Public Finance

Political Ragnarök, or, Obama’s Boldly-Played Budget Battle Bet-The-Ranch Blowout

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Newt Gingrich led the GOP to a massive victory in the 1994 elections.

He and Clinton went nose to nose, Clinton won.

The battle was the Federal Government shutdown of late 1995.

I remember it well. The country was outraged by the shutdown, Clinton successfully blamed the Republicans, his popularity went through the roof, Gingrich became a pariah, and the GOP gave up on any reform agenda and went native in DC. It was an unconditional, unmitigated victory for Clinton.

Obama has sent a budget to Congress. Obama’s budget makes no effort whatsoever to cut spending.

Obama is not “failing to lead” as some people are claiming. That is all wrong.

All suggestions to that effect are all wrong. Obama knows exactly what he is doing.

Obama is setting up a confrontation and he plans to win.

Obama is betting that he can force the GOP to make their proposed cuts, which he can blame them for, which he can truthfully say he does not support. Then he can attack the Republicans for making the cuts. He will appeal to the people who are suffering from the cuts, and strip away GOP support. They will be angry and mobilized.

Obama then plans to force the GOP into a funding crisis just as Clinton did. Obama plans to destroy the GOP reform wave of 2011 just as Clinton destroyed the GOP reform effort in 1995.

Obama’s team attempted to use the Tucson massacre in the same fashion that Clinton used the Oklahoma City bombings, to discredit the GOP. Obama is acutely aware of the Clinton playbook. This is another re-run.

If Obama wins, then the GOP / Tea Party effort is over and the Democrats have won the whole ball game. Obama gets reelected, the GOP is finished as a political party, and we have a mess for some number of years while a new party forms. But odds are it will be too late by then. A majority of people will be dependent on the Government.

It is that serious. Obama’s brazen, no-cuts budget proposal is not a sign of weakness.

It is a bold chess move that demands a strong response.

Obama has chosen to make this budget the big confrontation. This is the decisive political moment. Obama is prepping the battlefield.

Will the GOP win, lose, fold, get clobbered and not know what happened? Or will they call Obama out, see him and raise him, and make their case to the American people? Do the American people really care about the fiscal insanity and national bankruptcy? Or will the people who personally lose from the budget cuts have all the energy and outrage? Does the GOP have the courage to push ahead, no matter what?

Lenin said there are decades where nothing happens, then there are weeks where decades happen. We are heading into months where decades are going to happen.

Stay tuned.

UPDATE: Instapundit responds: “It’s not 1995 anymore, though.” Yes. True. I agree. It is better now. But, is it better enough? Boehner is not an eccentric visionary like Gingrich, and I cannot see him and McConnell getting punked by Obama the way Clinton did to Gingrich. Obama is not nearly as good as Clinton. The GOP members are, I think, much wiser and more realistic than the hopeful but ultimately naive class of 1994. The new crew is committed to reform, and they have the example of 1995 in front of them. May they learn the right tactical lessons. Plus, things are just way worse now. There is more at stake.

Interesting times, baby.

UPDATE II: Powerline gets it:

Obama’s game is transparent, isn’t it? He is playing a game of chicken. He puts forward a series of proposals that he knows are more or less insane; but he also believes that Republicans will come to his rescue. They, not being wholly irresponsible, will come up with plans to reform entitlements–like, for example, the Ryan Roadmap. Ultimately, some combination of those plans will be implemented because the alternative is the collapse, not just of the government of the United States, but of the country itself. But Obama thinks the GOP’s reforms will be unpopular, and he will be able to demagogue them, thus having his cake and eating it too. Is that leadership? Of course not. But it is the very essence of Barack Obama.

(Emphasis added.) Yes. That’s it. That’s the trap.

Let’s see the GOP, and the Tea Party, and everyone else who wants this mess really fixed work this problem, avoid the trap, and turn the table on Obama and his allies.

Thinking caps on, team.

UPDATE III: Good pushback in the comments. Message: 1995 =/= 2011. OK. Groovy. So, let’s see a good outcome here. It is doable.

