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Thursday, February 05, 2015 8:14 PM

Head-Banging Revisited; Obama’s 'Have-It-All' Budget; Mish Proposal

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Dead on Arrival

On Sunday, in More Obama Dead-on-Arrival Tax Proposals, a post regarding Obama's proposed corporate tax hikes, I asked a simple question ...

Is there a point to beating your head against a concrete wall? The answer would seem to be "no", yet President Obama continues to do just that with dead-on-arrival proposals. .... If he's attempting to pound some sense into his head, it's clearly not working.

Republican Head Banging

Now it's the Republican's turn at head-banging.

From the Washington Examiner: "The debate sounded like it usually does — with Democrats hammering Republicans trying to strip away the law's insurance subsidies and other benefits, and Republicans contending that the law remains unpopular among the public and has raised insurance costs for some people or cost them hours of employment."

What's the Point?

Obama will veto the legislation, assuming the Senate does not kill it first. That begs the question: Is there a point?

In Praise of Head-Banging

I see the error in my ways. There is a point to it, although it certainly will not pound sense into anyone's head.

In contrast to typical Washington compromise non-solutions, head-banging seldom does much harm. In fact, head-banging provides entertainment value.

In comparison, history suggests legislation nearly always makes matters worse. And it has for decades.

Obama’s 'Have-It-All' Budget

What worries me now is this: $4 Trillion Budget Replaces 'Mindless Austerity'.

Politico explains further in Barack Obama’s 'Have-It-All' Budget.
President Barack Obama released a $4 trillion budget Monday designed to convince Americans that they can have it all: more tax breaks for the middle class, more spending on government programs, and just enough cuts and tax hikes to keep the nation’s deficits under control.

To pay for it, Obama proposed raising a number of taxes on wealthy taxpayers or businesses — some of them already dismissed as nonstarters by the Republican Congress. They include fees on big banks and taxes on companies that do business overseas — plus spending cuts on health programs and other savings — to cover the costs of all the new initiatives.

The budget calls for $1.091 trillion in discretionary spending for fiscal year 2016, $74 billion above the “sequestration” spending caps that Obama wants to eliminate. The additional spending — $38 billion for defense, $37 billion for domestic programs — would produce a $474 billion deficit for next year.
Obama Threatens to Veto Any Bill That Does Not Increase the Budget

A Washington Post article is even more scary: Obama may have new leverage with his $4 trillion budget.
Obama warned that he will veto spending bills that do not do away with the sharp automatic budget cuts, known as “sequestration,” also adopted as part of that deal.

I am not going to accept a budget that locks in sequestration going forward,” Obama said in an appearance at the Department of Homeland Security’s National Operations Center.
"More Spending" Compromise

Obama will not accept budget cuts and Republicans will not accept tax hikes.

The compromise solution is the same as it's always been: Republicans will get more defense spending and the Democrats will get more social spending.

Neither side is willing to address the real problem: Both social spending and military spending is out of control.

The fake deficit-hawk Republicans will cave in, as they always do. A head-banging result where nothing at all happened would be a better result.

Mish Proposal

I would readily make concessions if I got something significant in return. Here's my bargaining list.

  1. End collective bargaining of public unions
  2. Pass national right-to-work legislation
  3. Scrap prevailing wage laws
  4. Allow states and municipalities to go bankrupt
  5. End all tariffs and subsidies

My proposals would start a genuine recovery enabling cities and states to shed debt obligations in bankruptcy while lowering costs for much needed infrastructure improvements.

President Obama says he is willing to make some "tough choices". Republicans never present him with any. Instead, both parties just spend more and more without fixing any fundamental problems. 

Mike "Mish" Shedlock

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