Several of us were involved today in what has become a bi-weekly conference call with Congressman Kevin McCarthy (R-CA). Today’s guests were John Campbell (R-CA), Patrick McHenry (R-NC), and (in a surprise to everyone included Rep. McCarthy) Paul Ryan (R-WI) (via a phone-in from somewhere else in the buildings).
The main topic was once again The Budget….
Some reporting below the fold….
Congressman Campbell spoke first:
o He noted how he’s always thought of the Democrats as being the party of “tax and spend”…. “but in all my years….” as he started to say that, I jotted in my notebook “never seen anything like this” – and then Mr. Campbell uttered that exact phrase…. that speaks for itself.
o He also called the budget “a spending orgy”;
o Contrary to what we were all told, this budget increases taxes on EVERYONE
o He said that he had been looking into what it would take to make this budget and future budgets even come close to balancing – and concluded that EVERY federal tax would have to increase by 30% to have any chance of covering it all.
Congressman Ryan spoke next.
o “This is a unique moment in our history.”
o The President is exploiting the crisis – not solving it.
o He will be introducing the “alternative” (Republican caucus) budget tomorrow morning.
Congressman McHenry then added a few comments.
o It’s noticeable that Republicans on Capitol Hill are now referring to “cap and trade” as “cap and tax” at last – since that’s what it is. Cap-and-tax is a huge tax increase on EVERYONE.
o Under the Obama plan, we’re looking at $1.4 trillion in tax increases.
A number of interesting points arose during the Q&A….
o The topic of the ability (of lack thereof) in future to successfully auction debt came up again – and it was noted that in addition to the January and February failures of German debt auctions, the British government failed to auction $2.5B last week…. and last week’s U.S. 5-year note auction went poorly (the interest rate had to be increased at the last moment to make sure that all the notes could be auctioned).
o Rep. Ryan noted that the Fed has been stepping in to buy T-bills – which is the contemporary equivalent (or one of them) to “printing money.” This is one of the nightmare scenarios, of a cascade failure from the budgets (too much borrowing, leading to the Fed battening the gap, leading to the debasement of the dollar).
o Rep. Campbell also noted what appears to be a softening of demand for Treasury bills – once again raising the scenario of inability to auction all the debt that the new budget(s) demand(s). (I’m actually beginning to think that we may be seeing the limiting factor in these massive spend-and-borrow plans – the appetite for buying up this debt may indeed be fading.)
o There was a question about the situation with the “blue dog” Democrats – who are supposed to be fiscal conservatives – and this provoked quite a discussion. The basic across-the-board take from the Congressmen was that if there were indeed as many “blue dogs” as we had been led to believe, they could stop this budget nonsense in its tracks. But it appears that other than maybe a couple of exceptions, all the supposed “blue dogs” are marching behind Nancy Pelosi’s banner. Rep. McCarthy’s terse summary was that “I don’t believe there are any more blue dogs.” (If that’s the case – particularly given the number of so-called “blue dogs” elected from conservative-leaning districts in 2006 by campaigning on “fiscal responsibility” – this should have important consequences in the 2010 midterms….)
o It was hard to parse the voices, but most or all of the four Congressmen on the call said that they plan to personally attend the “tea parties” in their districts on 15 April. Congressman Campbell noted that at a recent “tea party” event back in his district in Orange County (CA), they were expecting to get maybe 700 people…. and got 15,000.
All for today….