The GOP's Austerity: Billions for Tax Cheats and Oil Companies

As a U.S.default on the nation's debts - that is debts already incurred in past spending - the potential economic fiasco for the average Americans and the world inches closer and closer.  The Republicans who are currently holding all of us hostage claim they want to reduce the defiit, yet many parts of the GOP passed bill in the House of Representatives are simply more pieces of the GOP's overarching reverse Robin Hood agenda of taking from the poor and middle class and giving to the wealthy and large corporations, especially oil companies which have been enjoying record profits.  Meanwhile, the GOP hostage taking has already run up more federal debt as the Treasury has had to manipulate payments and the strength of U.S. Treasury bills has weakened. To Kevin McCarthy and his band of extremists in the GOP caucus none of this matters so long as th ugliest elements of the GOP base remain thrilled - and too stupid to recognize that many in that same base will be severely harmed by both the GOP brinksmanship and many of the cuts McCarthy is demanding.  A piece in the New Republic looks at the reality of what the Congressional Republicansare doing to the country.  Here are highlights:

Congressional Republicans say they’re resisting an increase to the debt ceiling because government spending is out of control. “Before we borrow another dime,” House Speaker Kevin McCarthy said last month, “we owe it to our children to save money everywhere.” But McCarthy’s claim that all his party wants to do is bring down government spending isn’t entirely true.

Granted, it is true that the bill would, according to the Congressional Budget Office, or CBO, reduce projected deficits by $4.8 trillion over 10 years. Doing that would necessitate, next year, a 27 percent cut in discretionary spending, according to the Center on Budget and Policy Priorities. That’s assuming, as everyone does, that congressional Republicans will never apply these across-the-board spending cuts to the Pentagon. McCarthy blows a gasket every time President Joe Biden points out that his plan would require a severe reduction in veterans’ benefits. But as the Center on Budget and Policy Priorities pointed out, if McCarthy intends not to cut funding for the Veterans Administration, then discretionary spending on all other domestic programs next year will have to be cut not 27 percent but 33 percent.

It’s sheer fantasy to conceive that you can cut spending by anything close to this magnitude without doing severe damage to government functions and creating a public uproar. Even the tough-talking Freedom Caucus would never allow it to happen. McCarthy’s debt limit bill is a bluff that, as I’ve noted before, wouldn’t have won support from his own caucus without McCarthy’s assurance that the bill would never, ever become law.

[L]et’s review how the GOP’s negotiating stance on the debt ceiling increases rather than decreases government spending.

Start with the debt limit bill itself. Democratic Senator Sheldon Whitehouse of Rhode Island tweeted last week that 275 of the 317 pages of McCarthy’s debt limit bill are “devoted to giveaways to the fossil fuel industry.” For example, the bill would reduce royalty rates for drilling on federal land. The combined cost of these giveaways, according to the CBO, is $430 million.

The debt limit bill would also claw back $71 billion of the $80 billion Congress included in last year’s climate bill to boost funding for the IRS. That sounds like a spending cut, but rescinding that increase would cost the federal government $186 billion in lost tax revenue over the next decade, according to CBO, netting out to a cost of $115 billion.

[C]ongressional Republicans say they’re fighting Biden on the debt ceiling (“We owe it to our children”) because they want to halt runaway spending. That renders glaringly hypocritical individual examples where they propose spending increases. We do not “owe it to our children” to charge oil companies less for leases on federal land or to enable tax cheating by the rich.

Even setting aside McCarthy’s debt ceiling bill, don’t kid yourself that Republican intransigence on the debt ceiling is cost-free. The statutory debt ceiling of $31.4 trillion was actually reached way back on January 19. The only reason the United States didn’t go into default then was that the Treasury used the same “extraordinary measures” (i.e., accounting gimmicks) that it deployed during similarly dangerous debt limit games of chicken that congressional Republicans chose to play in 2011 and 2013. . . . . In 2011, when the GOP played a similar game, it managed to lower Standard & Poor’s credit rating for U.S. Treasury bills.

To employ these tricks is economically unwise because you end up spending more money. But your cash flow leaves you no alternative.

The federal budget operates on the same principle. When money is suddenly tight, either because of a government shutdown or because of a debt limit standoff, Uncle Sam does what you do: He calculates which bills to pay now and which bills to pay later. Only instead of shorting the gas bill or the electric bill or the Visa bill, he skips contributions to retirement funds for civil servants and postal workers and he suspends the issuing of certain securities.

The federal government’s extraordinary measures will soon be all used up, possibly as early as June 1. At that point, the cost of Republican intransigence will be an economic recession, and that’s if we’re lucky. A protracted default would, according to the White House, push unemployment near or beyond 10 percent in the next quarter and cause a drop in gross domestic product of more than 6 percent. Even a brief default could lower the yield on Treasury bills by $750 billion over the next decade, according to economists Wendy Edelberg and Louise Sheiner, writing for the Brookings Institution.

GOP giveaways in the debt limit bill total $115.4 billion. Add in the $328 million we’re spending on extraordinary measures, and congressional Republicans’ holy war on government spending increases the federal deficit by nearly $116 billion. That means McCarthy will have to commit Biden to about $116 billion in budget cuts just to break even on what his bill proposes to spend plus what his theatrics have already cost the U.S. taxpayer.

If you prefer to calculate, more conservatively, based on the tab McCarthy has run up already, then that tab is $328 million. That may not sound like much in a federal budget that exceeds $6 trillion. But it ain’t nothing.

If a Republican member of Congress figured out how to cut $328 million from the federal budget, he’d send out a press release, right? But no Republican is going to send out a press release saying we could have saved $328 million had McCarthy not pissed it away refusing to let Congress pay its bills.