Sunday, December 17, 2017

Debt, Deficits, Divided Government and Deja Vu

UPDATED: 12/20/2017
The deficit and debt are unsustainable.
It's easy to understand why Republicans are circling the wagons on the Tax Bill. Given the dearth of legislative accomplishment in the first year of the Trump administration, failure to pass tax reform is truly an existential threat for the GOP.  If a Unified GOP Government can't even legislate every Republican pol's wet dream of tax cuts, then what is the point of the Republican Party?

It's understandable, but inexcusable. The Republican party took control of Congress in 2010 by raising the specter of spiraling deficits and debt, only to support a bill in 2017 that will add trillions of dollars to both.

An understandable vote for GOP partisans? Yes. An inexcusable vote for fiscal conservatives? Yes. And for students of divided vs unified government, unsurprising and completely predictable. The only time our federal government approaches anything that vaguely resembles fiscal responsibility is when the government is firmly divided:

Brag slide from Obama's last SOTU in 2016 - as corrected by The Dividist. 
The Dividist was a deficit hawk in 2006 when we railed against a Big Spending, Big Government, Big Deficit One Party Rule Republican Bush administration that squandered a balanced budget delivered by the Clinton/Gingrich divided government. If you're going to fight a trillion dollar elective war and pile on new trillion dollar entitlements and tax cuts, you better find a way to pay for it. The Unified Republican Government did not.  In the 2006 mid-terms we argued for a straight Democratic vote to divide the government and reel in Republican fiscal insanity.

The Dividist was still a deficit hawk in 2010, after a One Party Rule Democratic Obama administration piled on additional trillions of deficit and debt with a stimulus package that did not stimulate, and an additional trillion dollars of spending to finance Obamacare. We updated James Carville's campaign slogan "It's the Economy, Stupid!" to  "It's the Spending, Stupid!"  In 2010 we advocated for a straight Republican vote to divide the government and reel in Democratic fiscal insanity.

 By 2012, the hoped for Grand Bargain continued to elude our elected leadership, but the divided government at least managed to sequester spending in a compromise that made no one happy, except the Dividist. Still the debt increased, albeit at a considerably slower pace. It was then we embraced the buzzword of the day - "unsustainable" - as in "It's Unsustainable, Stupid".

Which brings us to Senator Susan Collins on Meet the Press - Sunday December 3rd, 2017:

Chuck Todd asked the $20 Trillion Dollar Question:
"Alright, if the debt is unsustainable at $14 trillion, how did you make yourself comfortable voting for something that’s going to increase the deficit - this tax bill? We’re at 20.6 trillion now and the best estimates say it’s going to - even the best estimates of dynamic scoring that we could find - still add half a trillion dollars to the deficit."
The banal hypocritical behavior of both parties switching to diametrically opposite positions from when they are out of power to when they are in power is so commonplace that it is a cliche. But occasionally the parallel hypocrisy is so monumentally stupefying that you just have to sit back and marvel.

In February, 2009 - during the first year of the Obama Democratic Unified Government - the Senate voted 61-37 in favor of the American Recovery and Reinvestment Act (AKA "Porkulus"), with all Democrats voting in favor and all Republicans voting against except for Susan Collins, Olympia Snowe, Arlen Specter and Judd Gregg (who abstained). The House voted 244–188 with no Republican support for the bill. Republicans were outraged at the ~ $1 trillion impact to the deficit / debt and the partisan way Democrats steamrolled a bill that predominantly benefited blue districts through Congress with last minute changes hand scribbled in the margins.

2009 and 2017 [can be played simultaneously]

In December, 2017* - during the first year of the Trump Republican Unified Government - the Senate voted 51-48 in favor of the Tax Cuts and Jobs Act (AKA #TaxScam) with all Democrats voting against and all Republicans voting in favor (John McCain absent). The House voted 224–201 with no Democratic support for the bill. Democrats were outraged at the ~ $1 trillion impact to the deficit / debt and the partisan way Republicans steamrolled a bill that predominantly benefited red states through Congress with last minute changes hand scribbled in the margins.

President Richard Nixon justified his heavy handed economic policies saying "We're all Keynesians now." It's certainly true when either party assumes control of the executive and both legislative branches. Once ensconced in power, both parties want to stimulate the economy with deficits, in the hope that an artificially goosed economy will encourage happy voters to keep them in power. Both major parties do it when we give them all the keys to the castle. They just pursue different means to the same end in order to pay off different constituencies.

Republicans prefer a "Starve the Beast" strategy - cutting taxes in the hope that spending can be restrained later. Democrats prefer a "Feed the Pig" strategy - piling on new spending in the hope that they can increase taxes later to pay for it. Neither works. With either party in unified control of the government, we get an explosion of debt and deficits. The closest we get to and the only hope for fiscal sanity is when the government is divided on partisan lines and the worst ideas of both parties are constrained. 

Note the change in earmark spending after Democrats divided the government in 2006 and Republicans divided the government in 2010:

Perhaps a case can be made for higher deficits when we are in the throes of a depression or recession. Perhaps. But... The economy is growing nicely, unemployment is at record lows, and markets are at record highs. Just ask the President:

In the meantime, our ~$20T debt is racing past 100% of the United States Gross Domestic Product.

What possible justification can there be for more insane deficit spending under these conditions? If we are not going to impose any fiscal discipline now in a benign economy, when will we? Apparently, the answer is: Never. Never F*cking Ever.

A single party is in unified control of the government again, and, as a consequence, we are going to pile even more massive additional debt on future generations again. But we can take the first steps to fixing it again in the 2018 midterm elections, by voting Democratic and dividing the government again.

*UPDATED: 12/20/2017 Edited to reflect the final vote on the final version of the legislation. 

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