Macro Monkey Says
New McCarthyism…?
Senator Joseph McCarthy, a Wisconsin Republican who served from 1947-1957, was quite the mover and shaker in Washington back in the day. Overall this guy seemed to be pretty mid (I‘m not a damn historian), but there is one thing for which this guy can never be forgotten: communism.
His outright genetic aversion to communism sowed the seeds for America’s hatred of it. Like Joe, our new McCarthy-branded leader is pretty terrified of one particular thing.
That, of course, is a debt ceiling breach, and House Speaker Kevin McCarthy came out hot on this topic yesterday.
As this story could very well become the defining economic event of the year, or just another last-second vote to avoid destroying the country, it seems worthwhile to revisit. Oh yeah, and the “X Date” – aka the date on which the Treasury can no longer pay its obligations – could be as few as just weeks away.
Anyway, McCarthy came out fired up with a speech that was essentially one long subtweet at Uncle Joe. He condemned what he sees as President Biden and his administration’s unreasonable spending, slinging potentially the hardest-hitting line of the day when he said, “a no-strings-attached debt limit increase cannot pass,” meaning Republicans demand spending restraints and reform to avoid what would certainly be a collapse of the US economy.
Let’s keep in mind some facts (that’s all they are):
Taken together, this tells us one thing: discretionary spending has been wildin’.
Let’s be clear because I can feel your political funny bone tingling, but both of the past two administrations have authorized some of the largest spending packages in history. No one’s perfect; we’re all just trying our best (right?).
Basically, McCarthy called for the promise that fiscal discretionary spending slow to 1% per year for the next 10 years without touching entitlement programs like social security and medicare in exchange for House Republicans to agree to a ~1-year lift on the national debt ceiling.
Naturally, volcanoes erupted in response. Republicans in the press are hyperventilating at the prospect of cuts to defense spending to match what Democrats largely view as just as tear-inducing spending on discretionary programs.
The big concession out of the Speaker was the lack of cuts to social security and medicare, which is all too predictable from a guy that’s about to be able to withdraw penalty-free from his IRA(s).
Regardless of whatever bullsh*t these overachieving nepo-babies inevitably stir, everyone expects this to come down in classic American government style – at the absolute last minute. Still, the big fear remains a US debt default, which some say is not only a last-cent scenario but literally unconstitutional.
See, amid all the money pissing, the Treasury actually does continually take in gobs of revenue. Experts expect the department to continue to make plenty in the meantime so that, if needed, it could direct as much cash as needed to avoid a default on our obligations. Losers – excuse me, *lawyers and other law nerds – claim the 14th Amendment effectively bans any national debt default, which kinda sounds like a Robinhood-style infinite leverage glitch if you ask me.
Buckle up.
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