The GOP Is AWOL On The Fiscal Front Yet Again

Here they go again. The House GOP leadership is fixing to sell-out the nation’s fiscal future still another time in order to protect missions that have nothing to do with true conservative governance.

We are talking about:

Playing policeman to the world with a hideously expensive Warfare State.
Building physical and enforcement walls at the Mexican borders when we desperately need more imported workers.
Loading up the budget with do-gooder pork that should not be dispensed by government at all or, at worst, should be handled by state and local units where both the benefits and costs are more evident to grass roots voters.

Owing to the above GOP follies, the so-called conservative party has once again fallen flat on its face fiscally, having passed only one of the 12 appropriations bills for FY 2024 to date. And that’s even under the ultra-lax ceilings agreed to in Speaker McCarthy’s capitulation to the Washington spenders during the June debt ceiling showdown. Not surprisingly, the only spending bill the full House has actually approved was the military construction appropriation, which is the very living essence of the Federal pork barrel.

So now we have another continuing resolution (CR) which pretends to be a prudent stopgap, but actually amounts to Washington shenanigans as usual. It fully funds the DoD boondoggle at current levels of $858 billion, while pretending to hold nondefense appropriations to 8.1285% below current levels.

Let’s see. The above nondefense cutback is effective for just 31 days and excludes the giant Veterans medical system, which has a current budget level of $119 billion. So what is being cut is one-twelfth of one-twelfth of the current $653 billion nondefense appropriations level excluding Veterans medical care. That computes to a savings of just $4.5 billion—a perhaps meaningful sum in the real world but only six hours worth of the projected $6.4 trillion of Federal outlays for FY 2024.

So the question recurs. How in the world has the Republican-controlled House not been able to pass this year’s appropriations bills in the face of agreed-upon spending allowances for FY 2024 that virtually give fiscal profligacy a new definition?

And we do mean profligacy. When Big Spender Obama shuffled out of the White House, the FY 2017 budget authority level for so-called discretionary appropriations—defense and nondefense combined—was $1.22 trillion.

By contrast, the so-called FRA (Fiscal Responsibility Act of 2023) sets a “cap” for FY 2024—including all the gimmicks and budgetary legerdemain—of $1.66 trillion. That’s $440 billion or 36% more than under Obama—yet these big talking GOP anti-spenders couldn’t even pass appropriation bills that conformed to this exceedingly lenient overall ceiling.

Moreover, when you break down this staggering $1.66 trillion total between defense and nondefense spending, the farce of it becomes all the more apparent. On the defense side the GOP was long ago taken hostage by neocon interventionists, who, as we have previously detailed, have added at least $500 billion to the DOD budget beyond what would be needed for a proper Fortress America defense.

But suffice it here to say that at the time the great General Dwight Eisenhower famously warmed about the dangers of the military-industrial complex in his 1961 Farewell Address the defense budget in today’s dollars (FY 2023$) totaled $400 billion. And that was at the peak of the Cold War when the Soviet Union possessed a decent quotient of industrial vigor, thousands of warheads pointed at the United States and 50,000 tanks lined-up on the central front that still had working parts and fuel.

Yet after cutting the defense budget he inherited by upwards of 30% in real terms, Ike judged his outgoing budget of $400 billion to be enough even in those precarious times. By contrast, the US today is faced by no industrial superpower with either the means or motivation to attack the American homeland.

The fact is, neither Russia nor China have the economic capacity—say $50 trillion of GDP—-or motivation to attack the American homeland with conventional military means. The vast invasionary armada of land and air forces, air and sealift capacity and massive logistics supply pipelines that would be needed to bridge the two ocean moats is virtually beyond rational imagination.

So what ultimately keeps America safe is its nuclear deterrent. As long as that is intact and effective, there is no conceivable form of nuclear blackmail that could be used to jeopardize the security and liberty of the American homeland.

Yet according to CBO’s latest study the current cost of the strategic deterrent is just $52 billion per year. This includes $13 billion for the ballistic missile submarine force, $7 billion for the land-based ICBMs and $6 billion for the strategic bomber force. On top of that there is also $13 billion to maintain the nuclear weapons stockpiles, infrastructure and supporting services and $11 billion for strategic nuclear command and control, communications and early warnings systems.

