This content originally appeared on Democracy Now! and was authored by Democracy Now!.
This post was originally published on Radio Free.
-
-
President Joe Biden on Saturday signed a debt ceiling deal into law that averts a catastrophic default by the United States through January 1, 2025, hailing it as a “big win” for the country. Critics say the agreement protects wealthy corporations and tax dodgers while imposing new cuts on key social programs and expanding work requirements for some recipients of food stamps. The legislation has also been called a “dirty deal” by climate activists because it rolls back environmental regulations and fast-tracks the approval of the Mountain Valley Pipeline through West Virginia and Virginia, a pet project of powerful Democratic West Virginia Senator Joe Manchin. “The working class of this country was deeply harmed by this bill,” says investigative journalist David Sirota of The Lever. He also faults Democratic leaders for not raising the debt ceiling after the midterm elections, when the party still had control of Congress. “What you see is a picture of a party that wanted this outcome,” says Sirota.
This content originally appeared on Democracy Now! and was authored by Democracy Now!.This post was originally published on Radio Free.
-
Martinus van Reymerswaele, Parable of the Unjust Steward (c. 1540), Kunsthistorisches Museum, Vienna.
Leader of the Republican revolt against suspension of the debt ceiling just passed in the House of Representatives, Rep. Chip Roy of Texas is a self-professed man of faith. One does not have to scratch the surface of his discourse to strenuously in order to hear it as a jeremiad against fiscal trespass as moral trespass.
Debt and sin are synonymous in Christian thought and liturgy: “forgive us our debts, as we forgive our debtors” runs the Lord’s Prayer as recited by evangelicals. Is it a coincidence that red is the of color sin, negative numbers on the balance sheet, and the Republican Party—not to mention Donald Trump’s face?
From the Indulgences sold by Pope Julius II to build St. Peter’s in the sixteenth century, to the High Priest of Reaganomics David Stockman, a one-time student at Harvard Divinity School in the 1980s, theology and economics have been two sides of the same coin. “Render unto Caesar the things that are Caesar’s, and unto God the things that are God’s,” said Jesus, inspecting a Roman denarius presented him by the Pharisees.
Nearly three centuries ago Johann Sebastian Bach also grappled with money and sin through music. Bach composed his Debt Cantata within the span of a few days, leading its first performance on the July 29th, 1725 in Leipzig, almost exactly twenty-five years before his own death, also to be thought of (by him) as his final reckoning before the Great Accountant.
The Gospel for that Sunday in the church calendar was taken from the thirteenth chapter of Luke. This passage relates the Parable of the Unjust Steward in which a manager is accused by his rich employer of squandering the goods entrusted to him. The manager then proceeds to cut deals with the wealthy man’s debtors on the theory that once fired, the manager will need a place to stay, and decides to forgive some of these debts without informing his boss. The parable has caused more than a little confusion and consternation among interpreters, especially those who attempt the difficult task of explaining Jesus’s apparent endorsement of duplicitous financial dealings, while he simultaneously argues for a downward redistribution of wealth. Many wealthy Christians like to skip over the passage’s closing line: “No servant can serve two masters …Ye cannot serve God and mammon.” Bach did no skipping on this one. He musically depicted this dictum with unmatched ferocity.
The fiscal parable from Luke was an alluring one for Bach’s librettist, Salomo Franck. Franck had been the court poet in Weimar when Bach had been employed there between 1708 and 1717. The two had begun to collaborate in earnest in 1714, when Bach was elevated from the position of court organist to that of Konzertmeister. In this new capacity was charged with producing one cantata every month (as opposed to one a week in Leipzig). Aside from being a man of letters, Franck was also director of the ducal mint in Weimar, which helps explain the frequent appearance of monetary images in his poetry. Franck provided the text for another of Bach’s fiscally-oriented Weimar cantatas, Nur Jedem das Seine (BWV 163) (To Each His Own), which treats the touchy subject of taxes, and includes a moving central aria in which the human heart is likened to a coin to be minted by God. Bach had left the Weimar court some eight years before writing his Debt Cantata in July of 1725 to become Director of Music in the much larger city of Leipzig. Also something of a coin collector, Bach may have returned to Franck’s vivid text because the poet had died just two weeks before. The cantata, which treats the big themes of money and death, might be heard not simply as an expansive musico-poetic interpretation of Luke’s Gospel, but also as a tribute to Bach’s former collaborator and fellow numismatist.
The cantata begins with the upper and lower strings chasing each other breathlessly through the orchestral introduction before the brimstone bookkeeper of a bass incessantly repeats his demand that the listener “Thue Rechnung” — “Make an accounting,” or, more colloquially, “pay up.”
In the opera house this music would have suggested a storm at sea; in the church it is a tornado that sweeps through the ledger of the soul. The music becomes still more frantic with the “word of thunder” that demands payment by the Almighty in a voice that “crumbles cliffs” and “freezes the blood,” the latter image brilliantly evoked by Bach through a long-held note low in the bass’s register. The ultimate payment will come at death when the Banker in the Sky evaluates all “goods, body, and spirit.” The Day of Reckoning is itself a financial metaphor, and to be in debt to Him is to be terrified of damnation.
