What's it gonna be tomorrow—2010 budget agreement or a government shutdown?  And how will the skirmish impact the budgeting process for 2011 and beyond?

The Democrats, it would seem, are in a pay now or pay-later-type situation.  Intellectually, they should agree to historic cuts (particularly in the 2011 budget) and absorb a short-term backlash from their liberal constituency, rather than stand in the way of the austerity virtually everyone understands is necessary to prevent us from devolving into a Greek-like economic meltdown.

At least In the former scenario they can attempt to share credit for averting a fiscal disaster of epic proportions, and concomitantly, make a credible case for relevancy in 2012, particularly to Independents.  Should they instead be seen as blocking the path toward critical deep cuts (back to the slightly more reasonable levels of the recent past), they run the stark risk, after the country's inevitable fiscal reckoning, of marginalizing their party for a generation or more.  A Herbert Hoover redux?

Having said all that, when was the last time Democrats made a decision that wasn't predicated on the political machinations of the here and now?

The Dems long-standing class warfare strategy has painted them into a corner with respect to drafting a responsible budget (not to mention successfully extricating us from the recession).

Their zero sum approach of pitting businesses and the wealthy against everybody else has led to the longest economic contraction in decades and most anemic rebound in history.  Unfortunately, they are using that same losing formula to inform their budgeting strategy.  Instead of a zero sum game, how about zero-based budgeting?

The grand irony of Obama's economic philosophy is that the more government attempts to lift the lower and middle classes (by wittingly or unwittingly holding down the upper), the deeper the hole it digs for those it purportedly strives to help most.

Apparently, Obama not only walks on water, he thinks he can selectively control the depth of the tide for each and every boat on that water.

The data doesn't lie.  Obama's policies have had the most negative impact on the less fortunate.  For example, the top 5% of earners now account for 37% of consumer outlays.  That's up from around 30% when he took office.  Don't be fooled.  The uptick on the high end is not because the wealthy are spending more.  They're not.  It's because all classes have been practically paralyzed by the business-hostile policies that have choked off opportunity.  The rich adapt.  Others cannot.

What Obama and his Democrat colleagues need to recognize, but likely will not, is that all the slack is out of the system.  Years and years of extreme wasteful excess have gotten us to the tipping point.  There's no more room to buy political favor with the purse strings.

The doomsday scare tactics that the Dems love to toss around in response to calls for cuts to their pet programs will only come true if we allow the fiscal insanity to continue. 

If congress and the President would eat a little of the budgetary restraint dog food the American people have choked down over the past few years, maybe Grandma and Grandpa won't have to.