Copy of AFF Sentinel V21 #55-D. C. Circus Can Be Educational & Entertaining
- Steve Dittmer
- Jul 22
- 4 min read
This Week’s Action Showed Things Could Be Different
Steve Dittmer | AFF Sentinel
Colorado Springs, CO
Originally sent to subscribers 12/21/24
The circus in Congress this past week on the debt ceiling bill has been very educational.
First, the gargantuan first debt ceiling bill of 1,547 pages of mostly pork (sorry pig producers) instead of a spending extension for three months was ridiculous. Trump, Elon Musk and conservative members raised so much hell the bill died. We can’t recall that happening before.
Fantastic.
That alone was a sea change in normal, end-of-year Congressional behavior. If it looks like an omnibus and quacks like an omnibus, it is an omnibus.
The second bill was much better but had some items, including removing the debt ceiling completely, that people weren’t ready to just pass without discussion. That one didn’t fly either.
So the third bill, which was a bill of immediate necessities -- extending government spending authority until March 14, disaster relief for hurricane victims and farmers and extending the Farm Bill until next fall -- passed. And it didn’t contain hundreds of extraneous elements.
But it was a revealing look at how different it might be in Washington, now that the majority of people have spoken. And we use the word “majority” specifically, rather than saying the “people” have spoken. Because we must keep in mind that there are millions of people who don’t agree and their Democrat members will fight for more government intervention, not less. Not that there aren’t Republican members who will go along with them.
But while Democrats were mouthing disparaging comments about President-elect Trump and Elon Musk opposing the “bipartisan” first bill, they were further revealing how out of touch with the majority of Americans they are. Americans don’t care whether there are people in or out of government decrying increased spending. They just want to cut, cut, cut not add, add, add.
Even among liberal Democrats, there is some support for cutting wasteful spending. It just depends on each person’s definition of “wasteful” spending. But we may have reached the point where more members of Congress have heard from those struggling to afford necessities, much less any “luxuries,” to redefine what wasteful is and what we absolutely need the federal government to be doing.
The difference now: Congressional members cannot count on going into the rotunda and telling the media what is going to happen and having them regurgitate their message. Now that the people have spoken by electing Trump, they will hold members accountable if they don’t work with him. People have finally figured out the general media has been misleading them. If members don’t fall in line on cutting spending, they will NOT get re-elected.
David Asman, from Fox Business, reminded us on Larry Kudlow’s radio show, that there has been a 48 percent increase in tax revenue -- $1.5 trillion -- from the Trump tax cuts. Problem is, the bean counters in D.C. count tax cuts as a “cost,” subtracting from revenue. The CBO doesn’t understand dynamic economies. That’s where Trump’s ask for getting rid of the debt ceiling comes from. The bean counters would oppose tax cuts as pushing the U.S. over its debt ceiling.
Pollster John McLaughlin told Kudlow that regulations are really taxes and when the government cuts regulations, it boosts not only growth but the productivity of peoples’ work.
Of course, the Democrats counter with their opinion that Republicans tax cuts are only for billionaires and that Republicans want to cut Medicare and Social Security, McLaughlin said.
We would add, per for example, the government employees’ union’s statement, that cutting government and regulations and regulation enforcers cuts jobs and they will oppose that.
Having spent time in government and observing from the outside for much of his life, commentator Larry Kudlow has been saying for weeks that the Republican leadership’s plan of doing two or three reconciliation bills in 2025, with the tax provisions in the second half of the year, is all wrong. The circus this past week couldn’t have been ordered up to better illustrate the danger in this approach any more brightly.
The new Administration and Congress must juggle a lot of balls in the air right away. And the planning and fast nominations for cabinet level appointments show they want to begin quickly.
But putting several reconciliation bills through with the tax bill later could be residual naivete on the part of the new Administration and Republican leadership. No one wants to argue tax cuts vs. border control but much of border fixing could be started by Trump reversing many of Biden’s executive orders on Jan. 20th.
Grover Norquist of Americans for Tax Reform pointed out that reconciliation bills can’t change laws but they can make costs go up or down. Reconciliation tax components will not be fast or easy but they need to get started right away. If the Republicans don’t get tax cuts and its effects right away, that could pose a real risk of losing their slim House majority at midterm time.
There was also interesting discussion regarding the Fed and it cutting interest rates again.
Many experts felt the Fed was jumping the gun in cutting rates in September. Commentator John Carney pointed out that the Fed has estimated that inflation will continue at roughly 3.5 percent for all of 2025. That doesn’t show that inflation has been tamed to the Fed’s supposed two percent target.
So why are they cutting rates again in December? Carney posits that the September rate cut was politically motivated and the December cut was added to make it look less like the September rate was political.
This from the same Fed that said inflation was “transitory” well into Biden’s term. Nancy Tengler, investing partner of Art Laffer, added that not only is the Fed wrong but they refuse to admit being wrong.
The bad part is that Trump could inherit Biden’s inflation because of the Fed’s move.
We need growth on the supply side of the economic equation along with spending cuts in order to reduce inflation and boost the economy. A fast start is what we need and this week’s circus showed that it won’t be easy but it can happen.
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