Get Ready For A Congressional Budget Blowout | Stock News & Stock Market Analysis

No one is paying much attention, but Congress is preparing a two-year budget that would blow past bipartisan spending caps to the tune of $216 billion through 2019.

XThat might be a best-case scenario. The budget watchers at FreedomWorks estimate that when hurricane disaster relief, funding for the border wall, added ObamaCare money for the bankrupt insurance markets, and other last-minute spending “emergencies” are thrown in the mix, the two-year spending blitz could exceed $300 billion.

President Donald Trump had better get his veto pen handy.

All of this is happening because Republicans have fallen into the Democrats’ fiscal trap. To secure more money for national defense, Democrats are demanding an equal amount of extra funding for domestic social welfare programs. So to get an additional $108 billion for the Pentagon, the Republicans may agree to another $108 billion-plus in ransom money for domestic agencies. But when all the emergency funding is included, the ratio could be closer to $2 of additional domestic spending for every $1 of increased military funding. What a deal.

If this deal were to get cut, any pretense of fiscal discipline and debt control would be officially and irrevocably washed away. “Almost no one here on either side of the aisle wants to control spending,” Sen. Rand Paul of Kentucky tells me. “It’s sad, but it’s the new reality.”

This is happening when the $4 trillion federal budget is expected to exceed $5 trillion within eight years. The $20.6 trillion debt is already headed to $30 trillion over the next decade — even without this new spending spree.

This would also be a nail in the coffin of the Budget Control Act of 2011, which instituted spending caps and sequester cuts if those caps are exceeded. The BCA caps have worked remarkably well as a deterrent to the very kind of spending blowout that Congress is considering.

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After the BCA was installed, during Barack Obama’s first term as president (and after Republicans seized control of Congress), federal spending fell for three years in a row — from $3.6 trillion in 2011 to $3.51 trillion in 2014. That was the first time that had happened since the 1950s. The caps have shaved more than $1 trillion from the spending that was supposed to happen without them.

Given that the caps are a success, why scrap them now?

The answer is that the caps have worked too well. The pro-spending lobby in both parties has come to despise the fiscal handcuffs of budget caps and the threat of across-the-board sequester cuts.

This fiscal retreat has exposed fiscal hypocrisy on both sides of the aisle. Republicans purport to be the party of fiscal responsibility and limited government, but they are all too eager to be removed from the BCA cage.

Meanwhile, Democrats, who unanimously moaned that the Trump tax cuts would blow a hole in the deficit (ignoring the impact on the economy), are willing accomplices in this fiscal jailbreak, which would cost the Treasury much more in the long term.

But it wouldn’t be Democratic leaders Chuck Schumer and Nancy Pelosi who would get blamed for the financial mess left behind. Voters would surely wonder why Republicans, who are in charge, let this surge in spending and debt happen on their watch.

A $300 billion spending spree would be no way to drain the swamp. But it would be a good way for the GOP to find itself back in the minority after this year’s midterm elections. President Trump may want to use his veto pen to save Republicans from themselves.

  • Moore is a senior fellow at The Heritage Foundation and an economic consultant with FreedomWorks.


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Originally posted 2018-01-23 15:51:49.


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