‘We Should Spend Less Than This Year,’ Speaker McCarthy Asserts
Schumer turns quiet as a mouse.
The beat goes on concerning debt ceiling negotiations between President Biden and Speaker McCarthy, as they took potshots at each other over the weekend. Apparently, though, they were scheduled to take in a drive-in movie together in the White House at 5:30 p.m. Monday. That drive-in movie part is a joke, but they are scheduled to meet.
My great hope is that Mr. McCarthy holds the line on the Republican plan to cut almost $5 trillion over 10 years using budget caps, plus work requirements, plus permitting reform — at a minimum. The GOP House has the only plan to raise the debt ceiling. It’s the only game in town, and it should be the baseline for all negotiations.
The Senate Democratic leader, Charles Schumer, is suddenly quiet as a mouse. The Senate Republicans are backing Mr. McCarthy, and I think one of the key arguments should be that passing the plan will reduce inflation, keep interest rates lower than they would otherwise be, and increase economic growth. Passing the McCarthy plan might — just might — spare us a recession with high inflation.
Of course, while at Hiroshima, Japan, at the G-7, Mr. Biden couldn’t help himself and started taking shots at Mr. McCarthy. Here’s what he said: “It’s time for Republicans to accept that there is no bipartisan deal to be made solely on their partisan terms. They have to move as well.” I don’t even know what that means, because for two-plus years we haven’t heard a bipartisan word out of Joe Biden.
Then he launched into tax policy, with this non sequitur: “There’s a lot of things that they refuse to look at in terms of tax generation, as well as what kinds of people we’re going to increase taxes for. We went from having roughly 740 billionaires to 1,000 billionaires in America. They’re paying an average tax rate of 8 percent.”
First of all, this 8 percent number that Mr. Biden constantly uses is a bottomless Pinocchio, just like his claim that he’s cut $1.7 trillion from the budget deficit. White House geniuses have calculated what unrealized capital gains would come to if they were the law. Yet they are not the law. Only realized capital gains tax revenues can be counted.
By the way, cap gains receipts have fallen significantly because of last year’s bear market in stocks — largely a function of Bidenomics and his 33 percent approval rating.
The CBO, JTC, and IRS numbers all show that the wealthiest people in the country pay roughly 42 percent of total tax revenues. No other group comes even close. If Hunter Biden’s tax returns were counted, then the wealthiest 1 percent would pay an even larger percentage.
Also, unlike President Biden, I’m glad America is producing more and more billionaires. That’s a sign of prosperity. They are the job creators.
On the better side, Speaker McCarthy over the weekend drew a red line in the sand over spending cuts: “I do not think it’s extreme that we simply say we should spend less than we spent this year.” Good for Mr. McCarthy.
Incidentally, while White House and Republican congressional staffers did meet Monday without any breakthroughs, the big issues are which baseline to use — FY 2022 or 2023, or some place in between. They are bickering over the speed limit for budget caps, and whether to apply them for two years or 10 years.
A former U.S. senator, Phil Gramm, writes in the Wall Street Journal that FY ’24 discretionary spending adjusted for inflation is projected at $1.86 trillion — a 10 percent real increase from the pre-pandemic estimate. Get this, though: Non-defense outlays have risen 18.8 percent over the same period, while defense outlays have dropped about a quarter of 1 percent.
Do Democrats really believe that nearly 20 percent growth in real domestic discretionary spending doesn’t deserve to be slowed down? Save America. Pass the bill. It’s the only bill.
From Mr. Kudlow’s broadcast on Fox Business News.