This bracing aria is followed by a grimly restrained tenor recitative conducted in a kind of bureaucratic language. The music tries to remain icily objective, yet it can’t always contain the angst below its boasts of “office and position.” Explicit reference is made to the Unjust Steward: when God takes an unstinting look at the accounts and the “selfish squandering” of His gifts, His response will be austere, angry. Perhaps suggesting the slow and earnest accounting to come, two oboes d’amore sustain their sonority throughout the twists and turns of the harmonies, like a pair of unfailingly assiduous comptrollers.
The unstinting look at moral finances continues in the ensuing aria: “Kapital und Interessen” (Capital and Interest). In his Bach biography, the humanitarian doctor, organist, and scholar Albert Schweitzer,
clearly put off by Franck’s penchant for talking about money in a sacred context, dismissed the aria as unworthy of Bach. I hear it differently. The unison oboes d’amore offer up a courtly dance suggesting the easy, leisure-filled life of the “capitalists,” defined in 18th-century Germany as someone who lives off his rents and investments. The music is smooth, untroubled but also insinuating, with the oboes sometimes elegant to a fault. However rich one is, there is always an accounting to come:
Capital and interest,
My debts large and small
Must one day be reckoned.
Everything that I owe is written in God’s book
as if with steel and diamonds.The ledger of eternity is not calculated with computers and obscure financial instruments, but cut through with heavy, screaming machinery, perilously high for the bass voice. The cufflinked capitalist will have to bare his soul and his tax returns. The Last Judgement is the Final Audit.
In strident tenor tones, the next recitative enjoins sinful debtors to come before the Great Creditor in the knowledge that He will cancel all debts through the “blood of the Lamb.” Luther’s reformist theology rejected good works as the path to heaven (the notion that made it possible to extract vast revenues from Catholic believers to build St. Peter’s, for example), claiming instead that faith alone guaranteed salvation. Nonetheless, good works could be taken as a sign of underlying faith, and the closing sentence of the recitative urges earthly altruism:
However, since you know
That you are a steward,
Be careful and not forgetful,
To use money wisely,
To help the poor,
Then you shall, when time and life end,
Rest securely in the courts of heaven.The recitative relaxes into soothing arioso that evokes the calmed conscience of the Good Steward.
These noble words usher in the impassioned soprano/alto duet that is the climax of the cantata, one that urges a rejection of money-making for its own sake:
Heart, rend the chains of Mammon,
Hands, sow goodness!The suave oboes are now silenced. A minor-mode descending bass-line, its contours long a symbol of death and despair, pulls down the spirit. This bass-line tries to escape the inexorable gravity of the chains of Mammon with upward ascending figures—artful shrieks. But the chains are too strong. Above this remorseless descent, gulping for air from above, the two vocal parts battle towards the good. Their crying, upward-fighting arpeggios dramatize the desire to “rend the chains” even as the close, enmeshed suspensions between the voices portray the unbreakable strength of Mammon’s shackles.
As always the moral injunction matters most in the final reckoning of death, and here the duet becomes somewhat sweeter, almost consoling, but for the stabs of the bass-line and occasional slashes of the vocal figures:
Make my deathbed soft,
Build me a solid house
Which will last forever in heaven
When the goods of earth turn to dust.There is no duet that is more harrowing in all of Bach’s oeuvre. The classic performance of it is from Nicholas Harnoncourt and the Concentus Musicus of Vienna with two boys, Christian Immler and Helmut Wittek, as soloists. Theirs is a powerful rebuttal of the claim that such pieces exceed the abilities of Bach’s Leipzig boys, and it is worth listening to again in light of the now-favored view that only male falsettists sang the treble arias of Bach’s demanding sacred music. The pure, determined, but slightly unstable voices of Immler and Wittek imbue the duet, even when it makes consoling overtures, with electrifying terror.
Appropriately, in the cantata’s final placid chorale, there is no talk of money and debt, but only of faith in God at the moment of death. Bach’s own financial house, it has to be admitted, was not in great shape when he calmly departed his cramped Leipzig quarters in the last days of July, 1750 for the spacious apartments of heaven, vaulting his widow and two young daughters into much straitened circumstances. (By contrast, Bach’s second son C. P. E. Bach, was a man made wealthy through the sale of his own printed music. He was also a fastidious bookkeeper when it came to what was owed him by publishers and subscribers. I like to think of him as CPA Bach.)
On that Sunday in July of 1725 the Leipzig rich had something to ponder (if they were listening) as they sat in the front of the church in their rented seats, while the poor milled around at the back of the church.
Like the parable on which it is based, Bach’s Debt Cantata invites diverse interpretations, even as it unambiguously demands that you listen not to the financiers and politicians but to your conscience.
This content originally appeared on CounterPunch.org and was authored by David Yearsley.This post was originally published on Radio Free.
-
Martinus van Reymerswaele, Parable of the Unjust Steward (c. 1540), Kunsthistorisches Museum, Vienna.
Leader of the Republican revolt against suspension of the debt ceiling just passed in the House of Representatives, Rep. Chip Roy of Texas is a self-professed man of faith. One does not have to scratch the surface of his discourse to strenuously in order to hear it as a jeremiad against fiscal trespass as moral trespass.
