So at one point, stocks were down 950 points today, after falling 150 yesterday. It took a while for Fed head Jay Powell’s comment to sink in — but, as we noted last night, Mr. Powell and the Fed are aiming for recession.
That’s what their new economic projections show — a 1 point rise in unemployment and a 0.5 percent GDP for next year. That’s as institutionally close as a central bank will ever come to letting you know in their own ‘Fed-speak’ that they want a recession.
Of course, recessions are bad for stocks. And they’re really bad for everybody. And, as Art Laffer said last night, if you believe a recession is coming — what are you doing to prevent it?
Well, the answer from Mr. Powell is: “we’re not going to prevent it. We’re going to keep raising rates and cutting back on excess money.” It’s a hell of a way to run a railroad.
You know, if Mr. Powell really had hair on his chest, he would stand up on his hind legs and tell Congress to stop excess federal spending, taxing, regulating, and end the war against fossil fuels.
In fact, there was a time when, as Fed chairmen, both Paul Volcker and Alan Greenspan would actually negotiate with Congress and the White House behind the scenes that ‘if you cut spending and the deficit, we won’t raise rates.’
Mr. Powell was a cheerleader for the spending bills in 2021, when he kept telling us there was no inflation problem, and then it was ‘transitory.’ Now he’s telling us there’s an intractable inflation problem and he’s going to keep tightening money.
I call that swinging from one extreme to the other. Not healthy for a senior public servant. Actually, not healthy behavior for anybody.
And speaking of unhealthy behavior, Senator Paul was dead right when he said this last night:
“The omnibus will be 3,000 pages, we’ll get it 2 hours before they want to pass it, no one will read it, but hidden in the 3,000 pages will be we will waive pay go. So Steve Moore is right, it will take 41 votes, but the other thing is 41 votes would stop the big spending.”
The Kentucky senator added: “We have completely and totally abdicated the power of the purse. Republicans are emasculated, they have no power and they are unwilling to gain that power back.”
Our pal Mr. Moore has argued to enforce the budget spending caps, or some combination of actions that would generate automatic spending cuts or negotiated spending cuts that might take $150 billion out of the $2 trillion-plus monstrosity called the omnibus bill.
There are twelve appropriation committees that should be holding public hearings on the merits of spending levels and policies.
There should also be a budget resolution to direct those appropriation committees in aggregate terms. This is called regular order. But there’s nothing ‘regular’ about regular order.
The Senate bypasses it and puts a couple people in a smoke-filled room and decides to spend whatever it wants — dictating its will on 350 million Americans who may well suffer the inflationary and recessionary consequences of their usurpation of power.
This is so undemocratic it’s beyond belief. This is so unrepresentative that it’s beyond belief. And it’s so antithetical to economic prosperity that it’s beyond belief.
The latest news is that the House has passed a continuing resolution that goes to December 23. This afternoon, the Senate voted 75-20 to debate a one-week continuing resolution.
That’s just buying time for the omnibus bill, which may spend several hundred billion dollars in new money above the current services baseline. They might stick in child tax credits without work requirements.
In fact, they might take a bunch of temporary Covid spending plans and turn them into permanent mandatory spending.
That’s what Democrats want to do. And the Republican leadership is going along with this so far. That is pathetic.
Mr. Paul told us last time he proposed to enforce the spending caps, he had three votes plus himself in the GOP conference. Isn’t that terrific?
What’s that do to Republican credibility on spending and inflation? The answer from our friend Senator Paul is that it “emasculates” the GOP’s credibility. Merriam-Webster dictionary defines “emasculation” as “deprival of strength, vigor, or spirit.”
Message to GOP senators: get your manhood back. Shut down the government if you have to. Save America. Kill the omnibus bill.