In all and after allowing for normal inflation and new weapons development costs, CBO’s 10-year estimate for the strategic nuclear deterrent is just $756 billion. That happens to be only 7.0% of the $10 trillion baseline for the total cost of defense proper over the next decade and only 5.0% of the $15 trillion national security baseline when you include international operations and veterans.

Accordingly, a return to the Eisenhower Minimum of $400 billion per year for defense proper over the next decade would save in excess of $4 trillion. And that would surely be more than feasible from the $9 trillion+ CBO baseline for defense spending excluding the strategic forces.

For instance, under a Fortress America defense strategy there would be no need for 11 carrier battle groups including their air-wings, escort and support ships and supporting infrastructure. Those forces are sitting ducks in this day and age anyway, but are only necessary for force projection abroad and wars of invasion and occupation. The American coastline and interior, by contrast, can be protected by land-based air.

Yet according to another CBO study the 10-year baseline cost for the Navy’s 11 carrier battle groups will approach $1 trillion alone. Likewise, the land forces of the US Army will cost $2 trillion and that’s again mainly for the purpose of force projection abroad.

As Senator Taft and his original Fortress America supporters long ago recognized, overwhelming air superiority over the North American continent is what is actually necessary for homeland security. But even that would require only a small part of the current $1.5 trillion 10-year cost of US Air Force operations, which are heavily driven by global force projection capacities.

The rest of Washington’s national security palaver about defending allies and supporting alliances is just a cover story that does not add an iota of national security.  What it does provide, however, is an excuse for the $886 billion budget the GOP appropriators are struggling to live with for FY 2024, and also a fulsome feeding trough for military and national security contractors—the avarice of which the world has never previously seen.

Still, it’s not surprising that the House GOP defense hawks are demanding more than double the Eisenhower Minimum.

As it has happened, the defense authorization and appropriations committees have become a clubhouse for bloodthirsty neocon fanatics like Senators Lindsay Graham and Tom Cotton in the upper chamber and for careerist busy-bodies, junketers and ex-military hawks like Congressman Mike Garcia in the House. Garcia is a former Navy fighter pilot who recently attacked the GOP’s thin ranks of true anti-spenders and was joined in his assault by a whole passel of GOP ex-uniform types from the appropriations committee including Rich McCormick of Georgia, a Marine veteran, Derrick Van Orden of Wisconsin, a retired Navy SEAL, and Brandon Williams of New York, a former Navy submarine officer.

In short, the Imperial City breeds its own handmaids and shills and then uses them to infect the so-called anti-spending party by placing them on the very national security committees that could make a $500 billion per year difference to Uncle Sam’s swelling rivers of red ink.

Owing to the handiwork of the GOP’s neocons and warhawks, in turn, Washington has deployed the nation’s grotesquely bloated war machine in folly after folly. These include the pointless string of disasters in the middle east; the subsequent doubling down with the madness in Ukraine for no valid reason of homeland security whatsoever; and the current warm-up for a war with China over Taiwan, when the fact is Chiang Kai-shek lost the Chinese civil war fair-and-square to the Chicoms 74 years ago. So there has been no valid reason of homeland security since then militating against Taiwan becoming the 23rd province of the PRC, if that’s what it came to. Within months, US investment bankers trolling the Pacific Rim for M&A deals wouldn’t be able to tell the difference between Taipei and Shanghai, even if the local inhabitants unfortunately could.

And yet that’s exactly the reason we have a trillion-dollar war machine. Neither god nor humanity appointed Washington to be the policeman of the world and the guardian of personal freedom everywhere on the planet. By now it should be evident that exporting democracy can’t be done, and actually undermines, not enhances, America’s homeland security.

Likewise, on the nondefense side of the equation the fiscal story is even more dismal. For most of the 6.5 years since Barry left office there has been a GOP president or GOP control of one or both houses on Capitol Hill. That is to say, there has been either a GOP president with a veto pen or at least a GOP blocking force in one of the two houses on Capitol Hill.

But the essential message of the data is “so what!”. Obama’s outgoing nondefense appropriations level for FY 2017 was $586 billion. Yet the House GOP has not managed to pass a single nondefense appropriations bill this year because it apparently can’t make ends meet under a $773 billion ceiling for FY 2024 per the June compromise.