Debt and sin are synonymous in Christian thought and liturgy: “forgive us our debts, as we forgive our debtors” runs the Lord’s Prayer as recited by evangelicals. Is it a coincidence that red is the of color sin, negative numbers on the balance sheet, and the Republican Party—not to mention Donald Trump’s face?
From the Indulgences sold by Pope Julius II to build St. Peter’s in the sixteenth century, to the High Priest of Reaganomics David Stockman, a one-time student at Harvard Divinity School in the 1980s, theology and economics have been two sides of the same coin. “Render unto Caesar the things that are Caesar’s, and unto God the things that are God’s,” said Jesus, inspecting a Roman denarius presented him by the Pharisees.
Nearly three centuries ago Johann Sebastian Bach also grappled with money and sin through music. Bach composed his Debt Cantata within the span of a few days, leading its first performance on the July 29th, 1725 in Leipzig, almost exactly twenty-five years before his own death, also to be thought of (by him) as his final reckoning before the Great Accountant.
The Gospel for that Sunday in the church calendar was taken from the thirteenth chapter of Luke. This passage relates the Parable of the Unjust Steward in which a manager is accused by his rich employer of squandering the goods entrusted to him. The manager then proceeds to cut deals with the wealthy man’s debtors on the theory that once fired, the manager will need a place to stay, and decides to forgive some of these debts without informing his boss. The parable has caused more than a little confusion and consternation among interpreters, especially those who attempt the difficult task of explaining Jesus’s apparent endorsement of duplicitous financial dealings, while he simultaneously argues for a downward redistribution of wealth. Many wealthy Christians like to skip over the passage’s closing line: “No servant can serve two masters …Ye cannot serve God and mammon.” Bach did no skipping on this one. He musically depicted this dictum with unmatched ferocity.
The fiscal parable from Luke was an alluring one for Bach’s librettist, Salomo Franck. Franck had been the court poet in Weimar when Bach had been employed there between 1708 and 1717. The two had begun to collaborate in earnest in 1714, when Bach was elevated from the position of court organist to that of Konzertmeister. In this new capacity was charged with producing one cantata every month (as opposed to one a week in Leipzig). Aside from being a man of letters, Franck was also director of the ducal mint in Weimar, which helps explain the frequent appearance of monetary images in his poetry. Franck provided the text for another of Bach’s fiscally-oriented Weimar cantatas, Nur Jedem das Seine (BWV 163) (To Each His Own), which treats the touchy subject of taxes, and includes a moving central aria in which the human heart is likened to a coin to be minted by God. Bach had left the Weimar court some eight years before writing his Debt Cantata in July of 1725 to become Director of Music in the much larger city of Leipzig. Also something of a coin collector, Bach may have returned to Franck’s vivid text because the poet had died just two weeks before. The cantata, which treats the big themes of money and death, might be heard not simply as an expansive musico-poetic interpretation of Luke’s Gospel, but also as a tribute to Bach’s former collaborator and fellow numismatist.
The cantata begins with the upper and lower strings chasing each other breathlessly through the orchestral introduction before the brimstone bookkeeper of a bass incessantly repeats his demand that the listener “Thue Rechnung” — “Make an accounting,” or, more colloquially, “pay up.”
In the opera house this music would have suggested a storm at sea; in the church it is a tornado that sweeps through the ledger of the soul. The music becomes still more frantic with the “word of thunder” that demands payment by the Almighty in a voice that “crumbles cliffs” and “freezes the blood,” the latter image brilliantly evoked by Bach through a long-held note low in the bass’s register. The ultimate payment will come at death when the Banker in the Sky evaluates all “goods, body, and spirit.” The Day of Reckoning is itself a financial metaphor, and to be in debt to Him is to be terrified of damnation.
This bracing aria is followed by a grimly restrained tenor recitative conducted in a kind of bureaucratic language. The music tries to remain icily objective, yet it can’t always contain the angst below its boasts of “office and position.” Explicit reference is made to the Unjust Steward: when God takes an unstinting look at the accounts and the “selfish squandering” of His gifts, His response will be austere, angry. Perhaps suggesting the slow and earnest accounting to come, two oboes d’amore sustain their sonority throughout the twists and turns of the harmonies, like a pair of unfailingly assiduous comptrollers.
The unstinting look at moral finances continues in the ensuing aria: “Kapital und Interessen” (Capital and Interest). In his Bach biography, the humanitarian doctor, organist, and scholar Albert Schweitzer,
clearly put off by Franck’s penchant for talking about money in a sacred context, dismissed the aria as unworthy of Bach. I hear it differently. The unison oboes d’amore offer up a courtly dance suggesting the easy, leisure-filled life of the “capitalists,” defined in 18th-century Germany as someone who lives off his rents and investments. The music is smooth, untroubled but also insinuating, with the oboes sometimes elegant to a fault. However rich one is, there is always an accounting to come:
Capital and interest,
My debts large and small
Must one day be reckoned.
Everything that I owe is written in God’s book
as if with steel and diamonds.The ledger of eternity is not calculated with computers and obscure financial instruments, but cut through with heavy, screaming machinery, perilously high for the bass voice. The cufflinked capitalist will have to bare his soul and his tax returns. The Last Judgement is the Final Audit.
