Republican Fiscal Hawks Revolt Against Budget Deal, Suspension Of Debt Ceiling

As more details emerged about today's bipartisan Senate budget deal, which will lift spending caps by $300 billion above the current limit and which prompted today's sharp Treasury selloff, it was revealed that the agreement would suspend the federal debt ceiling through March 1, 2019.

This, together with the generous spending terms which are sure to blow out the US budget deficit even more than recent troubling forecasts such as those from Goldman, which recently predicted  US debt issuance would more than double, rising from $488bn in 2017 to $1,030 billion in 2018...

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... prompted a revolt among GOP conservatives against the massive bipartisan deal, who complained that the GOP could no longer lay claim to being the party of fiscal responsibility.

"I’m not only a 'no.' I’m a 'hell no,'" snapped Rep. Mo Brooks (R-Ala.), one of many members of the conservative Freedom Caucus who left a closed-door meeting of Republicans saying they would vote against the deal.

According to The Hill, one of the Freedom Caucus leader, Rep. Dave Brat (R-Va.), called the budget "a Christmas tree on steroids."

"This spending proposal is disgusting and reckless — the biggest spending increase since 2009," conservative Rep. Justin Amash Mich.) tweeted after the meeting. “I urge every American to speak out against this fiscal insanity."

But the focal issue appears to be the debt hike, which is giving conservatives “heartburn,” said Rep. Dennis Ross (R-Fla.), a member of the GOP vote-counting team.

The swift backlash from fiscal hawks means that Speaker Paul Ryan (R-Wis.) and his leadership team will need dozens of Democratic votes to help get the caps-and-funding deal through the lower chamber to avert a government shutdown set for midnight Friday. At the same time, some Republicans predicted a majority of the majority would back the package.

Opinions were split on the chance of the budget's passage: Former Republican Study Committee (RSC) Chairman Rep. Bill Flores (R-Texas), who said he will probably support the agreement, estimated that about two-thirds of the lawmakers who spoke at the microphones during the closed-door meeting actually voiced support. Meanwhile, Rep. Mark Meadows (R-N.C.), the current Freedom Caucus chairman, predicted that the budget deal will get support from a majority of the majority, but not enough to pass without Democratic votes.

It’s unclear how many Democrats will support the plan without concessions from Ryan, given immigration demands from House Minority Leader Nancy Pelosi who on Wednesday evening concluded an 8 hour filibuster on "dreamer" immigrants.

As reported earlier, just as Senate leaders announced their bipartisan agreement, Pelosi was on the floor threatening to oppose the emerging budget deal without a commitment to consider legislation in the House to protect  “Dreamers.

At the same time, there are a lot of other items in the package that are attractive to Democrats, including money for opioids, disaster aid, more Children’s Health Insurance Program funding, community health center funding and the non-defense spending boost.

“We would need votes coming from both ways,” said Rep. Chris Collins (R-N.Y.). “Pelosi I guess won’t vote for it, but … I do think we will have a number of Democrats that would break.”

Ironically, it’s also possible more Republicans will back the legislation given opposition from Pelosi. GOP Rep. Mark Walker, current RSC chairman, acknowledged in a tweet that the deal is “a struggle for any one with fiscal concerns,” but said he was more inclined to support it "the longer Nancy Pelosi bloviates on the House Floor."

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As described earlier, the deal between Senate leaders Mitch McConnell and Chuck Schumer calls for raising the debt ceiling through March 2019 and busting budget caps imposed by the 2011 Budget Control Act. It would boost funding for the Pentagon and domestic programs by about $300 billion over current levels over the next two fiscal years, but lawmakers said that only about $100 billion of that would be offset.

The Bipartisan Budget Act also calls for an additional four years of funding for a popular children’s health program; $90 billion in additional disaster aid for hurricane-ravaged Florida, Puerto Rico and Texas; billions more to fight the opioid epidemic and funding for community health centers that serve the poor and uninsured.

In short, a debt tsunami.

Many fiscal hawks who were complaining the loudest Tuesday were among those lawmakers who rode an anti-spending, anti-debt Tea Party wave to Washington during the 2010 and 2012 cycles.

Rep. Scott Perry (R-Pa.) described the atmosphere inside the GOP conference room as “tense,” while Rep. Louie Gohmert (R-Texas) said it was “kind of depressing” to think Republicans could be responsible for adding billions of dollars to the deficit when they control all the levers of power in Washington.

