Debt Threats: Congress returns to its ritual fight over the debt ceiling.
IN THIS ISSUE:
- Debt Threats
- Podcast of the Week: The End of Solitude: Selected Essays on Culture and Society (Guest: William Deresiewicz)
- ‘P’ Is for …
- For-Profit Government
- Video of the Week: Paying Attention to Davos Doesn’t Make You a “Conspiracy Theorist,” it Means You’re Awake
- Bonus Video of the Week: Climate Lunacy and Unhinged Hypocrisy
Once again, the federal government’s malignant effect on the economy is our top story. Now it’s a debate over whether to raise the debt ceiling.
President Joe Biden and congressional Democrats keep pushing for higher government spending on top of the astonishing Biden binge in the wake of the 2020 pandemic spending hikes, blithely ignoring its destructive effect on the economy. They need more debt if they are to accomplish that. Government spending is like crack cocaine to them.
The Republicans, now back in charge of the House of Representatives after two years in the wilderness, have been looking for ways to stop Biden without being characterized as cheapskates and horsewhipped out of the best cocktail parties. I wish them well in their pursuit of that impossible dream.
The U.S. government hit its borrowing limit last Thursday. The legal borrowing limit, that is. The present legal borrowing limit, to be exact. The government surpassed any common-sense, workable borrowing limit about 55 years ago.
(That government-spending surge began our long battle with monetary inflation, by the way. You didn’t think I’d get through an issue of this newsletter without mentioning inflation, did you?)
The debt ceiling had been “looming” (as the debt-mongers like to say) for quite some time, yet nobody did anything about it but accuse one another of not caring enough. The obvious explanation is that everyone is too terrified to discuss it in any serious way.
Or maybe, just maybe, it is because nobody in power takes the debt ceiling seriously as anything other than a rhetorical device. As the latest deadline approached, the U.S. Treasury announced it would start moving money around within the federal budget “to keep paying obligations to bondholders, Social Security recipients, and others until at least early June, the department said last week,” The Wall Street Journal reports. That kicks the can down the road for another five months.
Significantly, nobody in any position of power is suggesting not raising the debt ceiling.
Biden and the Democrats want a clean lifting of the limit—and a permanent removal if possible. The Democrats dearly love government spending, and with good reason. They enjoy getting credit for all the “free” goodies they hand out—plus the votes the government giveaways buy. In addition, the Dems know they can rely on Republicans to cut the budget deficit down the road when it becomes unsustainable, and the GOP will take all the heat for it, when and if they should ever control the White House and both chambers of Congress again. For Democrat politicians, federal spending is all gain and no pain.
Republicans, for their part, want to use the “looming” debt ceiling to force Biden and the congressional Democrats to agree to spending cuts. The Republicans are saying they’re willing to trade a higher debt ceiling now for the promise of lower spending later. We’ve seen repeatedly how reliable those promises are. In any case, Biden and the Senate Democrats say they won’t agree to any cuts. I believe them. Senate Minority Leader Mitch McConnell has expressed certainty the Republicans will give in. Perhaps that’s why he’s the minority leader and not a majority leader, but chances are he’s correct in his prediction.
Red Jahncke of the Townsend Group International sensibly suggests Republicans could “adopt a simple dollar-for-dollar approach, offering Democrats $1 of additional debt capacity for every $1 of domestic spending cuts today—not 10 years from now—leaving Democrats to designate what nonmilitary programs to cut.” Unfortunately, it won’t happen. Democrats know all they have to do is wait it out and Republicans will cave.
Republicans did obtain concessions from President Barack Obama in 2011 when the Tea Party faction led a firm refusal to raise the ceiling without budget cuts. Obama gave in to some spending reductions, and Congress agreed to increase the debt limit. Obama won reelection in 2012 and Democrats picked up seats in both houses of Congress (though the GOP retained control of the House).
Lesson learned. The debt ceiling was $14.3 trillion in 2011. It is now $31.4 trillion, after regular increases over the years with the GOP generally controlling one or both houses of Congress—and the Tea Party consigned to oblivion. The national debt has increased by about $3.7 trillion since Biden took office. Biden and a Democrat-controlled Congress piled that on top of the $4.4 trillion the government borrowed to deal with the pandemic during President Donald Trump’s last year in office. And with the Federal Reserve raising interest rates rapidly to combat the inflation this reckless spending brought on, the government’s interest payments are rising even faster.
