inflation

Rep. Dave Brat, R-Virginia, is slamming Republican congressional leaders for caving to spending demands by Democrats in a two-year budget bill that he anticipates will spark trillion-dollar deficits as far as the eye can see while Republicans unilaterally surrender their greatest weapon for passing meaningful entitlement, welfare, or health care reforms.

On Wednesday, just one day before another government funding deadline, the Republican and Democratic leaders in the House and Senate announced an agreement to keep operations running for two years, but with a hefty price tag for the American taxpayers.

Republicans who favor the bill are celebrating the lifting of sequester spending caps on national defense.  They also included language to repeal the Independent Payment Advisory Board, often referred to as “death panels” in the Affordable Care Act.  And they contend there is money well spent on veterans programs, infrastructure, disaster relief, and opioid addition programs.

But Brat says everything is getting more money and the media’s estimate of $300 billion in new spending is actually low.

“It’s actually $400 billion now and wait til you see what policies get plowed into that $400 billion,” said Brat.

The congressman says the House of Representatives addressed appropriations last year, passing a budget that cut spending as well as 12 separate departmental spending bills.  He says things fell apart once those bills got sent to the U.S. Senate.

“They failed.  They failed on Obamacare.  They failed on keeping their word to the American people on being fiscally responsible,” said Brat.

Earlier this week, the House passed a continuing resolution that boosted defense spending but left other levels unchanged.

“The House Freedom Caucus plussed up defense spending.  The entire Republican Conference was in favor, plus up the military but nothing else.  We were going to stay as a team on that call.

“Then leadership got together and went to the Senate.  They need nine Democrats and it morphed into a Democrat bill in five minutes.  They plussed it up to $300 billion.  When you add in contingency funding, it’s $400 billion,” said Brat.

“When you’ve got (Senate Minority Leader Chuck) Schumer saying this is a great bipartisan bill, and Republicans are in charge of the House, the Senate, and the White House, you might have a problem on your hands,” said Brat, who points out the two-year deal allows the Senate to wash its hands of the issue until late next year.

“The Senate basically doesn’t even want to vote on a budget next year.  They’re scared of their shadow,” he said.

Brat is generally positive on Speaker Paul Ryan’s leadership but is not impressed with his actions on this bill.

“We got backed into a trap, but still [Ryan’s] got to take the boxing gloves and put them on and go over their to (Senate Majority Leader) Mitch McConnell and say no,” said Brat.

Brat says there’s only one reason why a bill like this gets passed in the GOP-run Congress.

“None of this has to d with rational policy.  No one’s in favor of a trillion dollar deficit and so it’s all politics.  It’s people protecting their hide and their slot up here .  Taking the ‘yes’ vote is the easy vote.  Sure, yes, yes, yes to everything.  Put it on the credit card and the kids will pay it off.  You know, were $21 trillion in debt right now,” said Brat.

And that’s about to get much worse.

“We’re going to have over trillion dollar deficits as far as they eye can see.  If you’re a Republican and you’re fine with that, then I don’t get it,” said Brat.

Not only that, the required payments on the interest for the national debt were tamped down in recent years since interest rates were next to nothing.  Brat says the markets are facing volatility now because of inflation fears brought on by rising wages.  He says the tab to preserve the government’s solvency will also be on the rise.

“That wage inflation set off a signal.  Markets are rational and they say, ‘Oh oh, interest rates are going to bump up once wages bump up,'” said Brat.

“We’re going to have inflation, interest rates going up, and then we’ve got to pay off $21 trillion in debt at normal interest rates like three, four, five percent,  That’s going to be hugely costly and the market has properly recognized that,” said Brat.

In addition to being awash in red ink, Brat is aghast that GOP leaders effectively handcuffed themselves from getting any major reforms done in the next two years.

“They deemed the budget and gave up our ability to do budget reconciliation again this year in the budget.  It’s a huge deal.  That’s how we tried to get rid of Obamacare and that’s how we passed the very successful tax cut.

“This year, we were going to work on welfare reform and maybe some mandatory spending programs because they’re a $100 trillion unfunded (liability).  Now for some reason e just unilaterally disarmed and gave away our power,” said Brat.

The reconciliation tool allows legislation to pass with a simple majority rather than having to meet the 60-vote threshold to cut off debate.  Republicans will now have to keep their entire conference together and pick up nine Democrats to pass any legislation.

Brat, who calls this bill “a Christmas tree on steroids,” is getting some blowback from critics who want to know why he is so upset at a bill boosting federal spending by $400 billion when he just voted in favor of a tax bill that adds $1.5 trillion to the debt over 10 years.

Brat says the explanation is simple.

“I did my Ph.d on economic growth and you’ve got to compete with the mainstream media that doesn’t know anything about economics.  All you need is an additional 0.75 percent economic growth to pay for our tax cut,

So when you put together the regulatory relief we have and the tax cut bill itself.  The bill itself won’t pay for all of it, but the economy is more than compensating for it.  We’re only at one-and-a-half or two (percent growth), so if you get to 2.75 you’ve paid for it and the Fed of Atlanta has us growing at 5.4 next quarter,” said Brat.

He says this line of attack is proof positive that liberals are clueless on fiscal policy.

“The tax cut does pay or itself but government spending does not pay for itself.  That’s Econ 101 and unfortunately I don’t think the Democrats took the class,” said Brat.