Government Spending

Cattle Queen of Wyoming 'Splains Why She's Voting No on Debt-Limit Increase

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Over at Reuters, James Pethokoukis details how Barack Obama's insistence on significantly expanded government (this time with much-higher taxes) doomed "the Mother of all budget deals." Rather than pushing for the sort of broad-based tax reform that's everywhere in the winds, the president

…apparently offered to keep top individual rates where they are, at 35 percent, in exchange for tax reform. Now that's a big tax hike. But it's also revealing. As a GOP source on the Hill put it:

Their fierce insistence on higher taxes is beyond bizarre.  …  The bipartisan consensus on tax reform (broader base & lower rates) was championed by President's fiscal commission, and yet now is being rebuked by the President. Lowering top rates that would help make America more competitive was too large a leap for a true class warrior.

Pethokoukis notes that Obama's fiscal commission relied on revenues equaling more than 21 percent of GDP—an unprecedented take by the feds—in balancing the budget by 2035, and concludes:

Obama sees a need for a permanently bigger government and a lot more tax revenue to fund it.  Had Obama agreed with his own debt commission and Republicans, a big agreement was possible. Or he could have proposed real reforms to entitlements. But he declined and there wasn't a mega-deal. Don't blame [Speaker of the House John] Boehner for that.

Whole thing here.

Meanwhile, Rep. Cynthia Lummis (R-Wyo.), who says she was leaning toward voting for an extension, explains why she is voting no on any debt-limit increase that doesn't do anything except give Congress a little more rope by which to hang our financial future. Because she's from Wyoming, she naturally has to talk about wrassling cattle or punching dogeys or spitting buckshot or something. But such cornpone shouldn't get in the way of her basic message:

I am deeply worried that an Aug. 1 agreement will fall short of what is needed to prevent a national fiscal crisis. One not related to debt default, but a crisis of spending, debt, deficits and entitlement reform — denial by the very people who know how to prevent such a crisis in the first place.

I would rather instruct Treasury Secretary Timothy Geithner to: (1) pay principal and interest on our bonds (which then enables issuance of new bonds under the ceiling) (2) pay our combat troops (3) make Social Security payments, than add to the weight of our debt burden and send America plunging into the ravine – with our children and grandchildren on board.

Like backing the load of cattle down that slope last weekend, to save my truck, trailer, cattle and me from a self-imposed calamity, the debt ravine may be the most calamitous alternative that Congress is considering.

Read the whole thing. Lummis is right that reaching the debt limit IS NOT (emphasis MINE!) the same as defaulting. As Reason columnist and Mercatus economist Veronique de Rugy has pointed out time and again (read this interview with her in The Daily Caller), the government can prioritize its spending to make sure there is no default; additionally, it can use cash on hand, sales of TARP assets, and more to cover its bills in the near term. There is simply no reason to create a panic-driven "grand bargain" to deal with a spending-revenue mismatch that requires serious, dare-we-say-it transformational thinking?

Meanwhile, The Daily Beast is running with a "Will Failed Debt Deal Doom Boehner?" headline to a squib suggesting the Speaker may be in trouble with anti-tax colleagues for simply considering a deal that might have jacked taxes by a trillion-plus dollars over the coming years. Maybe, but the only reason Boehner was resisting at all was due to the pressure not so much from fellow Republicans but from Tea Party voters who sent a clear message about spending in the midterm elections. Recall that prior to last fall's elections, Boehner (and possible rival Eric Cantor) couldn't even be bothered to push a serious plan to reduce short- and long-term spending, opting instead to go with a phoney-baloney Pledge to America that had more loopholes than a pound of Swiss Cheese (hats off to mangled metaphors!).

Here's hoping that after all these stupid preliminaries, the same government that can't pass a budget (hell, Senate Democrats can't even be bothered to propose one on the agreed-upon schedule!) will start to talk seriously and realistically about bringing spending and revenue into balance.

When they do, they might want to consult "The 19 Percent Solution" proffered by de Rugy and me in the March issue of Reason. It lays out how to balance the budget over 10 years without raising taxes while leaving spending higher as a percentage of GDP than it was in Bill Clinton's final year. That's not ideal, but it can get the conversation on the proper size and scope of government started.

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  1. As long as a single dollar remains in private hands, all bad economic news is the fault of libertarians, despite them being just 0.5% of the voters and a totally rejected fringe minority.

  2. the same government… will start to talk seriously and realistically about bringing spending and revenue into balance.

    You make me laugh, Nick.

    We’re not even near the Greek style dance of insulating the mega-banks and cronies from fiscal armageddon. We’re just at the pre-dance binge drinking stage. Of course, reading the newspaper, it sounds like we’re at the post-dance knife fight between the various parasitic groups.

    1. also, Barbara Stanwyck was a total babe – back in the day.

