America’s national debt has topped $28.4 trillion, but Democrats want to raise the debt limit and keep on spending.
For months, Democrats have been pushing a $3.5 trillion tax-and-spend bill, but they may have hit a roadblock Thursday.
Sen. Joe Manchin, D-W.Va., said he can’t support the social welfare spending package.
“My top line has been $1.5 [trillion],” Manchin told reporters outside the Capitol.
Rep. Tom McClintock, R-Calif., says congressional Democrats' $3.5 trillion bill would significantly harm the economy if they succeed in passing it. Although Manchin and some other centrist Democrats say they can’t support the bill, McClintock says he “would hate to see the fate of the republic rest on those narrow shoulders.”
Democrats also worked Thursday to promote a more bipartisan $1.2 trillion infrastructure bill. But McClintock says that bill provides funding to “Green New Deal subsidies to green energy companies” and other leftist priorities.
The California Republican joins “The Daily Signal Podcast” to break down the state of the economy and the likelihood that Democrats will be able to pass the $1.2 trillion infrastructure bill and the other $3.5 trillion spending bill.
We also cover these stories:
- Manchin says he won’t support Democrats' $3.5 trillion spending bill.
- The Supreme Court will take up a case about Boston’s refusal to fly a flag representing a Christian organization outside Boston City Hall.
- The gunmaker Smith & Wesson is moving its headquarters from Springfield, Massachusetts, to Maryville, Tennessee.
Listen to the podcast below or read the lightly edited transcript.
Virginia Allen: I am so pleased to be joined by Congressman Tom McClintock of California. Congressman, thank you so much for being here.
Rep. Tom McClintock: It's my pleasure. Thank you for having me.
Allen: I will note for our audience that we are having this conversation on Thursday afternoon. Congressman, we so appreciate you taking the time to be here. It's a busy day in Congress and across Capitol Hill with lawmakers voting on a spending bill to approve funds to keep the government open through Dec. 3.
Democrats actually wanted to include a measure in that funding bill to raise the debt limit. Republicans blocked that. Could you just explain why Democrats are trying to raise that debt limit and then also why Republicans are opposed to raising the debt ceiling?
McClintock: Well, the debt limit is like the debt limit on your credit card. And if you go on a borrowing binge and run up a huge amount on your credit card, you've got two options. No. 1, stop digging the hole, stop spending all that money, or see if you can get the bank to raise the credit limit.
In this case, it's the Congress raising its own credit limit, but it's the same general principle. And that is supposed to be there as at least a speed bump so that when we are borrowing money out of your future earnings and your future prosperity, we at least pause and ask ourselves, do we really need to be spending all of this and what's it getting us? And what can we do to be more efficient the way any family would do in similar circumstances?
Of course, the Congress under [House Speaker] Nancy Pelosi doesn't do that because all of the spending they do, according to them, doesn't cost anything. And now they're looking at a $3.5 trillion reconciliation bill, which is actually about $5.5 trillion, more than we spent in World War II for their social agenda, which includes everything from beefing up the IRS to come after working families to granting amnesty for 8 to 10 million illegal immigrants who are in this country and demand to stay.
Allen: That's right. And we're going to dive into the details of that $3.5 trillion bill in just a moment. But if you would help me understand a little bit more about the argument and the controversy over this debt limit.
As recently as Tuesday, Treasury Secretary Janet Yellen, she told Congress that there will be catastrophic consequences if the debt ceiling isn't raised. Well, America's currently in $28.43 trillion worth of debt. Our debt ceiling limit right now is set to $28.4 trillion. There's not a lot of wiggle room there. Are there any good options here?
I mean, raising the debt ceiling sends America into further debt, which, as you say, we all have to pay that off eventually. But Yellen says that there's going to be these catastrophic implications in the short term for America's economy and really for economies across the world if we default on our loans.
McClintock: Here's the thing about default, a relatively small amount is growing every year. And I shouldn't say relatively. I think our debt service now is well over $400 billion a year. But what we pay for debt service is what we've actually borrowed from capital markets. And as you may have noticed, when you borrow money from some company, they generally like to have you pay it back. In fact, they insist on it, and they charge interest until you do.
That number's been consistently growing and dangerously growing. In fact, the fastest growing part of the federal budget is our debt service costs. But it's still a relatively small part of overall spending.
