On the menu today: America returns to work after the Memorial Day holiday weekend with a potential debt-ceiling deal that gives conservatives a few things to cheer about but ultimately reflects their limited leverage; the former director of China’s Center for Disease Control and Prevention says that the Chinese government did secretly investigate whether there was a leak at the Wuhan Institute of Virology; and the Chinese government says that Defense Secretary Lloyd Austin is not allowed to meet with China’s new defense minister. But I’m sure the thaw in U.S.–China relations that President Biden predicted will arrive any day now. . . .
If You Want a Better Deal on the Budget, Win More Elections
It’s not a great deal, but it’s an okay deal. Kevin McCarthy and House Republicans had limited leverage; there was no way President Biden and Senate Democrats were going to sign on to deep cuts to non-defense discretionary spending.
For those who contend the bill doesn’t cut spending enough, recognize that before negotiations began, Republicans took entitlements such as Social Security, Medicare, Medicaid (roughly 52 percent of the entire U.S. federal budget), and veterans’ benefits (4 percent), as well as defense spending (19 percent) off the table. That only leaves 25 percent of the federal budget for any cuts, and those cuts were always going to be partially offset by the increase in defense and veterans’ spending that Republicans wanted.
Under the deal, in fiscal year 2024 — which begins October 1, 2023, and runs to September 30, 2024 — non-defense discretionary federal spending stays flat; in fiscal year 2025, non-defense discretionary federal spending will increase by 1 percent. Considering the rate of inflation, these are technically cuts, or at least reductions, in the federal government’s purchasing power. If the government’s budget allocated a federal office $100 this year for staplers, $100 next year, and $101 the year after that, but the cost of staplers increased in each of those years, that office will be buying fewer staplers.
Add it up, and there are real cuts — in part because the new budget numbers reduce the baseline for future increases:
A New York Times analysis of the proposal — using White House estimates of the actual funding levels in the agreement, not just the levels in the legislative text — suggests it would reduce federal spending by about $55 billion next year, compared with Congressional Budget Office forecasts, and by another $81 billion in 2025. If spending then returned to growing as the budget office forecasts, the total savings over a decade would be about $860 billion.
The problem is that our high rate of inflation is also at work in the areas where Republicans tried to increase spending. Defense spending increases from $797 billion to $886 billion next year, and rises to $895 billion in 2025. Defense analysts say that adds up to a 3.3 percent increase over this year. But the overall inflation rate in 2022 was 6.5 percent, and so far this year, the inflation rate is 4.9 percent. This is why Senator Lindsey Graham of South Carolina laments the deal’s defense spending as “a joke.”
Part of the deal is shifting money around — $11 billion in rescinded unobligated Covid-relief funds and $10 billion from the IRS’s budget are shifted to non-defense discretionary spending this year, with another $10 billion to be moved from the IRS to other priorities the following year.
The editors of National Review see some wins:
It increases the age caps on work requirements for food stamps to include adults with no children in the home who are ages 50 to 54. It includes permitting reforms that should expedite approvals for some energy projects and blesses the Mountain Valley Pipeline that will run from West Virginia to Virginia. And it has provisions to create incentives for Congress to actually pass appropriations bills rather than resorting to yet another blowout omnibus bill.
The editorial board of the Wall Street Journal is more enthusiastic:
The deal is a significant victory for GOP priorities, in return for raising the debt ceiling that had to be raised anyway. Mr. Biden tried to jam the GOP into a clean debt increase, but Republicans forced him to the table when they passed the Limit, Save, Grow bill. The lesson is that political unity pays.
Presidential candidate Ron DeSantis doesn’t like it, but when you’re running for president, the whole point is to argue that you could generate better results than the guys running Washington now:
“Prior to this deal, our country was careening towards bankruptcy, and after this deal, our country will still be careening towards bankruptcy, and to say you can do 4 trillion of increases in the next year and a half, I mean, that’s a massive amount of spending,” DeSantis, who recently announced his 2024 presidential bid, said on “Fox & Friends.”
Look, if Republicans controlled the House, Senate, and White House, this would look like a terrible deal. But we saw worse deals in fiscal years 2018 and 2019 when Republicans did control the House, Senate, and White House, and spent a couple hundred billion more than was spent in the last year of the Obama presidency. Believe it or not, the numbers in this deal are closer to fiscal responsibility than the Trump–McConnell–Paul Ryan years — in part because that’s not a particularly high bar to clear.
