The Republicans are serious about the budget. The results could be ugly.
Summary: After Obama taught the Democrats not to believe in change, they’re confident that the new Republicans are just as bogus. The Democrats might be disappointed when the budget debates show us their true values, wisdom, and strength of will. The results might prove unpleasant for America.
There are many challenges confront the 112th Congress when it convenes in January.
- We have people shouting about hyperinflation fears while Fed takes desperate measures to prevent another bouts of debt deflation.
- Our expedition in Iraq winds down to almost total failure, with the Iraq government paralyzed while Shiite theocrats in Iraq and Iran divide the pie.
- Our various tactics in Afghanistan have all failed, including the latest — COIN and clear/hold/build. Instead General Petraeus has resorted to Search and Destroy: increasing use of air strikes, deploying M1 tanks and razing to the ground thousands of homes that might be booby-trapped.
- The economy teeters on the brink of recession. In 2011 there will be almost certain spending cuts at State and local levels (which are 12% of GDP), the Federal fiscal stimulus quickly diminishing, and tax increases (net of all levels, local/state/federal).
- There is a high likelihood of paralysis both in the US government and internationally (with little or no international coordination of economic policy).
And so the Republican’s top priority is — reducing the Federal deficit. An important long-term problem, but an unlikely priority with the economy on life support and almost twenty million unemployed (including discouraged workers, per the BLS). This crusade is especially odd since the deficits’ origins lie in the Reagan, Bush Sr, and Bush Jr years. After Republicans decided deficits didn’t matter; see here and here. It will however provide a cudgel with which to extort tax cuts for the rich and reduced spending on non-Republican voters (e.g., no cuts for farmers, current retirees, military contractors).
But this cudgel’s effectiveness results from Republicans’ willingness to block all attempts to stimulate the economy. For them the worse, the better (it’s all Obama’s fault). For more about this see:
- Republicans have found a sure-fire path to victory in the November elections
- “What the Republicans Really Want“, John M. Berry, the Fiscal Times
- “There Will Be Blood“, Paul Krugman, op-ed in the New York Times
Most experts in Washington and on Wall Street believe that the revitalized Republican Party will play politics as usual. Like Obama, feeding the faithful sweet words during the election and betraying them once in office. But this time may be different, with the GOP now dominated by rigid ideologues. These don’t sound like people interested in palace games. They want change and, like so many motivated by faith, will burn the existing regime to get it. This doesn’t always end well, as the Weimar Republic learned.
Here are seven Republican officials telling us about the upcoming budget negotiations. There’s no evidence they have any serious plans, no balancing of needs and costs, short vs. long term. But they’re not kidding. Fools with knives.
RNC Chairman Michael Steele on CNN’s State of the Union, 31 October 2010:
STEELE: Well, I think that, to be very clear here, when we talk about not compromising, not compromising away on the principles that our party have run on and have stood for, for a long time. For example, we’re not going to compromise on creating more debt. We’re not going to compromise on raising the debt ceiling. We’re not going to compromise on increasing the burdens on the backs of small-business owners and families.
Senator Jim DeMint (R-SC) speaking on NBC’s Meet the Press, 7 November 2010: Would he would vote to raise the debt ceiling?
“No, I won’t. Not unless this debt ceiling is combined with some path to balancing our budget, returning to 2008 spending levels, repealing Obamacare. We have got to demonstrate that we have the resolve to cut spending … we cannot allow that to go through the Congress without showing the American people that we are going to balance the budget, and we’re not going to continue to raise the debt in America,”
Senator-elect Mike Lee (R-UT) on CNBC, 8 November 2010:
KUDLOW: Using the debt limit or the debt ceiling as a way of forcing down spending and deficits — how far would you go? Would you go toward government shutdown if you had to?
LEE: Well, look, I’m going to vote against raising the national debt ceiling. We simply can’t continue to mortgage the future or our unborn children and grandchildren. […]
KUDLOW: You know Senator, I always wondered, the government shutdown thing, I know people have a fetish about it. When I worked for Reagan many years ago, we did have a government shutdown, but you know, essential activities continue. It’s non-essential activities that get shut down. And if that’s what it takes to cut spending, isn’t that what it’s going to take?
