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Newsletter | January 4, 2024

New Year, Same Times

Economic PolicyIndependent Agencies
New Year, Same Times

This newsletter was originally published on our Substack. Read and subscribe here.

Good afternoon and happy New Year to you all! For many, this time of year offers the promise of a clean slate—the potential to re-evaluate the previous 365 (or more) days and the motivation to avoid repeating past mistakes. As the saying goes: “new year, new me.”

Unfortunately, this spirit of introspection seems to have been lost on many in the mainstream media as they gear up to cover yet another round of federal government funding negotiations. The new year has brought with it a fresh wave of anxiety over the possibility of a government shutdown as Congress faces two looming deadlines on January 19th and February 2nd. 

If this all sounds familiar, well, that’s because it is. The aforementioned deadlines were set back in mid-November by House Speaker Mike Johnson (R-LA)—and acquiesced to by Democrats led by President Biden & Senate Majority Leader Chuck Schumer (D-NY)—to avoid a shutdown. Under this staggered continuous resolution design, one batch of traditional appropriations bills (Agriculture, Rural Development, and the Food and Drug Administration; Energy and Water Development; Military Construction and Veterans Affairs; and Transportation, Housing and Urban Development) are funded until the 19th. The remaining eight appropriations bills—Defense; Commerce, Justice and Science; Financial Services and General Government; Homeland Security; Interior, Environment and Related Agencies; Labor, Health and Human Services and Education; The Legislative Branch; and State and Foreign Operations—maintain funding until February 2nd. Johnson’s ‘successful’ negotiations this round were preceded by similar crunchtime negotiations made back in late September by then-Speaker Kevin McCarthy (R-CA). While McCarthy was able to avoid a government shutdown under his watch, the process ultimately saw him removed from his position by his party mates, largely thanks to efforts by hardline Republicans in the Freedom Caucus.

If that recap sounds convoluted, it’s not because you are confused. As my colleague Fatou Ndiaye explained last year in Democracy Journal, the chaos that has come to accompany funding our federal government is by design. Republicans have weaponized the budget process to hinder government efficiency since Newt Gingrich. By favoring the passage of twelve separate appropriations bills, as opposed to one large omnibus budget, Republicans can—and have—wielded the threat of shutdowns to extract concessions from Democrats in the form of devastating cuts to government spending. 

And yet, while you would think that this constant can-kicking would elicit a more complete examination of the issue from those tasked with covering it, we are instead forced to (re)confront the myopia of our political media and pundit class. Nowhere has this phenomenon been more recently evident than in the pages of the New York Times, where its reporters have decided to enter the new year by doubling down on old habits. 

Take for example the first edition of “The Morning” newsletter, which the Times published on Tuesday.  Author German Lopez attempts to impress upon readers why “the debt matters again,” citing three reasons—rising interest rates, low unemployment rates, and inflation. Lopez ultimately urges the government to raise taxes and cut spending “​​in ways that many Americans will find unpleasant.” 

To understand the raw economic demerits of Lopez’s argument, I would urge you all to read Dean Baker’s response as well as David Dayen’s recent piece digging into the mechanics of looming budget cuts.

The focus of this newsletter will be on how such a narrow conception of ‘economics’ sidesteps more tangible reasons for why the American public should be concerned about the deficit. Unfortunately, Lopez seems almost entirely unconcerned with the larger implications of these negotiations, as evidenced by his painfully vague explanation of how the deficit has even become an issue in the first place:

“Both parties have contributed to the situation. Republicans have passed large tax cuts. Democrats have enacted ambitious climate and health care initiatives. Both funneled money to Americans in response to the pandemic […] Both parties have offered partial solutions to the growing debt. Democrats favor higher taxes on the rich, and Republicans favor cuts to Medicaid and some other federal programs. But each party has mostly blocked the other’s proposals, allowing deficits to add to the debt year after year. Even if the preferred policies of each party eventually are enacted, they do not come close to solving the problem. Neither party is willing to cut the biggest government programs: Social Security, Medicare and the military. And both have ruled out tax increases on most households. This dynamic — politicians criticizing deficits without offering a real solution — is not new. The shifting economic circumstances, however, could make the gridlock more damaging.”

The above passage is concerning for two main reasons. For one, some of Lopez’s assertions are just plain incorrect. The idea that neither party is willing to cut Social Security or Medicare only works if you ignore everything Republicans have repeatedly threatened for decades. But one doesn’t even have to go back that far in history to find evidence of Republican antagonism towards those programs. As Social Security Works highlighted in a thread responding to Lopez’s article, Donald Trump proposed cuts to Social Security and Medicare each year of his presidential tenure. Likewise, one of Mike Johnson first actions as speaker—in attempting to make good on his promises as the former Chair of the Republican Study Committee—was vowing to form a bipartisan debt commission to address “ballooning spending on Social Security and Medicare.” Although both Trump and Ron Desantis have tried to distance themselves from broader GOP attacks against benefit programs while on the campaign trail, their respective histories of governance tell a different story (for what it’s worth, 2024 hopeful Nikki Haley has fully leaned into benefit hawkery).

The second reason is broader and, unfortunately, far more pervasive in mainstream political journalism as a whole. Lopez’s insistence on placing equal blame on Democrats and Republicans for “runaway federal spending” allows questions of political power to be entirely omitted from discussions of government debt. Which is to say that the true dangers of the deficit have less to do with its objective size and more to do with the narratives Republicans build around the specter of $34 trillion. 

As Ryan Cooper pointed out during the debt ceiling negotiations that gave rise to this whole ordeal last May, Republicans who are supposedly ideologically committed to reducing the deficit wouldn’t have rejected proposals by the Biden administration to raise revenues, or continue to protect Trump-era tax cuts. Similarly, our colleagues Eleanor Eagan and Hannah Story Brown have noted that true deficit scolds would welcome additional funding to Internal Revenue Service, which could raise revenue by cracking down on tax cheats, and several other agencies whose “enforcement wings bring in more in fines to the federal Treasury each year than they cost.” Yet revenue raising, whether that be through corporate crackdowns or progressive taxations, never seems to be an option for Republicans. Instead they’d rather use deficit brinksmanship as a tool to force their unpopular agenda onto an uninterested public. Given that the Republican playbook is both obvious and over a decade old, it’s time for mainstream media to start covering it as such. 

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Want more? Check out some of the pieces that we have published or contributed research or thoughts to in the last week:

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You’re A Mean One, Mr. DeJoy

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Bidenomics Needs A Corporate Crackdown On Rent-Gougers

Corporate Headhunters Shouldn’t Control Who Can Be a Fed Reserve Bank President

Image credit: “National Debt” by cafecredit is licensed under CC BY 2.0.

Economic PolicyIndependent Agencies

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