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A Divided Congress Won't Slow Runaway Spending

Election results are rarely good news for libertarians—or for the economy. The 2018 midterm election was no different.

The Republicans lost the House, an outcome they deserved thanks to their failure to repeal and replace Obamacare, their lack of opposition to President Donald Trump's destructive trade policies and the resulting $12 billion farmers' bailout, and their responsibility for the return of $1 trillion deficits three years ahead of schedule.

Republicans also picked up two more Senate seats, giving them a comfortable majority to confirm new Supreme Court justices and other federal nominees. But even though divided government is generally thought to be good for fiscal restraint, that might not be the case for the next several years. As the late William Niskanen of the Cato Institute demonstrated, the slowest rates of spending growth occur when the president is a Democrat and one or two branches of Congress are under Republican control. That's because when they are in the minority, Republicans suddenly remember how to be fiscally responsible and object to large and rapid spending increases.

Unfortunately, it is unlikely that we will get the reduction in government spending we now need. Trump has repeatedly said he will not touch two of the biggest drivers of our debt, Medicare and Social Security. And on this matter, Democrats are solidly in the president's corner. (While Trump has said he would be willing to cut Medicaid, there is no chance House Democrats will allow him to.)

Is there any silver lining? Maybe a faint one. Maybe.

A Democratic House might block the militaristic instincts usually exhibited by Republican administrations. It might also refuse to approve further military-spending boosts—unless, of course, such spending is offset with nondefense spending on education and infrastructure, or on any other of the Democrats' pet projects.

There's also a serious risk that this administration, under the influence of first daughter Ivanka Trump, will pursue a federal paid-leave mandate. Although such a policy would be detrimental to women—producing lower wages for everyone and, very likely, discrimination by employers against women of child-bearing age—House Democrats would support it.

One big winner of the midterms is cronyism, and in particular the Export-Import Bank (Ex-Im). The president loves doling out favors to large companies such as Boeing and General Electric (which Ex-Im exists to do), especially if he believes that it will prop up U.S. exports. Meanwhile, with the House under Democratic control, the Committee on Financial Services will certainly approve Ex-Im's reauthorization.

That would be a shame. The data collected over the last three years—during which time the bank has functioned at only 16 percent capacity due to a lack of quorum on its board of directors—prove that taxpayers would be better off without it. Ex-Im's annual authorizations declined from $20 billion in 2014 to $3.4 billion in 2017, without reducing U.S. exports. Furthermore, Boeing and other big manufacturers continued to prosper while taxpayers' exposure dropped by about 34 percent.

In 2014, as in most years, 40 percent of the bank's activity benefited Boeing, the United States' No. 1 exporter—a giant company with revenue of $93.39 billion and a market cap of $210 billion in 2017. That percentage plunged to 0.56 percent in 2017 and averaged 27 percent between 2015 and 2017. Meanwhile, small businesses' share of Ex-Im activities increased from 20 percent to 63 percent in 2017. You would think that Democrats would welcome such a change. Instead, they're eager to restore the Boeing Bank to its past glory.

On the bright side, the midterms saw the re-election of the two most libertarian members of Congress: Reps. Justin Amash (R–Mich.) and Thomas Massie (R–Ky.). They can surely be counted on to push their colleagues on both sides of the aisle to resist their baser fiscal temptations. Nonetheless, we're likely in for two years of vitriol and little or no real reform.

Photo Credit: Joanna Andreasson. Source images: LiuNian/iStock, Sharon McCutcheon/Unsplash

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  • A Lady of Reason||

    Well, politicians are politicians no matter what the side...
    https://aladyofreason.wordpress.com/

  • A Lady of Reason||

    Well, politicians are politicians no matter what the side...
    https://aladyofreason.wordpress.com/

  • Brett Bellmore||

    " the slowest rates of spending growth occur when the president is a Democrat and one or two branches of Congress are under Republican control. "

    Technically, the slowest rates of spending growth occur when the President is a Democrat, Congress is Republican, and they're at each other's throats. That last makes it hard to agree on extra spending.

    Unfortunately, so much spending is now on autopilot I suspect even a serious push to impeach Trump won't have any impact on spending rates.

  • Moderation4ever||

    The first test will be "wall" funding. A very small amount for very unnecessary item. A simple test will be if the Democrats hold the line here. A second test is are new projects funded. Democrats have had a policy of funding new projects. Yes, that means taxes, but its better than borrowing for everything. I am optimistic.

