Right before Christmas, GOPs showcase the Two Santas

Unlike last year, there's no federal government shutdown at Christmastime this year. And that's because President Trump signed a budget deal last week that both the Democratic-led House and GOP-led Senate agreed to, as all sides decided to keep things running smoothly ahead of the 2020 election.

President Trump on Friday signed two spending packages totaling $1.4 trillion, averting a government shutdown at midnight.

The bills included all 12 annual appropriations bills for the 2020 fiscal year that started Oct. 1. They also included a slew of tax cuts, extending expiring and expired tax breaks and eliminating other taxes that amount to an additional $426 billion in lost revenue, bringing the total cost of the bill to more than $1.8 trillion.

The government spent the first quarter of the fiscal year operating on stopgap funding that was set to expire on Friday. Trump reportedly signed the bill while aboard Air Force One en route to Mar-a-Lago for the holidays....

Congress also agreed to scrap three taxes intended to pay for Obamacare. Eliminating those three taxes alone will add $373 billion to the deficit over a decade, the lion’s share of the bills’ lost revenue. Negotiators extended energy credits for biofuels and wind power, but not for solar or electric car manufacturers.

These parts of the budget deal will add even more to a deficit that was already projected to climb over $1 trillion in the current fiscal year. Trump/GOP "fiscal conservatism", you know.

But it's actually in line with how things have gone over the last 2 years, which have shown yet again that Republicans really don't care about cutting government spending, and instead, GOPs admit that more funding helps to keep our 10-year expansion going. Economist Paul Krugman noted this in a series of tweets that also served to commemorate the 2 year anniversary of the GOP Tax Scam being passed into law. In that time, business investment has NOT picked up after having their taxes cut, but something else has.

But you know what has been boosting the economy? Government spending. Austerity was a big drag on the economy as long as a Dem was in the White House; it suddenly went away under Trump 4/ pic.twitter.com/HEp8GiFYf0

— Paul Krugman (@paulkrugman) December 24, 2019

So the story of the Trump economy is that mostly it's a continuation of the Obama trend, but with the addition of politically weaponized Keynesianism: austerity for Dems, stimulus for Trump 5/

— Paul Krugman (@paulkrugman) December 24, 2019

Remember how at the start of the 2010s, Republicans were crying all of these tears about the deficit/debt, and how this would hamper "their children/grandchildren." Therefore, they claimed President Obama couldn't spend as much to help the economy recover from the Great Recession. But now, as the 2010s are ending, Republicans are more than happy to break out the government's credit cards to throw money around.

At the same time, Trump has jawboned the Federal Reserve to lowering interest rates from where they were this Summer, and the massive amounts of public and corporate debt has led the Fed to conduct numerous repo operations to allow bills to be paid. Given that these stimulative measures are happening at a time of full employment, it's led stocks and other assets to Bubble higher and give the impression of a strong economy.

Which allows me to use Christmas Eve to talk about the "Two Santa Clauses" theory of fiscal policy, which is a cynical type of politics that Republicans have subscribed to for the better part of 40 years.

Radio host Thom Hartmann gave a great description of how this works in a column released last year, a couple of months after the Tax Scam became law.

Republican strategist Jude Wanniski first proposed his Two Santa Clauses strategy in 1974, when Richard Nixon resigned in disgrace and the future of the Republican Party was so dim that books and articles were widely suggesting the GOP was about to go the way of the Whigs. There was genuine despair across the Party, particularly when Jerry Ford began stumbling as he climbed the steps to Air Force One and couldn’t even beat an unknown peanut farmer from rural Georgia for the presidency.

Wanniski was tired of the GOP failing to win elections. And, he reasoned, it was happening because the Democrats had been viewed since the New Deal as the Santa Claus party (taking care of people’s needs and the General Welfare), while the GOP, opposing everything from Social Security to Medicare to unemployment insurance, was widely seen as the party of Scrooge.

So what would Republicans do to avoid look like miserly Scrooges? TAX CUTS, and not have them be combined with the austerity of spending cuts.

For working people it would only be a small token – a few hundred dollars a year on average – but would be heavily marketed. And for the rich, which wasn’t to be discussed in public, it would amount to hundreds of billions of dollars in tax cuts.

The rich, Reagan, Bush, and Trump told us, would then use that money to import or build more stuff to market, thus stimulating the economy and making average working people richer. (And, of course, they’d pass some of that money back to the GOP, like the Kochs giving Paul Ryan $500,000.00 right after he passed the last tax cut that gave them billions.)

There was no way, Wanniski said, that the Democrats could ever win again. They'd be forced into the role of Santa-killers by raising taxes, or anti-Santas by cutting spending. Either one would lose them elections.

So Republicans give away money in a slightly different way than Democrats, but they give money away nonetheless. At least Dems have asked for taxes to pay for their high levels of spending. By comparison, Republicans run up spending on the military and won't cut spending on anything (except things like food stamps to poor people, because those people don't matter to Republicans).

After all, if there's something the 2010s have proven, it's that high fiscal deficits don't necessarily lead to high interest rates. As the federal deficit has risen since the Tax Scam was passed at the end of 2017, the yield on the benchmark 10-year Treasury note has dropped.

So if interest costs aren't rising and keeping people from spending, and Trump and other Republicans know they badly need the economy to avoid a recession that it is logically due to happen, they're more than happy to keep money pumping out as much as possible to keep the "growth" going. So they're more than glad to pull this two-step where they throw away their alleged belief in low government spending and reduced deficits.

Does that mean Dems should also stop asking for austerity and deficit control? No, because rising debt costs have to cause problems at some point, but the austerity can be of a different type. Make the rich and corporate have to tighten their belts this time, in the form of reversing the many breaks they've received from the GOP Tax Scam, and crack down on incentives that encourage stock buybacks over actual production and reinvestment. And then use those higher tax revenues to give stability to everyday Americans through universal health care and grow the economy through investment in infrastructure and other public goods.

For now, the average American consumer is continuing to spend and keep the expansion going. But when this Bubble inevitably bursts and/or Democrats take power again, you can bet the Republicans will become "concerned" about the deficit again, and try to trap Dems into limiting the programs that they believe in (like Social Security, Medicare and Medicaid), and try to limit the recovery from the hard economic times that reckless GOP policies have helped to cause.

Hey, it worked for the GOP in the 2010s, why wouldn't they try it again?