In strident tenor tones, the next recitative enjoins sinful debtors to come before the Great Creditor in the knowledge that He will cancel all debts through the “blood of the Lamb.” Luther’s reformist theology rejected good works as the path to heaven (the notion that made it possible to extract vast revenues from Catholic believers to build St. Peter’s, for example), claiming instead that faith alone guaranteed salvation. Nonetheless, good works could be taken as a sign of underlying faith, and the closing sentence of the recitative urges earthly altruism:
However, since you know
That you are a steward,
Be careful and not forgetful,
To use money wisely,
To help the poor,
Then you shall, when time and life end,
Rest securely in the courts of heaven.The recitative relaxes into soothing arioso that evokes the calmed conscience of the Good Steward.
These noble words usher in the impassioned soprano/alto duet that is the climax of the cantata, one that urges a rejection of money-making for its own sake:
Heart, rend the chains of Mammon,
Hands, sow goodness!The suave oboes are now silenced. A minor-mode descending bass-line, its contours long a symbol of death and despair, pulls down the spirit. This bass-line tries to escape the inexorable gravity of the chains of Mammon with upward ascending figures—artful shrieks. But the chains are too strong. Above this remorseless descent, gulping for air from above, the two vocal parts battle towards the good. Their crying, upward-fighting arpeggios dramatize the desire to “rend the chains” even as the close, enmeshed suspensions between the voices portray the unbreakable strength of Mammon’s shackles.
As always the moral injunction matters most in the final reckoning of death, and here the duet becomes somewhat sweeter, almost consoling, but for the stabs of the bass-line and occasional slashes of the vocal figures:
Make my deathbed soft,
Build me a solid house
Which will last forever in heaven
When the goods of earth turn to dust.There is no duet that is more harrowing in all of Bach’s oeuvre. The classic performance of it is from Nicholas Harnoncourt and the Concentus Musicus of Vienna with two boys, Christian Immler and Helmut Wittek, as soloists. Theirs is a powerful rebuttal of the claim that such pieces exceed the abilities of Bach’s Leipzig boys, and it is worth listening to again in light of the now-favored view that only male falsettists sang the treble arias of Bach’s demanding sacred music. The pure, determined, but slightly unstable voices of Immler and Wittek imbue the duet, even when it makes consoling overtures, with electrifying terror.
Appropriately, in the cantata’s final placid chorale, there is no talk of money and debt, but only of faith in God at the moment of death. Bach’s own financial house, it has to be admitted, was not in great shape when he calmly departed his cramped Leipzig quarters in the last days of July, 1750 for the spacious apartments of heaven, vaulting his widow and two young daughters into much straitened circumstances. (By contrast, Bach’s second son C. P. E. Bach, was a man made wealthy through the sale of his own printed music. He was also a fastidious bookkeeper when it came to what was owed him by publishers and subscribers. I like to think of him as CPA Bach.)
On that Sunday in July of 1725 the Leipzig rich had something to ponder (if they were listening) as they sat in the front of the church in their rented seats, while the poor milled around at the back of the church.
Like the parable on which it is based, Bach’s Debt Cantata invites diverse interpretations, even as it unambiguously demands that you listen not to the financiers and politicians but to your conscience.
This content originally appeared on CounterPunch.org and was authored by David Yearsley.This post was originally published on Radio Free.
-
Photograph Source: The White House – Public Domain
Over the weekend, US House of Representatives speaker McCarthy and president Biden announced a tentative agreement on raising the debt ceiling. The deal—almost certain to pass Congress later this week—represents a typical Neoliberal fiscal policy deal.
Ever since neoliberal capitalism policies were introduced under president Carter in the late 1970s, and subsequently expanded dramatically under Reagan, Neoliberal fiscal policy has been characterized by accelerating Pentagon & war spending; simultaneous cutting of business-investor taxes; acceptance of consequent escalating budget deficits—and in turn US national debt levels; and the use deficit/debt to cap and reduce social program spending.
That Neoliberal fiscal policy mix of tax-spending-deficit policies mix clearly defines the recent McCarthy-Biden deal.
In the roughly two year agreement, extending from the present to the end of February 2025, Pentagon spending will rise by 11% in the 2024 fiscal year which begins October 1, 2023. That 11% is estimated at $885 billion. A further increase in Pentagon spending will certainly take place the following fiscal year, commencing October 1, 2024, but the deal doesn’t say how much further rise in Pentagon spending is projected for that second year.
Pentagon vs. Defense Spending
It’s important to understand that the $885 billion in Pentagon spending is not exactly the same as US defense spending. Around $200 billion more in defense related spending occurs in US government departments in addition to the Pentagon.
For example: all the oil costs for the US military (the largest single consumer of fossil fuels in the world) comes out of the Energy Dept. budget. Veterans benefits spending for past wars comes out of that dept. Then there’s CIA’s spending on mercenary and its own field forces. So too for the State Dept. which finances similar covert military activities. Part of Homeland Security costs can be considered defense. And then there’s the so-called ‘black budget’ of secret US military weapons development that never even gets reported in publications of the US budget or by the US press. That’s been estimated around $75 billion a year. So actual, total annual US Defense spending—in contrast to Pentagon spending alone—is probably around $1.1 trillion a year.
