Spend More, Grow More View 686 20110802

View 686 Tuesday, August 02, 2011

· Spend and Tax

· Defending the Deal

· Realities

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Spend and Tax

The debt limit debate has ended with the adoption of the deal. That particular Kabuki dance is ended, and the President has made his victory speech.

President Obama marked the end of the "long and contentious" debt-limit debate Tuesday afternoon, lamenting that the "manufactured crisis" has stunted the economic recovery and promising a return to a jobs-focused agenda.

The president called the deficit-reduction measures paired with the debt-limit increase an "important first step to ensuring that as a nation we continue living within our means." But he also said he would continue to fight for a "balanced" approach when Congress continues the debate this fall.
"I’ve said it before, I will say it again: We can’t balance the budget on the backs of the very people who have born the biggest brunt of this recession," he said.

That is a call for new taxes. Of course new taxes are built into Obamacare which can now be funded with borrowed money, but this is a call for more money to be spent on jobs and education, under the assumption that we aren’t spending enough on those, and investing more money in job creation and education will get the economy going again. That premise is not up for debate: liberals believe it, conservatives do not. Either throwing more money at the problems will solve them or it will not. Until the debt limit was raised it was simply not possible to throw more money into TARP and Stimulus and the Department of Education, and the other federal programs to increase jobs and make education better. Now it is possible to borrow that money and spend it. The President says that won’t be enough: we will have to have a “balanced” approach, which means spend more, borrow more, and tax more.

The Deficit Dance ends with no end to the exponential growth of government. The government will double in size in 11 to 13 years. The National Debt will double in 11 to 13 years. And the beat goes on.

In Defense of the Deal

The President had threatened Chaos and Old Night: no more veteran benefits, no Social Security checks, nothing in the Food Stamp debit accounts, no salaries for Bunny Inspectors. This was a very dangerous thing to do, and playing chicken with the President was simply irresponsible. Someone had to be reasonable, and the Democrats were not going to be reasonable. The President continued to threaten Social Security. It was just too big a chance to take. Kick this can down the road and we will try to fix it after the next election when, with hope, Republicans will control both Houses of Congress and the White House and we can do some real restructuring, welfare reform, zero based budgeting, and all the rest. Hang on for a while.

The Vice President was calling us terrorists, and accused us of holding the nation hostage. This was too much to bear. Someone had to be reasonable and it was clear that the President wouldn’t budge. We had to do it.

That, at least, is the best I can come up with.

We do have the statement by Paul Ryan that we got 2/3 of what we wanted, so this is a partial victory. I don’t think we got 2/3 of anything: the Deficits continue to rise, the Debt continues to rise, the size of government continues to rise; ObamaCare comes in on schedule; and the only “cuts” – i.e. reductions in the rate of increased spending – don’t happen until 2013. New borrowing starts now. The Debt rises now. We’ll lower the raises in spending later. Maybe.

But it’s done. The Deficit will grow. Government will grow. But I have heard suggestions that now with the Deficit Dance out of the way we can reduce regulations to grow the economy. I would have thought that trimming expensive regulations would have been a nearly perfect thing to include in demands for a Deficit Deal but no one seems to have tried that. I did make the suggestion.

The best course for those who agreed to the Deficit Deal would be to show what it is they want to accomplish now that the Dance has ended with growing governments and no mandatory limits to regulation – and Obama announcing 50 mpg cars, more green jobs, more windmills, no new oil wells, more limits to growth, and a need for a “balanced” approach to deficit reduction.

Realities

As the cost of education rises inexorably; as the size of government goes up inevitably; as the Deficit goes up and up; as the cost of government soars; as the price of gold rises; there are some things to remember.

The most important is that No Congress can bind a future Congress.

At any time the Congress could halt the inevitable growth of government by refusing to appropriate the money. No funds can be drawn from the Treasury except according to law.

No taxes or revenues can be raised except by a law that originates in the House of Representatives.

This is worth repeating: they can’t spend money that is not appropriated.

The House could simply refuse to increase spending: send in continuation bills, allowing spending at current levels but no higher, and continue that until the November 2012 election gives a national referendum on the simple question: do you want government to get larger or smaller? Larger is built in to the current system, and it can’t be sustained without massive tax increases. Smaller requires a real change. The possibility is there. Smaller government, less regulation, more freedom, less government. It’s always possible. Is this what is meant by Hope and Change?

I have to say I am weary of the Deficit Dance, and I should be glad it is over: but it did have one good effect. More people are now aware that a “cut” is not an actual cut, and that a $3 Trillion cut over ten years is really an exponential growth of Debt and Spending and Government size of 5 to 6%; that a freeze in government spending, a simple continuing resolution to spend no more next year than was spent last year, is a $9.5 Trillion cut.

Let’s say that again: until there is a $9.5 Trillion cut, the cost of government will continue to rise. A real cut would have to be larger than $9.5 Trillion. If we can get enough people to understand this, perhaps there is some reason for Hope.