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October 28, 2023
Kevin McCarthy’s ouster revolved entirely around budgetary issues, including Ukrainian war funding. In his first floor speech as presumptive House Speaker, Mike Johnson outlined his priorities:
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The skyrocketing cost of living is unsustainable and Americans should not have to worry about how they’re going to feed their family every week because they can’t afford their groceries anymore. Everybody in this room should think about this. Here’s the stats: prices have increased over 17% in the last two years. Credit card interest rates are at the highest level in nearly three decades, and mortgage rates are now at a peak we haven’t seen since 2001. We have to bring relief to the American people by reining in federal spending and bringing down inflation. The greatest threat to our national security is our nation’s debt, and while we’ve been sitting in this room that debt has crossed almost $33.6 trillion. In the time that it’s going to take me to deliver this speech it will go up another $20 million in debt. It’s unsustainable. We have to get the country back on track. Now we know this is not going to be an easy task and tough decisions will have to be made. But the consequences if we don’t act now are unbearable. We have a duty to the American people to explain this to them so they understand it well and we are going to establish a bipartisan debt commission to begin working on this crisis immediately.
Johnson outlined “seven core principles of American conservatism,” including “fiscal responsibility,” two words terrifying to lobbyists. He was then sworn in as the 56th House Speaker and announced:
The chair would take this occasion to note that the Speaker’s announced policies with respect to particular aspects of the legislative process placed in the record on January 9, 2023 will continue in effect for the remainder of the 118th Congress.
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This is where it gets interesting. The January 9 Congressional Record provides a preview of coming attractions:
SEC. 2. CHANGES TO THE STANDING RULES.
(a) INITIATIVES TO REDUCE SPENDING AND IMPROVE ACCOUNTABILITY. —
(1) CUT-AS-YOU-GO. — In rule XXI, amend clause 10 to read as follows:
‘‘10.(a)(1) Except as provided in paragraphs (b) and (c), it shall not be in order to consider a bill or joint resolution, or an amendment thereto or a conference report thereon, if the provisions of such measure have the net effect of increasing mandatory spending for the period of either — ‘‘(A) the current year, the budget year, and the four fiscal years following that budget year; or ‘‘(B) the current year, the budget year, and the nine fiscal years following that budget year.
‘‘(2) For purposes of this clause, the terms ‘budget year’ and ‘current year’ have the meanings specified in section 250 of the Balanced Budget and Emergency Deficit Control Act of 1985, and the term ‘mandatory spending’ has the meaning of ‘direct spending’ specified in such section 250 except that such term shall also include provisions in appropriation Acts that make outyear modifications to substantive law as described in section 3(4)(C) of the Statutory Pay-As-You-Go Act of 2010. . . .
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(3) POINT OF ORDER AGAINST AMENDMENTS TO APPROPRIATIONS BILLS INCREASING BUDGET AUTHORITY. — In clause 2 of rule XXI, add at the end the following new paragraph:
‘‘(g) An amendment to a general appropriation bill shall not be in order if proposing a net increase in the level of budget authority in the bill.’’ . . . in the bill.’’ . . .
(4) LIMITATIONS ON INCREASES IN DIRECT SPENDING IN RECONCILIATION INITIATIVES. — In rule XXI, amend clause 7 to read as follows:
‘‘7. It shall not be in order to consider a concurrent resolution on the budget, or an amendment thereto, or a conference report thereon that contains reconciliation directives under section 310 of the Congressional Budget Act of 1974 that specify changes in law such that the reconciliation legislation reported pursuant to such directives would cause an increase in net direct spending (as such term is defined in clause 10) for the period covered by such concurrent resolution.’’
The enumerated policies are far too extensive to reproduce here. McCarthy’s failure to uphold them led to his ouster. Especially note on page H57:
Initiatives to Reduce Spending and Improve Accountability.
Subsection (a)(l) replaces current ‘‘pay-as-you-go’’ requirements with ‘‘cut-as-you-go’’ requirements.
Now in the final stages of a decades-long inflation, our economy is exceptionally fragile. Federal spending accounts for 24.2% of GDP. The more it is cut, the greater the short-term negative impact on economic activity. The massive Bidenomics deficit spending, including the Inflation “Reduction” Act, constituted a desperate effort to postpone the inevitable. Credit is contracting, the first step toward a deflationary death spiral. The Federal Reserve’s continuing efforts to control inflation by tightening credit contributes to this inevitably. The federal budget will be slashed, one way or the other. This can be accomplished through the political process and/or by financial markets. The latter occurred in 1980, when bond vigilantes restored sanity.
If Johnson followed a difficult path ascending to the speakership, that is a cakewalk compared to the fight to curtail Congress’ spending and debt addiction. Two factors propelled Johnson’s ascension to Speaker. 1) The reformist block was adamant they would not budge. Only by uniting with Democrats could the RINOs prevail. That was a non-starter, suicidal for RINOs with GOP voters. 2) The massive pressure the MAGA base applied to individual House members over the three weeks this drama played out. As Heraclitus observed 2,500 years ago: every animal is driven to pasture with blows. Realizing they were cornered, RINOs were herded into the unanimous vote electing Johnson as Speaker.
With a President and Senate now firmly under Deep State control, Johnson’s likelihood of success seems remote. That could change, depending on market forces and the potential for domestic terrorist attacks to shift the political dynamic. History establishes that democracies are innately fragile, enduring but a couple of centuries. Their usual demise is via the temporary stimulus provided by inflation. Once that party ends, economic reality intrudes and the party in power gets blamed. This occurred in 1932 with Hoover, or in 1980 when Carter played the scapegoat. With the Middle East on fire, we are entering a period of political danger for not only Democrats, but Republicans as well. The blame for current economic conditions now hangs around Biden’s neck. The less Johnson’s fiscal initiatives succeed, the better for Republicans in the long run. A debt commission keeps the spotlight where it belongs — on Biden’s planned chaos. If Biden vetoes House bills slashing spending, he drags his party down with him.
Legislatures in democracies are typically loath to curtail spending/debt orgies. The public demands bread and circuses. However, there is now so much fat that substantial savings could be realized without having to touch third-rail sectors such as Social Security or Medicare. With the House highlighting impeachment and debt, the coming months should be entertaining. With Johnson’s soft touch and civility, we may see a good cop/bad cop routine featuring him and Trump.
Douglas Schwartz blogs on politics, history, and economics at The Great Class War.
Image: House of Representatives
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