GOP: Say No To Another Bad Spending Deal

There are so many things wrong with the spending deal that John Boehner announced last night. Let us itemize a few of them.

First, the Left is openly crowing about the fact that the deal is a huge victory for their side. The New York Times headlines: “Obama Wins on Budget Deal as John Boehner Cleans Out the Barn.” How much more do you need to know? The sequester was the only thing that had successfully reduced federal spending in my lifetime, and if Boehner’s deal is accepted, it will be gone:

[I]t achieves the main objective of [Obama’s] 2016 budget: to break free of the spending shackles he agreed to when he signed the Budget Control Act of 2011, an outcome, the president allowed Tuesday, that he could be “pretty happy” about.

Second, this is a classic “Wimpy” deal: I’ll gladly pay you Tuesday for a hamburger today. Spending will increase now, and that increase is of course real. In exchange, spending is ostensibly cut years down the road, something that, as I have written countless times, will never happen. The “out years” never come. No one will remember this deal in ten years, when it is time for those alleged cuts to kick in. This simple graph from the Heritage Foundation tells the sad story:


2025? Don’t hold your breath.

Third, the process that led to this proposal is one that we have denounced over and over again–a back room deal, negotiated secretly by a handful of Washington insiders–John Boehner, Harry Reid, Nancy Pelosi, Mitch McConnell, Barack Obama–with plenty of input from lobbyists, and little or no input from anyone else. The people’s elected representatives are mere bystanders. The deal is presented as a fait accompli, take it or leave it, let’s vote tomorrow, it’s all or nothing, go along or the government shuts down and maybe defaults on its debt.

Jeff Sessions has been eloquent on this subject. Today he said:

Once again, a massive deal, crafted in secret, unveiled at the 11th hour, is being rushed through Congress under threat of panic. Once again, we have waited until an artificial deadline to force through that which our voters oppose.

At its core, this deal with President Obama does two things: First, it lifts federal spending caps for the next two years – including a $40 billion increase in spending on the federal bureaucracy. Second, it waives the federal debt limit through March of 2017, allowing for approximately $1.5 trillion to be added to the debt – ensuring no further conversation about our debt course or any corresponding action to alter it.

It appears this deal is built on the same principles as the Ryan-Murray budget deal from 2013. It exchanges instant increases in federal spending for distant savings, as much two decades down the road, that are likely to never materialize. …

The spending caps in law today were pledged as part of the 2011 Budget Control Act agreement to lift the debt ceiling by $2.1 trillion. It represented a bipartisan commitment to cap spending at a fixed amount. This deal shatters that commitment by spending $80 billion more than we promised over the next 2 years.

The deal also uses a common gimmick where alleged savings in an entitlement program are used to boost unrelated spending in the federal bureaucracy. Any savings found to entitlement programs faced with insolvency must be used to shore up those programs – not to surge spending somewhere else. Yet this deal claims illusory savings from Disability Insurance and increased pension insurance fees in order to boost bureaucratic budgets. Perhaps even worse, the deal attempts to stave off the shortfall in fraud-ridden Social Security Disability by plundering from the Social Security Trust Fund for retirees. One hundred and fifty billion dollars in funds will be siphoned from Americans’ payroll retirement contributions and redirected to the mismanaged disability program.

Finally, this deal cements the unacceptable precedent that every dollar of increased defense spending should be matched with a dollar of increased non-defense spending. This is upside-down: if an emergency requires more defense spending, common sense says we should seek to identify reductions, not hikes, to spending in non-defense accounts. …

The deadline is artificial and can easily be pushed back with a short-term measure if needed. Republicans should insist that any vote on spending caps or the debt ceiling be delayed until the House has chosen a new Speaker – and until there has been a full conversation among our conference and, most importantly, our voters. There is no urgency to pass a 2-year deal. GOP voters are entitled to have their representatives represent them – not act as opposing counsel, urging them to capitulate to the President’s demands. Whether it’s spending, debt, crime, immigration or trade it is time for us to start fighting for what our voters want – instead of demeaning their just concerns about the future of our country.

Fourth, the deal purports to deal with the impending bankruptcy of the Social Security disability program, but in fact just kicks the can down the road. Rachel Greszler has the story at The Daily Signal:

The budget deal reached last night attempts to stave off depletion of the Disability Insurance (DI) trust fund at the end of 2016 by “reallocating” about $150 billion over the next three years from the Social Security Trust Fund to the Disability Insurance Trust Fund. …

This isn’t the first time the disability insurance program has run out of money, and it isn’t the first time Congress has kicked the can down the road. As recently as 1994, the disability insurance program was about to run out of money, and Congress increased the disability insurance payroll tax by 50 percent, from 1.2 percent to 1.8 percent. That increase was coupled with a stark warning that the disability insurance program was in dire need of additional reforms to sustain it over the long run.

What has Congress done to reform the disability insurance program since then? Nothing.

Rather than looking to improve the efficiency and integrity of the program, Congress sat idly by as the percent of the working-age population receiving disability insurance benefits increased from 2.8 percent in 1994 to 5.1 percent today.

Have Americans gotten more feeble since 1994, so that nearly twice as many of them are permanently and totally disabled? Of course not. The Obama administration winks at fraud because the alternative is to admit that its policies have been so disastrous that millions of Americans have to pretend to be disabled because they can’t find jobs. The proposed spending deal just perpetuates that fraud, financing it with an accounting fiction.

Finally, the current deal, like all prior debt limit agreements, is based in part on the idea that if Congress doesn’t lift the debt limit, the United States will default on its bond obligations, with catastrophic consequences. This, as I have written many times, is simply a lie. It is not a debatable point or a difference of opinion, it is a lie. Default cannot and will not happen. Dan Mitchell makes the same point:

I can’t resist commenting on the deliberately dishonest scare tactics from our statist friends. They routinely claim that the United States government would have to default on its debt and cause a global crisis unless there is approval for more borrowing.

For instance, exuding an air of faux hysteria, one writer for the Washington Post asserted that, “Failure to raise the debt ceiling would unleash hell on the U.S. economy.” Another Washington Post columnist fanned the flames of fake despair, writing, “The chaos…is about to have some very serious effects on the entire country.” And a third Washington Post reporter falsely fretted that not raising the debt limit by November 3rd, “could plunge the United States into default, an outcome that…could lead to economic catastrophe.”

Oh, please, we’ve heard this song and dance before. But it’s utter nonsense.

Here’s some of what I said as part of my testimony to the Joint Economic Committee in 2013.

…there is zero chance of default. Why? Because…annual interest payments are about $230 billion and annual tax collections are approaching $3 trillion. …there’s no risk of default – unless the Obama Administration deliberately wants that to happen. But that’s simply not a realistic possibility.

…[F]or backup, let’s look at some identical analysis from an ultra-establishment source, as reported in The Hill.

Moody’s Investors Service announced Monday that, despite dire warnings from the Treasury Department, the government would find a way to pay money owed on its debt, regardless of whether lawmakers agree to raise the $18.1 trillion borrowing cap. … “Even if the debt limit is not raised, …the government will order its payment priorities to allow the Treasury to continue servicing its debt obligations,” says Moody’s Senior Vice President Steven Hess.

To avoid default, the government just has to continue to make interest payments on its debt, which by law it is required to do. It can retire old debt and incur new borrowing; those transactions are a wash. The effect would be as though a balanced budget amendment had gone into effect. Any time you hear a commentator or a politician mention default, you know he or she is lying to you.

Those are good reasons for any conservative in Congress to vote against Boehner’s ill-conceived deal.