The coming political fight after the inauguration will be among the Democrats. The Republicans will still be wounded severely. For an out of favor and out of power force the Republicans would be wise to pick their battles wisely; they do not have the force to squander on partisan attacks with little meaning to the general voting populace.

Facing a record deficit the Democrats will be forced to take action on entitlements spending; something they have fought against for some time. We simply can not live up to the promises made in the name of Social Security and Medicare. There will be means testing, benefits reduction, and tax increases.

Tax increases will target the richer, but expect to see limits on mortgage interest deductions and an increased upper threshold on social security.

Failure to address these expenses will mean inflation and a long term devastation of our economy and our currency. The global financial market will not let our government have its cake and eat it too, as we tried to do from Kennedy to Reagan.

Fiscally conservative Democrats (Blue Dogs) will counter the ultra loyal Democrats (Yellow Dogs). The Blue Dogs realize that if they do not steer to the middle in financial matters they risk losing the Congress as they did under Clinton. The Yellow Dogs may feel they have a mandate and a window to accomplish more extreme objectives.

The origin of the Yellow Dogs is take from the 1920’s when southern Democrats claimed they would vote for a ‘yellow dog’ before they would vote for a Republican.

Texas Democratic Rep. Pete Geren created the ‘Blue Dog’ label when he said that the party had been “choked blue” by “extreme” Democrats, from the left.

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