There are so many things in the news every day that make me angry but for some reason this bit from Politico’s Playbook makes me absolutely livid:
HOUSE REPUBLICANS will take up a balanced-budget amendment when they return from recess, several sources tell us. This follows on the heels of their $1.3-trillion budget bill and their massive tax bill. WHY DO THIS NOW? Here’s what we think: It’s almost election season, and it would be helpful if GOP lawmakers could go home and be able to say they voted to support balancing the federal budget, even though they voted boosted discretionary spending by a ton, and have not touched entitlement spending, which, they have said for years, is the driver of U.S. budget deficits.
It’s only one little paragraph but it contains enough effrontery to make me see red. And I think it’s unique in the sense that it should make everyone spitting mad no matter where their beliefs lie on the ideological spectrum. Anyone with even a modicum of policy chops knows that the Balanced Budget Amendment is the dumbest idea ever devised. It would take one of America’s greatest advantages, that we have great credit and can borrow almost unlimited amounts of money because we print our own money and alway have customers for our bonds, and make it illegal for Congress to utilize it in times of economic peril. If we could not use debt to stimulate a down economy, we’d be as vulnerable as Greece or Argentina to downward spirals, and considering the importance of our economy to the world economy, this would be a very dangerous development for everyone.
But it’s true that deficit spending comes with problems. The most consequential of them is that money spent financing the interest on debt is money that cannot be spent on real things like Social Security checks, college loans, nutrition assistance, research and development, or even ill-advised wars in Asia. This is why giving out an enormous tax cut to the wealthy doesn’t trickle down the way it is supposed to. Half the point of these tax cuts is to deny the federal government money to spend on programs that people like and find useful, or, in the words of Grover Norquist, to shrink the government down to a size small enough that it can be drowned in a bathtub. Partly this is done by taking in less revenue to begin with, and partly this is done my making us spend an ever-increasing percentage of our revenues on interest payments. If you go into debt to stabilize a cratering global economy, you are saving people from losing their businesses or their jobs and perhaps helping to ensure domestic tranquility and keep the peace between nations. If you go into debt for no particular reason at all other than to enrich your donors, you’re weakening the nation and hurting the vast majority of its people.
Still, if you’ve bought into the idea that the government should be smaller and that deficit spending is always a bad thing, then you should be outraged to see the Republicans in Congress completely disregard all their deficit hawkery with their tax cut and their huge appropriations omnibus bill, and then turn around and pretend that they’re really concerned about deficits. And it’s even worse than it seems.
If you had an alcoholic in your family who had just gone on a months long binge and then came to his senses, handed over the car keys and offered to enter a rehabilitation center, then you’d probably see that as a positive development. But the Republicans only support the Balanced Budget Amendment because they know it will never become law. This is more like an alcoholic who says all the right things when the family comes together to confront them on their drinking, but who has no intention of actually changing his ways.
What they’ve done, after howling like banshees about the deficit for the totality of President Obama’s term, is to turn on a dime and fund the government at the same or even higher levels than Obama. And they decided to do this with much less revenue. Then, realizing that a good segment of their base wasn’t in on the joke from the beginning, they seek to appease them by pretending to be deficit hawks by voting for the stupidest idea in the history of the world: “it would be helpful if GOP lawmakers could go home and be able to say they voted to support balancing the federal budget.”
This takes bad faith, disingenuousness, and insincerity to unprecedented levels. To even attempt it demonstrates an unlimited contempt for the intelligence of the American voter. It’s like catching your child with his hand in the cookie jar and having to listen to him promise you that it’s okay because he plans to ban cookies altogether.
You write:
Yes.
It does.
As do literally thousands of other actions by both parties within living memory.
Who’s keeping score?
It’s a rotten game any way you cut it.
Opt out.
AG
Ah, c’mon, Arthur. I’d begun to think you’d turned a new leaf in these comment threads. But, alas, we are back to the both sides are equally bad schtick. There is no way that Democrats are in the same category as the GOP. For one thing, Democrats are not and have never been nearly as tribal as the GOP is. For another, they aren’t nearly as arrogant when dealing with their supporters. Maybe the GOP arrogance is justified, given the ways those around me have found to rationalize their undying support for Trump, and even have the nerve to paint him as a Christian.
I’m a jazz musician. My basic job is to improvise.
Turn a new leaf?
