John R. Smith: Reduced Government Spending, Less Government Power-Will Increase Prosperity
With mid-term elections around the corner, the outcome will decide which political party will control Congress, and Florida’s government, for the next 2-4 years. The stakes are enormous, and dramatic.
Congress is up for grabs, which is where the financial purse strings are controlled and how tax collections will be spent.
What should voters expect if we end up with 1) a split government, or 2) if Democrats remain in control of both Chambers, or 3) if Republicans capture both Chambers? Here’s a probable breakdown.
If we have a divided government, the stock and bond markets can live with that change because it would be difficult for Congress to pass significant legislation that could be harmful to financial markets. A divided government would create sustained gridlock that would restrain and stifle the passage of new laws that could negatively impact the financial markets. The federal government already has over 50,000 laws on its books, which create a rabbit warren of smothering regulations. Many of those laws are incredibly costly to businesses while not providing any significant protections to consumers; often, those laws are enacted simply to allow government officials to control business operations and hogtie the decisions of business executives.
A divided government offers the potential for the bipartisan cooperation needed to strengthen U.S. industrial policies to keep us competitive and dominant against the likes of China and the European Union. But it may also make it difficult to reduce spending in a way that will give the country fiscal relief from out-of-control federal debt and deficits.
The so-called “Build Back Better” agenda will see renewed “reconciliation” efforts to get it fully passed. If the Democrats control both the Senate and House, spending will increase. They will accomplish this by changing the tax codes to raise revenue, including an increased capital gains tax and fighting to impose a global minimum tax on corporations. Ukraine will likely see greater monetary aid. But Republicans would instead provide military equipment. The Dems will try to assert federal support for a Roe vs. Wade “blue re-do” that will transfer the power to regulate the abortion process from the states to the Feds. Democrats also will focus on mitigation funding for climate-change measures.
Over 60% of Americans are living paycheck to paycheck as a result of failed liberal economic policies. My colleagues and I are committed to creating a strong economy that works for every American by reining in reckless government spending. #CommitmentToAmerica pic.twitter.com/1xMH1TRd5I
— Gus Bilirakis (@RepGusBilirakis) November 3, 2022
House Republicans will rein in reckless government spending and end this inflation crisis.https://t.co/I0O1w4ACKI
— Rep. Elise Stefanik (@RepStefanik) November 3, 2022
https://t.co/nIijoV9hQo "Joe Biden was elected to contain the COVID-19 crisis and resulting economic damage, and instead spent his capital on record government spending to subsidize favored green energy purchases.”
— Gov. Bobby Jindal (@BobbyJindal) November 4, 2022
If Republicans win the Senate and House, spending will decline except in the area of defense spending. The military will benefit with increased capabilities and better equipment. There will be no tax increases, reducing the cost of living. In the Senate, stepped-up efforts will be made to impede, possibly block, Joe Biden’s judicial and Cabinet appointments. Funds to strengthen border security and to support rural farming will be a priority. The oil and gas industry will see much greater financial and legislative support, as part of an effort to restore America’s energy independence. The loss of both legislative Chambers will no doubt prompt Joe Biden to increase the number of White House executive actions to try to bypass Congress, resulting in a congressional effort to cripple Biden’s agenda. Another Republican priority is to provide a research-and-development tax credit.
Government spending and deficit financing fueled the inflation that America is fighting today. A Democratic Congress would be a problem for the Federal Reserve to achieve success in reducing inflation. This is because Democrats would be spending money on stimulus programs which would fan the fires of inflation. Such stimulus would nullify the Fed’s efforts.
All business leaders should hope for an election outcome that stops the whole process of expanding and empowering government, borrowing or printing exorbitant sums of money by the Feds, and spending taxpayers’ funds to expand the government’s balance sheet and power. Goes without saying: On Tuesday, there is a lot at stake.
Other stories you may want to read:
- John R. Smith: PBC Officials Should Stop Being Tyrants & Learn Federalism - February 16, 2024
- John R. Smith: Taxes Are Choking Palm Beach County Taxpayers - February 6, 2024
- John R. Smith: The Nasty Plague of Cancel Culture - December 14, 2023