Max Headroom
How to make sure your next debt ceiling crisis is someone else’s fault. Plus, this weeks news.
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Hey Everyone,
Yesterday was Groundhog Day, a perfect day to blame someone other than fossil fuels for the weather.
As it turns out, blaming someone else is the name of the game.
I'll get to that in a minute...
But first, let's get to The News.
Hot Takes
Week 05 of 2023
Tyre Nichols
Last week, news broke of a traffic stop in Memphis that led to the death of Tyre Nichols on January 7th after receiving a beating from five police officers, caught on video. Race is considered an issue in the case, but it's worth noting that while Nichols is black, the five officers are too. Those five officers were part of a specialized team known as the SCORPION unit, a name which, in hindsight, is now better known as "BAD PR," considering the connotations of a poisonous arachnid.
According to reports, instead of the mean-sounding SCORPION acronym that stands for "Street Crimes Operations to Restore Peace in Our Neighborhoods", branding advisors were said to have suggested naming the unit after something more cuddly like KOALA, which stands for "Kick Our Awful Crime's Legal Ass."
Unfortunately, branding can't fix everything, and the unit has been shut down, and at least seven officers involved in the altercation have been relieved of duty. The five accused of beating Nichols have been charged with second-degree murder.
(Here's a summary of the incident for those who missed it)
Wagner the Dog
In Ukraine, the war wages on, with Putin still committed to winning – although it looks more like a cow winning his battle with a meat grinder. No matter how big the cow is on one side, it's still burgers on the other side. One soldier described the current wave of the war as akin to a Zombie Apocalypse, largely consisting of untrained Wagner soldiers, many of them prisoners, charging in large waves, often to find out they are just meat sent to the front lines. (more)
Spill it, Jerome
Powell kicked up the interest rates by a baby-sized quarter point, and people are loving it. This week's increase is brought to you by egg prices so high we're expecting eggs to cook themselves. (more)
FBI Searches Biden Vacation Home
The FBI searched Biden's vacation home and only found several Hawaiian shirts and a trimmer to shave his back hair. No classified documents, which, according to my wife, is the way it should be on vacation. Leave work at work. (more)
China Spy Balloon
The Pentagon announced they identified a Chinese spy balloon above the Pacific Northwest, eventually hovering over Montana. Officials believe that Xi Jinping may have been holding the balloon at a birthday party and then accidentally let it go. (more)
Tom Brady is Retiring Again
Finally. (more)
That's it for the news. Now here's The Gist.
Hitting the Ceiling
The Gist
It's getting to the point where when the United States gets a phone call, it answers, "I know I owe you money," just so it can address the elephant in the room. An elephant that is 31 trillion large.
The national debt includes the debt it owes itself, which explains all the political infighting. We're irritable because we owe us money, and we're tired of being ignored.
The national debt, despite our repeated efforts to change the subject, has come to the fore as of late because, well... we're going to need a few more bucks just to get us through a tough spot, but we promise we're on to something big.
The limit on how much we can borrow is set by Congress, and ultimately, "we need to talk" because we've hit that limit early this year. Fortunately, this is a perfect opportunity to jockey for power since two big spenders (known as Republicans and Democrats) will need to blame the other for their problems.
McCarthy and Biden met earlier this week to discuss the debt ceiling. According to reports, both struck an optimistic tone. McCarthy, that the two of them will be able to find common ground, and Biden, that McCarthy looked weak after a contentious election to Speaker.
McCarthy, albeit a little pale, has cards to play, but having made unwanted concessions to the extremist wing of his party, finds himself without the better hand.
The President's team said he would ask McCarthy two questions in their Wednesday meeting. One "Will you commit to the US not defaulting on its financial obligations?" and two, "What's this on your shirt? A republican budget proposal!?!?" after which the President will lift his pointed finger to boink Kevin in the nose just as he looks down.
The Republican position has been that "lifting the borrowing cap must be tied to spending reductions," which is a great conservative talking point. However, the reality is just the opposite since current tax revenues are subject to Trump-era tax cuts under a Republican triple majority. Current spending has been passed by both parties. A budget shortfall may be a bipartisan problem, but the latest version is a Republican design.
And you can't control spending by lowering cash flow.
It's reasonable to lump blame on Democrats as well. Based on an autopsy of the last 20 years and four presidents, two Republicans, and two Democrats, the added debts for both parties are roughly 13 trillion each. The blame between parties remains muddy – because policies transcend presidents. Between the two parties, their plans have netted the same results. A deficit.
But McCarthy has to play the card he has. If he wants to look like he's reducing spending, he has to make a show of it now, even though a US default will cost taxpayers way more. Relying on gamesmanship to gain political ground is exactly what McCarthy should be doing when the other option is to look like a Democrat.
But we're not going to reduce spending any more than we're going to stop eating waffle fries because "they're bad for us." We know from years of history that the US will not reduce its spending. No Republican or Democrat majority or President has done so since FDR. So, as ever, we'll buy more, and they'll say "my pleasure" like they always do, and we'll have gas.
But the problem isn't spending. The problem is the gap.
The Democrats' strategy has long been to increase investment. The Republicans' is to decrease income.
That's it for this week!
Thanks for reading and supporting my work. Be sure to wish your 90-year-old Grandmas a happy birthday this weekend and apologize for not being at their birthday parties, but explain to them that they should thank you for not giving them Covid.
And if this doesn't apply to you at all, then simply have a great weekend!
Reminder
Last week, I released chapter 3 of Made From Leftovers. Find it here:
Daniel Herndon