I turn a new leaf every day…a number of leaves if I have the time to do so.
I look under them and I report what I see.
Mostly creepy-crawly things, these days.
I think that almost every major, successful politician in the U.S. is a bought-and-sold creature of the corporate entities that actually rule this country and most of the rest of the world. I further think that they and the creatures who run them are…to put a word on it…aliens. Probably not from another star or dimension, but at the very least, definitely alien to the wellbeing of their fellow inmates in this madhouse.
You have swallowed the leftiness media Kool-Aid. Others have swallowed the rightiness media Kool-Aid. They too are owned by corporate interests.
I don’t drink media Kool-Aid.
None of it
It ain’t cool, and…considering the state of the country…it surely isn’t nourishing.
I think that DNC-approved candidates are one side of a corporate-issued counterfeit coin and RNC-approved candidates are the other. Heads is the good guys and tails is the bad guys.
Trump?
Damned if the coin didn’t bounce right off the table and roll into someplace that the owners are finding hard to reach. They are willing…if necessary…to tear the house down to get it. This is exactly what Trump and his controllers/handlers (Call them who and what you will.) want to have happen.
Watch.
Solutions?
i have none, other than reporting what I see under my daily leaves. Take it or leave it. Some people like it, some others don’t and the majority of people on this planet couldn’t care less.
Just like jazz.
But we do keep playing.
AG
P.S. “Self Reliance”-Ralph Waldo Emerson:
This is the kind of “nail, head, bang” article that everyone’s crazy uncle needs to read. Unfortunately, it’s really hard to get those who don’t pay attention to what’s really going on to turn away from the bullshit long enough to pay attention to something like this.
To anyone paying even the slightest attention, it’s been obvious since at least Gingrich’s “Contract on America” that Republican concerns about the deficit are nothing more than a pretext. They had every opportunity to cut spending then. They chose not to. They’d rather just howl about it.
Deficits s only matter when there is a democratic president.
They have being doing this for years
IOKIYAR
. . . What’s even more infuriating is that this is just episode infinity of the same scam they’ve been running for decades now. It indeed “demonstrates an unlimited contempt for the intelligence of the American voter” (or at least the duped, dumb, and/or brainwashed, Reality-denying GOP voter).
Contempt which has so far imposed no significant cost on them, so not that surprising they’d just stick with the program.
Well AG has already highlighted the critical sentence of your righteous rant. So who is more to blame, the deceitful conman or the credulous mark? Surely the later has to bear some significant portion of the blame.
Repubs treat the voters as being stupid because (unfortunately) they are stupid. Supremely stupid. One would think that a child could not only see through this cynical con but be offended by it. Offended in the sense of actually voting against the person who demonstrated such contempt for your intelligence. But white voters aren’t offended. And now they are white identity voters to boot!
The disgusting Pence, for example, is today out in Middle America touting Repubs’ Make America Irresponsible Again tax cuts. Coupled with their renewed wastage on our absurdly Bloated Military, Repubs have (again) set the budget on course for the shoals of massive deficits. No macro-economist but Larry Kudlow thinks otherwise, and of course he isn’t an economist. Yet the patriotic goofs are out there eating the shit up like it’s chocolate. They truly are this stupid and shortsighted. It is obvious they are un-educable at this point.
Bushco (and his “conservatives”) cut taxes on the eve of starting multiple wars that now appear literally endless. They then cut taxes again after their great Iraq “victory”. Then the appalling abuses of the (unregulated) Wall Street plutocrats blew up the economy, necessitating Obama’s (proper) use of counter-cyclical deficit spending to save the (global) economy. Now we are back to “conservative” tax cuts and unpaid wars as our default SOP. One doesn’t have to be a Rhodes scholar to figure this con out. Yet our voters can’t, and are satisfied with some halfhearted scam yapping about constitutional amendments to save the government from ourselves.
The national debt has exploded in the 21st century, to be honest. It has exploded as a result of cynical “conservative” policy prescriptions, wars and lies. We are now betting the country on the hope that there will always be so much money sloshing around in the global financial system that we can perpetually issue debt at very low rates. Should this bet not pan out, and interest rates rise by any significant amount, interest on the outstanding debt (not even considering the latest Trumper insanity) will simply destroy the budget. And if you think we have a guns vs. butter problem now, wait till 40% of the budget goes to interest payments.