Taxation & the National Debt
Economists estimate that tax revenues, or lack thereof, are responsible for about 60% of deficits and therefore the debt (which is just the accumulation of annual deficits). Tax revenues are reduced as result of tax cutting and/or reduced revenues as a result of slow economic growth when recessions occur—or when post-recession recoveries are weak.
The McCarthy-Biden deal prohibits raising business-investor taxes the next two years. Businesses and investors will thus be assured that their Trump era $4.5 trillion in tax cuts, December 2018-28, will continue. Estimates of the cost of the lost tax revenues caused by the 2018 Trump tax cuts, from 2023 through 2028, will be about $2.7 trillion thus contributing significantly to a further rise in the national debt by 2025.
A Short History of US Debt Trajectory 1980-2025
That the McCarthy-Biden deal has nothing to do with the national debt is obvious from the fact two more years of US deficits, and thus the national debt, are expected to continue to rise by $4 trillion—up from the current $31.4 trillion level. US government debt levels will therefore exceed $35 trillion by the time the next ‘debt ceiling negotiations’ occur. However, neoliberal capitalism is not concerned about rising debt levels per se. (Which means it is not at all traditional ‘liberalism’ in the historical sense of that term).
During the era of US neoliberal capitalism, which extends from 1978-79 to the present, US national debt has accelerated. When Reagan took office in 1981 it was less than $1 trillion. By 2001 it had risen to approximately $6 trillion. Starting 2001 the national debt accelerated sharply under George W. Bush, as Mideast war spending escalated and Bush era taxes were cut by $3.8 trillion simultaneously.
The US national debt further accelerated under Obama. When the latter assumed office in January 2009, the national debt was around $10 trillion. Obama then cut taxes and introduced spending totaling around $787 billion in his 2009 fiscal stimulus program. He subsequently then extended the Bush tax cuts another two years in December 2010, to 2012, when they were to expire in December 2010 after their initial 10 year period. That two year extension cost another $803 billion. Then, outdoing himself, starting in 2013 Obama once again extended the Bush era tax cuts, permanently this time, at an estimated additional lost tax revenue cost of $5 trillion.
Obama thus cut taxes, composed about 80% of cuts for businesses and investors, more than $6 trillion. The tax cuts, the slow economic recovery from the great recession that also reduced US tax revenues, and the $787 billion (plus another $50 billion or so for ‘cash for clunkers autos’ and first time home buyers assistance) spending in his 2009-10 fiscal stimulus programs, resulted in the US debt rising to about $18 trillion when Obama left office in January 2017.
Then came Trump’s $4.5 trillion additional tax cuts passed in December 2017, followed by year one (2020) of the Covid economic shutdowns and spending all of which pushed the national debt level to about $22 trillion when Trump left office.
The collapse of the economy in 2020-21 driving down tax revenues, the further tax cuts in 2020 through 2022, the continuing of Trump’s 2018 tax cuts, the bailing out of businesses in the various Covid economic stimulus bills of 2020-21, the roughly $3 trillion spent on households’ assistance during Covid, the mere 1% GDP growth in 2022 (December 2021 to December 2022) that depressed tax revenues, the funding of the Ukraine war ($200 billion in 2022-23), and Biden’s roughly $1.65 trillion spending on three business investment stimulus bills of 2022 (Infrastructure, Semiconductor & Manufacturing subsidy, and the energy industry misnamed ‘Inflation Reduction Acts), and the steady rise in interest on the debt from less than $300 billion in 2019 to estimated $600 billion in 2023—all converged to accelerate the national debt to its $31.4 trillion current level.
It is perhaps not coincidental that the tentative debt ceiling agreement (the 79ths in US history by the way, extends only to 2025. That’s when the $4.5 trillion Trump tax cuts of 2018 come up for a vote in Congress on whether to make them permanent instead of expiring in 2028. So we can expect another even more contentious debt ceiling crisis déjà vu in about two years.
The McCarthy-Biden Social Program Spending Cuts
As with all neoliberal fiscal policy measures, the deal’s 11%+ Pentagon-Defense spending increase—combined with the absence of any tax hikes in the deal—has meant cuts to social program spending.
The main cut in discretionary social programs is the agreement to freeze all 2024 fiscal year spending at 2023 levels, and in 2025 to allow a mere 1% increase in such spending.
On Monday, May 30 House Speaker McCarthy publicly bragged, when measured in dollar terms, the deal results in $2.1 trillion in social program spending reduction. Biden says it’s ‘only’ $1 trillion. The New York Times estimates the two year deal amounts to a cut in total discretionary spending—defense and non-defense—is 18%. However, since the Pentagon gets a 11% (plus more in 2025) increase, the net discretionary non-defense spending cuts are likely in the 20%-25% range.
Total available funds for discretionary social program spending—like education, transport, health, etc.—in the 2024 fiscal year is capped at $704 billion. But it’s really only $583 billion after $121 billion spending on Veterans is taken out of the $704 billion total non-defense. The US considers Vet spending as spending on social programs but it should be considered Defense spending.