“It’s too much money,” Perry said.

Rep. Matt Gaetz (R-Fla.) quipped that fiscal hawks might now be an “endangered species.” Meadows and Reps. Jim Jordan (R-Ohio) and Warren Davidson (R-Ohio) were among the members who stood up during the conference meeting to vent their frustration, lawmakers in the room said.

Retiring Banking Committee Chairman Jeb Hensarling (R-Texas), a close Ryan friend, also railed against lifting the debt ceiling, sources said.

Jordan, a former Freedom Caucus chairman, said earlier in the day that he was disappointed by the tentative deal and expressed surprise that Ryan — who has staked his political career on being a fiscal hawk — would go along with the proposal.


“It’s a terrible deal,” Jordan said. “I never thought Speaker Ryan would be supportive of this … I just never thought the Speaker would go here with these high numbers.”

Speaking to reporters after the meeting, Brooks slammed the deal as a “debt junkie’s dream.”

“I don’t know if we have enough votes amongst the members to stop this legislation,” the outspoken Alabama conservative said. “All I know is that unfortunately those who vote for this bill are betraying our country’s future and they are selling out our kids and our grandkids.

Brooke went on: “I am baffled why the Republican Party has turned into such a big spending party. It is one thing to spend money; it is another thing to spend money you don’t have. No American family can operate that way; no American business can operate that way, and it is folly to believe that the United States of America can operate that way.”

Some defense hawks were also upset over the proposal because of the inclusion of the debt ceiling. Rep. Bradley Byrne (R-Ala.), a member of the House Armed Services Committee, said he was prepared to swallow the spending boost for domestic programs in exchange for the military bulk-up, but he was thrown off by raising the debt ceiling as part of the deal.

Part of Ryan’s pitch to the conference, according to lawmakers who attended, was that the budget deal not only delivers a long-sought-after spending boost for the military, but it also clears the way for an honest debate over immigration if lawmakers don’t have the debt ceiling, the threat of government shutdown and other unresolved issues looming over their heads.

Trump picked up on the defense angle in a tweet on Wednesday afternoon, saying that "the Budget Agreement today is so important for our great Military. It ends the dangerous sequester and gives Secretary Mattis what he needs to keep America Great. Republicans and Democrats must support our troops and support this Bill!"

The irony here is that just on Wednesday morning, Trump was also complaining on Twitter that "good economic news" now make the market go down; what Trump was really complaining about was the rise in 10Y yield - an indicator of an overheating economy spurred in part by his fiscal reform, or excessive debt supply in a time when the Fed is also unwinding its balance sheet - which at or above 2.85% is now officially hurting stocks and other risk assets. To be sure, the Budget agreement will achieve one thing - lead to a surge in US debt issuance, and - by implication - even higher yields, leading to an even steeper drop in the market, not to mention more frequent VIX-flaring episodes.

Eventually Trump will have to choose: a budget deal including sharply higher yields and a slump in the stock market, or keep the equity party going and risk a government shutdown every few weeks. For now, he has picked the former, even if his earlier tweet indicates he doesn't fully understand it just yet.

Comments

Endgame Napoleon hongdo Thu, 02/08/2018 - 11:15 Permalink

On the campaign trail, he said he loved refundable child credits — i.e. bigly cash-welfare paycheck add ons, issued on top of free groceries and subsidized rent for single-earner citizens with custody of kids and legal / illegal alien parents, working part time to stay below the cut off. At the $6,444 maximum for high womb productivity, those refundable child-tax-credit welfare infusions equal 3 months of full-time, earned-only wages for half of the citizens in many states before doubled by the Uniparty.

On the campaign trail, he said he loved that stuff. I just thought his CLEAR emphasis was on ending mass-scale, welfare-buttressed immigration, not on distributing more tax welfare to people who are NOT working hard in reality. They are part-time workers, staying below the earned-income limit for monthly welfare and the cut off for refundable child-tax-credit welfare by NOT working hard.

Brooke is right about the debt-based spending, but wrong about families — whether citizens or noncitizens — not spending money they did not earn. Our economy is now based on the sex-and-reproduction crowd, spending monthly welfare money and child-tax-credit welfare money, often on things like $900 tattoos and beach trips to copulate with boyfriends that have zero to do with child maintenance (as sold).