Repubs excel at placing the nation in peril. Unfortunately they usually are rewarded for their efforts by the incompetent white electorate, whose lack of critical understanding simply knows no bounds.
“Repubs excel at placing the nation in peril. Unfortunately they usually are rewarded for their efforts by the incompetent white electorate, whose lack of critical understanding simply knows no bounds.”
When did this become a racial issue?
Have you watched Tucker Carlson lately? He’s a celebrity conservative who was always sympathetic to the “paleocon” sect of conservativism, but firstly he knows which side of the bread is buttered and will go where the pull and money is:
Do you suppose Tucker forgot we are a nation of immigrants and somehow we are all productive and creating our own culture and that we are the richer for it?
I take your point but travel around the Deep South and any deep red state and then tell me their white electorate are freaking geniuses.
Well, what do you imagine was the racial make-up of Trumper’s 46%? Der Trumper is a creation of the white electorate. And to vote for him was to proclaim and reveal yourself as an incompetent voter.
And do you really question that the Repub party now presents itself as the party of white interests? The dog whistles have been blowing non-stop since at least RMoney’s campaign IMO…
Every word is golden.
It’s clear that the basic concept of money being taxed and redistributed just repulses them on a gut level.
Of course they want a strong military, and they complain when “government” can’t do anything right…but those are exceptions, apparently. They just viscerally can’t deal with their money going into the pockets of other people (or, as my right-wing relatives put it, “taking money from people who work and giving it to people who don’t”).
Insanity. I think that we can all see how this has the potential to destroy us all, mostly our children.
If last weekend was any indication, “our children” are ready to fight back. The speeches and signs and marches made me proud to be an American again. I look forward to the fight.
But it would be awful nice if they didn’t have to fight back from the time before FDR. These bastards may use a balanced budget to do away with all sorts of things we can no longer afford, like health care, food stamps and even social security.
Cutting, shredding, then burning the social safety net is the goal. Make no mistake about it.
I can picture it now: “Gee, so sorry we cannot pay your Social Security, but the constitution requires a balanced budget, and we just don’t have the funds.”
This will be said by the same people that brought us endless war (paid for with deficit spending), but they will say it with all seriousness.
Yes, a Balanced Budget Amendment is the dumbest idea in economic policy.
But why oh why do we keep referring to “borrowing,” unlimited or otherwise. Why would a nation that prints its own money “borrow” in the first place? It makes no sense.
The activity that is referred to as “borrowing” is just not something that you or I or an accountant would recognize as borrowing. It’s a swap of reserve dollars (promissory notes created out of thin air by the Federal Government) for bonds (promissory notes created out of thin air by the Federal Government), at market rates. It makes no more sense to say that the Government is “borrowing” dollars from the private sector than it does to say that the private sector is “borrowing” bonds from the Government.
Treasury bonds are just another form of money (promissory note denominated in units of currency) created by the Federal Government. It’s money printing. And there will never be a problem paying the interest on those bonds, because that’s money printing too.
We call it borrowing because that’s what issuing bonds is. That doesn’t make it bad.
When a private entity sells bonds, that has the classic accountant’s hallmark of borrowing–the entity’s liabilities increase by the face value of the bond. Since reserve dollars and Treasury bonds are both liabilities of the Federal Government, a swap does not increase the Gov’s liabilities, just changes the balance of reserves to bonds. In that sense, it’s not borrowing.
As you say, issuing bonds isn’t necessarily a bad thing. And if they are payable in a currency that you can print at will, it’s just never going to be a problem. My issue is that calling it “borrowing” makes it sound bad. (“We’re burdening our children!) It’s not like that at all.
Where on earth did you study economics or monetary policy?
In part, I learned by looking for answers to questions like “If a government can create money at will, what is the point of borrowing?”
Here’s a good starting point, though: https://www.scribd.com/document/35432615/Soft-Currency-Economic
Well, sure—if you want both your currency and debt instruments to be perpetually declining in value. Central bank printing of fiat money without relation to economic activity has generally been inflationary.
And if one wishes to fund government operations via debt under traditional public finance theory, then some entity (domestic or foreign) must needs be convinced to purchase the bond(s) for cash. They can’t simply be “issued” into the economy by the central bank like fiat money. And they can’t be issued at less than market rates of interest, which our Federal Reserve can influence but not “control”.