The $583 billion for discretionary non-defense spending contrasts with the $886 billion for the Pentagon alone. Or $1 trillion for Pentagon and Vets. (And still more for other ‘defense’ costs distributed in other departments of the US government).
In other terms of the deal involving discretionary social program/non-defense spending:
An estimated $30 billion in unspent Covid funds is cut. That’s another de facto $30 billion taken out of the economy.
In environment policy, fossil fuel companies are now able to expedite reviews and obtain licenses quicker. And West Virginia Senator, Joe Manchin, gets billions in funding for his gas pipeline in his state.
Republicans get an initial ‘bite of the apple’, as they say, in work requirements for single adults as a precondition for receiving food stamp benefits. The prior age rule for work requirement was raised from 50 to 54, with exemptions for veterans and the disabled. McCarthy did not get his additional work requirement rule for recipients of Medicaid.
Biden gets to keep his $60 of his $80 billion to hire IRS agents. $20B is redirected to other spending. That means only 7200 more agents will be hired during the deal’s two years. The research arm of Congress, the Congressional Budget Office, has estimated if more agents were not hired then continuing tax avoidance and tax fraud would reduce tax revenues by $204 billion. (The CBO has also estimated that failure to raise taxes by ending Trump’s 2018-28 $4.5T tax cuts for business and investors results in a loss of $2.7 trillion in US government tax revenues).
Biden compromised with McCarthy as well on the subject of student loan forgiveness. In addition to preventing any student loan forgiveness, McCarthy wanted immediate restoration of student loan payments plus retroactive back interest added to loans during the Covid period moratorium. In exchange for McCarthy dropping these draconian proposals, Biden agreed to resume student loan payments this August 2023.
Deficits and Debt Continue
Previously it was noted that Neoliberal fiscal policy is fundamentally unconcerned with annual deficits and a rising national debt. That’s no less true in the current debt ceiling deal.
McCarthy may brag that the agreement amounts to a $2.1 trillion reduction in non-defense spending over two years due to the freeze and 1% caps. But the truth is that the annual deficits will continue to rise in the $1.5T to $2T per year range. Independent estimates are the US debt will continue to rise by $4 trillion by the end of the deal. That’s more than $35 trillion by the end of fiscal year 2025. Interest on that debt that year will rise to approximately $600 billion, up from less than $3 trillion in 2019.
The causes are obvious: No rescinding of Trump’s 2018 tax cuts (which the CBO estimates will add $2.7 trillion to the debt). Continued below historic average US GDP growth which reduces tax revenues as well. Third, an ever-rising Pentagon and Defense spending trajectory, as the US funds the Ukraine war while preparing for another, even bigger one in west Asia with China before the end of the decade.
Debt Ceiling As Political Theater
The US has raised the debt ceiling 78 times before the current negotiation. This writer has argued the recent negotiations are just a ‘debt ceiling dance’ and predicted it too will be raised, a 79th time. And it has.
It’s virtually certain the deal will be approved by both the US House and Senate and signed by Biden by next weekend at the latest. McCarthy’s margin in the House was a mere 217-215 vote in support of his initial proposals. By agreeing to a two year non-defense spending freeze and 1% caps—or in other words a $2.1 trillion and 18% discretionary spending cut—Biden clearly gave in far more than he needed to. One would have to conclude McCarthy and the Republicans came out ahead in the negotiations.
The House will vote on the deal on Wednesday, June 1, 2023 and will likely pass it. The Senate will take a little longer but will pass it as well by the weekend. Biden will sign by the weekend. Thereafter, both sides will ‘spin’ the deal and exaggerate their claims. They’ll both hide behind a claim that the economic sky would have fallen in had they not agreed. A dubious claim at best.
Then the real negotiations will begin. For the political theater surrounding the debt ceiling negotiations was in fact an attempt to renegotiate the Biden 2024 budget that commences next October 1, 2023. McCarthy simply used the debt ceiling issue to cut programs early. And he’ll come back for a second ‘bite of the apple’ at the end of this summer.
And if Biden’s negotiating performance during the debt ceiling negotiations is any indicator, he’ll get even more concessions from Biden
This content originally appeared on CounterPunch.org and was authored by Jack Rasmus.This post was originally published on Radio Free.
-
Photograph Source: The White House – Public Domain
Over the weekend, US House of Representatives speaker McCarthy and president Biden announced a tentative agreement on raising the debt ceiling. The deal—almost certain to pass Congress later this week—represents a typical Neoliberal fiscal policy deal.
Ever since neoliberal capitalism policies were introduced under president Carter in the late 1970s, and subsequently expanded dramatically under Reagan, Neoliberal fiscal policy has been characterized by accelerating Pentagon & war spending; simultaneous cutting of business-investor taxes; acceptance of consequent escalating budget deficits—and in turn US national debt levels; and the use deficit/debt to cap and reduce social program spending.
That Neoliberal fiscal policy mix of tax-spending-deficit policies mix clearly defines the recent McCarthy-Biden deal.
