January 17, 2019

$1.1 trillion budget deal doesn’t change fiscal cliff

Photo: Jacquelyn Martin/AP

Photo: Jacquelyn Martin/AP

TAMPA, January 15, 2014 – The Associated Press reported today that Republicans and Democrats are ready to support a $1.1 trillion spending bill that would fund the federal government through its current fiscal year, which ends September 30, 2014. Citing a perceived mandate from voters to put aside their differences, Congress largely abandoned the superficial cuts remaining from sequestration.

Those widely reported “cuts” weren’t really decreases in spending. They were merely promises to increase spending less than planned.

Out in the real world, when an employee making $18.00 per hour gets a 5% pay cut, his new hourly wage is $17.10. That’s not how it works in Washington, D.C. When a federal program funded at $3 billion in 2013 is “cut,” it’s funded for $3.1 billion in 2014 instead of $3.2 billion.

What have been called “draconian cuts” and “gutting the military” by hysterical politicians and media are, for the most part, increases in spending that beneficiaries deem inadequate. Now, even that infinitesimal restraint is gone.

Depending upon which poll one cites and the wording of the questions in it, there is some evidence that the public was unhappy with last autumn’s government shutdown and desires more “bipartisanship” in Congress. Representatives on both sides of the aisle were eager to comply in an election year.

“There’s a desire to show people we can do our job,” said Rep. Mike Simpson, R-Idaho.

However, no poll attempts to separate net taxpayers from net tax collectors. It shouldn’t surprise anyone that the latter group would be unhappy with any interruption in government spending. A poll exclusively querying the former group may have yielded far different results.

Regardless of how any part of the public feels about federal spending, it is going to be cut dramatically. The fiscal realities that prompted sequestration and the shutdown have not gone away. Playing nice in Congress hasn’t changed that.

The federal government can only service its $16 trillion debt while its interest rate remains artificially low. The Federal Reserve has attempted to keep it near zero since 2008. It has only been successful because other buyers of federal debt have continued to buy while the Fed has pumped liquidity into the economy with its own purchases.

Should China, the Fed or any other buyer of federal debt cease or even significantly decrease its purchases, interest rates will begin to rise.

When interest rates rise on home mortgages, it hurts. When interest rates rise on $16 trillion, chaos ensues.

According to the White House’s fiscal year 2014 Budget proposal, interest in fiscal year 2013 was $220 billion or 6.2% of all federal spending. That was with interest rates below one half of one percent. It doesn’t take a Nobel Laureate to imagine what happens if the rate begins creeping up to the modest 3-6% levels of the last decade, much less the double digit rates accompanying the crises of the late 1970’s and early 80’s. Annual interest due on federal debt would increase hundreds of millions of dollars.

That would amount to de facto cuts in federal spending on everything else. We’re not talking about make believe “cuts” where spending is still more than the year before. We’re talking about hundreds of billions of dollars less available to spend than the year before. We’re talking about cuts.

Increasing tax revenues isn’t the answer because taxes revenues are already maxed out. The only real debate left on tax rates is whether the top rate on the wealthiest should be 33% or 39%, which is inconsequential to the debt problem. If tax rates are raised significantly overall, revenues go down. That’s already been proven.

So, the federal government tiptoes forward on a fiscal tightrope, dependent upon a set of artificially-created conditions that could change at any time. An overpriced stock market could crash on its own. China could decide to cease or decrease its debt purchases. A natural disaster could occur. Any of these could start the dominoes falling towards higher interest rates, recession for the economy and an unserviceable federal debt.

Even if none of the above occur, the end is inevitable. If printing money to buy your own debt were sustainable, the government could legalize counterfeiting and everyone would be rich. Sooner or later, economic reality will assert itself and the United States will be forced to consume less than it produces. The only question on federal spending is whether it will decrease due to a deliberate act of Congress or the way Greece’s did.

The current budget deal may provide an answer.

Tom Mullen is the author of A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

>A Century of Bipartisan Tyranny

>“Americans are tired of partisan bickering. They are looking for their representatives in Washington to put partisanship aside and get to the work of the American people.”

Statements like this have become a mantra over the past few decades. Like Democracy, “Bipartisanship” is now held up as an ideal and an end in and of itself. It would seem that no matter how ludicrous or destructive a policy might be, it must be just and beneficial if both major political parties agree that it should be law. Implicit also in this reasoning is that a truce between the two rival gangs in Washington, D.C. on any particular issue represents the consent of the governed for that policy – a fallacy that is becoming increasingly exposed as the American people begin to take to the streets.