Does your comment means you agree with our Repubs’ handling of the finances of the federal government? Under your analysis, what are they doing wrong? It sounds like a government with its own currency can simply do whatever it likes, as there needs be no limit to “money printing”, be it fiat or debt…
Good questions.
I definitely don’t agree with the Repub’s handling of the finances of the Federal Government. But I sometimes think they understand how finance works, and use that knowledge to get what they want (spending on the military, primarily). Of course as soon as D’s get into power the R’s immediately denounce deficits and unfortunately D’s fall for this gambit. Cynical on the part of R’s, but effective since people don’t understand how money works.
The Government should of course use taxation to control the value of money and control inflation without pulling so much money out of the private sector that goods and services offered for sale go unsold and unemployment emerges. That doesn’t imply a balanced budget. It likely means an ongoing deficit of 3-5% of GDP on an ongoing basis. There’s no law of finance or accounting that says the Federal budget must balance over a fiscal year or a business cycle or ever.
Finally, bond sales by the Government are (part of) an interest control mechanism. Without bond sales, interest rates on reserves (Fed funds rate) would fall to zero and stay there. That’s the totality of the effect of issuing reserve dollars instead of bonds to pay for Government spending.
The game is in your last sentence. Yes, it can without limit. We don’t really need bonds to “finance”the federal government, that ole printing press works just fine and dandy.
The really disturbing thing is that a majority of Americans probably thinks a balanced budget amendment is a good thing.
It’s an easy sell right? Folks are afraid of going bankrupt and they hear about countries like Greece or others who are going bankrupt. What they miss very critically is a country ( not a state)like the US or the UK that issues a freely floating fiat currency can never really go bankrupt. In fact they can control the interest they want to pay on their debt. Truly amazing.
“The deficit will burden our children and grandchildren.” That’s an incredibly powerful argument; it’s easy to understand and it appeals to common sense and personal experience. As you say,it’s also wrong. Common sense and personal experience don’t include printing money.
The reason it has power is it conforms to our preconceived ideas. We know we can personally go bust if we borrow too much and then get laid off. And our leaders, like Obama, reinforce it when they say we have to “tighten our belts”. This applies to the entity that controls our currency and that is the feds. States can go bust and so can any individual country in the European Union. So you can expect to see republicans saying things like this a lot as they want to cut social programs like SSMM and Obamacare, etc.
Yet, studies show average Americans are terrible at budgeting, if they do it at all, and most are swimming in debt themselves.
Also, the argument is never extended to private sector corporate debt which, if you stacked it up, would make the Federal debt look like a rounding error. Most corporations run leveraged to the gills, especially those who most typically support conservatives like the resource extraction industries of oil, gas, and mining.
So, taken at face value, the argument is demanding “fiscal responsibility” for a third of our society so the other two thirds can continue to be irresponsible.
Or
Like most conservative “deficit hawks” it is really about gutting the power of government to act in the common good.
So if you are worried about paying interest on the debt ( I’m not entirely sure why but ok) why issue debt at all? The Fed can simply fund the Treasury for whatever the budget is and skip the step of selling bonds. There’s prolly a law about that but since we are now in the business of making laws as we go, just repeal the damn thing. In fact isn’t that the whole idea of a balanced budget? No more debt. Easy. Gotcha covered.
But alas, in the end the elites want debt. It is a guaranteed savings account.
Continual increases of fiat money to fund government operations irrespective of GDP size/growth has generally been inflationary in the majority of cases.
This is about generally accepted theories of public finance, not what elites might want.
That does not an omelet make. A deficit will only trigger an inflation if we are at full capacity and that is usually understood to mean employment. But over the last, oh you pick the time frame, we have had excess labor that could be employed. The inflation we most often see is supply side inflation triggered by shortages like say food shortage (think famine) or monopoly power outside our control which could be oil or maybe some minerals that are controlled by China, or by temporary shortages in a sector say from a flood. But demand inflation occurs when labor is bid up from too much money chasing available goods and services and not a terrible threat for the most part. That sort of inflation is controlled by the Fed by increasing interest rates or more logically by an increase in taxes. At that point the idea is to take money out of the economy, not add more through a deficit. Hence the insanity of a balanced budget amendment and likely why it will not happen.
“This takes bad faith, disingenuousness, and insincerity to unprecedented levels. To even attempt it demonstrates an unlimited contempt for the intelligence of the American voter.”