In the roughly two year agreement, extending from the present to the end of February 2025, Pentagon spending will rise by 11% in the 2024 fiscal year which begins October 1, 2023. That 11% is estimated at $885 billion. A further increase in Pentagon spending will certainly take place the following fiscal year, commencing October 1, 2024, but the deal doesn’t say how much further rise in Pentagon spending is projected for that second year.
Pentagon vs. Defense Spending
It’s important to understand that the $885 billion in Pentagon spending is not exactly the same as US defense spending. Around $200 billion more in defense related spending occurs in US government departments in addition to the Pentagon.
For example: all the oil costs for the US military (the largest single consumer of fossil fuels in the world) comes out of the Energy Dept. budget. Veterans benefits spending for past wars comes out of that dept. Then there’s CIA’s spending on mercenary and its own field forces. So too for the State Dept. which finances similar covert military activities. Part of Homeland Security costs can be considered defense. And then there’s the so-called ‘black budget’ of secret US military weapons development that never even gets reported in publications of the US budget or by the US press. That’s been estimated around $75 billion a year. So actual, total annual US Defense spending—in contrast to Pentagon spending alone—is probably around $1.1 trillion a year.
Taxation & the National Debt
Economists estimate that tax revenues, or lack thereof, are responsible for about 60% of deficits and therefore the debt (which is just the accumulation of annual deficits). Tax revenues are reduced as result of tax cutting and/or reduced revenues as a result of slow economic growth when recessions occur—or when post-recession recoveries are weak.
The McCarthy-Biden deal prohibits raising business-investor taxes the next two years. Businesses and investors will thus be assured that their Trump era $4.5 trillion in tax cuts, December 2018-28, will continue. Estimates of the cost of the lost tax revenues caused by the 2018 Trump tax cuts, from 2023 through 2028, will be about $2.7 trillion thus contributing significantly to a further rise in the national debt by 2025.
A Short History of US Debt Trajectory 1980-2025
That the McCarthy-Biden deal has nothing to do with the national debt is obvious from the fact two more years of US deficits, and thus the national debt, are expected to continue to rise by $4 trillion—up from the current $31.4 trillion level. US government debt levels will therefore exceed $35 trillion by the time the next ‘debt ceiling negotiations’ occur. However, neoliberal capitalism is not concerned about rising debt levels per se. (Which means it is not at all traditional ‘liberalism’ in the historical sense of that term).
During the era of US neoliberal capitalism, which extends from 1978-79 to the present, US national debt has accelerated. When Reagan took office in 1981 it was less than $1 trillion. By 2001 it had risen to approximately $6 trillion. Starting 2001 the national debt accelerated sharply under George W. Bush, as Mideast war spending escalated and Bush era taxes were cut by $3.8 trillion simultaneously.
The US national debt further accelerated under Obama. When the latter assumed office in January 2009, the national debt was around $10 trillion. Obama then cut taxes and introduced spending totaling around $787 billion in his 2009 fiscal stimulus program. He subsequently then extended the Bush tax cuts another two years in December 2010, to 2012, when they were to expire in December 2010 after their initial 10 year period. That two year extension cost another $803 billion. Then, outdoing himself, starting in 2013 Obama once again extended the Bush era tax cuts, permanently this time, at an estimated additional lost tax revenue cost of $5 trillion.
Obama thus cut taxes, composed about 80% of cuts for businesses and investors, more than $6 trillion. The tax cuts, the slow economic recovery from the great recession that also reduced US tax revenues, and the $787 billion (plus another $50 billion or so for ‘cash for clunkers autos’ and first time home buyers assistance) spending in his 2009-10 fiscal stimulus programs, resulted in the US debt rising to about $18 trillion when Obama left office in January 2017.
Then came Trump’s $4.5 trillion additional tax cuts passed in December 2017, followed by year one (2020) of the Covid economic shutdowns and spending all of which pushed the national debt level to about $22 trillion when Trump left office.
The collapse of the economy in 2020-21 driving down tax revenues, the further tax cuts in 2020 through 2022, the continuing of Trump’s 2018 tax cuts, the bailing out of businesses in the various Covid economic stimulus bills of 2020-21, the roughly $3 trillion spent on households’ assistance during Covid, the mere 1% GDP growth in 2022 (December 2021 to December 2022) that depressed tax revenues, the funding of the Ukraine war ($200 billion in 2022-23), and Biden’s roughly $1.65 trillion spending on three business investment stimulus bills of 2022 (Infrastructure, Semiconductor & Manufacturing subsidy, and the energy industry misnamed ‘Inflation Reduction Acts), and the steady rise in interest on the debt from less than $300 billion in 2019 to estimated $600 billion in 2023—all converged to accelerate the national debt to its $31.4 trillion current level.
It is perhaps not coincidental that the tentative debt ceiling agreement (the 79ths in US history by the way, extends only to 2025. That’s when the $4.5 trillion Trump tax cuts of 2018 come up for a vote in Congress on whether to make them permanent instead of expiring in 2028. So we can expect another even more contentious debt ceiling crisis déjà vu in about two years.
The McCarthy-Biden Social Program Spending Cuts
As with all neoliberal fiscal policy measures, the deal’s 11%+ Pentagon-Defense spending increase—combined with the absence of any tax hikes in the deal—has meant cuts to social program spending.
