The Speaker of the House Debate

The Journal’s Kimberley Strassel is urging conservative holdouts to now take the win while noting their success in getting key reforms included in a new proposed House rules package:

It includes new provisions for accountability and transparency… It requires a 72-hour rule to give members time to read legislation…

And it makes it much harder for the House to tax and spend. It imposes a “cut go” rule—requiring any mandatory spending increases be offset with equal or greater mandatory spending cuts. A three-fifths supermajority vote will be required for tax increases. It revives what’s known as the “Holman rule,” allowing appropriations bills effectively to defund the salaries of specific executive-branch officials or specific programs. It also requires each committee to submit an oversight plan that lays out what action it intends to take on unauthorized or duplicative programs.

Sounds good. A Washington Post report adds:

McCarthy also expressed a willingness to place more members of the staunchly conservative House Freedom Caucus on the Rules Committee, which debates legislation before it is moved to the floor.

This suggests that taxpayer-unfriendly provisions within large bills will be more vulnerable to challenges on the House floor. Making all members vote on particular items of indefensible spending could have a salutary effect.

By one measure the debate in Washington doesn’t seem to be inflicting any great cost on the United States. On Wednesday Sandra Smith at Fox News pointed out that investors were bidding up stocks as Mr. McCarthy was losing some rounds of balloting.

When markets declined on Thursday the trigger seemed to be a U.S. labor market that appears too strong to allow the Federal Reserve to stop raising interest rates. Stocks rallied on Friday morning, but again not necessarily because of Washington. Investors seem to be encouraged by slower-than-expected wage growth and a disappointing reading on service industries. In the current bad-news-is-good-news mentality of many traders, the data suggest the Fed’s tightening cycle is nearing an end.

The republic seems to be surviving the ongoing negotiations over the rules and agenda of the U.S. House in the new Congress. There’s an argument that this is how representative government is supposed to work. The Journal’s Cameron McWhirter and John McCormick report:

A faction of House Republicans who have spent days blocking Rep. Kevin McCarthy from gaining the speaker’s gavel is facing intense arm-twisting in Washington from their own party, but its members are unlikely to encounter much pressure back home, local GOP leaders in some of their conservative-leaning districts said.

Mr. McCarthy’s opponents—about 20 House members—exposed divisions in the GOP between mainstream leaders seeking to gain the reins of power in Washington and those in the party who want power to be less concentrated… “We’re not supposed to just fall into a party line on everything,” said Cody Mitchell, GOP chairman in Lewis County, Tenn., in the district of Rep.-elect Andy Ogles.

Mr. Mitchell supports Mr. Ogles’s opposition to Mr. McCarthy’s election. The county chairman distrusts Mr. McCarthy and politicians who have been in Washington a long time, he said, adding that Mr. McCarthy and other GOP leaders in Congress didn’t do enough to oppose pandemic restrictions or federal spending in recent years.

“None of them stood up strong enough to the overreach that was going on,” he said.

It’s a fair point. This column has tried to chronicle some of the many negative consequences of that overreach. And it seems that every day brings news of another one. A.D. Quig reports in the Chicago Tribune:

An independent watchdog has singled out more Cook County employees who fraudulently applied for pandemic relief… It’s the latest in an ongoing investigation by the county’s Office of the Independent Inspector General to determine whether county workers who applied for federal Paycheck Protection Program loans were violating any personnel rules. In all, the OIIG’s office has released more than a dozen findings of violations of such rules since July, as well as evidence of fraudulent applications and misspent funds…

As of last month, the Justice Department’s Fraud Section had prosecuted roughly 200 defendants in more than 120 criminal cases, seizing “over $78 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds,” according to a release.

But that’s a drop in the bucket compared with the $80 billion some experts estimate was stolen from the program nationally.

And of course $80 billion is a drop in the bucket compared to the trillions of dollars of Covid-era federal debt inflicted on America’s children.

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The always interesting Grant’s Interest Rate Observer points to a bracing reminder of what can happen if monetary and fiscal authorities do not follow a responsible path. Reuters reports:

Argentina’s cash has lost so much value in recent years that local artist Sergio Guillermo Diaz finds painting on even the most valuable banknotes has become affordable.

With annual inflation that likely neared 100% last year, the largest denomination of Argentine currency, the 1,000-peso bill, is worth around $5.60 officially or just $3 on parallel markets commonly used to skirt capital controls.

“Nowadays it makes sense for me to paint on the largest denominated bill here in Argentina. Once I paint on it, I can sell it for much more than what the bill is worth,” Diaz told Reuters in an interview in the northern city of Salta.

Let’s hope that reform comes to Washington before this new school of art has a reason to catch on in the U.S.

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James Freeman is the co-author of “The Cost: Trump, China and American Revival.”

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(Lisa Rossi helps compile Best of the Web. Thanks to Chip Dickson and Wes Van Fleet.)

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