Now, what that means is, … well, let me put it this way, if you were running up a big credit card debt, what would you do? Obviously, you'd try to take measures to cut back, and that's why we have that debt limit to force the Congress to do that. But what you'd also do is make damn sure that you pay back the minimum payment on your credit card first, right?
Before you do anything else, you don't want them to cancel the credit card. So you will first and foremost pay back the minimum payment on your credit card. … And you could go a very long time doing that. The federal government has that authority. It was established in the Organic Act that first set up the Treasury Department, an act written by James Madison when he was in Congress. And it's been consistently affirmed every time. In fact, it's enshrined in the Constitution to assure that the debt's not questioned.
So the point is the administration has the ability to prioritize all of its expenditures to be damn sure that the credit card's paid off first. What they pretend is they can't do that. They're going to pay everybody as if we don't have a debt. That's a choice and it's a very bad choice. And it's actually, I think, a phony choice. They're not going to do that. So there's not going to be any default on the debt. What there may be are delayed payments to vendors, and that's a different matter.
Allen: OK. All right. Thank you so much for explaining that. That's very helpful. And I know that one of the biggest controversies in this conversation about raising the debt limit and spending more is, as you mentioned, Democrats' $3.5 trillion spending bill. And many members of Congress have been very outspokenly opposed to this bill. Even West Virginia Democrat Sen. Joe Manchin called the $3.5 trillion spending package fiscal insanity. Explain what exactly is in this bill and why Democrats are trying so hard to push it through Congress.
McClintock: Well, first of all, we have to understand what a trillion is. Arthur Laffer loves to call that a MEGO number, M-E-G-O, “My eyes glaze over.” A trillion dollars has no reference point in the real world. But let me boil it down to a family-size number. You divide the number of households in America into that number, it's about $8,000 per family.
Now, I just mentioned it's not $3.5 trillion because they pretend that permanent increases entitlements are only temporary. Once you take that pretend out of their number, it's actually about $5.5 trillion. So that's more than $40,000 that's going to be added onto your family's credit card statement, just as surely as if it appeared on your credit card bill. In fact, you're required to pay that money back before you pay back your credit card.
This is to support this massive expenditure, this huge increase in the welfare state. But as I said, you have to understand … whenever government spends a dollar, it first has to take a dollar out of the economy. Every dollar it gives to you it first has to take from you. And there are only three ways to do it.
Either it's through current taxes. And they've got about $2 trillion of tax increases. And that robs you out of your current purchasing power. There's borrowing, that robs you of your future purchasing power because you have to pay that back, plus interest through your future taxes. And you may notice the IRS is pretty insistent that you do. Or the third is to print money. And of course, that robs you every time you go shopping, every time you go to the gas station, the grocery store, because it reduces the value of your earnings. And at the same time, it silently hollows out your savings and retirement funds.
We had a 5.3% annual inflation in August. What that means is, if you scrimped and saved and put together $100,000 toward your retirement, the government just took $5,300 of that. You don't see your balance drop, but the $100,000 that you put away for your retirement now purchases $5,300 less in goods. That's the inflation that they've unleashed on us already and it's going to get worse from here.
And one of the lies you hear is, “Well, don't worry, it's only businesses that'll be paying these taxes.” Well, the problem, of course, with that is businesses don't pay business taxes. People pay business taxes. You pay business taxes, either as a consumer through higher prices, or as an employee through lower wages, or as an investor through lower earnings. Again, that's your retirement fund. Those are the only three possible ways a business tax can be paid. So they're coming after working families.
And you know this because one of the provisions in this reconciliation bill is to hire 87,000 new IRS agents. Now, I want you to think about that: 87,000 new IRS agents—87,000 is every man, woman, and child living in Miami Beach, Florida, or Ogden, Utah. Now imagine the entire population of one of these cities unleashed to go after every taxpayer in America.
And you know where they're aiming this because in their American Families Plan there's a requirement that your bank reports every one of your private transactions over $600 to the IRS. So you buy a sofa, you buy a TV, it's automatically reported to the IRS. Now, does that sound to you like they're coming after the Biden family? They're coming after your family.
By the way, if you're a typical American family, last year you paid more in taxes than you paid for food, clothing, health care, and entertainment combined. Yet according to the Democrats, that's just not enough. So you've got $2 trillion of additional taxes coming that you'll either pay directly as a taxpayer or indirectly as a consumer, an employee, or an investor.