You can spend your child-tax-credit welfare on beach copulation, when government pays your rent and grocery bills, in addition to handing you monthly cash assistance and electricity assistance on top of not-for-profit family-friendly charity offerings, your measly wages from lackluster part-time work in the many jobs with UN-DIVERSE (98% mom-gang) enployees, untraceable help from the children’s father(s) and help galore from the children’s grandparents that almost all of these “poor” mommas have.

Fake Budget Hawk RepubliCONs eliminated none of the welfare and tax-welfare layers, even for illegal aliens who, like other welfare recipients, drive wages down for the many citizens who must live on EARNED-ONLY income, financing rent that consumes more than half of their monthly income and all other bills on pay ONLY.

The Swamp hates such Americans.

And the ONLY governent spending they [deplore] is the SS that you have paid into at either 7.65% or 15.3% on every penny you ever earned up to the $127,200 cap. The Swamp does not pay into that program on every dime of their $175k pay. 

The Swamp is full of pimps, wanting to boost up the US population by giving out more and more 100% NON-contributory, 100%-free welfare to reward sex and reproduction in increasing amounts per child produced by citizens and noncitizens, and the only thing the RepublCON Fake Budget Hawks go after is the contributory programs of SS and Medicare.

No other programs are even critiqued. 

The recent tax-welfare expansion also benefits a lot of married, part-time-worker moms, taking jobs out of the economy that they don’t need for keeping-up-with-the-Jones’ money, and getting away with a ton of excused absenteeism, just like their single-momma counterparts. 

The reason Swamp Creatures are approving all this debt-financed “stimulus” for womb producers is not because most of the jobs that are being created are full time, yet millions of unrepresented, underemployed US citizens have nothing BUT earned income to live on and must compete with all these welfare-fueled workers who do not need higher pay or more hours due to their Swamp-fed welfare for sex and reproduction. 

In reply to by hongdo

new game hongdo Wed, 02/07/2018 - 19:44 Permalink

 

ya know man, i'm at the point where i just don't care wtf they do anymoar.

beyond any illusion that they can do even the wrong thing. just fuking hopeless...

besides, 20  + trillion can not be paid back. but-but hey, it's only 106 % of gdp lofl.

it will be the usery that will take the nation to the woodshed.

 

In reply to by hongdo

Give Me Some Truth directaction Wed, 02/07/2018 - 21:47 Permalink

Re: Will $3 trillion in new debt make silver and gold go up?

Answer: "Not no, but hell no."

 

The only thing that would make silver fall faster than $3 trillion in new debt is maybe $30 trillion in new debt. $300 trillion? $300,000,000 trillion in new debt would be nirvana for fiat bugs. 

New economic rule/law:

The more fiat is printed, the lower the price of gold and silver.

 

 

 

In reply to by directaction

hooligan2009 Wed, 02/07/2018 - 19:09 Permalink

one day, politicians will rush to cut spending by as much as they have increased it.

something like a 25% across the board cut in spending would do for starters - no exceptions.

call it a patriotic duty

Meat Hammer Wed, 02/07/2018 - 19:10 Permalink

Lol, what the hell does it even matter anymore? 21 trillion, 80 trillion, 300 kagillion. To the moon Alice!

But, seriously... how much military do we need? Are there terrorist penguins in Antartica? Jihadi elves at the North Pole? I knew Santa looked a little shady.

hongdo Meat Hammer Wed, 02/07/2018 - 19:24 Permalink

It matters because it will eventually turn real.  There are many ways to create a virtual environment.  We have been living in a financial virtual environment vice a computer virtual environment.  However as has been noted on ZH by many, when everyone tries to cash out by trading virtual financial chips for real resources, they will find out how tiny the exit is and not who has been swimming naked, but who is on which end of the gun.

In reply to by Meat Hammer

Give Me Some Truth Meat Hammer Wed, 02/07/2018 - 22:20 Permalink

Our military expenditures are only two times bigger than all the other world militaries combined. That's embarrassing. We are so vulnerable. I think our enemies will land first in Pensacola Beach and then swing down from Ontario with yet another thrust into Carmel. Finally, a couple divisions will blitzkreig us through Tiajuana.

We might be able to make a stand in Lincoln - Omaha - some corn field near there. But not with the shitty, inadequate military we have today.

God bless you, Donald for protecting us against the terrifying hun of (pick one: Syria, Afghanistan, Iran, North Korea, Belgium, Nova Scotia, Venezuea, Sudan, Niger).

In reply to by Meat Hammer