Tuesday, July 23, 2019

Committee for a Responsible Federal Budget: New budget “may end up being the worst budget agreement in our nation’s history”

By Robert Wenzel

Congressional and White House negotiators have reached a budget deal. Crony America is celebrating.

The deal announced Monday evening would increase spending caps by $320 billion relative to the limits prescribed in the 2011 Budget Control Act.

It also would suspend the debt ceiling and permit more government borrowing until July 31, 2021 -- after the next presidential election.

The Spendocrats cheered.

 Speaker Nancy Pelosi and Senate Democratic Leader Chuck Schumer said in a joint statement:
Importantly, Democrats have achieved an agreement that permanently ends the threat of the sequester.  We are pleased that the Administration has finally agreed to join Democrats in ending these devastating cuts, which have threatened our investments to keep America Number One in the global economy and to ensure our national security.  With this agreement, we strive to avoid another government shutdown, which is so harmful to meeting the needs of the American people and honoring the work of our public employees.
Democrats are also pleased to have secured robust funding for critical domestic priorities in this agreement.  Democrats have always insisted on parity in increases between defense and non-defense, and we are pleased that our increase in non-defense budget authority exceeds the defense number by $10 billion over the next two years.
The out of control spending in this deal is so outrageous that the street hustler president had trouble coming up with strong spin.

The best he could come up with in his two tweets on the spending was that is was a "real compromise" that it was a "big victory to our Great Military and Vets!"

Yes, a wonderful "compromise" to shrink government, more military spending matched by Nancy Pelosi led domestic spending.

The former Office of Management and Budget director under President Reagan, David Stockman got  it right in his tweet reaction:
David Stockman@DA_Stockman

And a huge kick in the ass to taxpayer!. A disgusting display of fiscal recklessness, duplicity & stupidity.With a $1T deficit after a record 121 mo. expansion, you're busting the caps by $320B to gorge the Pentagon & the domestic pork barrel with waste. goo.gl/iGRxVD  

Combover man is currently on pace to increase discretionary spending by an average of nearly 4 percent per year.

This is what the debt situation looks like before the spending increase.

So how will this increase in spending be paid for?

I explained that in Monday morning's EPJ Daily Alert:
Trump is muscling the Fed to cut rates, don't for a minute think he won't push the Fed to monetize a big chunk, if not all, of the new debt that will be created because of this deal.
It is just difficult to think of a way, this doesn't all explode in terms of upside price inflation at some point. With every development I see, my expectation for what level price inflation will hit keeps climbing. At first, my take was 3% and then climbing to 5%. Now, I am thinking 3%, then 5% and then 7%. 
Capitol Hill leadership hopes to pass the deal before Congress leaves for its August recess.

Robert Wenzel is Editor & Publisher of EconomicPolicyJournal.comand Target Liberty. He also writes EPJ Daily Alert and is author of The Fed Flunks: My Speech at the New York Federal Reserve Bankand most recently Foundations of Private Property Society Theory: Anarchism for the Civilized Person Follow him on twitter:@wenzeleconomics and on LinkedIn. His youtube series is here: Robert Wenzel Talks Economics. More about Wenzel here.

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