Saturday, June 17, 2017

WisGOPs want DC to do what they won't in Wisconsin- reduce debt

You may have heard that the Wisconsin Assembly passed a resolution this week that was promoted by the American Legislative Exchange Council (ALEC), and calls for a convention to pass changes to the US Constitution. You can read State Rep. Chris Taylor's column on what a load of crap this oligarch-driven movement is, and how dangerous it could become.

But I wanted to concentrate on the fiscal arguments which were used by Wisconsin Republicans to pass this resolution. They claimed that the US's national debt was a fiscal problem that threatened to destabilize the country, and required this drastic measure.
During debate in the Assembly on Wednesday, several Republicans cited a nearly $20 trillion national debt as the reason that states need to push for a federal balanced budget amendment.

"If you look at history, at the great empires, it wasn't the sword that brought those empires down, it was the financial burden," said Rep. Dale Kooyenga, R-Brookfield. "One of the greatest threats to our national security is excessive debt."
Assembly Speaker Robbin' Vos also used the "$20 trillion number" as a scare tactic, and implied a Constitutional Convention to pass the balanced budget amendment (and any other piece of ALEC crap they decided to try to jam through) would be a way to keep Congress in check from the "dangers of overspending".

But these Republicans need to take care of their own backyard first, and need to learn a little about government finances before they start trying to slash federal spending (and make no mistake, that would be what they would do. Raising taxes on the rich to shore up the regular budget and Social Security/Medicare is not something the ALEC crew will consider).

Let's go into detail about two terms that are frequently thrown around in this "balanced budget" talk, since many people mess them up, including elected officials. And then we will also show why Federal finances and state finances should not be put on the same level, and I will leave out the obvious point that states don't have a military that can be called into wars and other international issues.

1. Deficit/surplus- The difference between revenues and expenses in a given amount of time. Part of this calculation includes payments on debt in a given year or years, but doesn't reflect the overall amount of money that has to be paid out over time. In addition, when people like Robbin' Vos and other ALEC stooges say "states have to balance their budgets," they are referring to the amount of money coming in and out in that year. What they aren't mentioning is that borrowing isn't taken into account in a state's "balanced budget", except for the amount of money used to pay off debt (aka "debt service") in a given year or biennium.

This is how a state's debt can rise while a state budget is balanced, and their expenses to pay off the debt may even be lower. This is much like how you may take out a mortgage or pay for something with your credit card, but your checkbook balance won't change other than when you make payments to pay back that debt. Another important difference is that when we hear the Federal Budget is running a deficit, that's because the Feds count ALL spending in their budget as it happens, regardless of whether they are borrowing or paying "cash" for their services. When we run a deficit in DC, most of the funds are paid back by selling Treasury Bonds and notes, including buildings and highway construction that are usually "off the books" in Wisconsin's calculation of a "balanced budget."

If this ALEC convention were ever to happen, we'd need to define whether borrowing could also be taken off the books in DC. If so, it's possible not much would change at all, but it doesn't seem like the definition of a "balanced budget" is ever given when these bills come up. This difference between federal deficits and state "balanced budgets" is never mentioned, perhaps by design by the ALEC crew to scare the average dope into approving of spending cuts that harm their own communities.

2. Debt- The total amount of money that is owed and has to be paid off at some point. That time period could be 30 days from now, or it could be 30 years, and it could be refinanced down the road into better terms or extend the time that the bills should be paid off. I bet many of you owe more on your houses + credit cards + student loans than what you make it a given year, but I also bet you're not claiming bankruptcy, because you are confident in making enough money now and in the future to be able to eventually pay these items off. But Robbin' Vos and Koo-Koo Kooyenga are crying crocodile tears about the alleged "Strongest Country in the World" not being able to pay its bills because it has racked up nearly $20 trillion in debt. That number sounds like a lot, but that debt takes a variety of forms, and some of it includes 30-year US Treasury Bonds and Social Security and Medicare payments on young workers that won't have to be paid for 40 years.

