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Two Weeks To Fix Three Problems - Will Republicans Cave Again?

Tyler Durden's Photo
by Tyler Durden
Sunday, Jan 07, 2024 - 03:30 PM

Authored by Mike Shedlock via MishTalk.com,

Budget problems haven’t changed for a year: the debt ceiling, Ukraine, and the Border. Israel is logically a distinct issue but is lumped with Ukraine. A partial government shutdown looms on January 19.

Shutdown Deadlines

  • January 19: A partial shutdown turns off funding for the departments of Agriculture, Transportation, and Housing and Urban Development.

  • February 3: Complete Shutdown.

  • April 30: This date is in play if there is another clean continuing resolution that punts the decisions further. This is the lead chart, discussed below, in which spending caps will be enforced by sequestration, across-the-board reductions applied to budgetary resources as set by the Fiscal Responsibility Act of 2023.

Statutory Limits on Discretionary Funding

Please consider the CBO letter to the House Chair of the Budget Committee Re: Implementing the Statutory Limits on Discretionary Funding for Fiscal Year 2024

Dear Chairman Arrington and Ranking Member Boyle: At your request, the Congressional Budget Office is providing information concerning implementation of the caps on most discretionary funding for fiscal year 2024 as established by the Fiscal Responsibility Act of 2023 (FRA; Public Law 118-5). The FRA sets separate caps (in law they are called limits) on defense funding (in law, revised security, which is budget function 050) and on nondefense funding (revised nonsecurity, which covers all other budget functions).

Section 101 specifies caps for 2024 of $886 billion for defense and $704 billion for nondefense funding.

Section 102 Caps. CBO estimates that the annualized base budget authority provided by the current continuing resolution exceeds the section 102 defense cap by $10 billion and the nondefense cap by $41 billion. Thus, on April 30, 2024, OMB would be required to cancel 1 percent of sequestrable defense budgetary resources and 5 percent of sequestrable nondefense budgetary resources

Secure the Border Act H.R.2

The House Republican hardline Freedom Caucus wants the Secure the Border Act H.R.2 which passed the House but died in the Senate.

H.R.2 would provide funding for a 900 mile wall, while waving environmental and historical site reviews. It would mean taking property from private landowners, at a price specified by the government, shutting off water access to the Rio Grande for many.

H.R.2 would fast track deportations of minors unaccompanied by parents.

The Hill points out “the bill denies people the ability to claim asylum unless the Customs and Border Protection (CBP) officer who processes them believes their ultimate case would more likely than not be accepted, adds a $50 fee to make an asylum claim and bars migrants from making an asylum claim anywhere but at an official port of entry.”

One of the reasons there is surge of border crossings is the backup at the ports of entry.

The bill provides no path for citizenship for millions of productive immigrants who have been living and working here for years, and it does not mention legal immigration at all. I wonder how we are going to get crops harvested if we simply deport everyone.

Dead on Arrival

H.R.2 is flawed for many reasons. Regardless, like it or not, the bill is dead on arrival, as is.

It will not pass the Senate.

What’s the Real Deadline?

January 19 is less than two weeks away. The real deadline is allegedly February 3.

Since Treasury Secretary Janet Yellen is not incessantly yapping over this, I suspect the real deadline is further away.

Republicans can always punt with another “temporary” and “clean” continuing resolution. And that would not surprise me in the least. It would buy everyone time to avoid budget cuts that would kick in on April 30.

But eventually, it will come down to my long-stated beliefs, expressed below.

Expect More of This for More of That

The Republican hard-line House Freedom Caucus won’t accomplish anything because there is not enough of them and they are not even united on what they want.

Some want funding for Israel but that is conveniently lumped with funding for Ukraine which they generally don’t want.

H.R.2 is a nonstarter. As a result, there will be some Republican holdouts who will not vote for whatever Speaker Mike Johnson concocts with Senate Majority Leader Chuck Schumer.

If any bill passes in the House, it will be with Democrat support. The Freedom Caucus will howl.

The only question is how big this final boondoggle is. There will be more money for defense, more money for Ukraine, and more money for Israel in return for a pittance of money for the wall.

Fiscal Responsibility Act Hoot of the Day

The FRA would cut the defense budget by 1 percent and the nondefense discretionary by 5 percent.

But even that pittance will be too much for Republicans to swallow. They won’t allow any cuts in the defense budget.

Thus, the FRA was cleverly worded to ensure the final outcome would be “more of this in return for more of that”.

The only questions are on timing how fast the Republicans cave in and how many Democrats it takes to pass the final boondoggle.

Continuing Resolution Poll

Debt Ceiling Resolution Poll

Secure the Border Poll

Debt Jumps Past $34 Trillion, $1 Trillion Interest

Data from US Treasury, chart by Mish

Meanwhile please note Debt Jumps Past $34 Trillion, $1 Trillion Interest

The fallback position is not less of anything. Rather, it’s another clean continuing resolution.

A bipartisan majority wants more of this and more of that. So that is what you should expect.

Debt to GDP Alarm Bells Ring, Neither Party Will Solve This

In case you missed it, please see Debt to GDP Alarm Bells Ring, Neither Party Will Solve This

“Neither party will fix the deficits. Neither party will do anything about mounting debt. No one will do anything about anything because the political system is totally broken.” Mish

That’s the message of gold. Bitcoin advocates would say Bitcoin as well.

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