From Atrios, couple of posts with several important reminders that actually deal with policy.

Really Bad Ideas That the Media Loves and Democrats Must Resist

1) "privatizing" Social Security. I don't worry so much about benefits being cut. The upshot of a growing population of old people is that it's a growing populating of old people who vote. But, this will just be the Treasury Looting Act of 2005. Firms will get their fees, funds will be looted, then they'll be bailed out, rinse, repeat...

2) "Medical Savings Accounts." Insurance is about reducing risk and uncertainty. Forcing people to cover their medical costs by hording a big pile of cash they can't spend until they get sick is a just a weird idea. And, it might have the added advantage of destroying the private health insurance market entirely.

3) Tort reform. The "Moron-American Act of 2005." You get what you wish for, I guess.
[...]

6) Tax cuts. Oh, just let them have their goddamn tax cuts. The bond market'll snap like a twig at some point.

The first two items really are just two manifestations of the same Republican fantasies that a bunch of folks on the left who don't understand economics and markets seem to have bought into. They share the following premises:

• there is such a thing as a free lunch, and the market manufactures it
• individuals expressing their personal preferences are always much wiser than institutions that aggregate and manage risk for a living
• competition among oligopolists for savings the government forces people to make will reduce costs to indivduals, increase quality, and expand product choice
• in the future, the WH and Congress will maintain strict firewalls to keep individuals and financial firms from "leveraging" the assets
• when a stock market bust comes or other economic hard times hit, the poltical system won't step in to bail out large portions of the elderly and sick whose accumulated assets are insufficient to meet their basic needs
• our political system can tolerate over the long-term a new social contract involving a radical shifting of risk away from employers and government to individuals.

For a whole host of reasons, including the experiences of privatized systems in Latin America, I find each of those assumptions either heroic or plain flat wrong.

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On Item 6, I'm reaching a point close to Atrios' on tax cuts. At a certain point, why keep fighting it. It's not as if opposition now could produce somewhat improved packages. Tinkering and niggling to get a percentage point here or there on a deduction or credit for one population group or another isn't going to make the tax system any fairer and will just add to its opacity and inefficiency. Why not just vote no, while arguing for a system overhaul based on both simplicity and progressivity -- and that means reopening the horror show of a corporate tax law just signed by Bush.

The currency and bond markets are increasingly going to be the only effective constraints on Bush fiscal policy. They'll certainly garner more attention from the WH than any speech by a Democrat on the floor of the House.

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That brings us to a second Atrios post, in which he provides a fine description of the total macroeconomic incoherence of economic policies that GWB has promised to spend political capital on. And some suggestions as to how the financial markets are reacting in a less than enthusiastic (and even perhaps incoherent themselves) manner.

First, he cites an article from the Washington Post on Bush Admin policies and the currency markets:

But John B. Taylor, the Treasury undersecretary for international affairs, defended the Bush administration view that the deficits pose no danger of a dollar collapse. He issued a detailed rebuttal of what he called "scare stories." [...]

The declined rekindled the fears of some analysts that the dollar could be headed for a severe sell-off unless the White House and Congress make a major effort to shrink the budget gap.

"As the dust settles after the U.S. elections, the one theme that is developing is the growing recognition [in the markets] of the need for more dollar depreciation," economists at J.P. Morgan told clients yesterday, citing as one major reason the likelihood that "there will be no serious new policies to trim the U.S. budget deficit." [...]

Taylor said administration policies already in place will help shrink the trade deficit. One is President Bush's pledge to cut the budget deficit in half, as a percentage of the U.S. gross domestic product, by 2009. That would decrease the trade deficit because lower government spending or higher taxes would reduce the amount of money consumers spend on imported goods.

This is basically a good old fashioned short-term Keynesian recession to correct the trade deficit.  As Atrios notes:

But, it isn't the kind of argument Bush administration officials usually make (unless they're justifying tax cuts to increase employment after their other justifications disappear). It isn't the kind of argument sensible people really make over a 5 year time horizon. It isn't an argument that actually makes sense unless the guy is promising recession.

And then continuing his quotes from the Post article "here's the kicker":

President Bush's news conference yesterday did little to lessen concerns over the deficits, Wall Street analysts and currency traders said. Bush simultaneously promised not to raise taxes under the guise of tax simplification, to pursue a costly restructuring of Social Security and to cut the budget deficit in half by 2009.

The currency markets aren't buying it, said William G. Gale, an economist at the Brookings Institution.