House votes overwhelmingly to cut $4B
The House yesterday approved a two-week extension of the continuing resolution that was adopted during last December's lame duck session. The vote was a rout, 335-91. Minority Leader Nancy Pelosi (D-Calif.) voted against it. And If you think fiscal silliness is only a left-wing phenomenon, consider that Pelosi was joined by six Republicans, including some of the, shall we say, most "out there" Republicans, including Rep. Steve King of Iowa, Rep. Michele Bachmann of Minnesota and Rep. Ron Paul of Texas.
There are several noteworthy items here.
First, 104 Democrats defected and voted to cut $4 billion from the 2011 budget. I asked an adviser to the Republican House leadership if he was surprised by that total. He replied via e-mail: "I was, yes. Particularly given how many Blue Dogs didn't win reelection. I think it's a clear signal - 1) how widespread the understanding that the we need to cut spending is, and 2) how untenable Sens. Reid and Schumer's position that we can't cut one penny is." Now, Reid and Schumer have since relented and will, we are told, pass the extension in short order; but this is a conversion of necessity. The status quo Democrats can no longer control their own troops.
Second, this would not have been possible had the Republican Senate last December folded on the omnibus spending bill. By standing firm, they forced Democrats to vote yesterday (and likely at least one more time) to cut spending. It is obvious which party is leading the effort to return to fiscal sobriety and which is being dragged kicking and screaming into it.
Third, it was a bad day for shoddy economists. Mark Zandi of Moody's (who also vouched for the president's stimulus plan) and Goldman Sachs (goodness knows what that firm's angle is) had predicted dire job losses if the Republicans' plan to cut $61 billion from the remainder of a budget running a $1.6 trillion deficit. It sounded preposterous on its face, but left-leaning pundits as well as liberal pols gobbled it up like candy. But all of that was debunked yesterday by Fed Chairman Ben Bernanke, as The Hill reported:
The Goldman Sachs report released last week predicted that the Republican spending cuts would slow growth by as much as 2 percentage points in the second and third quarters of this year. Senate Democrats pounced on the analysis to argue that Republicans were trying to "drag our economy back into a recession."
But Bernanke said that analysis is off the mark.
"Two percent [reduction in growth] is enormous and would be based on $300 billion in cuts," Bernanke told the panel in his semiannual report to Congress. "Sixty billion to $100 billion isn't sufficient to create that kind of effect."
Although Bernanke didn't provide a projection of possible jobs losses from the spending bill, he said the proposed spending cuts aren't likely to lead to the 700,000 job losses predicted by Moody's Analytics chief economist Mark Zandi.
What's more, Bernanke emphasized the necessity of cutting off the flow of red ink.
And if that were not enough to deflate the defenders of fiscal sloth, the White House got into the act. White House press secretary Jay Carney announced, "We do believe that if $4 billion in cuts over two weeks is acceptable, that $8 billion over four or five weeks is something that we could agree on." That pretty much sets up all the Democrats for another epsiode of follow the leader (in this case, the speaker of the House) budget-cutting.
The White House in the lame duck session undermined decades of liberal soak-the-rich tax policy by agreeing to extend the Bush tax cuts. Now, it has accepted that its own 2011 budget could use some trimming and that the economy won't be wrecked by some initial steps toward fiscal sanity.
I am certain House Budget Committee Chairman Paul Ryan (R-Wis.) has picked up on the key development here: The Democrats are on the run. Once we get past the next continuing resolution (which very likely will be part of the larger battle over the debt limit), Ryan will take center stage. He will roll out the Republicans' first full year's budget -- and the first dramatic effort in years -- to get our fiscal house in order.
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