      1. She liked girls. Not that there’s…you know.

    2. We’re not even near the Greek style dance of insulating the mega-banks and cronies from fiscal armageddon.

      Doesn’t TARP ring a bell?

  3. Obama and his Democratic horde wants more and more big government. Spending cuts are off the table for them – because they need more taxes to feed the beast. In their mind, any ‘compromise’ cannot cut government.

    So we’re in a game of chicken, but the driver of the other car, Boehner, doesn’t exactly have the mettle to see it through.

    We’re screwed.

  4. It’s almost like Obama has some kind of ideological disposition towards high taxes and big government?

  5. Obama sees a need for a permanently bigger government

    You know who else wanted a permanently bigger government?

    1. Charles Pinckney?

  6. Well, it’s because Democrats remember how they so easily rolled Bush the Elder at Andrews Air Force Base back in 1990. Bush agreed to be a “statesman” and agreed to tax hikes, then the Democrats used higher taxes as a club against him in the 1992 Campaign.

    The Tea Party people remember this kind of thing. The Beltway GOP, not so much. Obama is the kind of guy who would pocked GOP concessions on taxes, then run against the GOP in 2012 as the party that increased taxes on working people.

    He’s that duplicitous. Nobody trusts him. That’s why there’s no agreement.

    1. It goes further back than that. Tip O’Neill totally took Reagan to the cleaners; the famous Reagan tax cut deal included a solemn promise by the Dems in Congress on spending in the out years, which they immediately and gleefully broke.

  7. Both parties see immense value in continuing the deadlock and increasing the fear factor of the public. Public fear is the ground out of which their political power is presumed to grow.
    There is no motivation of any strength to solve this problem because to the players involved, it’s not a problem, it’s a golden opportunity.
    The Dems deserve all the condemnation coming their way. But I’ll listen to the Repubs claiming the high ground only after they repudiate McCain and Bush and the other big-spending, big-government types that infest that party. A plague on both parties.

    no hugs for thugs,
    Shirley Knott

  8. Aren’t we already playing all of the financial games that de Rugy is advocating? I thought we hit the debt ceiling in May and the August deadline is when all of the accounting trickery will no longer be enough.

    1. That is accurate…to the extent that they can predict things.

  9. I had NPR on this morning in the bathroom (don’t ask).

    It was a constant stream of stories about how not raising the ceiling = default = TEOWTWAKI.

    My wife finally had to turn it off before I slit my own throat shaving.

    1. before I slit my own throat shaving.

      WTSHTF have your BOB with you. Then you’ll be at a competitive advantage and won’t need to slit your own throat. Of course you might have to worry about having it done for you…

      1. OK, I have to ask.

        BOB?

        1. I had NPR on this morning in the bathroom

          Yeah that’s what I call it too! Pull my finger!

  10. (don’t ask)

    OK.

    My wife finally had to turn it off before I slit my own throat shaving.

    My parents watch Fox News. They yell at the TV. This happens every day. They will not stop. Somebody help them.

    1. You don’t really need to worry until they start expecting an answer.

  11. “Maybe, but the only reason Boehner was resisting at all was due to the pressure not so much from fellow Republicans but from Tea Party voters who sent a clear message about spending in the midterm elections.”

    Surely effectively raising tax rates, considering our tepid economic growth, is a stupid thing to do regardless of political pressures.

    Effectively raising capital gains taxes, for instance, when we’re desperate for more investment and growth is unconscionably stupid.

    “Their fierce insistence on higher taxes is beyond bizarre. ? The bipartisan consensus on tax reform (broader base & lower rates) was championed by President’s fiscal commission, and yet now is being rebuked by the President.”

    It’s worse than bizarre. It’s based on an ideologically rigid hatred of capitalism. You can see it in Obama’s nationalization of healthcare among other things. Obama’s ideologically rigid hatred of capitalism infects most everything he does. It isn’t bizarre–but it is consistent.

    He doesn’t care if what he’s doing harms the country so long as it’s consistent with his rigid ideology.

  12. thats kinda crazy when you think about it dude. Wow.

    http://www.anon-toolz.tk

  13. Dear Leader Obama is a drunk – he is drunk with spending money that has been stolen from unborn Americans – just so his union buddies keep their outrageous pensions.

    See how easy class warfare is – you just find an enemy and rally the troops.

    Obama might be your president but he’s not mine………….

  14. Honestly, Republicans (after years of ignoring it) are the only ones who are serious about dealing with the issue the threatens to bankrupt the country. Democrats won’t even propose a budget plan. Their strategy is class warfare and demagoguery. That is not a plan.

  15. What if the government shuts down, and nobody notices?

  16. This is such a phoney discussion. Apparently, the Treasury Secretary has the legal authority to issue platinum coins in any denomination he desires. He could direct the mintage of million dollar or billion dollar coins and deposit those coins with the Fed. Spending continues without additional debt. For a full discussion see

    http://pragcap.com/qe3-treasur…..ing-limit/

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