Hummm … I think electing Dotard 45 and GOP/Republican governce AFTER Bush/Chaney AND their unprecedented obstruction of TWICE elected African-American POTUS Obama IS a better example of your argument!
Americans, notoriously knowledgable about their own household and backyard, but ignorant about where Country X is, or even if Country X “is”, are easy to fool.
So, first you float terms like “debt” and “deficit” and “bankrupt” and “interest” around, which Americans understand in the context of an individual/family balance book, then you point to the US Government and imply that the way the terms work against an individual/family household account will function against the US Government in the same way.
Obviously (is it obvious?) the terms don’t have the same function when you’re discussing a government with the power of the printing press and fiat currency.
That is one of the first disconnects that has to be explained in order to even begin a discussion on economics, with most Americans.
Since Republicans love having a confused, confounded and ignorant electorate to scare, they, of course, will NEVER have that conversation.
Which means that libtards and hippies have to bring this up, and since we’re all liars and America-haters, the discussion can often never get off the ground.
But, it has to be done. So, if having the conversation, you have to let the informee know that the US government, unlike you, has the inherent ability to print money and have it accepted as legal tender. Full stop. The government also adds in the (unnecessary and convoluted) process of essentially “borrowing” the money from a Central Bank it has power over, by issuing bonds to that bank… as a way to create a lever to monitor and control inflation later, if it needs to.
The thing is, the US debt doesn’t really matter. It’s an accounting column. When the US government “pays down” debt, all it is doing is taking dollars it has the right to print, and giving it to the Central Bank it controls, and having both accounting columns essentially cancelled out into nothingness. Because it’s just a method of controlling inflation. That’s it.
There is no big, bad debt, and no, we don’t owe China all of our money. The “debt” is just how much money has been printed and added to the economy, that hasn’t been taxed back out of the economy yet. Sure, people and banks may own the bonds the government issues, but they will ultimately get dollars back, guaranteed, because THE GOVERNMENT CAN PRINT MONEY AT WILL. The only thing preventing the government from ever paying on bonds are shit-heel politicians. Unless the government prints 20 trillion dollars and helicopter dumps it, adding to the national debt in the manner that has been occurring since the 1820s has essentially no long-term economic problems…unless shit-heel politicians go around fucking with levers they shouldn’t be touching.
That is the disconnect. This basic ebb and flow of money/debt that Republicans scare ignorant people with has to be explained, otherwise the people just assume that the Government Budget works just like their own budget. Which is 100% incorrect.
The government could print enough cash tomorrow to pay off the entire US debt. The US debt as it currently exists is an accounting column of money it either needs to print, or needs to tax, to pay off the bonds column. The dollar column is just the amount of money that the Central Bank has dumped into the economy (“loaned” to banks at x% interest rates that function as the lever to control inflation).
The government controls both of those columns on the accounting worksheet, and the lever to control inflation. Bonus points if you want to go into the 70s/80s stagflation as a bungled response to dropping the Gold Standard. Which, by the way, allows the government, if it so wills it, to more competently manage inflation and recessions…key concept of course being: if it so wills it. Which, again depends on whether shit-heel politicians are screwing around with the levers wrong.
The debt is only scary if you don’t know how it works.
If that can be explained, and understood, then you can get into actual policy of how much money should be printed/borrowed, and what it should be spent on. Until that basic concept is actually understood though, it acts as a buffer to make your typical US conservative refuse to even get to the policy part.
Imagine what your household finances would be like if you could wake up in the morning, open up your on-line banking app on your phone, and add AS MANY ZEROES AS YOU WANT TO THE LEFT OF THE DECIMAL POINT. (Sorry for raising my voice, but you are patiently explaining the difference between federal debt and household/State/small-nation debt, yet some here don’t seem to get it.)
A balanced budget amendment is not only unnecessary, it would be, without question, one of the most catastrophic things that could ever be done.
I completely agree that the cynicism and sheer destructiveness of the GOP’s behavior is simply amazing but when you say this move “…demonstrates an unlimited contempt for the intelligence of the American voter…” you only have to look at the electoral success for decades of the GOP with precisely these same policies to know that, as H.L. Mencken famously put it: “No one ever went broke underestimating the intelligence of the American public.”
The GOP knows very little but they do know their electorate.