LARRY KUDLOW: This is the most important fiscal negotiation
Kudlow provides insight on the debt ceiling
Probably the most important fiscal negotiation that's going to take place this year is over the debt ceiling and the budget. So far, it's gone nowhere. House Speaker Kevin McCarthy met with President Biden two months ago with no results and they haven't met since. No cup of coffee. No high tea. No drive-in movie. Nothing.
Yesterday, Speaker Kevin McCarthy put some heat on President Biden with a strong letter asking for another meeting to reach a deal and before nightfall Biden wrote back that he's not ready. Biden is also still calling for a so-called "clean bill" to raise the debt ceiling without any spending cuts. Now he knows just as everyone in the country knows that there is going to be a deal to raise the debt ceiling and that deal is going to have spending cuts no matter what Mr. Biden says.
The president in his letter says "this has been done by previous Congresses with no conditions attached and this Congress should act quickly to do so now," but in fact, previous Congresses have always compromised with a higher debt ceiling attached to spending cuts and sometimes other measures.
Biden's hypocrisy is illustrated by just a little bit of recent history, when as Barack Obama's vice president he, Biden, led the charge for a deal back in 2011 that included a debt hike and some tough spending caps with sequestration penalties. Here's a snippet from CBS 60 minutes, Scott Pelley interviewing Joe Biden:
FORMER WHITE HOUSE ECONOMIST CALLS BIDEN OUT FOR SPEWING ‘UTTER ECONOMIC LIES’ ON NATIONAL TOUR
PELLEY: The vice president has been up here on Capitol Hill today pressing reluctant Democrats to support the compromise
BIDEN: How can you explain the fact that grown men and women are unwilling to budge up till now and still some of them are still unwilling to budge, by taking an absolute position: my way or no way?
So, of course it's been done before. We just need a compromise. That’s proof pudding. Now, Biden's letter to McCarthy goes on to talk about how Republicans want to raise deficits by $3 trillion with big corporations and the super wealthy not paying their fair share of taxes, which is nonsense because the bulk of the Trump tax cuts went to middle and lower income people driving down the minority unemployment rates to record lows, boosting blue-collar family incomes and so forth and so on. We've been through this so many times. Biden just keeps lying about the Trump tax cuts and keeps up his drum beat that the rich don't pay their fair share. It's all hog-wash and malarkey.
In fact, Biden claims his budget released a few weeks ago will cut the deficit, but actually he does it simply by raising taxes on the most successful earners and large and small businesses and American firms overseas, policies that would slam down the economy, raise the inflation rate and give us a bigger economic mess than we already have. Don't forget, Biden has no spending cuts and $5 trillion in tax hikes. It's a "Bernie Sanders" budget.
More to the point, Speaker Kevin McCarthy has a very constructive letter where he argues that a debt deal should reduce excessive nondefense spending, reclaim unspent COVID funds and really super importantly strengthen work requirements for those without dependents who are able-bodied, the kind of workfare reform enacted under years ago under President Bill Clinton which Biden voted for as a U.S. senator.
I want to repeat this. Biden voted for workfare reforms as a U.S. senator in the mid-90s just as Biden led the charge to get a debt compromise in 2011 that included spending cuts, just to make the record straight. Now, this is of course a new Joe Biden, today's version. As I say, it's a Bernie Sanders version, but perhaps Biden at some point will regain his conscious which had some common sense in those days believe it or not.
So, let's go back in time to the Clinton-Gingrich work requirements reforms to welfare programs back in the mid-90s because it is so important. We are going to put stuff up on the full screen.
Welfare, food stamps, SSI, Medicaid, child nutrition, foster care, social service block grants, EITC and maternal and child health. Total savings way back then were $54 billion. That was an enormous number in the mid-90's. Adjusted for inflation today that would be worth about $92 billion and if you include payroll tax revenues paid by those who went from welfare to work the savings would be well over $100 billion and it's also worth noting the record reduction in poverty that occurred after workfare reform nearly halved the poverty rate while increasing employment, reducing spending and cutting deficits. I think we have the chart, I hope we do, of the collapse of poverty rate that occurred with the workfare revolution of the mid 90s.
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So, hats off Speaker Kevin McCarthy for including work requirements. It would be a huge reform that Joe Biden himself once supported. That is the old Joe Biden, the pre-Bernie Sanders Joe Biden, when Joe Biden was Joe Biden from Scranton, PA. Remember that?
Now, on top of all this, when you add in Steve Scalise's H.R. 1 "lower energy costs" bill, which would be a huge factor cutting inflation and promoting growth, Speaker Kevin McCarthy has put together a very strong Republican agenda for economic growth and prosperity with or without Joe Biden. That is my riff. We're going to revisit this issue with one of the House leaders Byron Donalds and related issues a bit later in the show, but I was so excited about Kevin McCarthy's letter that I just had to talk about it at the top.
This article is adapted from Larry Kudlow’s opening commentary on the March 29, 2023, edition of "Kudlow."