SPECIAL BREAKING NEWS REPORT: Congress Passes Massive Bipartisan Budget Deal With No Way Of Paying For It
While You Were Sleeping (Probably), Government Briefly Shuts Down Again, Then Reopens After House Passes Bill Shortly Before 6 AM Local Time
- Gives the President huge increases in defense spending (it’s gonna be some parade!…)
- Funds, and increases funding for many of the programs Trump wanted to cut deeply. Like medical research and environmental protection.
- Takes care of victims of recent natural disasters to the tune of $90-billion.
- Eliminates the bits-and-pieces way Republicans have been funding the government. Putting an end to continual big budget battles at least through 2019.
- Paves the way for a separate discussion on an immigration bill, which needs to pass by the beginning of next month, although Democrats did not get the firm promise they were demanding from Speaker of the House Paul Ryan that he’d immigration up next no matter what.
- Proves that bipartisanship isn’t totally dead, at least when it comes to throwing around money. This is the biggest piece of bipartisan legislation we’ve seen in a long time.
- Provide a mechanism for paying for any of it: it’s just pure accumulation of debt. The Washington Post describes it as “showering billions of dollars on defense and domestic priorities”.
In The End, It Was Democrats In The House Who Pushed The Spending Bill Over The Goal Line
As Roll Call Reports, enough of them voted “yes” to offset Republican defections. 73 Democrats voted in favor, despite House Minority Leader Nancy Pelosi voting against, after her 8 hour long floor speech in support of undocumented immigrants who came to the U.S. as children. That more than made up for the loss of 67 Republican votes over the issue of deficit spending, even though most of those same House Republicans recently voted for a much bigger $1.5-trillion tax cut bill, also with no way of paying for it.
If you want to see how your Representative or Senator voted, or just how the vote went down in general:
- Here’s a link to a list of the final roll call vote in the Senate.
- Here’s a link to a list of the final roll call vote in the House.
Or there’s this lower-tech list of House Democrats voting in favor, courtesy of the Washington Post’s Mike DeBonis:
Rand Paul, Hypocrite (Even Though He’s Right This Time Around)
The short-lived government shutdown was entirely caused by a single person: the Senator from Kentucky, out to make a point about wanton levels of deficit spending the government has now embraced. Paul blocked a swift passage by filibustering on the Senate floor for hours.
Paul calling out Republicans for supporting a bill they would’ve fought tooth and nail under a Democratic President; calling out Democrats for not fighting huge increases in military spending just because they’re getting some social programs they want. (Paul is against a lot of U.S. overseas military intervention as well as lots of domestic spending.)
You can watch a few choice moments by clicking on the video below:
It’s compelling stuff. Only problem is when Paul says “the hypocrisy hangs in the air”, he could very well be talking about himself. Because Paul voted for the $1.5-trillion in tax cuts, with no way of paying for them, and which have yet to start “paying for themselves”. And that will almost certainly blow a far bigger hole in the budget than any 2-year spending agreement.
A Story About The Dollar That Has Nothing To Do With Bitcoin
Forget about the threat from Bitcoin replacing traditional currencies, like the U.S. dollar. Mounting debt and a sagging stock market is a far bigger threat, that could easily lead to a real dollar crisis. Maybe even sooner than anyone expects. That’s one thing we agree with Rand Paul about.
Right now lots of foreign governments help the U.S. finance its budget deficit by buying lots of U.S. treasury bonds. China and Japan are the biggest, together accounting for about 11% of U.S. debt. Since the bonds are denominated in dollars, they have to buy lots of dollars in order to do that. But even in countries that are sworn enemies of the U.S., like North Korea, the U.S. dollar is still the currency of choice.
And it makes sense: as a reserve currency, and long the world’s most accepted global currency, there’s lots of stuff that has to be paid for in dollars whether you like it or not. Oil is the big one. Planes from Boeing. iPhones from Apple. Defense equipment from Lockheed-Martin (if you’re on our good side).
So with stable interest rates, and a strong dollar, there’s little risk for foreign countries to keep a big chunk of their money in dollars because they’re going to need dollars anyway.
But what if that changes? What if China’s New Silk Road initiative is successful and it decides its cash is better spent in developing countries where there’s a prospect for higher rate of return (not to mention increased political influence)? Especially with Trump decreasing their risk by making it very clear the U.S. is fully focused on “American First”, which means it won’t move as aggressively to compete with China in partnering and building new factories overseas.
What if Trump cuts back on visas so sharply that experts in technology and other industries go to Europe or Asia instead and lead to what’s been a predominantly U.S. led technology boom to shift to companies over there?
All that coupled with a bumpy stock and bond market could lead to less trust in U.S. government securities, meaning less trust in the U.S. Dollar, and less need on the part of foreign governments for dollars. And that could create a very deep hole for the U.S. to climb out of, and increase the cost of paying off the debt we’re taking on today even more.
(This story originally appeared in “The Chaos Report” Newsletter. Subscribe for free at https://thechaosreport.com/subscribe/?scr=Medium)