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Tuesday, February 02, 2010
The budget will split the House caucus
Some polls registered an uptick in Obama’s approval rating following the State of the Union address. It was a typical Obama speech and was covered mostly in light of its promise to reduce the deficit.
So much for that. A few days ago, Obama gave a press conference unveiling a near $4 trillion budget that is set to run a deficit of $1.6 trillion. Because those numbers assume revenues from the defunct cap-and-trade bill and its nearly dead cousin Obamacare and also throw in spending cuts unlikely to materialize, I expect the actual number is somewhere near $2 trillion. For reference, the last time the Republicans had control of Congress (2006), the budget deficit was $248 billion. At the end of the Clinton administration, we were actually running a surplus.
Is it just me, or have the Democrats gone completely mad? Have the Tea Parties, the 2009 elections, Scott Brown, and other recent events not taught Obama anything?
That is easy for me to say. The real problem is that last year’s budget and the stimulus bill locked in massive increases in federal and state spending that rested on 2 questionable assumptions:
1) The economy would recover shortly, and tax receipts would increase
2) Gigantic revenue raising monsters like cap and trade would pass before 2010
Now, the Democrats are in a terrific hole. Reducing spending in any climate, much less a recession is anathema to them. Liberals in the House and Senate have already threatened to derail the minimal cuts to discretionary spending that Obama has outlined. On the other hand, if they continue to rack up deficits of this magnitude, they may find their ability to put their spending spree on the nation’s credit card suddenly cut off by problems in the bond markets or massive inflation. Finally, if they raise taxes to the level necessary to finance the proposed level of spending, they will almost certainly choke off whatever recovery that is coming in the future.
Obama apparently intends to keep punting, hoping that economic recovery will be more robust than his own CBO predicts so that he can avoid the hard choices he is bringing upon himself. The bad news for Obama and for us is that he may achieve the effective bankruptcy of the nation before 2012, when he must stand for reelection.
During the New Deal, Roosevelt’s deficit spending, which was quite large for the time, required him to effectively seize the gold of private citizens to keep the dollar from putting a gun to its head and pulling the trigger. Back then, of course, the United States was on the gold standard and had substantial savings, so Roosevelt’s crude solution was at least workable. Obama’s deficits dwarf Roosevelt’s, and now we have a fiat currency and negative savings. What will we do if our currency is again threatened? Down that road lie Zimbabwe, Chile, and any number of other banana republics.
That is enough economic speculation, however. The more immediate question is whether the budget has a chance in the House. Believe it or not, last year’s budget actually passed with the widest margin since 1997 - 233 yea votes. Budget bills are treated as yearly formalities, but they are not entirely uncontroversial. Moreover, Jay Cost provides this extremely interesting chart:
Those are the vote tallies from last year’s House roll calls that saw high numbers of Democratic defections. We can see the usual suspects - Obamacare and cap and trade - clearly, but look also to the appropriations votes. They are consistently the most controversial within the Democratic caucus, and even the motion to adjourn in Decemeber garnered 29 Democratic defections! For those keeping score, 39 is the maximum number of Democrats that Nancy Pelosi can afford before she must either pick up Republicans or lose the vote.
Cost wonders whether the numbers in that chart represent a nascent backbencher revolt:
These were all partisan votes in that Republicans mostly voted against the Democratic leadership. Two of the bills - HR 2454 (cap and trade) and HR 3962 (health care reform) - were high profile pieces of legislation that attracted a lot of attention. But the rest did not garner nearly as much focus, and several of them are downright obscure. And yet the number of defectors was still high.
It’s striking to see 29 Democrats defect on a concurrent resolution providing for the adjornment of Congress. Or how about 39 Democrats defecting on a bill “to permit continued financing of government operations.” That’s an increase of the debt limit. How could so many vote against it? After all, the House voted through all the spending that required an increase in the debt limit. Yet Pelosi could only muster 218 Democrats to do what absolutely, positively had to be done!
The budget votes will be our key clue to the answer. The Democrats have been mostly mum about the proposal so far, but my guess is that a $2 trillion deficit is dead on arrival at Capitol Hill. Too many Democrats, and not just those in McCain/Bush districts, will have to fall on their swords to vote for it.
Budget fights can be among the nastiest, as the continued operations of the federal government are at stake. The 1995 “government shutdown” is the most recent example, but if we get a repeat of that this time it will be because Democrats will be cannibalizing each other in an attempt to run for the exits. At this point, such an outcome might even be likely.
At this press conference, Obama laughably stated that the government must not treat taxpayer money as “Monopoly money” before blaming his deficits on a “decade of profligacy.” If the Democrats shut down Congress squabbling over this year’s budget, that decade will begin to look awfully good.
Comments
Pelosi is disgusting, but she is not dumb. She needs 218 votes to pass bills, so she always gives the moderate/vulnerable dems political cover by letting them vote no on controversial bills. A no on health care here, a no on cap and trade there. The moderates can smile and say “See, I didn’t vote down the line with Obama and Pelosi.”
Posted by on 02/03/2010 at 02:52 AMLaughable. Yes, exactly. I read the numbers and laugh, and laugh, and laugh.
Here I was thinking we’d only have to suffer through the effects of TWO years of Obama/Reid/Pelosi running the country by fiat. Looks now like that two gets cut down to one.
You know...I haven’t always agreed with Fran’s choices of co-bloggers since he opened the site up to posting by others. But Aaron is a favorite. Glad you’re here.
Posted by Matt on 02/03/2010 at 01:59 PM
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