” as the Washington elite ensures all roadblocks to crippling tax increases and other planned assaults on the constitution are removed.

According to The Weekly Standard, Republican sources have confirmed that the likes of Rand Paul, Jim DeMint and other fiscal conservatives will be dismissed as choices for the new super committee partly as a punishment for their failure to back the debt hike and most importantly to prevent any obstacles to the committee passing tax hikes and entitlement cuts.

“Excluding those who vote against the debt deal will ensure that some of the most fiscally conservative members of the Senate Republican caucus, including most of its freshmen, will be reading about the committee’s activities in the newspaper rather than guiding its decisions,” writes Stephen F. Haynes.

“Among those who have already declared their opposition to the deal: libertarian-leaning senators Mike Lee and Rand Paul; Jim DeMint, the aggressive fiscal hawk from South Carolina; conservative reformers Ron Johnson from Wisconsin and Pat Toomey from Pennsylvania; the ranking member on the Senate Budget Committee, Jeff Sessions; and Florida’s Marco Rubio, already one of the highest-profile conservatives in Congress.”

Despite Mitch McConnell, who will make the selections for the panel, promising that the committee won’t raise taxes, immediately before voting began on the debt bill today Senate Majority Leader Harry Reid (D-NV) promised that “painful” tax increases would be enacted by the committee or that automatic triggers will kick in which mandate spending cuts of at least $1.2 trillion.

In addition, the Obama administration has already indicated that it will take the deciding vote as the de facto 13th member of the Super Congress. During his press briefing yesterday, White House press secretary Jay Carney said that the government would work with the Super Congress to hike taxes in 2012 and beyond.

McConnell has proven he cannot be trusted. Earlier this month, the Kentucky Republican proposed reaching an agreement on the debt hike by completely handing over the power of the purse, constitutionally held by Congress, to the executive branch, by transferring the authority over to President Obama for the remainder of his term.

The fact that McConnell will be the main player on the super committee virtually guarantees it will be exploited to further eviscerate the constitution.

As we have documented, legislation decided on by the Super Congress would be immune from amendment and lawmakers would only be able to register an up or down vote, eliminating the ability to filibuster. The Speaker of the House would effectively lose the power to prevent unpopular bills from making it to the House floor.

Harry Reid has already insisted there will be “no constraints” on the committee and that it will have “the ability to look at everything,” prompting concerns that gun control legislation and all manner of other issues could be on the table.

Given the fact that the “Super Congress” is brazenly being established as a weapon with which to butcher what remains of the constitution and the rule of law, it’s hardly a surprise that Washington insiders have already moved to ensure that the few lawmakers in DC who are not completely corrupt and compromised will have no say in how it operates.


08-02-2011, 02:29 PM
McConnell already debunked that Weekly Standard article.

That's not to say that Paul or DeMint are going to be on the SC.


Today 8:27 AM McConnell Will Consider ALL Members Interested In Super-Committee

A spokesperson for Senate Minority Leader Mitch McConnell (R-Ky.) said on Tuesday that he would be willing to appoint senators to the soon-to-be-created deficit-reduction super committee even if they vote against raising the nation's debt ceiling.

"He will have serious discussions with ALL those who are interested in serving prior to making any appointments," emailed McConnell spokesperson Don Stewart. "No one is stronger in his opposition to tax hikes than Sen. McConnell. He will have serious discussions with all those who are interested in serving prior to making any appointments."

Stewart's comment came in response to a Weekly Standard report that McConnell would hold members' votes against them when it came time to choose his three committee members (each chamber gets six members, to be divided equally among the parties). Such a policy would, seemingly, rule out some of the more fiscally conservative voices in the party who have refused to vote to raise the debt ceiling, either out of belief that the corresponding cuts didn't go far enough, or conviction that the United States wouldn't risk default.

In actuality, however, those lawmakers likely won't be in consideration for the super-committee as they are either younger members -- Sens. Marco Rubio (R-Fla.), Rand Paul (R-Ky.), and Pat Toomey (R-Pa.) -- or individuals whose legislative purviews don't necessarily include budget matters -- Sens. Orrin Hatch (R-Utah) or (R-S.C.).

-- Sam Stein