LEE: Yes, and that’s why I say it’s not something that we avoid at all costs. It’s something we try to avoid, because it’s an inconvenience, it’s a nuisance. … We have to stop looking at the Bush tax cuts as something we have to afford.
“What Republicans can accomplish in the 112th Congress“, Senator Tom Coburn (R-OK), Washington Examiner, 10 November 2010 — Excerpt:
One key test Republicans will face as early as this spring will be whether to bail out career politicians who have failed to budget by increasing the national debt limit, or instead force them to cut spending. If Congress would cut spending, it may not be necessary to increase the debt limit this spring. If Republicans vote to raise the debt without insisting on spending cuts, whatever credibility we may have will be gone.
Ignoring The Danger, Rep.-Elect Jeff Denham (R-CA) Vows To ‘Absolutely’ Vote Against Raising The Debt Ceiling, interview with ThinkProgress, 15 November 2010:
TP: One of the first things that Congress will take up next year is going to be the debt ceiling. Have you determined what your feelings are on how you’re going to approach that vote?
DENHAM: I just don’t see this next Congress raising the debt ceiling. But it’s certainly a challenge we’re going to have to deal with. I mean, there’s a lot of things at play here in this lame duck session.
TP: So you think that’s something that you’ll probably vote against?
DENHAM: Absolutely, yes.
“‘Brutal’ vote ahead on whether to raise the national debt ceiling“, Christian Science Monitor, 19 November 2010 — Excerpt:
Saying he “can’t wait for the bloodbath in April,” the co-chairman of President Obama’s debt commission says that the “brutal” politics surrounding an upcoming vote on raising the national debt ceiling could force Congress to act on the commission’s controversial recommendations. “This is going to be beautiful politics – the brutal kind,” said Alan Simpson, co-chair of the National Commission on Fiscal Responsibility and Reform. He spoke at a Monitor-sponsored breakfast for reporters on Friday along with Erskine Bowles, the other co-chair.
… “The debt limit, when it comes in April or May, will prove who is a hero and who is a jerk and who is a charlatan and who is a faker,” former Senator Simpson said. Roughly half of the new Republican members of the House of Representatives ran on a tea party-supported platform of cutting or curbing government spending. “We’ve got guys who will not approve the debt limit extension unless we give them a piece of meat, real meat off this package” of deficit cutting plans, Simpson said. “They will say, ‘I will not vote for the debt limit extension until you cut this.’ ”
… As for the congressional battle over raising the debt ceiling, “I can’t wait,” Simpson said. “It will be something and I will be watching from our witness protection program.”
“GOP Ranks Fray on Vote to Raise Debt Limit“, Wall Street Journal, 22 November 2010 — Excerpt:
Rep.-elect Tim Scott of South Carolina, a rising party star: “The vote will garner a lot of attention and provoke a lot of pain and anxiety, but there are consequences to all votes,” Mr. Scott said. “The question is, when are we going to stop the way we are going? I think we have to stop it now.”
… During this year’s Congressional campaign, many of the GOP newcomers attacked their Democratic opponents as spendthrifts for past votes to raise the debt limit. Wisconsin Republican Reid Ribble, for example, who eventually defeated incumbent Democratic Rep. Steve Kagen, blasted Mr. Kagen for voting to increase the ceiling in February, calling the debt “unconscionable” and “insane.” Mr. Ribble couldn’t be reached to comment.
In Colorado, Rep.-elect Scott Tipton ran a TV spot against Democratic Rep. John Salazar saying, “He voted to increase the debt limit to a staggering $14 trillion, even with Colorado’s skyrocketing unemployment.” And an ad by Rep.-elect Steve Stivers against Rep. Mary Jo Kilroy declared, “She says we’ve got to deal with the deficit, but Kilroy voted to raise our national debt…Typical Washington politician.” Rep.-elect Bill Johnson of Ohio said those who ran on such messages didn’t intend to reverse themselves now. “Most of us agreed that to increase the limit would be a betrayal of what we told voters we would do,” he said.
… Some of the incoming Republican senators associated with the tea party movement have said they would oppose raising the debt limit, including Senators-elect Mike Lee (R., Utah) and Rand Paul (R., KY.). Minority Leader Mitch McConnell (R., KY.) has said a raise wouldn’t pass without significant strings attached.
For more information, about the Republican budget ambitions