Our Contrived Fiscal Crisis and the President who buys into it …

Federal deficits always go up big and automatically during two events.  That would be wars and recessions.  We have had two wars going on for about 10 years now and we’ve had the deepest recession since World War 2.  Getting rid of the two wars and solving the residual problems of unemployment would eliminate any potential future fiscal crisis.  Any economist will tell you this.  It’s not a secret we keep from the world.  Passing huge tax cuts and laws that remove nearly all capital and all types of businesses incomes from the pool of revenue sources only exacerbates the revenues problems you get during recessions and expenditure run-ups that come from running wars.

We’ve had excessive war spending before.  Our country was born with a lot of money borrowed from the Dutch.  The Civil War and both World Wars–especially number two–placed our federal deficit and debt at astronomical levels of GDP.  Did our country crash and burn because of the actions of John Adams, Abraham Lincoln or the spending during World War 1 or World War 2?  Did you feel that life in the 1950s and 1960s and the children born then were oppressed by excessive debt?

Of course not.

Federal Debts and Deficits are functions of the size and health of the economy underlying the obligations.  We have plenty of taxable assets and businesses making money.  You can tell how risky the market for our Federal debt is by looking at the yields on Government bonds and Treasuries.  The current yields for Treasuries are listed right here. They are at near historic lows and they are still selling.  Nothing in that market indicates any reticence by any participant to buy American Debt obligations.  The ability to tax and raise taxes as well as print money is a unique function of government.  We can do both.  If we’d have let the Dubya Bush tax cuts just expire we would’ve closed the deficit gap and reduced the debt by more than anything than is on the table right now.  That would include the disingenuous and malfeasant Ryan plan. It also includes the the one that will come from the White House today at 1:35 est.

We need to put taxing capital back on the table.  That includes dividends, capital gains, and vast inheritances and trust funds.  We need to remove tax loopholes and subsidies to corporations.  We do not need to remove the last vestiges of safety nets standing.  There appears to be no one brave enough in Washington DC to say that but I will join the bow tie set in shouting just that.  It is time to stop subsidizing incompetent business owners and time to invest in the country and its people.  Washington DC has the nation’s priorities all wrong.

The White House provided no more specifics on the four steps to be offered in his afternoon speech at George Washington University. But an official said his plan would “borrow” from the recommendations of the 2010 fiscal commission that Obama empaneled, but whose proposals he never fully embraced.

“The president will make clear that while we all share the goal of reducing our deficit and putting our nation back on a fiscally responsible path, his vision is one where we can live within our means without putting burdens on the middle class and seniors or impeding our ability to invest in our future,” the official said.

Republicans–as eloquently stated by former budget Director David Stockman–have a tax fetish.   Republicans are refusing to put any taxes on the table.  Rand Paul is considering filibustering the increase in the debt ceiling. It appears some of these folks are so disturbingly ideological and economics-disabled that they will let the US go “bankrupt” in the only way possible it could do so.  They will allow the US to default on its debt obligations.  The Republican Party seems ruled by insane people at the moment.  The Democrats, however, are ruled by folks that appear to be playing into right wing memes to appeal to some independents.  So, why are we only left with poisonous choices?

Some of the Democratic base is finally waking up to the truth about Obama. He has no core Democratic values.  We’re about to see a Democratic president put the cornerstones of Democratic policy on the bargaining table in an effort to appease some folks during the re-election cycle.  I’m wondering if it’s all not just a little too late.  Ever since the real economists left the building, White House Policy has grown more and more Republican.

Key liberal groups, which helped elect Obama in 2008, are raising concerns that he has given up political ground to Republicans, allowing the message of reducing government to trump that of creating jobs and lowering the unemployment rate.

Seizing on Friday’s deal, which would cut $38.5 billion from the fiscal 2011 budget, activists on Tuesday threatened to sit out the 2012 presidential campaign if Obama goes too far with further cuts.

“The fundamental problem in our country right now is unemployment and a jobs crisis, not a deficit crisis,” said Deepak Bhargava, executive director of the Center for Community Change, an advocacy group for the poor. “It appears the president is fighting on the wrong terrain and is conceding that the only thing we should be talking about is how to bring down the deficit.”

The clash over government spending — coming as Obama prepares to make a major speech on fiscal discipline Wednesday — is the latest example of the frayed relations between the president and a broad coalition of union and activist groups.

The details of the budget compromise as well as the way that the Health Care Reform act was rammed through congress have shown that Obama is more than eager to get something, anything passed than to fight for reform that would actually reflect either public opinion or traditional Democratic Values. Poor black women from the District of Colombia were  nearly the first ones thrown under the budget cutting bus.  Which previous US Democratic President would have sold them out?

To get the trade-off on the policy riders, Democrats had to give on spending — to the tune of the largest budget cuts ever. There’s a $1.1-billion cut across the board for discretionary spending and dozens of nips and tucks all over government, from Justice Department programs to subsidies for co-ops in the new health care law to the Pell Grant program for low-income college students.

I am going to watch this speech.  I’m only hoping some of the disgruntled chat coming from real Democrats materializes into something substantive after it happens.

DeFazio said Monday that Democrats haven’t put enough pressure on Obama.

“That’s what the House did wrong in the last Congress, and in part why we lost is we never pushed back, no matter how wrong he was or how off-base he was; we never pushed back,” DeFazio told MSNBC.

“There are a number of us in the caucus now pushing back very hard on our leadership,” DeFazio said. “Who knows where they’ll end up, but maybe we can take enough D’s with us to make them uncomfortable and to make them stick with making the president act like a Democrat.”

The Democrats’ frustration with Obama is hardly new. Liberals were furious in December when the president caved to GOP demands that Congress extend tax cuts for the wealthiest Americans. More recently, many liberals have questioned the wisdom and constitutionality of launching military attacks on Libya with prior approval from Congress.

Behind closed doors, Democratic leaders are frustrated that Obama hasn’t been more involved in the big policy fights of recent months, including the spending battle.

The way to get to this President is through his re-election efforts and his ego.  Hopefully, a few groups will stop facilitating the cave-ins and start fighting for the country’s interests.   You can watch the President’s speech on CSPAN at this link. I have my bucket o’ Nerf balls ready and I’m warming up for the first pitch of the 2012 presidential campaign season.  Join me as we share the pain and none of the gain.