The compromise will include some formula for revenue increases, (probably in the form eliminating deductions while reducing rates), it will include cuts to the military, and it will include deep meaningful and substantial cuts in spending in the overall budget. And the compromise will be agreed on the brink of default to no one’s satisfaction. In the meantime, we have six weeks of Kabuki theater to enjoy while the eventual compromise is hammered out. Both tribes will have ample opportunity to point at the feckless hypocrisy of the other. Enjoy the show.

For anyone interested in doing a deep dive into the state of the financial budget crisis facing the United States, you cannot do better than Mary Meeker’s recently released report “USA Inc.” Published under the auspices of venture capitalist Kleiner Perkins, it is detailed and comprehensive, yet clear, understandable and served up in digestible bites. It is well worth the time and effort.

Taiwanese animations are the future of all mainstream news. The folks at NextMedia have distilled US TV news, newspaper commentary, blogs, and twitter feeds on the Wisconsin standoff into an easily digestible two minute animation. As far as the legislative standoff is concerned, this is a foregone conclusion. Polls do not support the AWOL Wisconsin Senators. The Wisconsin State Assembly passed the Walker Budget Repair Bill after beating back a filibuster and the Senators will have to return sometime or be recalled. The protesters in Madison will have to go back to work or be fired. The Republicans have the votes and Walker has the will. Done deal. I think it is all Kabuki Theater in Wisconsin from this point.

Last week, in the Republican controlled House of Representatives, with Republican Speaker of the House John Boehner supporting the continued funding of the unneeded engine, it was finally defeated. Credit to President Obama, Defense Secretary Robert Gates for reaching out to Republican legislators and the new crop of Tea Party supported freshman Republican representatives who stood up to their own leadership.

President Obama is not going to get re-elected if he continues to treat American voters like they are complete idiots. He cannot tell us that a spending increase is really a spending cut, and that a massive new entitlement program will save money when it will actually cost money and expect to maintain any credibility.

He needs to outflank the Republicans on fiscal responsibility by supporting the bipartisan recommendations of the deficit commission he sponsored. If he puts the full weight of the Presidency behind the Simpson-Bowles Plan and pushes it to a floor debate, the American people would put their electoral weight behind him.

President Obama and his political brain trust were diligently taking notes while getting schooled in the midterms. On Monday President Obama announced a federal employee pay freeze for non-military employees. On Tuesday he met with congressional leadership and assured the American people that he heard the voice of the voters.

Observing the carving of our currency, as it is sliced by administration fiscal policy and diced by Fed monetary policy.

The bogeyman of “gridlock” will not dissuade voters. While often messy, political gridlock in Washington D.C. can yield very positive results. The poster child of dysfunctional gridlock is the Clinton/Gingrich budget impasse that shut down the government in 1995. Ugly – to be sure. Yet out of that same dynamic during the six years of divided and “gridlocked” government, we got a lot of good, smart governance.

Most investors believe that the stock market will benefit from Republicans taking control of either the House or Senate in the fall. With that expectation, a rising market could very well be a self-fulfilling prophecy. If the GOP begins to look like it has a realistic chance of taking control of one house, the opportunities may come along sooner rather than later.

All week I’ve watched GM CEO Ed Whitacre walking down a factory floor in a GM advertisement, crowing about repaying government loans while saying he could respect the opinion of those who did not want to give GM a “second chance”. It is good to know that Ed can respect my opinion of the bailout. He might be interested to know that my current opinion is that his claim that GM repaid the loan from the US Government in full and ahead of schedule is more than a little disingenuous. I hope Ed still respects me.

Alex Gibney, the filmmaker behind Enron: The Smartest Guys In The Room, is back with his take on the Abramoff scandal and it seems like it’ll be illuminating…and scary. Check out this featurette… Basically…Money + Power = Problems. Especially when it comes to the upcoming financial reform legislation. Which is why I’m heartened that the [...]

First, the relevant facts about the budget that’s set to be released on Feb 1… About $447 billion will be devoted to funding the government — the parts that aren’t mandated by law (the entitlements) or aren’t related to defense, intelligence, veterans or national security issues. Obama will promise to veto any budget that exceeds [...]

Yesterday, in a background briefing, the administration announced a three year spending freeze on portions of the budget. Since departments with the fastest growing government expenditures like Defense, VA, the State Department, and entitlements are excluded from the “freeze”, it will have a negligible effect on the ballooning deficit. One cannot help but wonder if the administration is trying to be all things to all people, and risks representing nothing to no one.

The President is on the stump, giving speeches, sitting for interviews, and conducting town-halls in a media blitz supporting the financial system reform initiative. He campaigned on this reform and his administration has promoted several iterations of the bill since taking office. In the meantime, Democrats in the House and Senate are crafting reform bills that are inconsistent (if not incompatible) with each other and with the President’s promises.

The administration that has initiated so much that is unprecedented in American politics, introduced an unprecedented new Thanksgiving tradition – carving up our currency for the holidays.

Justin Gardner (Donk Quixote) and Mike Wallach (Phanto), endeavor to tilt at windmills (With apologies to Miguel de Cervantes). Justin is a registered Democrat, considers himself an independent but views the world from the left side of the political spectrum. Mike most recently registered as a Republican, but considers himself primarily a fiscal conservative, deficit hawk, and a libertarian leaning independent. They find common ground in the Health Care Reform debate.

Now that the House has left for summer recess, with the Senate leaving in a week, it’s a perfect time to look back and see what may have gone wrong in the Democrats’ plan to pass a major health care reform package before this week had passed. Most people tend to focus on the policy [...]

In my last post I detailed some of the roadblocks that have kept the Democratic leadership in Washington from finding a way to pass a major health care reform bill with a public option. They’ve whittled the cost of the bill down a few hundred billion dollars by negotiating concessions from drug companies and hospitals, [...]

Thanks to Justin and company for welcoming me on here as a regular contributor. I will be posting on a number of issues, but one area you can expect that I will regularly be tracking is technology related developments and how they interact with the political world and policy. I also live less than ten [...]

Kevin Hassett (whose American Enterprise Institute affiliation probably tells you all you need to know about his economic opinions) has written a skewering critique of Obamanomics. But what’s interesting is not that he calls the Obama administration the most fiscally irresponsible in history, but that he uses California’s monetary problems as evidence that moderate Democrats [...]