UPDATE IV: Cool: Stanley Kurtz link, mostly agreeing with me. He says my “vision of permanent Republican meltdown is overdrawn.” Maybe so. But I would rather the GOP and the Tea Party overestimate the hazard of the coming confrontation with Obama than not be aware it exists, as seemed to be the case in the initial round of responses to Obama’s budget proposal. Obama’s budget is not a failure of leadership, or a lack of imagination, or something that happened in a fit of absence of mind. It is a deliberate political play, with a goal of creating useful issues for 2012, breaking up and defeating the GOP opposition, reversing 2010, getting reelected, and continuing to expand the power and scope of government. Will it work? I hope not. But if we take it seriously for what it is, the odds of it working are greatly reduced. (I very much want to read Kurtz’s book Radical-in-Chief, but right now the pile of books in front of it is ceiling-high.)

UPDATE V: Good post from Keith Hennessey (via/Instapundit). Hennessey says:

The President is choosing both a policy path and a campaign strategy. He is betting that having no proposal to address the looming fiscal crisis is better for his reelection prospects than having one.

This is exactly right. Hennessey also says:

The President has made his strategic choice: we are headed toward a two year fiscal stalemate in a newly balanced Washington.

But this is wrong. It will not be a stalemate. It will be an open conflict. 1995 was not a stalemate, it was a duel, and Gingrich and the GOP lost. The GOP in 2011 will have to propose cuts, and Obama is going to attack them for each and every one, and blame them for every bit of hardship that any cuts impose on anyone. The President is betting that Mancur Olson is right, and that focused opposition will defeat inchoate and widespread public interest, as usual. Is 2011 “different”? Is it “different” enough? Cue portentious music: On that question turns the fate of our Republic.

Mitch Daniels at CPAC

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My man Mitch. Do, please, RTWT. It is all good. Some snippets:

We believe that government works for the benefit of private life, and not the other way around. We see government’s mission as fostering and enabling the important realms our businesses, service clubs, Little Leagues, churches to flourish. Our first thought is always for those on life’s first rung, and how we might increase their chances of climbing. …
 
We have broadened the right of parents to select the best place for their children’s education to include every public school, traditional or charter, regardless of geography, tuition-free. And before our current legislature adjourns, we intend to become the first state of full and true choice by saying to every low and middle-income Hoosier family, if you think a non-government school is the right one for your child, you’re as entitled to that option as any wealthy family; here’s a voucher, go sign up. …
 
An affectionate thank you to the major social welfare programs of the last century, but their sunsetting when those currently or soon to be enrolled have passed off the scene. The creation of new Social Security and Medicare compacts with the young people who will pay for their elders and who deserve to have a backstop available to them in their own retirement. …
 
Medicare 2.0 should restore to the next generation the dignity of making their own decisions, by delivering its dollars directly to the individual, based on financial and medical need, entrusting and empowering citizens to choose their own insurance and, inevitably, pay for more of their routine care like the discerning, autonomous consumers we know them to be. …
 
The second worst outcome I can imagine for next year would be to lose to the current president and subject the nation to what might be a fatal last dose of statism. The worst would be to win the election and then prove ourselves incapable of turning the ship of state before it went on the rocks, with us at the helm. …
 

Mitch is my front-runner.

Is it too early to put up a yard sign?

UPDATE: Audio.

Wisconsin Makes A Move On Illinois Business

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Our new Governor (Wisconsin) Scott Walker has signed legislation giving businesses that relocate to Wisconsin two years “free” – no corporate OR personal income taxes:

MADISON (WKOW) — Governor Scott Walker has signed a bill that gives income tax breaks for companies that relocate to Wisconsin.

The bill will forgive corporate and personal taxes for two years for companies that move to the state. The company could not have been located in Wisconsin for at least two years in order to qualify

I think they mean personal income taxes such as if you were running the company as a pass through like an LLC. I assume that is what they are talking about. Any way you slice it, this is fantastic news.

This got through the legislature with lightning speed, helped out by the fact that all three of our branches are Republican controlled now up here behind the cheddar curtain. I also read today that the public employee unions are getting ready for some very bad news for them in the near future.

We have just begun with the Walker administration, but I am very hopeful and happy by this stroke. Walker also sent back the Obama buck$ that would have started out the sham “high speed” rail network that would have been a boondoggle for the ages.

We may as well pick off what is left of the Illinois corpse before other states do.

