Remember those commercials featuring a classroom full of Chinese students, listening to a lecture about the fall of the United States of America? As of this latest agreement on a “not-really-a-debt-ceiling,” we are headed in that direction. Don’t be alarmed, of course. It will all work out in the end. We really do need all the things that the government is doing with all that money that we’re borrowing from anyone around the world that is foolish enough to keep investing in us.
The concept of Obama spending more in one day that George W. Bush did in an entire year was brought to my attention today on Facebook by Dr. James S. Robbins. The context was that he was bemoaning the fact that he could no longer make the comparison between a month of Obama spending, and a full year of Bush deficit spending. Obama had reached the one day mark.
True, that’s the fault of some interesting accounting procedures that the government uses to deal with what used to be debt ceilings. This particular radical increase was the result of repaying various governmental accounts that have been tapped since May, in an attempt to not hit the debt ceiling. The increase put the national debt over $17 trillion for the first time in United States history ($17,075,590,107,963.57, to be exact).
When the news broke that the City of Detroit had declared bankruptcy, there were a fair number of jokes going around on social media, but in general, it wasn’t “news.” Yes, it is the largest city to take that step so far, but it’s Detroit. No one in their right mind could consider it surprising. What was remotely interesting in the case was what happened afterwards.
One judge - Circuit Court Judge Rosemarie E. Aquilina - put a new twist to the story by declaring that it was unconstitutional for the City of Detroit to declare bankruptcy in the first place. And so the political circus begins. Of course, Allahpundit at Hot Air dissected the situation, and came to the conclusion that this was little more than political pandering by yet another leftist judge.
As a consequence of loose monetary policy with a fiat currency, the United States is rapidly descending into an economic reality of Modern Monetary Theory, or MMT. While MMT (also known as Chartalism) is typically associated with its Keynesian predecessor and the policies of the Left, new developments reveal that both parties are responsible for the slip into a brave new economic world.
Essentially, there are four preconditions in Modern Monetary Theory:
1) Money enters the economy through government spending, as the total amount of money is constrained not by gold but by the total output of the national economy;
2) Government spending is speculative as it prints as much money as it needs to control production and, as a byproduct, employment, and spending beyond productive capacity leads to inflation;
3) Taxes do not pay for expenditures but are instead a way to throttle private sector demand; and
4) The government is the issuer of the currency, sovereign governments that issue their own currency are never insolvent, so debts essentially don’t matter.
Senator Rand Paul has a new plan to prioritize government spending in order to stave off defaults and bring the country back towards solvency:
In a renewed attempt to force President Barack Obama’s hand on the debt limit, Kentucky Republican Sen. Rand Paul is pushing legislation that would ban federal spending on anything but interest payments on the national debt, Social Security checks, and military salaries.
Paul, who is traveling through Israel this week, told Business Insider here Thursday that he believes the GOP should take a more pro-active approach to the coming fight over raising the debt ceiling. Rather than march the country toward a government shutdown — and spook markets with possible default — Paul argued that Republicans should pass a bill that would force the government to prioritize payments to bondholders.
With the “fiscal cliff” behind us, it’s important to remember that in less than two months, the Congress will be dealing with another manufactured crisis: The budget cuts of the 2011 Budget Control Act known as “sequestration.” The Department of Defense will bear 41% of the prescribed cuts, eliminating an additional $492 billion over 10 years. Although entitlement spending will also be on the table, the initial fight will be over cuts to the Defense budget.
A new study by the nonpartisan RAND Corporation concludes that the defense budget cuts cannot be taken without altering our overall defense strategy, and that “the department should modify defense strategy to fit the new resource constraints and prepare its course of action sooner rather than later.”
The authors highlight three alternative strategies, which anyone interested in this topic should read and consider. An accompanying article by the authors states, “Reductions of the magnitude implied by sequestration—some $500 billion over the coming decade—cannot be accommodated without a re-examination of current defense strategy.”
Grover Norquist is under fire. Unjustly.
With Republican Sens. Lindsey Graham, Saxby Chambliss, Rep. Peter King and others seemingly deserting Grover Norquist and the Taxpayer Protection Pledge created by his organization, Americans for Tax Reform, media outlets across the spectrum are declaring that the GOP is “Over Grover” and that his vicelike grip of eternal dominance on the GOP might not be so eternal after all. We have images like this one, showing Republican leaders bowing to him as if he is a god. And on and on and on.