Allen: I know I'm certainly not alone as an American when you look at your pay stub and you see how much was taken out for taxes and it's pretty discouraging when you see that.
McClintock: And by the way, we're only talking about the reconciliation bill. You want to throw in the so-called infrastructure bill, which only a fraction goes for conventional infrastructure or the nearly $2 trillion they already spent earlier this year on a party-line vote, the amount of money is absolutely staggering. And it is going to have an enormously negative impact on the quality of life of every American as a result. All that free money they keep promising, turns out that free money's very expensive.
Allen: So Congressman, you're saying that even though the rhetoric we're hearing from the left is, “The wealthiest of the wealthy Americans, they're the ones that are footing this bill,” you're saying, no, it's actually, it's the middle class, it's everyday Americans that are going to be paying for this and that are going to be really harmed by this much debt?
McClintock: Yeah. And you know that's who they're going after because you see all of the signs in their legislation—the massive increase in IRS agents, the automatic reporting of $600 of personal transactions every time you buy something. You can see exactly who they're coming after.
At the same time, by the way, they are doing everything they can to put provisions in that bill. In fact, provisions are in the bill now for amnesty and legal, permanent residents, and a fast-track to citizenship for between 8 and 10 million foreign nationals who have illegally entered our country and that are demanding to stay.
And again, another MEGO number. What's 8 million? The low end of what they're granting as amnesty, 8 million is the entire population of the states of Wyoming, Alaska, Vermont, South Dakota, North Dakota, Rhode Island, Montana, and Maine combined. And that's at a time when real family earnings are declining, crime's increasing, homelessness is rampant, and this mounting debt is absolutely killing the American dream of a better future for our children.
Allen: So where does this $3.5 trillion bill stand right now and how likely do you think it is that Democrats will succeed in pushing it through Congress?
McClintock: Well, it's a reconciliation measure. So it only requires a majority vote in the House and a majority vote in the Senate to go to [President Joe] Biden, who's … bragging about signing it. So I think the chances, unfortunately, are pretty good.
Obviously, right now, you've got Joe Manchin and Kyrsten Sinema, two Democrats in the Senate, who are saying, “This is spending a little too much money. We're not sure about this.” But I would hate to see the fate of the republic rest on those narrow shoulders. And that's where we are right now. So it's a very real possibility.
Allen: And how close do you think we are to a vote? I know we have Democratic leaders that have repeatedly really tried to bring this to the floor for votes and it keeps getting delayed, keeps getting delayed. Could we see this brought to the floor for a vote sometime within the next month?
McClintock: Well, you'll see it brought to the vote the moment that they bludgeoned enough Democrats to pass it out of the House in the Senate. And you know that because Nancy Pelosi's already said so. That's where we are.
And people everywhere I go now, I mean, they look at the collapse of our southern border, they look at the wicked inflation that's now been unleashed, at all of the new restrictions that are hobbling our economy, they look at the catastrophe in Afghanistan, they look at all these things and say, “How could this possibly be happening to our country?” And I'm afraid the answer's very simple: If you voted for the Democrats, this is exactly what you voted for. And if you're surprised by that, well, then, you weren't paying very close attention.
Allen: Congressman, you mentioned the $1.2 trillion infrastructure bill. The Senate has already passed this bill. Now it's waiting for a vote in the House. The bill has received some support from Republicans in the Senate. Explain what exactly this infrastructure bill is. What's included in this.
McClintock: Well, first of all, most of it is Green New Deal subsidies to green energy companies. So massive handouts, among other things. Huge subsidies for the fashionable elite who buy Teslas, for example. If you remember the enormous taxpayer burden when they extended all these subsidies to Solyndra, a solar energy company that immediately collapsed, you begin to get a sense of what's going on.
That's what they call infrastructure, not traditional roads and bridges, which are a tiny fraction of the amount involved.
But the other really sinister thing about this is it's turning completely upside down the whole way that we normally finance infrastructure. It used to be that … infrastructure was financed by the people who used the infrastructure. If it's a highway, then that was paid for by highway users through their gas tax. If it was a dam, that was paid by the people who used the water and electricity off that dam.
It was called the beneficiary pays principle. It assured that we weren't robbing St. Petersburg to pay St. Paul. Why should St. Petersburg pay for a water system for St. Paul? In the past, St. Paul paid for its water system, St. Petersburg paid for its … Every community paid for the things that it used exclusively and it was paid for by the beneficiaries.