You can’t make this up. The nondefense spending ceiling for next year is $187 billion or 32% higher than Obama’s last out-of-control budget, yet the GOP is now squabbling over another CR because it can’t even pass inflated domestic appropriations bills, and for reasons that should be more than obvious by now. To wit, the Appropriations Committee of the House has become populated by GOP spenders, porkers and warhawks who can’t even manage to comply with the disgraceful compromise deal enacted in June.

Thus, Republican Rep. David Joyce, who oversees the appropriations subcommittee on Homeland Security, offered the following gem:

Republicans must come together to advance these bills because we cannot risk a government shutdown. When we shut down our government, we communicate to our adversaries that America is vulnerable and threaten the security of our nation.”

Well, no. You damn well better risk another government shutdown and for as long as it takes. And the very worst reason to capitulate to more spending once again is national security. At a bloated $858 billion level under the CR it is not even remotely jeopardized.

The same goes for Congressman Dusty Johnson of South Dakota, who represents the so-called Main Street Caucus:

“Congress needs to keep the government open and secure the border,” Johnson told the Washington Examiner. “These are issues that united the six negotiators and should unite the conference.

 For crying out loud. Do these GOP cats know that the native born workforce will shrink by 10 million workers over the next decade or so, while the number of retirees aged 65 years or older will rise from 60 million to nearly 100 million by the middle of the century. In fact, the ratio of workers per retiree will grow from 5x in 2015 to less than 2X during the next several decades unless the US adopts a major Guest Worker program bringing in several million migrant workers per year.

Needless to say, Speaker Kevin McCarthy is a weak-kneed empty suit who allows the neocons and immigrant bashers to rule the roost in the GOP caucus. As a result, the GOP’s #1 job in the tussle of democratic governance in America—safeguarding the public purse and minimizing the relentless growth of Leviathan on the Potomac— has been essentially forfeited.

The truth is, the former party of fiscal rectitude on the GOP side of the aisle is too cowardly to take on entitlements, to enthrall to the neocon Warfare State and Forever Wars to even scratch the defense budget and too hypocritical about their own slices of pork in the nondefense appropriations budget to do anything except stand-up phony outyear spending caps that are utterly unenforceable and call it a day.

Again, despite the fact that the GOP was in control of either one or both houses of Congress and/or the White House for most of the six-and-one-half years after Obama moved out of 1600 Pennsylvania Avenue in January 2017, Federal spending and the public debt have spiraled like never before.

To wit, since Obama’s departure for several more commodious mansions the public debt has grown from $19.98 trillion to $33.04 trillion, which amounts to $98,791 per man, woman and child in the US. And nearly two-thirds of that $13.0 trillion eruption of the debt was owing to a GOP presidential signature and a majority of GOP votes on Capitol Hill.

So here we are with an projected public debt of $55 trillion baked into the cake for the early 2030s. And that’s assuming:

No recessions or economic setbacks ever again.
Inflation and interest rates have already peaked.
The Trump tax cuts will be allowed to expire in 2025.
Not a dime of new spending beyond the current CBO baseline will ever be authorized.

Those assumptions would make even Rosy Scenario of the Reagan era blush. So the real truth is that the Federal budget has become a doomsday machine, with the public debt heading toward $100 trillion in by the middle of the current century, at the latest.

And yet and yet. The Washington GOP has once again proven in spades that it has no capacity to do anything about it—except to slide by the seat of its collective pants into an eventual thundering fiscal calamity.

Public Debt And Federal Debt % Of GDP Since January 2017

For avoidance of doubt, here is a long-term view of the Federal spending in constant 2022 dollars, with GOP versus Dem tenures in the White House represented in red and blue bars, respectively. There is no magnifying glass that can detect the difference in the outcomes as between the two parties. That’s because there isn’t any!

The Republicans trade more domestic spending for higher defense budgets, while the Dems do the opposite. And both sides sit on their hands as automatic entitlements and debt service payments climb relentlessly skyward.

Thus, when the Reagan Revolution proposed to curtail Big Government back in 1980, Federal outlays in current (2022) dollars of purchasing power were a tad above $2 trillion. After 12 years of Reagan/Bush budget “cuts” that number had grown to, well, nearly $3 trillion in constant 2022 dollars. That is, Big Government got 50% bigger on the Republican watch, albeit mainly on the Pentagon side of the Potomac.