What it really is, though, is just another round of misinformation, wrong data, and interpretations based on faulty premises. Yet another sideshow that is completely missing the point, the real debate we should be having in DC.
Conventions aren’t just about the present, conventions are also about the future. As the 2012 Republican National Convention in Tampa draws to a close, one of the most important questions for the party going forward is what role – if any – will libertarians play in the direction of the GOP in the years ahead.
Congressman Ron Paul’s 2008 campaign for the Republican Party’s Presidential nomination helped to launch the modern day liberty movement and gave voice to libertarians within the Republican Party.
The rise of the Tea Party and a second Paul Republican Presidential run gave the libertarian wing of the party hope for the future and increased visibility.
As Paul’s popularity grew in the party, so did the tension between the libertarian wing of the GOP and the party’s establishment. Many in the establishment would have you believe that the tension was more about the behavior of Ron Paul’s supporters than about policy. While there is no doubt that Ron Paul has an intensely loyal and fervent following, the truth is the tension wasn’t about behavior – it was about policy.
Libertarians want an end to foreign adventurism, they want deep cuts in spending across the board (including the military), they want government out of the boardrooms and the bedrooms, they want dramatic tax reform (starting with throwing out the current tax code), they want to privatize social security and Medicare, and they want a return to sound money.
The policy differences between libertarians and the current GOP are real and they are significant. The question going forward is whether this marriage can be saved?
The Wall Street Journal editorial board today floats House Budget Chairman Paul Ryan as the best possible vice presidential running mate for presumptive GOP presidential nominee and former Massachusetts governor Mitt Romney:
The case for Mr. Ryan is that he best exemplifies the nature and stakes of this election. More than any other politician, the House Budget Chairman has defined those stakes well as a generational choice about the role of government and whether America will once again become a growth economy or sink into interest-group dominated decline.
Against the advice of every Beltway bedwetter, he has put entitlement reform at the center of the public agenda—before it becomes a crisis that requires savage cuts. And he has done so as part of a larger vision that stresses tax reform for faster growth, spending restraint to prevent a Greek-like budget fate, and a Jack Kemp-like belief in opportunity for all. He represents the GOP’s new generation of reformers that includes such Governors as Louisiana’s Bobby Jindal and New Jersey’s Chris Christie.
As important, Mr. Ryan can make his case in a reasonable and unthreatening way. He doesn’t get mad, or at least he doesn’t show it. Like Reagan, he has a basic cheerfulness and Midwestern equanimity.
Cuts to defense and military spending should reflect a principled commitment to reducing wasteful spending, crony capitalism, and the size and scope of the part of the federal government with all the bullets and bombs — it should not be a matter of political convenience.
When congressional leaders sparred over whether or not to raise the debt ceiling last year, the parties agreed that if Congress failed to come up with a deficit reduction plan, automatic triggers would kick in, and would sequester $1.2 trillion in spending across the federal budget (mandatory and discretionary; defense and non-defense). That agreement, which came to fruition almost exactly a year ago to the day, reflected a trade the president made with House Republicans: he gave up demanding revenue increases in exchange for an agreement to include defense spending in sequestration. Speaker of the House John Boehner reluctantly agreed, making sure no triggers would go into effect until January 2, 2013.
As a long-time leader in the conservative movement, Grover Norquist of Americans for Tax Reform become famous in recent years for his Taxpayer Protection Pledge.
The Pledge, which was rolled out in 1986 with the endorsement of President Ronald Reagan, requires office holders to oppose increases in the marginal income tax rates (personal & business) and to vote against any net reduction or elimination of deductions unless the changes are matched, dollar for dollar, by further reducing tax rates.
With signers in every state, more than 1,100 state officeholders, from state representative to governor, have signed the Pledge. Liberals and wayward Republicans blame it (and Mr. Norquist personally) for deadlock in Congressional budget debates.
Mr. Norquist is also involved in many center-right organizations, such as the National Rifle Association, the American Conservative Union, ParentalRights.org, and GOProud. He is also a Contributing Editor of The American Spectator.
Recently, Mr. Norquist co-wrote a book with Professor John Lott, Debacle: Obama’s War on Jobs and Growth and What We Can Do Now to Regain Our Future. It is a brilliant take down of President Obama’s radical policies, and you should buy multiple copies today.
With a dry sense of humor, Mr. Norquist tweets @GroverNorquist.