The main cut in discretionary social programs is the agreement to freeze all 2024 fiscal year spending at 2023 levels, and in 2025 to allow a mere 1% increase in such spending.
On Monday, May 30 House Speaker McCarthy publicly bragged, when measured in dollar terms, the deal results in $2.1 trillion in social program spending reduction. Biden says it’s ‘only’ $1 trillion. The New York Times estimates the two year deal amounts to a cut in total discretionary spending—defense and non-defense—is 18%. However, since the Pentagon gets a 11% (plus more in 2025) increase, the net discretionary non-defense spending cuts are likely in the 20%-25% range.
Total available funds for discretionary social program spending—like education, transport, health, etc.—in the 2024 fiscal year is capped at $704 billion. But it’s really only $583 billion after $121 billion spending on Veterans is taken out of the $704 billion total non-defense. The US considers Vet spending as spending on social programs but it should be considered Defense spending.
The $583 billion for discretionary non-defense spending contrasts with the $886 billion for the Pentagon alone. Or $1 trillion for Pentagon and Vets. (And still more for other ‘defense’ costs distributed in other departments of the US government).
In other terms of the deal involving discretionary social program/non-defense spending:
An estimated $30 billion in unspent Covid funds is cut. That’s another de facto $30 billion taken out of the economy.
In environment policy, fossil fuel companies are now able to expedite reviews and obtain licenses quicker. And West Virginia Senator, Joe Manchin, gets billions in funding for his gas pipeline in his state.
Republicans get an initial ‘bite of the apple’, as they say, in work requirements for single adults as a precondition for receiving food stamp benefits. The prior age rule for work requirement was raised from 50 to 54, with exemptions for veterans and the disabled. McCarthy did not get his additional work requirement rule for recipients of Medicaid.
Biden gets to keep his $60 of his $80 billion to hire IRS agents. $20B is redirected to other spending. That means only 7200 more agents will be hired during the deal’s two years. The research arm of Congress, the Congressional Budget Office, has estimated if more agents were not hired then continuing tax avoidance and tax fraud would reduce tax revenues by $204 billion. (The CBO has also estimated that failure to raise taxes by ending Trump’s 2018-28 $4.5T tax cuts for business and investors results in a loss of $2.7 trillion in US government tax revenues).
Biden compromised with McCarthy as well on the subject of student loan forgiveness. In addition to preventing any student loan forgiveness, McCarthy wanted immediate restoration of student loan payments plus retroactive back interest added to loans during the Covid period moratorium. In exchange for McCarthy dropping these draconian proposals, Biden agreed to resume student loan payments this August 2023.
Deficits and Debt Continue
Previously it was noted that Neoliberal fiscal policy is fundamentally unconcerned with annual deficits and a rising national debt. That’s no less true in the current debt ceiling deal.
McCarthy may brag that the agreement amounts to a $2.1 trillion reduction in non-defense spending over two years due to the freeze and 1% caps. But the truth is that the annual deficits will continue to rise in the $1.5T to $2T per year range. Independent estimates are the US debt will continue to rise by $4 trillion by the end of the deal. That’s more than $35 trillion by the end of fiscal year 2025. Interest on that debt that year will rise to approximately $600 billion, up from less than $3 trillion in 2019.
The causes are obvious: No rescinding of Trump’s 2018 tax cuts (which the CBO estimates will add $2.7 trillion to the debt). Continued below historic average US GDP growth which reduces tax revenues as well. Third, an ever-rising Pentagon and Defense spending trajectory, as the US funds the Ukraine war while preparing for another, even bigger one in west Asia with China before the end of the decade.
Debt Ceiling As Political Theater
The US has raised the debt ceiling 78 times before the current negotiation. This writer has argued the recent negotiations are just a ‘debt ceiling dance’ and predicted it too will be raised, a 79th time. And it has.
It’s virtually certain the deal will be approved by both the US House and Senate and signed by Biden by next weekend at the latest. McCarthy’s margin in the House was a mere 217-215 vote in support of his initial proposals. By agreeing to a two year non-defense spending freeze and 1% caps—or in other words a $2.1 trillion and 18% discretionary spending cut—Biden clearly gave in far more than he needed to. One would have to conclude McCarthy and the Republicans came out ahead in the negotiations.
The House will vote on the deal on Wednesday, June 1, 2023 and will likely pass it. The Senate will take a little longer but will pass it as well by the weekend. Biden will sign by the weekend. Thereafter, both sides will ‘spin’ the deal and exaggerate their claims. They’ll both hide behind a claim that the economic sky would have fallen in had they not agreed. A dubious claim at best.
Then the real negotiations will begin. For the political theater surrounding the debt ceiling negotiations was in fact an attempt to renegotiate the Biden 2024 budget that commences next October 1, 2023. McCarthy simply used the debt ceiling issue to cut programs early. And he’ll come back for a second ‘bite of the apple’ at the end of this summer.
And if Biden’s negotiating performance during the debt ceiling negotiations is any indicator, he’ll get even more concessions from Biden
This content originally appeared on CounterPunch.org and was authored by Jack Rasmus.This post was originally published on Radio Free.