The Scolds Never Stop

John McCain had another "old man yells at cloud" moment yesterday, complaining about earmarks in last year's spending bill, and trying to eliminate all of them. His effort lost on a bipartisan basis, probably because this is last year's spending needed to keep the government running, a shutdown at this point would be completely counter to economic fiscal stimulus, earmarks are 2% of the total bill and half of them were inserted by Republicans, including $76 million from Thad Cochran (R-MS), the overall leader.

However, this hasn't stopped the Democratic worry warts to fret about spending, at a time when there's practically no other economic activity other than that coming from the federal government.

Moderate and conservative Democrats in the Senate are starting to choke over the massive spending and tax increases in President Barack Obama’s budget plans and have begun plotting to increase their influence over the agenda of a president who is turning out to be much more liberal than they are.

A group of 14 Senate Democrats and one independent huddled behind closed doors on Tuesday, discussing how centrists in that chamber can assert more leverage on the major policy debates that will dominate this Congress [...]

Asked when he’d reach his breaking point, Nebraska Sen. Ben Nelson, one of the most conservative Democrats in the Senate, said: “Right now. I’m concerned about the amount that’s being offered in [Obama’s] budget.”

Another attendee, Sen. Mary L. Landrieu (D-La.), said she expected the newly formed caucus to shape Obama’s budget proposal as it moves through Congress.

“We want to give the president a chance, but our concern is going to be on the budget, looking forward,” Landrieu said. She added that she agrees with Obama that there needs to be “fundamental change” in fiscal policy, but she said “we do have to keep our eye on the long term, on intermediate and long-term fiscal responsibility.”

Sen. Evan Bayh, the Indiana Democrat who assembled Tuesday’s skull session, added that he was “very concerned” about Washington’s level of spending, especially in a $410 billion “omnibus” spending bill to fund the government until the start of a new fiscal year in October.

As for the tax increases on high-income earners called for in Obama’s plan, Bayh said, “I do think that before we raise revenue, we first should look to see if there are ways we can cut back on spending.”

“The American people and businesses are tightening their belts,” Bayh added. “I think we need to show that the government can economize as well.”

Ladies an gentlemen, your almost-Vice President, Evan Bayh.

Once again, the path for a Democratic President must go through Democratic fiscal responsibility scolds. And this is coming in the middle of a Great Recession, where investment is non-existent, trade is stalled, and consumer spending isn't going anywhere, meaning that ONLY GOVERNMENT IS SPENDING. Cutting that spending translates directly into losing thousands of jobs. That's reality for the next year or so.

If anything, Obama is being modest in his plans. And he is paying for the big investments in his budget by making the tax code more progressive and fair. And that's the reality of the fiscal scolds - they want to protect the status quo for their buddies and contributors. They would rather the 30-year cycle of radical conservative economic policy continues unabated. Obama's budget is a a threat to the DC estabishment that is best represented by these "moderates."

It was his boldest acknowledgment yet of what is slowly becoming clear to the rest of us: That his proposals represent such a dramatic reversal from the course the nation has been following over the last eight years -- and even the last three decades -- that they will inevitably face intense resistance from Washington's traditional power centers [...]

It's worth revisiting Obama's explanation of "how we arrived at this moment" from that joint address:

"The fact is, our economy did not fall into decline overnight. Nor did all of our problems begin when the housing market collapsed or the stock market sank. We have known for decades that our survival depends on finding new sources of energy, yet we import more oil today than ever before. The cost of health care eats up more and more of our savings each year, yet we keep delaying reform. Our children will compete for jobs in a global economy that too many of our schools do not prepare them for.

"And though all of these challenges went unsolved, we still managed to spend more money and pile up more debt, both as individuals and through our government, than ever before. In other words, we have lived through an era where too often short-term gains were prized over long-term prosperity, where we failed to look beyond the next payment, the next quarter, or the next election.

"A surplus became an excuse to transfer wealth to the wealthy instead of an opportunity to invest in our future. Regulations... were gutted for the sake of a quick profit at the expense of a healthy market. People bought homes they knew they couldn't afford from banks and lenders who pushed those bad loans anyway. And all the while, critical debates and difficult decisions were put off for some other time on some other day."

The inevitable conclusion here is that establishment Washington is complicit in what went wrong. That includes all the people in positions of power who accepted what was happening as simply politics as usual -- even as the country was slowly but inevitably headed to that day of reckoning.

After all, since the Reagan era, even mainstream Democratic leaders have internalized the trickle-down, free-market, small-government mentality which Obama now blames for our woes. Few in the Democratic party -- or the mainstream media -- did much more than watch as the economic playing field tilted further and further to the advantage of the rich.

And yes, it's true that many of Obama's initiatives could well be described as pent-up Democratic goals. But you might also call them nearly-forgotten goals, as far as the current batch of Democratic leaders is concerned. Even when they controlled Congress, they failed to block budgets that turned out to be blueprints for disaster. And they either didn't fight for their principles or flinched in a pinch. I described some of their capitulations to former president George W. Bush in this December 2007 column. These very same leaders may well be motivated to -- at least -- complicate or modify Obama's proposals to validate their own previous inaction.

Exactly, I don't remember Evan Bayh or Ben Nelson or any of these scolds raising an eyebrow to any of the radically destructive policies the Bush Administration trafficked in on a daily basis. It's only with a Democratic President attempting to lead on Democratic principles that their spines stiffen.

Fortunately, Obama remains extremely popular, and he has shown an growing aptitude for this kind of conflict. However, his favorability is favored more than his policies at this point. I'm not sure if Republicans will get their act together to exploit this, but they can certainly get a boost from these "moderates" to revive their political fortunes.