Hopefully Walker will end up being a star like some other up and comers such as Mitch Daniels of Indiana.

“The Man is Hiding the Stash” Fallacy

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At Belmont Club, Richard Fernandez says of the Marxist Piven’s philosophy:

The problem with Piven’s theory is that events in Europe have shown those “major economic reforms” to be unsustainable, if not actually ruinous. However, she appears to believe that the European crisis is only apparent, being the result of the Man hiding the Stash. Find that stash and things become sustainable again.

I think this fallacy deserves its own name because I think this is the central economic fallacy of leftists in general. Whether we are talking about unions, public workers, redistributionists, etc., there is always the implicit idea that somewhere there is this big pile of money that the rich business people are hoarding away like a squirrel with its winter store of nuts. Leftists tell everyone that all problems can be solved if we just use the force of the state to threaten the squirrels to give up their nuts.

The problem is that rich people don’t own a lot of nuts, they own nut producing trees, i.e., rich people don’t have a stash of cash, they own assets that can, if managed properly, produce a stream of income. Worse, for the leftists, those assets usually provide jobs for the majority of the population, so you really can’t alter their use too much. If you cut the tree down to get the nuts, what are going to eat next year?

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Something New or Deja Vu?

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FROM THIS WEEK’S HEADLINES:

Despite tensions, Turkish diplomats are keen to point out when they started their trilateral meetings the then leaders of Pakistan and Afghanistan would not even talk to one another. On Thursday night the Afghan and Pakistan presidents dined together.

“Turkey-Afghanistan-Pakistan summit in Istanbul, Turkey, Friday, Dec. 24, 2010. ” – VOA (via Small Wars Journal)

FROM THE HISTORY BOOKS:
“Dear Mr. Prime Minister:

I send you this personal message because I want you to know about my decision to extend military aid to Pakistan before it is public knowledge and also because I want you to know directly from me that this step does not in any way affect the friendship we feel for India. Quite the contrary. We will continually strive to strengthen the warm and enduring friendship between our two countries.

Our two Governments have agreed that our desires for peace are in accord. It has also been understood that if our interpretation of existing circumstances and our belief in how to achieve our goals differ, it is the right and duty of sovereign nations to make their own decisions. Having studied long and carefully the problem of opposing possible aggression in the Middle East, I believe that consultation between Pakistan and Turkey about security problems will serve the interests not only of Pakistan and Turkey but also of the whole free world. Improvement in Pakistan’s defensive capability will also serve these interests and it is for this reason that our aid will be given. This Government’s views on this subject are elaborated in a public statement I will release, a copy of which Ambassador Allen will give you.

What we are proposing to do, and what Pakistan is agreeing to, is not directed in any way against India. And I am confirming publicly that if our aid to any country, including Pakistan, is misused and directed against another in aggression I will undertake immediately, in accordance with my constitutional authority, appropriate action both within and without the UN to thwart such aggression. I believe that the Pakistan-Turkey collaboration agreement which is being discussed is sound evidence of the defensive purposes which both countries have in mind.

I know that you and your Government are keenly aware of the need for economic progress as a prime requisite for stability and strength. This Government has extended assistance to India in recognition of this fact, and I am recommending to Congress a continuation of economic and technical aid for this reason. We also believe it in the interest of the free world that India have a strong military defense capability and have admired the effective way your Government has administered your military establishment. If your Government should conclude that circumstances require military aid of a type contemplated by our mutual security legislation, please be assured that your request would receive my most sympathetic consideration.

I regret that there has been such widespread and unfounded speculation on this subject. Now that the facts are known, I hope that the real import of our decision will be understood.

With best wishes,

Sincerely,

DWIGHT D. EISENHOWER”

Letter to Prime Minister Nehru of India Concerning U.S. Military Aid to Pakistan. February 25, 1954

Long term strategy-wise, the American foreign policy establishment appears to get “stuck” in habits and patterns and grooves and constituencies and conventional wisdoms and all of that. I suppose that’s life in a big old messy democracy, eh? Or is it possible to do better? (By the way, this is not “blame America” time here at ChicagoBoyz. India, Pakistan, America, Turkey – what have you – all have “agency” and are responsible for individual national actions.)