In fact, if you look at the Federal Government's debt payments during the Obama Presidency, it hasn't really hurt our overall budget that much. In recent years, we are paying less for interest on the federal debt than the $244 billion that we paid 20 years ago in 1997. Low interest rates and a declining deficit throughout most of the Obama presidency means that these expenses have been stable for much of the 2010s, with the only notable increase coming in 2016.

Of course, the economy has grown throughout that time period shown, so revenues have been more than sufficient to cover these extra expenses. This means there is no immediate debt crisis issue to worry about in America, although if you want to care about what happens in the future as Boomers retire and fewer people replace them, then you may have a point. But the size of our country's debt isn't causing any real fiscal strain as of now, and with us coming on 6 straight years of our 10-year note being below 3%, and a current 10-year yield of 2.16%, lenders aren't showing concern about taking our debt or debt-related inflation any time soon.

(Side note, this reference page from the Congressional Budget Office is a great place to find historical budget information, so you can cut through the BS).

And you know who else doesn't care about adding debt? Scott Walker and the WisGOP Legislature. Heck, Walker and Senate GOP Leader Scott Fitzgerald seem to be fine with borrowing the state into oblivion to repair roads rather than make people pay another dime in gas or property taxes. This includes the possibility of using General Fund borrowing to do it, even though that would squeeze funding for schools and human services in future years.

That's not a new trend either. Since Scott Walker and the Wisconsin GOP have taken power in 2011, Wisconsin's General Obligation debt (for regular government borrowing) and total debt (which includes items like debt for the Transportation Fund and other dedicated funds) have risen, and both are now at record levels.

(numbers are taken from Wisconsin's Comprehensive Annual Fiscal Report (CAFR) as well as the offering document for the state's latest plans to refinance $342 million in debt)

What's ironic is that while the debt for our Federal Government won't cause any problems in our current budget (other than interest rate risk from more borrowing or possibly increasing the deficits in future budgets from increasing debt payments), increasing debt is a problem for the 2017-19 and 2019-21 budget because those debt payments have to be accounted for every year, and the payments count against a "balanced budget". If those debt payments go up, then it crowds out other state spending in that given 1-2 year period.

Of course, the ALEC crew is fine with this, which is why they want to impose this stupid requirement on the federal government, because as State Rep. Jimmy Anderson (D-Fitchburg) pointed out, this could lead to cutting programs like Social Security and Medicare, which is something that Republicans could not away with if they tried it as a standalone bill.
"If that's what you want, there's a process to accomplish those goals that doesn't require a constitutional convention," Anderson said. "They're called elections. Run on it. Run on cutting Medicare. Run on cutting our military budget. Run on dismantling the federal government."
But Jimmy, then Republicans would have to actually admit to their bad policies and fiscal recklessness from cutting taxes for unproductive rich people and corporations, and that's not something they want the voting public to know.

And if Koo-Koo Kooyenga and Robbin' Vos are so concerned about the size of our debts at both the state and national level, then maybe they should stop supporting tax cuts to the rich and corporate that are a big reason behind that problem. Until they say that, they truly don't give a damn about the national debt, and are crying crocodile tears as an excuse to screw over poor people and other constituencies that aren't GOP donors. It's well past time that these duplicitous dimwits be called out for their cynicism and fiscal illiteracy.


  1. Let's be clear: Knuckle-dragging nincompoops like Jake here don't give a good God's damn about the poor. It's nothing more than a fake concern to hide behind, to keep their own lard-dripping government paychecks coming. The irony is, unless some form of fiscal restraint is forced on these greed-heads, eventually the taps will run dry. They're just hoping to run out the clock; screw the next generations. As long as they get theirs. The Act 10 protests and the Milwaukee County pension disaster proved that.

    1. This comment has been removed by the author.

    2. As was so accurately stated in the movie Billy Madison.

      "What you just said is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought.

      Everyone in this room is now dumber for having listened to it. I award you no points, and may God have mercy on your soul."

      Can't refute the facts, can you Bradley boy?

  2. Bradley boy can't handle the truth.