Budget Agreement Fiasco: Will the Real Republicans Please Stand Up?

Mish

A Senate budget agreement raises spending $300 billion over 2011 limits. Military spending jumps $80 billion.

Senate leaders reached a Two-Year Budget Deal with huge goodies going to more military waste.

Congressional leaders said Wednesday they have reached an agreement on a two-year budget deal, charting a path out of the long-running turmoil over spending and immigration that culminated in a government shutdown last month.

The agreement raises federal spending by almost $300 billion over two years above limits imposed by a 2011 budget law. If approved by the GOP-controlled Congress, the deal would mark the triumph of defense hawks, who have pushed for higher military spending, over the dwindling number of conservatives focused on reducing the federal budget deficit.

The budget deal would raise military spending by $80 billion through the rest of fiscal year, which runs through September, and by $85 billion in fiscal year 2019, according to a congressional aide familiar with the agreement.

Congressional leaders also agreed to raise nondefense spending by $63 billion in this fiscal year and $68 billion the following year, according to the aide, addressing demands from Democrats, who had pushed for boosting domestic spending.

“After months of legislative logjams, this budget deal is a genuine breakthrough,” Senate Minority Leader Chuck Schumer (D., N..Y.) said on the Senate floor.

Will the Real Republicans Please Stand Up?

The real republicans cannot stand up for one simple reason: There aren't any and haven't been any for decades.

Perhaps "any" is too strong a word, perhaps not. It's easy for a few legislators to pretend to object when their votes are not the deciding ones.

Compromise in Washington has always been you give me goodies and I'll give you goodies, with the deficit forever soaring out of control.

Currency Crisis Coming Up

A currency crisis is baked in the cake.

When?

That's the tough question. The party can continue as long as other central banks in the world play along. There is no evidence of firm policy in Japan, China, the UK, or the EU.

Sure, QE is starting to roll back, until the next recession when QE and deficits expand universally. With so many countries playing along, a crisis can start anywhere.

Don't expect the dollar to blow up over deficits, because it won't until, like the VIX, it does. I still expect a currency crisis will hit elsewhere first.

Mike "Mish" Shedlock

Comments (22)
No. 1-22
Ambrose_Bierce
Ambrose_Bierce

When potus said he wanted a shutdown, you knew the fix was in

Jcbl
Jcbl

I am to old to be surprised by this outcome but I can at least continue to be disappointed. I've said for years that the only differences between the Republicans and the Democrats lie in the nature of the big government they would support. Neither will ever act to control to government or heaven forbid try to make it smaller

Bam_Man
Bam_Man

Didn't Bill Clinton say "The era of big government is over." 25 years ago?

Bam_Man
Bam_Man

I guess it was "over" and then came back.

CautiousObserver
CautiousObserver

Money Magazine, July 1973:

“Most people have the same philosophy about taxes,” says Senator Russell B. Long, who has heard all the variations during seven years as chairman of the Senate Finance Committee, which handles tax legislation. Long puts that universal theme to verse:

Don’t tax you,
Don’t tax me,
Tax that fellow behind the tree.

stillCJ
stillCJ

Editor

I am always reading stories about the waste & fraud in the military budget, but nothing ever seems to be done about it. If the waste & fraud was ever corrected they would not have to keep wasting more & more all the time.

jiminy
jiminy

This is right out of the Reagan playbook.

Jojo
Jojo

Military needs a parade to celebrate! Coming right up!!

SweetKenny
SweetKenny

If countries are going to give the US money for free and there's no way out, why not milk them? /s

El_Tedo
El_Tedo

What IS a real Republican, anyway? This is what they are, unfortunately.

Bam_Man
Bam_Man

At least we taxpayers will get a parade out of it.

Realist
Realist

As a foreign observer, it became apparent long ago that this is the difference: Democrats tax and spend; Republicans borrow and spend. Trump is a newer entity: borrow, spend, and then declare bankruptcy.

aqualech
aqualech

Frankly, I am tired of paying for all of those drones and bombs. I do not feel any safer for all of that,

Stuki
Stuki

“…and then declare bankruptcy.”

Fat chance the idiot is even capable of figuring that one out.

Even sadder, it doesn’t look like the well indoctrinated, uncritical dunces whose scripted role in the farce is simply to stand around and cheer in between doing slave labor to pay “their” debt, will figure it out, either. Instead continuing to waste their little lives, uncritically believing the drivel their massas are feeding them, and that they and massa comprise some sort of “we.”

George_Phillies
George_Phillies

What Republicans? The only way a real Republican Congressman can stand up is to rise from the dead.

killben
killben

Mish,

For me, this exhibition from the markets last week showed how fragile the system is and how fast it can break (as someone said it can come down like the twin towers). The system seems so dependent on the cenral banksters. It is likely that Bullard's speech coincided with the 700 points move from 2 pm onward on Tuesday.

The central banksters by constantly pandering to the markets have now allowed the system to become so fragile that it needs handholding every time it sneezes. Since it is unlikely this can be done forever, while we cannot say when the system will blow up, do you think it is now possible to get out of this without a market holiday at some point in time?

2banana
2banana

I guess you were not paying attention under obama. Obama added more to the deficit than ALL other previous administrations combined and accounting for inflation.

Democrats TAX, BORROW and SPEND.

2banana
2banana
(deleted message)

Well, at least get you facts straight:
Spending on entitlements: 62% of the US Budget
Spending on Defense: 15% of the US Budget
Proposed spending on a southern border wall: 0.6% of the US Budget

https://en.wikipedia.org/wiki/Expenditures_in_the_United_States_federal_budget#/media/File:CBO_Infographic_2016.png

RonJ
RonJ

"There is no evidence of firm policy in Japan, China, the UK, or the EU." Control+Alt+Print seems to be the policy. Japan just said it would buy up as much debt as needed.

RonJ
RonJ

"Senate leaders reached a Two-Year Budget Deal with huge goodies going to more military waste." The Fourth Turning. Fourth quadrant of an 80 year cycle. Fourth Turning war. 80 years ago was WW2. 80 years before that was the American Civil War and 80 years before that was the American Revolutionary War. Global debt is 230+ Trillion dollars. There is a lot of sabre rattling going on within an unsettling global economy. The last 3 Fourth Turning wars were major events in American history, with the U.S. coming into the current 4th T as the global empire. Having peaked, that empire is now being challenged.

CautiousObserver
CautiousObserver

One thing seems likely: a rapidly growing need for US Government financing is going to put upward pressure on interest rates as they try to place all that new debt. To the extent the Fed steps up as a buyer to control upward pressure on rates, they are going to put more upward pressure on inflation. This is beginning to remind me of the 1970s.

An excerpt from Investopedia “The Great Inflation of the 1970s:”
In public and private Nixon turned the pressure on Burns (Fed Chair). William Greider, in his book "Secrets of the Temple: How the Federal Reserve Runs The Country" reports Nixon as saying: "We'll take inflation if necessary, but we can't take unemployment." The nation eventually had an abundance of both. Burns, and the Fed's Open Market Committee which decided on money creation policies, soon provided cheap money.

I can easily imagine President Trump appealing to Powell in the same way that Nixon appealed to Burns.

theplanningmotive
theplanningmotive

The December tax cuts have bankrupted an indebted country. Now looking at a tripling of budget deficit to 2009 proportions after interest rate hikes fells the economy. Wonder who Trump is going to blame.


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