The first question that comes to mind when hearing the bipartisan mantra is “who are these Americans that are tired of partisan bickering?” I haven’t been able to find any of them. In my own experience, Americans seem to be divided into two groups. The first and largest has no idea what their representatives are doing or what they stand for (or even who they are in many cases). They have no interest in the political process and regard any broach of the subject as in slightly bad taste. The second, smaller group is rabidly partisan; they will back whichever side they associate themselves with no matter how wrong their side might be on a particular issue and attack the other side no matter how right it might be. They associate left or right with issues that largely do not affect them, like gay marriage, abortion, or stem cell research, while entirely failing to evaluate either party on its core purpose: to secure their unalienable rights to life, liberty, and property.

Reality aside (a prerequisite for politics in Washington), this mantra is repeated ad infinitum at every opportunity. Whenever the two parties reach some dubious consensus, as they currently have on Keynesian economics, we have to endure the typical gloating about how “Republicans and Democrats came together in a bipartisan manner” to “get the work of the American people done.” There is the implication that these parasites somehow made some sacrifice in putting aside their differences to agree upon what usually amounts to another scheme to loot more of the American people’s rightful property. In reality, the destruction of our republic that has occurred over the past century has been completely bipartisan.

While one can find examples of these two parties collaborating against us every single day, let us consider some of the more egregious milestones over the past century and what part both parties played in each.

The seminal moment was, of course, the bloodless coup of 1913. During the first year of the Wilson administration, the federal government established the income tax, the Federal Reserve System, and passed the 17th Amendment. All of these changes were indicative of the change of philosophy in Washington about the role of government. No longer was the government’s purpose to secure individual rights, as the Declaration of Independence said it was. Instead, the role of government was now to achieve societal goals of social and economic equality and a world safe for democracy – all at the expense of individual rights.

We associate these ideas and these changes with Woodrow Wilson, but the “progressive movement” certainly did not start with him. In fact, it was Republican Theodore Roosevelt that began the assault on free enterprise with his “trust-busting” and other incursions into the markets that set the stage for Wilson. Remember also that Wilson was only able to get into the White House with 42% of the popular vote because Roosevelt jumped into the 1912 election on the Progressive ticket. Why did he challenge his former protégé William Howard Taft? He did so because Taft turned out not to be progressive enough – especially in withholding support for a central bank. The bloodless coup of 1913 – which planted the seeds for the destruction of the American Republic – was a completely bipartisan effort.

Moving forward a few years, let us look at the next massive move away from liberty – the New Deal. Here again history grossly distorts reality in characterizing Democrat FDR’s policies as diametrically opposed to those of his Republican predecessor, Herbert Hoover. Ironically, Roosevelt the Democrat actually ran on a platform criticizing Hoover’s policies as fiscally irresponsible. However, just like the Obama bailout/interventionist policies of today, much of FDR’s “New Deal” was merely an expansion of the policies of his Republican predecessor. By the time that FDR took office, Hoover had already worsened the depression with his own bailout program via the Reconstruction Finance Corporation, set up a Public Works Administration to
expand federal public works, created the Home Loan Bank discount system to reflate the deflated housing bubble, and perpetrated other crimes against free enterprise and property rights that FDR would merely expand upon. To be fair, FDR made much more fundamental changes in establishing Social Security and the vast regulatory system that continues to strangle our economy and violate our rights, but the underlying philosophy was shared by both Hoover and FDR. Therefore, score the Great Depression and the resulting destruction of liberty as another great victory of “bipartisanship.”

Let us move on to the next fundamental shift – Lyndon Johnson’s “Great Society.” It was during this administration that the other of the two entitlement giants that will eventually bankrupt America was born – government-provided healthcare under Medicare and Medicaid. Johnson actually pursued his “War on Poverty” and other “social reforms” at the same time as he tried to prosecute a permanent war in Viet Nam. This was the infamous “guns and butter” philosophy that led directly to the collapse of the U.S. dollar and the rampant stagflation of the 1970’s.

Again, conventional wisdom or perhaps intentional spin characterizes these destructive policies with the “big government Democrat” Johnson, but he did not emerge out of a vacuum. History seems to have forgotten that it was the Republican Eisenhower that created the massive Department of Health, Education, and Welfare within the federal government, setting the stage for federal government involvement in healthcare. Similarly, the Republican Nixon ran on a platform to end the Viet Nam war, but managed to take almost six years to do so, while assaulting free enterprise himself with wage and price controls to address the inflation that he helped perpetuate with his own spending on top of Johnson’s. In retrospect, it is clear that both the “Great Society” and the “guns and butter” disasters were completely bipartisan efforts.