As it happened, the constant dollar budget remained nearly flat during the eight Clinton years owing to the fact that Washington did temporarily allow real defense spending to shrink by about 10%. But the Warfare State was not to be denied for long.

Bush the Younger launched two costly neocon wars abroad and goosed domestic spending too, via another Medicare entitlement (Part D) and a goodly helping of the existing domestic pork. That got constant dollar Federal spending to the $4 trillion mark.

For his part, big spending Barry pushed the number to about $4.8 trillion with his “shovel-ready” anti-recession boondoggles in 2009 and kept it at the level for the next seven years. Apparently, Hillary was scheduled to resume the push higher in 2017, but the electorate delivered a dirty trick—by a hair of 40,000 votes in three states—and put another “Republican” in the Oval Office.

It goes without saying, of course, that the Donald had never enrolled in the old-time GOP course on fiscal rectitude. By 2020, constant dollar Federal spending hit $7.4 trillion. That was 54% more than Barry had spent during his last year, and it only took four years to get there!

Stated differently, between 1969 and 2016 a medley of uniparty presidents had increased constant dollar Federal spending from $1.5 trillion to $4.8 trillion, representing a growth rate of 2.5% per annum. Then came the GOP’s new hero, who, in a manner of speaking, knocked the spending ball right out of the park.

Real Federal spending grew by 11.5% per annum on the Donald’s watch or nearly five times faster than the rate during the prior 47 years.

Indeed, it can be well and truly said that the Donald fiscally castrated the once and former party of budgetary rectitude. Which is perhaps why its rank and file on Capitol Hill is pleased to choose fiscal frauds like McCarthy and McConnell as leaders.

That is to say, they are in the service of the Warfare State and Welfare State uniparty, not the Republican party of yore. In that regard, Joe Biden almost blurted out the truth—until he mendaciously added “for our economy and the American people” to obfuscate what has actually happened.

No one gets everything they want in a negotiation, but make no mistake: This bipartisan agreement is a big win. (for the uniparty)…….

By now it shouldn’t take much data, if any at all, to demonstrate the fraudulent nature of the hideously named “Fiscal Responsibility Act”. And yet three months later the House GOP can’t even implement the super-lenient ceilings contained in the FRA, as it is fondly called in the Imperial City. But for avoidance of doubt, just consider a couple of gems from the CBO scoring report on the Congressionally passed debt ceiling bill that is already on the verge of being unceremoniously kicked into the ditch.

The current CBO baseline for entitlements/mandatories over the 10-year budget window is $48.3 trillion. Yet the FRA cuts exactly nothing, and actually increases baseline spending for Food Stamps by $2.1 billion.

Perhaps this is why back in June Chuckles Schumer was crowing about the Dems great victory on the matter, as he racked up their key takeaways from the negotiations:

“No. 1, we avoided default – our number one goal, which we’ve been talking about from day one,” Schumer said. “No. 2, it is a far, far cry from where the Republicans started out.”

Well, we guess so. On the matter of the vaunted work requirement, for instance, the House passed bill’s provisions were scored by CBO to save $110 billion from Medicaid, $10 billion from family assistance and $10 billion from Food Stamps over the next decade.

Then again, Schumer wasn’t lying when he said the savings from Medicaid and family assistance were each zero, and that the math from the food stamp provisions worked out as follows:

Savings from raising the mandatory work age for recipients without minor dependents from 49 years to 54 years: +$6.5 billion;
Impact of exempting veterans, homeless and ex-foster care recipients age 18-24 from the work requirement: -$8.6 billion;
Net Savings From the compromise “work requirement”: -$2.1 billion.

When it comes to “negotiations”, therefore, we can imagine there is a virtual army of beltway con artists getting in line to negotiate with McCarthy and his hapless henchmen.

Of course, it also bears repeating on this score that the only real savings in the original House version of the FRA passed in May bill was the $320 billion for cancelling Biden’s student loan forgiveness plan and $570 billion for cancelling Sleepy Joe’s wasteful green energy tax credits.

