No Sign of Progress
Reuters reports No signs of progress from White House, Republicans in ‘tough’ debt ceiling talks
Democrats say wealthy Americans and businesses should pay more taxes. Republicans want spending cuts.
Republicans also want to reverse funding for the IRS, a measure the Congressional Budget Office projects would reduce the deficit.
Freeze or Cut?
The Wall Street Journal reports Debt-Ceiling Fight Comes Down to Spending: Freeze or Cut?
“We are not putting anything on the floor that doesn’t spend less than we spent this year,” McCarthy reiterated on Tuesday. A top negotiator, Rep. Garret Graves (R., La.), said the administration “thinks they can continue in the future on the same [spending] trajectory. And we’ve made it clear that that’s a nonstarter.”
Democrats say the GOP demand to cut spending is unreasonable, particularly after the White House has signaled it could agree to freeze discretionary spending next year and potentially cap future increases for two years.
House Minority Leader Hakeem Jeffries (D., N.Y.) noted freezing spending was a position many in his party “might even be uncomfortable with.” But he said House Republicans rejected that “because they want to impose draconian cuts.”
Democrats have criticized Republican negotiators for seeking an increase in military spending even as they are insisting on broader spending cuts. The GOP also rejected the White House’s proposal to allow Medicare to negotiate the price of a wider range of drugs, a measure the administration pitched as a way to reduce the deficit. Some in the administration are struggling to see a path forward in the talks, according to people familiar with the matter.
Two Year Freeze is Meaningless
A two year freeze is meaningless because this congress will not propose spending increases anyway in the next two years.
The Idea of draconian cuts is absurd.
But Democrats have a point on military spending. If it was up to me, I would slash all spending, including military. I also suggest we could eliminate entire departments including the Departments of Education and HUD.
But none of that would do much unless we can cut entitlements and the military.
McCarthy’s Key Demands
- Claw back unspent Covid-19 funds.
- Impose tougher work requirements for recipients of food stamps and other government aid.
- Halt Biden’s plans to forgive up to $20,000 in student loans.
- End many of the landmark renewable energy tax breaks Biden signed into law last year. It would tack on a sweeping Republican bill to boost oil, gas and coal production.
None of that is the least bit “draconian”.
Understanding the 14th Amendment
There has been much discussion regarding using the 14th Amendment as a way forward.
Has anyone bothered to read or understand what the amendment actually says?
Section 4
The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.
Curiously, the main purpose of section 4 was to punish the South in the wake of the Civil War. Debts incurred by the North were guaranteed, but not debts used in the insurrection.
That aside, the 14th Amendment deals with debt. And that means money already spent.
Thus, President Biden is mistaken saying that he can Constitutionally use the 14th amendment to do much of anything other than pay interest on debt. The 14th certainly does not allow new funding.
The power of the purse undoubtedly belongs to Congress, not the executive branch.
The same applies to other ridiculous schemes including depositing a $1 trillion coin with the Treasury.
Understanding Default
The US would default if it did not pay interest on debt. The risk of default is close to zero.
Before we get to the point of default, Social Security checks (new spending) would not be paid among other things.
Failure to send out SS checks would raise so much havoc that Congress would indeed do something, well before default.
The Way Forward
Just because no one understands now the final resolution does not mean there is no way forward.
Not sending out Social Security checks, if it came to that, would get sides talking in a hurry.
It’s no wonder the stock market shows little concern.
Perhaps some bills may not be paid in early June. So what?
Quarterly tax payments come in by June 15. At that point there will be room to bicker for another two months if not longer.
Meanwhile, statements by Democrats and Republicans and discussions of default are meaningless theatrics.
Understanding House Speaker McCarthy’s “Limit Save Grow Act” on Free Government Aid
The lead chart shows number of people collecting disability is soaring rapidly. McCarthy wants to do something about that. Liberals object.
For discussion, please see Understanding House Speaker McCarthy’s “Limit Save Grow Act” on Free Government Aid
McCarthy’s Peril
Recall that Kevin McCarthy became Speaker of the House by allowing a rule change to force a vote on a new Speaker if even one House Republican puts forward such a motion.
So don’t be surprised if some Democrats come to a deal rescue in the House upsetting the Tea Party.
This potentially could cause McCarthy to lose his job as Speaker.
That’s one way forward that I have not yet seen discussed.
If the final deal accomplishes anything, I will be happy. But set your bar low because neither side will get everything they want.
This post originated on MishTalk.Com.
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Mish
It would be nice to allow the debt ceiling to be raised, but on the condition that every department that receives a budget of money MOST have a balance sheet with receipts. That way we know if it’s burned up in inefficiency or in somebody’s Swiss bank account. The taxpayer, however, was not responsible for this fraudulent change in law, and therefore 21 trillion in debt should be erased as it could be considered STOLEN until otherwise proven not, which nobody CAN NOT Prove it was stolen
negotiate the price of a wider range of drugs, a measure the
administration pitched as a way to reduce the deficit.”