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Debt Ceiling Threats Gets Ugly
Big Government comes for the Human Shields
With as little as 3 weeks to go until the debt ceiling hits and the federal government has to stop deficit spending, Washington swung into the mother of Fear campaigns to terrify American voters with threats to starve schoolchildren, put seniors on a cat food diet, and default financial markets into oblivion.
If you’re just tuning in, the US government is broke, and it’s about to break the $31.4 trillion debt ceiling — representing $31.4 trillion in accumulated theft from the American people — which it’s legally obligated not to break.
Instead of doing the right thing and just cutting the waste to end the deficits, Washington is doing everything possible to conjure up human shields to frog-march voters into handing over all the trillion their cronies and activists could want.
Where Negotiations Stand
In the US all spending laws start in the House, and raising the debt ceiling requires a fresh spending law. The House is currently in the hands of the relatively small-government Republicans who passed a ceiling hike to cover the next year, but in return for reducing federal spending by close to $5 trillion over next 10 years. Which, of course, cued the human shields.
Most of those reduction comes from rolling back spending to last year’s level, then applying a 1% annual cap for the next 10 years. It also returns unspent Covid relief money to the Treasury and elminates Biden’s cancellation of student loans that would have blue collars paying off rich kids’ college loans.
Now, limits have been gamed in the past, but the GOP offer does contain one true gem: a “REINS Act” mechanism that requires Congressional vote on any regulation with economic costs over $100 million.
This would be a game-changer for the unelected deep state that is steamrollering jobs and banning entire industries without the actual voters having a say. Which is not how it’s supposed to work: elected representatives are supposed to run the country, not unelected bureaucrats with life tenure who, invariably, are loyal to the state, not the people.
Of course, the House proposal is only the first step: any ceiling hike must also pass the Senate and get Joe Biden’s signature.
The Senate is currently controlled by Democrats who abhor any spending cuts, while Biden has already warned he’ll veto any reduction in spending, even threatening a Constitutional crisis by effectively repealing Congress’ ability to limit debt.
What if they can’t Agree?
Historically, both parties have caved on debt ceilings, and this time will probably be no different.
Still, what happens if Republicans actually take a stand and let the debt ceiling hit?
Simple: It means the Federal government would have to immediately stop the deficits and content themselves with spending the roughly $5 trillion they collect in taxes.
That would mean a spending reduction of roughly $1.4 trillion, or 22% of federal spending.
On paper that would be very easy, in fact it would be great for the country: Less than half of federal spending goes to popular programs like social security, medicare, veterans, school lunches, and testing drinking water. Meaning all of those could be funded with a couple trillion a year left for defense or naming post offices, and still zero deficits.
Of course, Washington will instead use the essentials as human shield — called the “Washington Monument Strategy” or “Firemen First” since they’re particularly fond of closing national parks and laying off firemen when there are voters to extort.
Where does the Money Come From?
So what if voters see through the threats and actually force the federal government to cut the rest?
If we tally up projected spending this year and take the essentials off the table — social security, medicare, veterans, debt service, even the firemen and water safety — we’re left with about $3.1 trillion in extra spending vs a $1.4 trillion deficit.
There are two ways to get there: either a roughly 50% across-the-board reduction in non-essentials, everything from foreign aid to military spending to bike paths to nowhere named after Congressthings. Or, better, just drop all the unconstitutional and useless programs government shouldn’t be doing in the first place — there’s a good chance you’d end up with a surplus to actually pay down debt instead of digging the hole deeper.
Now, 50% sounds like a lot — it certainly is to career bureaucrats grown fat on the backs of the people, making twice what we make and retiring at 42. But, for perspective Elon just cut 90% of Twitter and it works better. One might argue we should try that with the non-essential trillions the federal government floods out to cronies and activists.
Also, remember that a 50% across-the-board cut would simply take us back to 2004 levels of federal spending, even adjusting for inflation.
The rule in Washington is the most disappointing outcome is the most likely. So all the above is more imagining what’s possible than predicting what’s likely to happen.
So what is likely? A continuing march off the fiscal cliff, kicking the can another couple years and amassing yet more trillions for our grand-kids to try and fail to payf off.
Still, with voters widely opposed to raising the ceiling — yes, even Democrat voters — there is always the possibility that, for the first time in many of our lifetimes, Washington could actually do the right thing.
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