Needless to say, McCarthy & Co are still grasping for their britches on these items. CBO scored them at zero because they ended up on the cutting room floor, not in the final FRA text!

Next, there had been a lot of GOP brouhaha about freezing discretionary spending at $1.590 trillion in FY 2024 and $1.606 trillion for FY 2025. Except you don’t have to read very far in the CBO report to uncover a $417 billion elephant in the room. That is, the latter huge amount is reserved for “emergencies” and other exceptions and are not counted under the caps!

Some funding would be limited either according to a formula or to specified amounts, funding designated as an emergency requirement or for overseas contingency operations would not be constrained, and certain other funding would not be subject to the caps. With those adjustments, and base funding constrained by amounts specified in section 101(a), CBO projects that total discretionary funding under the bill would amount to $1.795 trillion in 2024 and $1.818 trillion in 2025 (see Table 3)

Worse still, the GOP’s propaganda sheet pretends the CBO estimate of $205 billion and $212 billion for these exempt items in FY 2024 and FY 2025, respectively, is non-existent. The GOP sheet tendentiously scores them at zero.

Moreover, if you follow the normal budgeting convention for the 10-year window, the total cost of these “no see ’em” spending loopholes would be in excess of $2 trillion.

Some kind of elephant in the room, that.

Actually, it gets worse from there. In the first place, the ballyhooed “rollback” in FY 2024 spending is no such thing. It is based on so-called BA or budget authority. The latter is the authorization for Federal agencies to obligate funding, but does not represent actual cash out of the drawer at the US Treasury, which is called “outlays.

So, naturally, the relatively trivial $12 billion cut in BA contained in the FRA  (from $1.602 trillion in FY 2023 to $1.590 trillion in FY 2024) disappears entirely when it comes to outlays. The CBO cash outlay numbers are $1.712 trillion and $1.781 trillion for FY 2023 and FY 2024, respectively.

So, mirabile dictu (wonderful to relate), the $12 billion “cut” for FY 2024 is actually a $69 billion increase in cash out the door!

And that’s just means even more new borrowings under the now open-ended debt ceiling, which has been suspended for two years. So just like all the other kids in Woke America, Kevin McCarthy got his trophy for, well, failing.

And this isn’t some kind of budgetary quirk, either. The CBO discretionary spending number for FY 2025, which is supposedly “capped” at a 1% increase from FY 2024, is no such thing. The outlay number is $1.833 trillion, representing a 3% gain over FY 2024.

More importantly, CBO’s estimate for the second year (FY 2025) of the FRA discretionary freeze/cap  represents a 37% gain in outlays from pre-Covid levels of $1.338 trillion in FY 2019 and an increase of 53% from Obama’s last budget at $1.220 trillion.

So let us repeat. Back in June, McCarthy and McConnell ended up “freezing”  discretionary spending at nearly $500 billion above Barry’s last budget, and they still believed they were due a trophy!

Needless to say, after FY 2025 there was nothing except a large void. No entitlement cuts and only aspirational targets for discretionary defense and nondefense spending. They haven’t even bothered with a make pretend enforcement mechanism. It’s entirely scouts honor.

Then again, there is no honor among these wanna be fiscal boy scouts, either. They claim $1.331 trillion of discretionary spending cuts over the 10-year budget window, but only $248 billion of that is due to the enforceable caps for FY 2024 and FY 2025. The remaining 81% is to due the aspirational targets for the out-years that have exactly zero chance of being realized.

In sum, even if you credit $42 billion of 10-year interest savings to the FY 2024-2025 reductions, which are actually only “cuts” from a rising CBO baseline, the total semi-honest “savings” would be only $290 billion over 10 years. That’s just 0.31% of the $80 trillion of total baseline spending over the period.

So, as we said, the GOP has been fiscally castrated. You can’t interpret a total punt on entitlements, a freeze on discretionaries at 53% above the Obama level and a mere one-third of one percent cut in a runaway spending baseline as evidence of anything else.

And that’s especially true when in the first attempt to implement this ballyhooed agreement the Republican House can’t even manage to get out of the starting gate.

Reprinted with permission from David Stockman’s Contra Corner.

The post The GOP Is AWOL On The Fiscal Front Yet Again appeared first on LewRockwell.

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