This brings us to the present. Another depression is upon us, and the similarity of the Bush/Obama dynamic to that of Hoover/Roosevelt couldn’t be more striking. Again, we have a Republican president that is criticized for being “too laissez faire,” when in fact he was a massive interventionist both before and during the crisis. Just as in 1933, we have a new Democratic president that is merely continuing or expanding the interventionist policies of his Republican predecessor, yet is credited for bringing some ill-defined “change” to Washington. Like FDR, President Obama seems intent upon using the crisis to make even more fundamental changes to American society – among them universal government healthcare – that will further destroy our liberty and prosperity. However, whatever destruction Obama brings upon our Republic can only be seen as the result of a completely bipartisan effort. Clinton and then Bush created the crisis with their policies encouraging home ownership at the expense of responsibility and property rights (remember the loans were guaranteed with other people’s money through Fannie Mae and Freddie Mac), and Bush and Obama responded to it with further violations of property rights that turned it from a recession to a depression. Score another “victory” for bipartisanship.

The fact that any substantive difference between the two parties is an illusion was never more apparent than during the last presidential campaign. It astounds me how anyone could have perceived any difference in the platforms of these two candidates. By the time he was nominated, Obama had completely abdicated his anti-war position, now campaigning that America is merely in “the wrong war,” and that he would get us into the right one. For both candidates, the vast overseas military empire was going to grow. In addition, both candidates supported the bailouts, more intervention into the economy, more regulation on commerce, and even the idiotic idea that American young people are somehow obligated to do slave labor for their government (yes, McCain also supported a “national service” plan – a fact the right has conveniently forgotten).

The similarity of these positions is rooted in a similarity of philosophy shared by both parties. In contrast to the most important of our founding principles – that the rights of the individual are unalienable and cannot be taken away – not even by majority vote – both of our political parties believe that the state and the state’s needs take precedence over the rights of the individual. After a weak appeal to traditional Republican rhetoric about individual liberty, John McCain went on to advocate a philosophy at least as collectivist as Obama’s, continually appealing to Americans to sacrifice the pursuit of their own happiness for a cause “greater than themselves.”

Likewise, Obama continually reminded Americans that they had a duty to “service and sacrifice.” Like most of his platitudes, he never answered the most crucial questions. Sacrifice What? For Whom? Allow me to answer them now, on behalf of both Obama and McCain. “Sacrifice your individual rights, especially the hard-earned fruits of your labor, for the needs of your country – “country” and “government” being synonymous for both of them.

It should be abundantly clear that the left-right, Republican-Democrat dichotomy that we have been divided by over the past century has been one, vast Jedi mind trick. Over and over, the political ruling class has divided us with acrimony over meaningless, fringe issues while the two parties have consistently collaborated to loot our wealth, rob us of our liberty and dignity, and transform American society from one built upon self-reliance, personal responsibility, and the rule of just laws to one built upon dependence, fear, and legal plunder. It is past time for a third party movement. It is time for Americans to reject the paradigm of political party altogether. The answer to the problem of political gangs using the brute force of government to rob its people is not to form a rival gang and try to compete for or share in the plunder. The answer is to dissolve the two rival gangs and replace them with nothing.

As Americans, we have it in our power to do this in just eighteen short months. As Thomas Paine put it, “We have it in our power to begin the world over again.”[1] What is imperative is that we do not allow ourselves to fall for the same trick that has been played upon us in the past. We cannot continue to vote one political party out and vote the other one in and expect any substantive change. Instead of succumbing to voting for the lesser of two evils, I would suggest a third alternative. We can select representatives from among ourselves, affiliated with no political party and committed in writing to what most Americans truly want – a government that protects their life, liberty, and property and otherwise stays out of their lives.

No special training is needed for this job. If there was any illusion that the members of the entrenched political class in Washington, D.C. possess some special skills that make them more qualified for the job than average Americans, their performance over the past year and a half should have dispelled that falsehood completely. Not only are they not qualified for leadership, but they are beholden to interests that conflict with the interests of their constituents. There is absolutely no way we can improve our lot while they remain in power.

Americans are waking up to this. The consistent message from the recent Tea Party protests, despite media spin in contradiction to observable reality, was that Americans are fed up with BOTH Republicans and Democrats. While these events were characterized by media outlets on the left as “right-wing extremist” rallies, one need only watch video of Republican Gresham Barrett’s reception in Greenville, South Carolina, where attendees booed and even turned their backs upon him, to see that this couldn’t be farther from the truth. I doubt that Mr. Barrett will be returning to Washington after the next election. One down, 534 to go.

Eighteen months. During that time, let us not forget the outrage that has driven us to the streets. Let us remember the BIPARTISAN destruction of our Republic over the past century. Let us remember that there is no way to restore our republic while these rival gangs remain in power. We do not need violence – our founders gave us an easier method. In eighteen months, let us demonstrate that we are no longer fooled by the left-right, Republican-Democrat illusion. In eighteen months, let us once and for all throw ALL of the bums out. Instead of a third party, let us replace them with representatives of the only legitimate special interest – We the People.

[1] Thomas Paine Common Sense (1776)

Check out Tom Mullen’s new book, A Return to Common Sense: Reawakening Liberty in the Inhabitants of America. Right Here!

Home