The House of Representatives passed the “Big Beautiful Bill”, containing most of President Trump’s agenda (which is good), but it fails to do one important thing that Mr. Trump wanted: it fails to control federal spending. Many members of Congress have been going around bragging that the bill “cuts spending by 1.5 trillion”. The problem, as always, is that the 1.5 trillion is spread over ten years, and as usual, by that time some future Congress will figure out how to restore the “spending cuts”. So it’s the same old thing in Washington: make a big deal out of nothing.
I’ve enclosed a short excerpt from my book The Control and Manipulation of Money (available for free pdf download at https://fremontvalleybooks.com) that describes the basic problem. This is from Chapter 24, where I discuss the four main problems of debt and inflation, one of which being federal spending.
“…. Congress cannot control its spending impulses, nor will it raise taxes to pay for what it spends, and therefore debt increases and the depreciation of the dollar continues. The debt and depreciation can only be reduced if Congress cuts spending and generates surpluses to pay off the existing debt. Here is a small example of this problem. The National Endowment for the Arts is a federal agency that partly finances artists and performers and promotes various entertainments. Every year, Congress allocates more money for the Endowment (its budget for 2020 was $162.5 M). Admittedly, that is not even pocket change when considering the total federal budget. That said, if Congress cannot cut small things, it cannot cut the large ones. Consider the following thought experiment. Suppose all 535 members of Congress were lined up, put under oath, and asked under penalty of perjury if they would go so far as to reduce the rate of increase in the funding of the Endowment. About 5% would go further: they would abolish it altogether. Another 5% would agree to abolish it over a period of ten years. Another 5% would agree to fix the funding at the current dollar level. But the other 85% would poop their lace dainties and assert their Fifth Amendment rights. Congress is a now a political prisoner of its own largesse (actually the taxpayer’s largesse) and cannot cut funding for anything. Its favorite option is to raise hidden taxes on the middle class without cutting spending, which will eventually drive the middle class into poverty.
Why can’t Congress cut spending? There are two reasons: first, it is the easy path to buying votes, and secondly, they’ll be long gone when the bill comes due. Typically the members of Congress find it easy to go along to get along. Faction A supports faction B’s spending priorities in return for faction B supporting faction A’s spending priorities, and all of them get most of what they need to buy the votes necessary to get re-elected. Remember that it is perfectly legal for one member of Congress to bribe another member of Congress with your money; it is only illegal when you try to bribe a member of Congress with your money. See the difference/trick? This is how irresponsibility of Congress has caused the U. S. to degenerate into a fiat monetary system based on debt.”
So don’t be expecting any big reduction in the deficit or any decrease in the rate of acceleration of the national debt due to the Big Beautiful Bill. The only positive possibility is that the bill causes the economy grows at such a fast rate that the government takes in additional revenue to cover the spending that Congress won’t reduce. It could happen, but even that won’t solve the long-term spending problem.
