The travails of West Virginia Senator Joe Manchin have been well documented on these pages and the pages of many other news sites. He’s lionized on the right for standing in the way of the radical juggernaut looking to transform the country. He’s vilified by the left for his stubborn refusal to kowtow to the president and spend trillions of dollars we don’t have.
But Joe Manchin’s biggest sin against both parties is his desire to bring rational thinking back to the government. And he’s just old-fashioned and curmudgeonly enough to do it.
“Spending trillions more on new and expanded government programs when we can’t even pay for the essential social programs, like Social Security and Medicare, is the definition of fiscal insanity,” he wrote earlier this week.
Who in Washington talks like that anymore? Manchin’s old-fashioned thinking includes the forgotten notion that spending lots and lots and lots of money will drive inflation higher and raise taxes when we’re forced to pay for these trillions in borrowed money.
“I can’t support $3.5 trillion more in spending when we have already spent $5.4 trillion since last March,” Manchin said. “I cannot—and will not—support trillions in spending or an all or nothing approach that ignores the brutal fiscal reality our nation faces.”
He’s a dinosaur. But everyone knows he’s right.
Well, maybe not everyone:
THERE IS NO BRUTAL FISCAL REALITY THE NATION FACES; IT IS ENTIRELY MADE UP!
— Chris Hayes (@chrislhayes) September 29, 2021
I’d go further and argue not only is debt not bad, it’s actually in current circumstances *affirmatively good.* As the world’s reserve currency, have a moral obligation to do what we can to help power a global economic recovery from Covid and lead the way on climate investment.
— Chris Hayes (@chrislhayes) September 29, 2021
The MSNBC host is brain dead. In fact, neither Manchin nor Hayes knows what will happen after spending the trillions that Biden wants to spend. It’s a crapshoot — a “riverboat gamble,” as Senator Howard Baker referred to President Reagan’s massive tax cut in the 1980s. The radicals hated that tax cut and are still trying to get taxes back to the level they were when Reagan took office.
The tax bill passed by Republicans in 1981 lowered the top marginal tax bracket from 70 percent to 50 percent and the lowest bracket from 14 percent to 11 percent. Subsequent Republican tax breaks lowered the top rate to 35 percent which was then raised by Barack Obama to its current 39 percent.
“America is a great nation but great nations throughout history have been weakened by careless spending and bad policies,” Manchin said Wednesday. “Now, more than ever, we must work together to avoid these fatal mistakes.”
Otherwise, we need to prepare for fiscal Armageddon.
While he did not specifically invoke the $28 trillion national debt or the federal government’s current budget deficit, Manchin obviously wants to draw Congress’ attention to the massive disconnect between how much the government spends and how much it collects in taxes. According to the Congressional Budget Office (CBO), the national debt will exceed the size of the U.S. economy by the end of this year and will continue growing as annual budget deficits pile up over the next few decades. “A growing debt burden could increase the risk of a fiscal crisis and higher inflation as well as undermine confidence in the U.S. dollar, making it more costly to finance public and private activity in international markets,” the CBO has warned.
Higher levels of debt mean higher interest costs and larger sums of money that must be dedicated to debt service. Every dollar spent paying for the cost of carrying so much debt is a dollar that can’t be used on something else. If interest rates rise even just a few percentage points, the cost of servicing $28 trillion (and counting) of debt will skyrocket.
Indeed, debt servicing could easily be the ruination of the country. We’ve been floating along the last decade dealing with zero or near-zero interest rates. But now the Fed is promising to raise interest rates beginning next year. As the debt grows so do interest payments. Eventually, we may be forced to pay up to 40% of the budget in order to service the debt. That simply isn’t sustainable.
The shackles have come off spending constraints. The excuse used now is the pandemic. But does this mean when the pandemic ends that we’ll stop spending ourselves into penury? Manchin knows that’s not true, which makes him possibly the last rational man in Washington.