This whole new world that we're in, under the Democrats, we simply finance it from taxpayers. And that way it's no longer consumers telling us what they want, it's politicians telling the consumers what they will have. And that is a huge change in the way we've approached infrastructure traditionally in this country.
We began ripping off, for example, our highway funds for purposes unrelated to our highways. Now, much of what you pay in gas taxes don't go to your streets and roads, they go to subsidies for mass transit systems. They go to all sorts of green objectives. They no longer go into your highways. And that's why we have such a problem, both nationally and you can see the same thing in California, which for many decades has had among the highest gas taxes in the country and yet spends at the very bottom in per capita spending for roads.
Allen: So where does this bill stand right now and how likely is it that we're going to see this passed?
McClintock: We're simply waiting now to find out if the Democrats are able to put enough votes together. As you know, in the case of the House, the extreme left of the Democratic Party is arguing with the left of the Democratic Party. The extreme left wants to have a vote and pass the reconciliation bill—that's the majority vote bill, that's that $5.5 trillion bill we were talking about—before they vote on the $1.2 trillion so-called infrastructure bill. They want it done that way because they think that enhances the chances of both passing.
They really have an objective on the reconciliation bill. … The reconciliation bill—so, well, they're both dangerous. One, because the so-called infrastructure bill's already passed out of the Senate. If the House passes it without changes, it goes straight to the president for signature. The reconciliation bill because … if they are able to keep all the Democrats together in the Senate, they pass it by a simple majority vote.
Allen: I think it's been fascinating to see how determined Democrats have really been to try and pass these two bills together. You mentioned that. I know that's been one of their key objectives and obviously, Republicans have made that challenging for them. So it's going to be fascinating to see how this plays out. Congressman, just how worried should the American people really be about our economy right now?
McClintock: I'm terrified about it. First of all, the amount of damage that's been done by these lockdowns is astronomical. We are now seeing study after study, after study that demonstrate they had no impact on the spread of the virus. Those jurisdictions that destroyed their economies by locking down have the same viral curves as those that didn't.
In fact, if you look at Sweden—which never ordered lockdowns, never ordered masks, never closed schools, never shut down businesses—last time I checked about a week ago, their mortality rate from COVID was about 500 per million less than that of the United States. In other words, if we had Sweden's mortality rate for COVID, there'd be about 190,000 fewer dead Americans. And don't forget Sweden has an older population, so they should be much more vulnerable to COVID as a result because COVID strikes so much more severely the elderly.
So the damage just from that is astronomical. And then you put on top of that the kind of spending they're talking about—and again, when they spend a dollar, they take a dollar out of the economy to do it—and the impact that is going to have on businesses trying to get back on their feet. And then all of the welfare spending that they've done, the enhanced unemployment benefits, which actually pay people more not to work than to go back to work, that's having a terrible impact on the ability of employers to get back up on their feet.
The really frustrating thing about that is before these lockdown leftists took a wrecking ball to our economy, under [President] Donald Trump, because we had gotten major tax reductions and the biggest regulatory relief in the history of the country, we were experiencing a period of unprecedented economic expansion.
Best economy in our lifetimes. We had the lowest unemployment rate in 50 years. We had the lowest poverty rate in 60 years. We had the fastest wage growth in 40 years, and it was blue-collar workers that were seeing the biggest increases in wages. The income gap for the first time in decades was actually narrowing.
That was because of the Trump tax cuts, the Trump regulatory relief, and also, I believe, because Trump was able to get control of our border and stop this enormous influx of low-wage labor that's depressing workers' wages and has been for a decade.
So when you contrast where we were under the Trump policies and where we are today under the Biden policies, it's sickening. And the prospect of going another three years down this road is painful to think about.
Allen: Is there anything that the American people can do?
McClintock: Yes, there is everything the American people can do. We haven't been struck by some act of God. I used to blame at least COVID as an act of God, but it turns out, no, that was financed in part by our government through the gain-of-function research in Wuhan that we were helping to finance.
My point is, this is all a matter of public policy, including the lockdowns that used COVID as the excuse. These are all matters of public policy. We can change that anytime that we, the American people, summon the political will to do so. And the only question is whether the American people have had a bellyful of this nonsense and want to restore policies that produce the greatest economic growth in our lifetimes, secure borders, and a secure country.
Allen: Congressman, thank you so much for your time today.
McClintock: My pleasure. Thank you for having me.
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