Total U.S. gross domestic product is currently $25.72 trillion, the St. Louis Fed reports. That means the debt we U.S. taxpayers owe on past and present federal spending is 120 percent of the nation’s annual economic output. That number does not include other obligations that will kick in down the road and eat up additional trillions of dollars unless current laws are changed to eliminate those handouts, which Congress will never do voluntarily.
So, once again Congress and the president act out this timeworn ritual in which Democrats pretend the world will end if the federal government cannot borrow more money and Republicans make believe they are protecting the taxpayers by exacting promises the Democrats will never keep and the Republicans will never require them to honor. With the press and social media on their side and the public denied a hearing, the federal wastrels will get their way as usual.
The incentives for our national government are all wrong, and they are entirely in furtherance of continual spending increases in perpetuity until the U.S. economy can no longer support such extravagant improvidence and the Treasury is finally forced to default on the nation’s debt or watch spiraling inflation unleash devastating social chaos.
Don’t think it cannot happen. That day will come, and sooner than most people seem to think; but it is not today, and it is not tomorrow, so we will all go to bed tonight in the sure and stupid confidence that all will be well if we just ignore the wolves at the door.
Source: The Wall Street Journal
Podcast of the Week
Heartland’s Tim Benson is joined by award-winning essayist and critic William Deresiewicz to discuss his new book, The End of Solitude: Selected Essays on Culture and Society. They chat about how social media is changing the nature of our interaction with others, addressing West Point plebes about leadership, why he left academia, and why they love essay collections.
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‘P’ Is for …
Education reformer Larry Sand, president of the California Teachers Empowerment Network, is one of the best writers on the education beat. As such, he often has to tell unpleasant truths. His latest column deals with one: the startling rise of sexual abuse of children by educators and other school personnel.
“Pedophilia is proliferating in the nation’s public schools,” Sand writes. “Going back to 2004, a [U.S. Government Accountability Office] report prepared for the U.S. Department of Education revealed that nearly 9.6% of students are victims of sexual abuse by school personnel, and these are just the reported cases.”
You may find that number hard to believe, but Sand provides plenty of documentation it continues to be true up to the present. Here’s an example:
[A] report published on Jan. 1 by the Chicago Board of Education’s Office of the Inspector General (OIG), reveals that hundreds of public school students in Chicago were either raped, sexually assaulted or groomed by their teachers during the 2021-2022 school year. The report discloses that a total of 772 investigations into the alleged crimes occurred over the year. Additionally, the OIG was able to close 600 “adult on student” cases with “more than half of the allegations being substantiated.”
The main reason the sexual abuse statistic is difficult to accept is that the nation’s press has generally kept the public in the dark about these incidents. Sand writes,
“The fact that the mainstream media has ignored the findings is also scandalous. As of this time, just a handful of conservative news outlets have covered the story. Perhaps child abuse in America is just not newsworthy anymore.”
Oh, it’s newsworthy, all right. It’s just that the media, like the education establishment, have developed a strange approval of the sexualization of children. “As sex crimes against children proliferate, the efforts of the sex and gender cult are also growing,” Sand writes. Sand cites reports—none of them from the mainstream press—about San Francisco teachers encouraging children to “choose” a gender and hiding that from parents, a “naughty” holiday party for students at the home of the president of the Claremont Unified School District, and similar situations in Missouri and Wisconsin. Sexualization has become increasingly normalized in the nation’s public schools, with parents and taxpayers being told nothing about it.
Businesses and private schools are also expressing enthusiasm about the sexualization of children, Sand notes:
Project Veritas released an undercover video during which Joseph Bruno, Dean of Students at Chicago’s tony Francis W. Parker School—a private school that charges over $40,000/year in tuition for upper level students—discussed pride week:
“So, I’ve been the Dean for four years. During Pride—we do a Pride Week every year—I had our LGBTQ+ Health Center come in [to the classroom]. They were passing around butt-plugs and dildos to my students—talking about queer sex, using lube versus using spit. They’re just, like, passing around dildos and butt-plugs. The kids are just playing with ‘em, looking at ‘em. … They’re like, ‘How does this butt-plug work? How do we do—like, how does this work?’ That’s a really cool part of my job.”
Bruno went on to say, “We had a Drag Queen come in—pass out cookies and brownies and do photos.”
“Really cool.” Our schools have gone from “Diagram this sentence” to “How does this butt-plug work?” Although some parents and taxpayers may consider that to be progress, I suspect that most would not. The corruption of our schools is an outcome of the development of a permanent ruling class that is insulated from the consequences of its decisions. The resultant widening gap between the opinions of lawmakers and those of their constituents has led to an increasing migration of black Americans, in particular, out of Democrat-controlled cities as local governments’ failures in education, crime control, infrastructure, and other services make conditions intolerable for the residents. The New York Post reports,
The black population in New York City declined from 2.1 million in 2000 to 1.9 million in 2020, according to the U.S. Census Bureau, even as the black population nationwide surged dramatically from 36 million to 47 million over the same period.