  • Rat on a train||

    Yes, that means taxes, but its better than borrowing for everything.
    How about no new projects, or even drop some existing projects? Nah. Democrats want to both raise taxes and increase spending.

  • tommhan||

    Unnecessary to you with no criminals trespassing through your property with drugs, illegals, weapons etc.....

  • Rev. Arthur L. Kirkland||

    The Republicans lost the House, an outcome they deserved thanks to their failure to repeal and replace Obamacare, their lack of opposition to President Donald Trump's destructive trade policies and the resulting $12 billion farmers' bailout, and their responsibility for the return of $1 trillion deficits three years ahead of schedule.

    A libertarian also would have mentioned the military spending, the drug war, the statist womb management, and the bigoted, cruel, authoritarian Republican approach to immigration.

    Another year, another year of right-wingers prancing about in garish, unconvincing libertarian drag.

  • a ab abc abcd abcde abcdef ahf||

    A libertarian also would have mentioned the military spending, the drug war, the statist womb management, and the bigoted, cruel, authoritarian Republican approach to immigration.

    A realist would recognize that the two parties differ but little on all these subjects.

  • Rev. Arthur L. Kirkland||

    Where realist = dope and recognize = perceive or claim

  • Sevo||

    Rev. Arthur L. Kirkland|1.2.19 @ 1:43PM|#
    "Where realist = dope and recognize = perceive or claim"

    Where realist = dumb-shit lefty asshole, dumb-shit lefty asshole.
    Go clean the shit out of your double-wide, scumbag.

  • Rev. Arthur L. Kirkland||

    You seem cranky today. I am content, ready to enjoy the worst year of Donald Trump's life and the beginning of the end for Republican influence in our federal government.

    Carry on, clingers. While obeying the preferences of the liberal-libertarian mainstream, of course.

  • libertynugget||

    I just want the House to pass a budget...
    I don't care if it is a GOP or Dem that passes a budget, just pass a freaking budget...
    No more CRs...
    Just a simple budget...

  • Rat on a train||

    Appropriations. Budgets are just a guide.

  • libertynugget||

    I just want the House to pass a budget...
    I don't care if it is a GOP or Dem that passes a budget, just pass a freaking budget...
    No more CRs...
    Just a simple budget...

  • CE||

    I'm fine if they never pass a budget and never end the shutdown and just give up and go home

  • Mike W.||

    I'm sure it's true that the divided congress won't slow spending, but a united government (Democrat or Republican) would be even worse for spending. Sigh.

  • Uncle Jay||

    Its not "runaway spending."
    Its tax, waste, embezzle and enrichen the ruling elites and their cronies.
    That's what Big Government is for.

  • TommyInIdaho||

    full declension:
    A Divided Congress Won't Slow Runaway Spending
    A Republican Congress Won't Slow Runaway Spending
    A Democrat Congress Won't Slow Runaway Spending
    Congress Won't Slow Runaway Spending

  • UnrepentantCurmudgeon||

    "A Democratic House might block the militaristic instincts usually exhibited by Republican administrations"

    Excuse me. Is the author deluded? OK, Bush 43 was President after 9/11, but most Democrats supported the invasion of Iraq, including Hillary. Obama managed to be elsewhere, as he did throughout most of his Senate tenure. That said …

    WWI was prosecuted under Woodrow Wilson, a Democrat.

    WWII was prosecuted under FDR, a Democrat.

    The Korean War was prosecuted under Truman, a Democrat.

    The Vietnam War was initiated and expanded by JFK, and LBJ, both Democrats.

    Since the initial military adventure in Iraq we have initiated 7 new Mideast wars, all under Barack Obama, also a Democrat.

    Congressional Republicans haven't started any wars in a while, they just lack the guts to stop the Democrats

  • CE||

    not to mention Obama bombing and sending troops to more countries than Trump has pulled out of

  • tommhan||

    I don't see any end to the asinine spending in congress since they both spend our money like drunken sailors. I guess they are waiting for the debt to swallow the whole budget.

  • CE||

    the real risk is that the deal to end the shut down and the deal to permanently repeal the debt ceiling will be to let the Repubs spend more to beef up our neglected national defense while letting the Dems spend more on beefing up our crumbling infrastrucure

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