Former Chinese CDC Director: Don’t Rule Out Anything
We shouldn’t overstate the importance of these comments from George Gao, the former director of the Chinese Center for Disease Control and Prevention, to a BBC Radio 4 podcast. All Gao is saying is that nothing should be ruled out when investigating the origin of Covid — which is correct in the abstract but also can be used to justify cockamamie theories about the virus being traced back to Maine lobsters.
But it does seem a little surprising that a high-level Chinese official — who was right in the middle of the crisis from the beginning — isn’t reflexively insisting that the virus could not have been the result of a lab leak in Wuhan. Since the beginning, the party line — no pun intended, but I’ll take it anyway — in China was that a lab leak was unthinkable, and that the state-run labs were far too careful, professional, and well-trained to ever make such a consequential mistake. Now, Gao is subtly acknowledging that it is indeed thinkable, and was indeed secretly investigated, with the results of that investigation never being disclosed:
In an interview for the BBC Radio 4 podcast Fever: The Hunt for Covid’s Origin, Prof Gao says: “You can always suspect anything. That’s science. Don’t rule out anything.”
A world-leading virologist and immunologist, Prof Gao is now vice-president of the National Natural Science Foundation of China after retiring from the CDC last year.
In a possible sign that the Chinese government may have taken the lab leak theory more seriously than its official statements suggest, Prof Gao also tells the BBC some kind of formal investigation into the Wuhan Institute of Virology (WIV) was carried out.
“The government organized something,” he says, but adds that it did not involve his own department, the China CDC.
We asked him to clarify whether that meant another branch of government carried out a formal search of the WIV — one of China’s top national laboratories, known to have spent years studying coronaviruses.
“Yeah,” he replies, “that lab was double-checked by the experts in the field.”
It’s the first such acknowledgement that some kind of official investigation took place, but while Prof Gao says he has not seen the result, he has “heard” that the lab was given a clean bill of health.
“I think their conclusion is that they are following all the protocols. They haven’t found [any] wrongdoing.”
Well, I’m sure if the Chinese government found evidence that Covid started with a lab accident or leak at the Wuhan Institute of Virology, it would be sure to tell the rest of us.
China: No, You Can’t Talk to Our New Defense Minister
Friday’s Morning Jolt headline: “Biden’s Foolish China Optimism Runs into Reality”
The Wall Street Journal, this morning:
China has rebuffed a U.S. request for a meeting between their defense chiefs on the sidelines of an annual security forum in Singapore this weekend, the Pentagon said Monday, showing the limits of a tentative rapprochement between the two rival powers.
The decision by China formally to inform the Pentagon shuts the door for now on a meeting between Defense Secretary Lloyd Austin and Li Shangfu, China’s new defense minister, which the U.S. had proposed on the sidelines of the annual Shangri-La Dialogue security forum.
China’s dismissal of the proposal also was termed an unusually blunt message, U.S. defense officials said. Beijing has questioned Washington’s sincerity in pushing for the meeting, pointing to sanctions Washington has imposed on Li since 2018 when he ran the Chinese military’s armaments departments and purchased combat aircraft and missile equipment from Russia.
In a statement to The Wall Street Journal, Liu Pengyu, Chinese embassy spokesman in Washington, said the U.S. was “seeking to suppress China through all possible means and continue imposing sanctions on Chinese officials, institutions and companies.”
And now we get a little more backstory on President Biden’s odd comment at the G-7 meeting about the possibility of lifting the sanctions on Li: “That’s under negotiation right now. . . . The answer to that is under discussion.” The U.S. State Department later adamantly insisted that lifting the sanctions was not under discussion. It certainly sounds like somebody wanted the sanctions on Li lifted, although perhaps it was only the Chinese government that wanted that concession before agreeing to any meeting.
ADDENDUM: Over in that other Washington publication I write for, I conclude that the most ominous sign for Democrats in the debt-ceiling deal is how badly McCarthy beat Biden in the messaging competition — which is not a great omen for an 80-year-old president about to head into a tough reelection campaign. (The great offensive tackle Jumbo Elliott laments the term “messaging war,” which I quoted from an NBC News headline. I can get as tired of hyperbole as the next guy, but I guess under that mindset, from now on we should just call Elliott’s catch against the Miami Dolphins the “Monday Night Unlikely Event” instead of the “Monday Night Miracle.”)