Crime-ravaged Chicago witnessed an even greater decline, from more than 1 million black residents in 2000 to less than 800,000 in 2020. Chicago has been ruled solely by Democrat mayors since 1931.
The city government of Chicago has begun a program begging “Black and Brown” people to come back to the city, with elaborate plans to put up new buildings in depopulated areas. Perhaps that will lure back the segment of the population that does not mind daily shootings and school rapes.
Local governments are profiting big from their constituents’ financial struggles, reports Reason magazine. In several states, local governments can sell the property of residents who fall behind on their property taxes and pocket not only the back taxes and (often outrageous) fines, but in fact all the money from the sale of the property, Reason reports:
Which is what happened to Tawanda Hall of Oakland County, Michigan, when she, too, accrued a property tax debt. Hall, who lived in the house with her husband and children, set up a payment plan with the local authorities. She eventually fell $900 behind schedule. The total bill—after penalties, interests, and fees—came out to $22,642.
… [T]he government then seized the home, sold it to collect the debt, and kept the profit. … [T]he Halls’ home was worth more than $300,000.
The state kept the change. It totaled more than $286,000.
The fines and penalties are an essential part of the scam. A person who falls behind in their taxes might be able to pay them down if given a chance, but the local government makes sure that doesn’t happen, by tacking on fines and penalties far beyond the original amount owed. If a private lender did that, the government would step in and put a halt to it, pronto. When the government does it, the resident ends up in a Kafkaesque nightmare. This is the situation in several states:
Among the states that allow home equity theft—when the government not only satisfies the debt but also keeps the profit—are Oregon, Arizona, Colorado, Nebraska, South Dakota, Minnesota, Illinois, Alabama, New Jersey, New York, Massachusetts, and Maine. That list used to be longer. Several states have abolished it.
Some of these arrangements include private-sector partners, and they are even more odious:
[In Nebraska,] people who fall behind on their property taxes are bought out, without their knowledge, by private investors. They receive no correspondence.
That changes after three years go by, when they finally get notice in the mail. Included in that letter is that they have 90 days to satisfy the tax burden, the 14 percent interest, and additional fees. It’s a Herculean task for individuals and families to accomplish when considering they were struggling to pay the original debt, much less a multiyear accumulation and the associated penalties. If they fail to pay within the short period, the county treasurer gives the deed to the private investor, who then takes the home, sells it, and keeps the change.
These property seizures are happening all across the country, and courts have upheld them. The U.S. Court of Appeals for the 8th Circuit ruled on one such case in October 2021:
The question before the judges: Was it constitutional when the government seized the 94-year-old’s Minnesota condo valued at $93,000, sold it for about half of that, and then kept every last cent, all to satisfy a $15,000 debt?
The answer they arrived at was yes. “Where state law recognizes no property interest in surplus proceeds from a tax foreclosure-sale conducted after adequate notice to the owner,” wrote Judge Steven Colloton, “there is no unconstitutional taking.”
Regardless of what state law might say, that is obviously a “taking,” and it is up to the courts to protect the citizenry from such injustices. Fortunately, the U.S. Supreme Court has agreed to hear one of these cases. The court challenge has received amicus briefs in support of the plaintiff from the National Taxpayers Union Foundation, the Howard Jarvis Taxpayers Association, the Wisconsin Realtors Association, AARP and the AARP Foundation, the Buckeye Institute, the Competitive Enterprise Institute, and the Cato Institute, among others, Reason notes.
“There aren’t many things that unite people these days,” the Reason reporter writes. “Perhaps outright government theft meets that bar.”
Let’s hope the Court agrees.
Cartoon of the Week
Video of the Week
In this clip from the latest edition of the In The Tank Podcast, broadcast LIVE every Thursday at noon CT at Heartland’s Stopping Socialism TV channel, we talk about how just paying attention to what’s happening at the World Economic Forum meeting in Davos makes you, by their definition, a “conspiracy theorist.”
The Heartland Institute’s Donald Kendal, Jim Lakely, Justin Haskins, and Chris Talgo debunk that nonsense.
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BONUS Video of the Week
In episode #48 of Climate Change Roundtable, Anthony Watts, H. Sterling Burnett, and Linnea Lueken look at the craziest things that have happened in the clima-sphere over the past two weeks.