Imagine a family facing impending bankruptcy while suddenly hitting their credit limit. Typically, that family would make serious lifestyle changes to balance the budget, and if they found it necessary to take out a new line of credit, they would only do so for the minimal amount necessary for a short period of time. Well, when it comes to the uniparty in Washington, after the $11 trillion COVID spending and money-printing orgy, they responded to calls for spending cuts and reforms … by allowing an all-you-can-eat debt buffet from now until 2025! Don’t worry, they gave us a couple of spending and accounting gimmicks in return.
The central flaw in McCarthy’s approach to this deal was his entire messaging in the lead-up to this act of political adultery. Rather than drawing a line in the sand on the GOP-passed bill and then making the battle about debt, inflation, and the weaponization of government, he made the battle about getting Biden to negotiate and about not defaulting on the debt. In other words, he conveyed the message that Republicans fear not raising the debt limit just as much as the Democrats. Perforce, Biden easily agreed to “negotiate” so McCarthy could say he got “something” other than a “clean” debt limit increase. Once Biden agreed to negotiate and McCarthy wrongly validated June 1 as a drop-dead deadline, he had no leverage left. Hence, the interception rather than a touchdown in the form of the debt ceiling bill.
And make no mistake about it, this was a political interception. Not only did this bill enshrine the biblical and apocalyptic levels of spending into law – not only did it jettison all of the meaningful provisions of the GOP bill – it gave Biden more debt credit than what was on the table. The assumption from every GOP member was that the debt limit would be increased for one year. Instead, McCarthy, along with his negotiators, Reps. Patrick McHenry (N.C.) and Garret Graves (La.), agreed to suspend the entire debt limit for the rest of Biden’s presidency. Worse, there is no dollar limit, so that Biden can now run up the tab for the remainder of his presidency. It will be at least $4 trillion in additional debt, but likely more.
Worse, the only other leverage point Republicans have is the annual appropriation bills. But now that Republicans agreed to top-line spending numbers for the next two years, they don’t have much leverage to fight on the budget bills either. Sure, this bill does have a trigger that induces automatic 1% cuts to discretionary spending if they fail to agree on appropriation bills, but a 1% cut is no longer sufficient if working off the insane baseline of spending enshrined last year by Biden and McConnell in the omnibus bill.
McCarthy is acting like it’s 1998. Yes, back then, a slight cut in baseline spending increases and some modest increased work requirements for a few welfare programs might be worth supporting. The COVID spending, however, has made our budget insolvent and our inflation unsustainable. It is truly hard to comprehend how unprecedented the COVID spending is. Aside from the monetary printing, our budget essentially went from $4.4 trillion to $6.4 trillion overnight! It typically took 15 years for our budget to expand by such a sum of cash. With COVID over, it is indefensible to continue working off this baseline. Talking about 1990s-era welfare reforms – and very nebulous at that – is laughable relative to the issues we face both with top-line spending and debt, as well as the woke and weaponized bureaucracies flush with ungodly sums of cash.
As such, even the House-passed bill was very modest. But at least it vitiated the Green New Deal, the 80,000 new IRS agents, and the student loan bailout, while instituting the REINS Act to force all new government regulations to get approval from Congress. The polling on the GOP position was terrific, and even the media was surprised at how Republicans were finally winning a budget issue. In the worst-case scenario, we would have given Biden $1.5 trillion in new debt in return for a watered-down version of this bill.
Instead, McCarthy gave Biden at least $4 trillion (but potentially unlimited until 2025) in return for nothing. The lawmakers cleverly jettisoned all the meaningful provisions of the bill and left the nebulous ones, such as clawing back already unspent COVID funds and ill-defined permitting reform while enshrining the Green New Deal. Oh, they cut $1.9 billion from the NEW additional $80 billion in funding for the IRS. What a joke!
Even the budget caps that lock in last year’s spending levels will really wind up locking in this year’s levels. As the New York Times reports, “White House officials say a series of side deals with Republicans, including one related to funding for the Internal Revenue Service, will allow actual funding to be closer to this year’s levels."
McCarthy replaced the REINS Act, which requires Congress to approve new regulations, with an honor system allowing Biden’s own OMB to accept commensurate cuts paired against new regulations, which the director can either waive or hollow out with notional cuts.
Additionally, here are a few more important observations on the bill:
- Ironically, the only real savings come from already unspent COVID funds. Not only does this bill fail to uproot the COVID biomedical security state that led to this inflation bomb, it continues exempting the worst elements – mitigation efforts, vaccines, and genomic sequencing (potential gain of function) from recissions.
- Democrats are fully supporting this bill. This is astounding given that Republicans control the House and had the upper hand on the politics of this issue. It’s a reflection of McCarthy’s (and Trump’s) tenure in leadership last decade when every major budget bill passed with more Democrat support than Republican votes, despite the GOP having controlled the chamber.
- While making nebulous cuts to the record high baseline growth of discretionary spending, the bill will increase mandatory spending by 5% and increase military spending 3%, after a $70 billion surge last year. At some point, Republicans need to kick their habit of aimless and unlimited spending for defense lobbyists until we fix the culture of this woke and broken military.
- According to the CBO, we are slated to spend $80 trillion over the next 10 years, and there’s never been an era when the CBO has not lowballed the cost of government. The blank check for the remainder of the Biden presidency will allow him to create the “next current thing,” such as Ukraine or COVID, which will be used to override the budget caps, but will not require an extra politically perilous vote on raising the debt limit.
We all know McCarthy has a narrow majority, which is why we all tried to rally behind the House bill and give him some leeway. We could even have accepted less than the GOP House bill. But to jettison every important reform, make a mockery of the others, and do so in a way that precludes us from coming back for more throughout Biden’s presidency – all while leading in the polls against a dead carcass of a president – is not just political malpractice but an act of political betrayal.