Third Party & Independents Archives

A Little More Sweat on the Hill Please

How committed is the current Congress to limited government? In other words, how committed is Mitch McConnel? And how committed is the GOP with a majority not seen since the early 20’s? Senators Thune, R-S.D. and Corker, R. Tenn. are already suggesting boosting gas taxes. And increased sales taxes at the state level is being bandied about. Mac Thronberry, R-Texas wants tax increases to protect defense spending from sequester cuts. There is always a pet project, some worthwhile some outrageous pork barrel spending, that a congressman or congresswoman wants to cuddle and feed. And fiscal conservatism, which seems to hover like a ghost in the background rather than take center stage, warns of worsening deficits if the starve-the-beast method of reducing government is attempted.

The problem, of course, is not and has never been taxes in and of themselves. It's the spending stupid. And when it comes to spending we are all of us a little stupid nowadays. After the huge build up of credit starting some 10 years ago, the rapid lowering of average American credit card debt during the crisis years 2009 - 2010, for example, occurred more as a result of charge offs than prudent personal financial management. And it occurred after the huge run-up in personal debt - whether credit card or mortgage - in the years leading up to 2008. Further, the question of how much personal debt is needed to spur the consumer-driven economy versus that very debt's implications for America's economic performance is an enormously tricky trade-off to manage. Consumers, however, have in large part learned the bitterly tough lessons of personal financial management as they work their way out of debt in a restricted credit environment with sluggish job growth and stagnating wages. Most of them want their representatives in Washington D.C. to show some restraint on spending and sweat a little over trade-offs to the national budget, as well as state and municipal budgets.

That means that a shutdown of government, while temporarily lowering GOP poll ratings, is not necessarily a bad thing if it leads to major changes in tax and spending policies. Is there the will to confront Obama? The Senate Majority Leader seems to have dismissed the shutdown option out of hand already. And yes, the closed loop between K street influence peddlers and budget-busting big government largesse and it's big business clientele remains intact, adding to the layered complexity of tax policy and regulation. Congress needs to sweat a little more, the way Nouriel Roubini's forehead glistens under the lights as he worries about another credit bubble. Because if he is half-right about a slowing China and another credit bubble fueled by QE's multiple versions, then the current apparently benign environment will become very harsh very quickly; as in China cashing in a portion of it's US debt holdings to rescue a collapsing real estate sector. In that case, Congress will have to sweat it out whether they like it or not. Like the majority of American households have had to for the last several years, or longer.

Posted by AllardK at January 19, 2015 3:54 PM
Comment #387529

The problem here can easily be addressed by watching this video:

You see, the majority of our federal budget are untouchable, by law. Meaning that unless changes are made to those programs, they cannot be altered in any significant way to lower the spending already authorized.

46% of the budget is made up of Social Security, Medicaid, Medicare and CHIP.

19% of the budget is National Defense

12% of the budget is on direct safety net programs.

6& of the budget is paying on the national debt.

That’s 83% of the Federal Budget. That number doesn’t include the now expected increased spending from the ACA.

That doesn’t leave a whole lot of room in there find any left to pay off the debt or even bring the budget down further… Those 3rd rail programs are going to have to be looked at if anything real is going to be able to be done.

Posted by: Rhinehold at January 19, 2015 4:14 PM
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