OPINION:
There must be a precise method to messaging the Republican House’s debt limit bill. Otherwise, the Democrats will successfully — but falsely — brand House Speaker Kevin McCarthy’s bid to tame the federal budget extremist madness.
To cut the projected debt by about $4.5 trillion, the deal proposes few actual cuts other than a rollback to last year’s extravagant levels — that’s the quiet part out loud. Instead, the bill primarily relies on holding budget growth to 1% annually over the next 10 years for the lion’s share of the reductions ($3.2 trillion).
This moderate approach notwithstanding, the Biden administration has dusted off the same cry-wolf playbook President Bill Clinton used in 1995 and 1996 to eviscerate a far more radical budget-balancing effort by Republican House Speaker Newt Gingrich. In President Biden’s new whine from the old Gingrich bottle, Mr. McCarthy is a MAGA puppet out to destroy the lives of millions of low- to moderate-income American families through crippling budget cuts, while Mr. McCarthy’s alleged brinkmanship is also rattling an already fragile Wall Street.
House Republicans must unite and fight this Democratic smoke with the fire of this searing truth: Unless the U.S. government brings its unprecedented spending spree and burgeoning national debt under control, Americans face a grim and prolonged back-to-the-1970s stagflation future of soaring interest rates, plunging wages, a prolonged bear market and devastated 401(k)s, and, as sure as night follows day, far more draconian cutbacks in government services.
Inflation is raging at rates not seen since President Jimmy Carter’s administration, with no end in sight despite massive interest rate increases by the Federal Reserve. Not coincidentally, growth in gross domestic product has slowed to a mere 1.1% in the latest print, with most forecasters predicting a recession later in the year.
Republicans must make this particular point crystal clear to the American people across party lines: The inflation part of the current stagflation equation is being largely driven by a “demand-pull inflation” almost entirely the result of the Biden administration’s massive and repeated fiscal stimuli and government overspending.
On this economic principle alone, Mr. McCarthy and the company can make a fiscally conservative case for their proposed budget controls. But it gets worse.
The Biden stagflation is further breeding this double whammy: Projected tax revenue is falling as the economy slows, and as inflation drives up interest rates, America’s cost of servicing its current national debt is rising.
This debt service drag threatens to be so toxic over time. Consider that it already costs nearly $400 billion a year in taxpayer money to service what is already a more than $30 trillion debt.
As noted by the Pew Research Organization, this is $100 billion more than what the federal government spends on veterans benefits and services and more than the total annual spending on “elementary and secondary education, disaster relief, agriculture, science and space programs, foreign aid, and natural resources and environmental protection.”
Unless House Republicans prevail in this current debt limit confrontation, our national debt will continue to balloon, service on that debt will eat an ever-increasing share of our tax revenue, and every dollar that goes to debt service — and many of those dollars flow abroad in a wealth transfer to foreigners like China — is a dollar NOT spent on serving the needs of Main Street Americans.
This is not a drill. Nor is the McCarthy bill MAGA extremism. Rather, it is simply MAGA common sense that the center and center-right of this country must rally around.
We would do well to remember here that it was not Donald Trump but rather Ronald Reagan who originally coined the slogan “Let’s make America great again.” Reagan did so in the 1980 presidential race, which centered on what would be a fulfilled MAGA promise to tame Mr. Carter’s stagflation.
We would likewise do well to remember that under the MAGA banner, Mr. Trump promised — and delivered — unprecedented peace, prosperity and national security by embracing a populist nationalist platform of a strong American manufacturing base, secure borders, and an end to endless wars.
There is nothing extremist about Mr. Trump’s MAGA. There is nothing extremist about Mr. McCarthy’s new bill. Republicans need to successfully deliver that message and win this fight on the battlefield of economics where it belongs.
• Peter Navarro served as former President Donald Trump’s manufacturing czar and chief China hawk. This piece originally appeared in his Taking Back Trump’s America Substack at http://peternavarro.substack.com.
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