Shrinking Greatness of Congressional Budget Cuts
By Staff News & Analysis - April 13, 2011

Tea Party's First Victory … Obama (left) opposes spending cuts right up to the time he calls them historic. This is getting to be a habit. President Obama ferociously resists tax cuts, trade agreements and spending cuts—right up to the moment he strikes a deal with Republicans and hails the tax cuts, trade agreements and spending cuts as his idea. What a difference an election makes. This is the larger political meaning of Friday's last minute budget deal for fiscal 2011 that averted a government shutdown. Mr. Obama has now agreed to a pair of tax cut and spending deals that repudiate his core economic philosophy and his agenda of the last two years—and has then hailed both as great achievements. Republicans in Washington have reversed the nation's fiscal debate and are slowly repairing the harm done since the Nancy Pelosi Congress began to set the direction of government in 2007. – Wall Street Journal

Dominant Social Theme: Wow that was really good. Cutting US$38 billion from total obligations of some US$200 trillion was a big first step – even if a lot of the cutting is turning out to be "smoke and mirrors."

Free-Market Analysis: The Wall Street Journal and other mainstream US financial publications are in full cry about the greatness of the recent historical Congressional budget deal that supposedly reverses decades of spending. It's a kind of dominant social theme in fact: Big Government DOES work. "Elections matter," as Barack Obama famously said. This one, repudiating the Democrats' big spending ways, is leading the nation back to the fiscal conservatism of the earlier 20th century that made it great.

The Wall Street Journal editorial excerpted above basically takes this tack. The Journal is pleased to award a victory to the Republicans. Their determination to put America's economic house in order is most welcomed (even though it conveniently ignores Republican George Bush's spendthrift reign with its serial war making and larger ruin.) In fact, this unsigned opinion piece directly blames Democrats for current US budget chaos.

Now it seems to us that while Barack Obama et. al may be blamable, the larger problems likely have to do with the corruption of the democratic process, the implementation of an American central bank (the Federal Reserve) and political and legislative trends that have gradually eviscerated American society and prudential public management for a century or more. In other words, the issues are way beyond the normal political dialogue. California Governor Jerry "Moonbeam" Brown was recently quoted as saying he believed the nation was more divided than at any point since the Civil War. This may be so.

On the more mundane issue of budget cuts themselves, serious critics are beginning to emerge who point out that many of the so-called cuts touted by Republican House Speaker John Boehner (closely identified with the bill) are book-keeping items. They sound good on paper but actually don't mean anything. Thus the actual reductions in spending are far less than US$39 billion, which itself only shrinks the federal budget by about 1%. Washington Examiner reporter Susan Ferrechio posted an article yesterday that claims that the Republican backlash is growing:

The GOP must push through the 2011 spending bill despite growing opposition from some Republican lawmakers who say it cuts far too little … Many fiscal conservatives, including Reps. Mike Pence, R-Ind., and Jim Jordan, R-Ohio, have both announced they will not back the 2011 plan because it cuts only $38.5 billion, a historic amount for a single-year reduction but about $23 billion less than what Republican lawmakers said was needed to fulfill their campaign pledge to reduce spending to 2008 levels. Jordan … said he expects significant GOP opposition when the 2011 budget comes up for a vote.

Ferrechio suggests that even with a 24-seat majority, it will be Democrats that come to the rescue of the spending plan. She writes that both GOP conservatives and Tea Party legislative freshmen will vote against it, which presumably would be a substantial embarrassment to Boehner who surely wanted to show that he has good relations with the Tea Party firebrands that have swept into office as a result of nationwide frustration with the federal government's spendthrift ways.

Boehner in fact eager to move on to bigger numbers, presumably without the threat of an imminent government shutdown. He would like to simply pass the current budget – even if it doesn't make aggressive spending cuts – and move onto a debate over the 2012 spending plan. This larger discussion will be one involving trillions in savings rather than billions, he maintains.

From the point of view of conservatives, however, if one cannot save a billion, how can one save a trillion? Talk show host Rush Limbaugh may have been of this opinion when he said this past Monday that Boehner hadn't done enough. Chris Edwards of the CATO Institute predicts "a bit of a backlash" from conservatives. Lorie Medina, a leader of the Texas Tea Party, believes the agreement has damaged the GOP going into negotiations over the 2012 budget. "They are setting a precedent with Democrats that they are going to give in, they are going to cave," Medina reportedly said.

She may be right. Boehner may not just have lost credibility as regards his stance as a tough negotiator. He may already have lost precious credibility with Tea Party types that will be impossible to reclaim. Already there is talk of opposing him for re-election. In fact, the real problem may have to do with shutting down government. Boehner is as scared of that as he is of his own Tea Party caucus apparently. So long as he fears it, it is difficult to see how he can be an effective negotiator.

Here's a thought: We do not actually believe that the political process will provide the necessary curative. Even with the best of intentions, Boehner and others working within the system simply don't have the emotional and intellectual frame-of-reference to do what needs to be done. The Republicans generally won't even touch defense spending, which constitutes half of the federal budget year in and year out.

The Tea Party remains the butt of jokes and contempt from the mainstream media, but we would argue that in its various (less tamed) incarnations it is among the most vital forces in American politics today. Portions of the Tea Party can be seen to have been co-opted, but the larger trends of economic dysfunction and military-industrial authoritarianism that created it – and it is essentially a libertarian invention – will be the ones that will continue to drive it forward.

Eventually, we would think there shall begin to be a serious (hopefully peaceful) confrontation with the powers-that-be that have created the current monstrous sociopolitical, economic and military mess. These elites have deliberately implemented mercantilist policies to facilitate global governance (for their own benefit) while bankrupting America and the West itself. Such a confrontation has the ability to change the course of Western civilization and may determine America's fate as a cohesive, republican entity. The current political battles may therefore be seen as a warm-up for something much bigger and more resonant.

After Thoughts

By then perhaps Boehner will be nothing more than a footnote in history. If he wants to avoid that fate he will have to do much better. He will have to realize that he is not strictly speaking involved in a political process anymore and that there are larger forces at work. Given that he IS a politician and very successful one, such an epiphany will likely be beyond him. Too bad. He won't be the only victim of what is likely to take place sooner or later, though he may be among the initially most prominent.

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