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Saturday, January 15, 2011

Setting The Stage For The Big Kabuki

by digby

It looks like the Third Way folks and the Republicans are working in tandem to position the Democrats on the wrong side of the people again. (It's always interesting how much their agendas intersect.) Here's a rather astonishing report on the politics of deficit reduction from yesterday's Washington Post:

President Obama's refusal to raise taxes for the vast majority of Americans will prevent him from pursuing a broad overhaul of the tax code and is making it difficult for him to achieve his goals for reducing the budget deficit, according to administration and congressional sources.

Barely a month after Obama's fiscal commission laid out a road map for reining in the soaring national debt, the president's resistance to tax increases for families making less than $250,000 a year has ruled out a key prescription: a plan to reduce cherished but expensive tax breaks for individuals.

Obama is planning to propose deeper cuts in agency spending in the budget request he will submit to Congress next month, including a sharp reduction at the Pentagon. But the president is unlikely to trim nearly as much from future spending as the commission has proposed and nowhere near as much as House Republicans are demanding, the sources said.

Without deeper cuts or fresh revenue, White House budget officials will have a tough time meeting the president's own targets for short-term deficit reduction, including a promise to narrow the budget gap from nearly 9 percent of the gross domestic product last year to 3 percent of GDP by 2015.

The sources spoke on the condition of anonymity because the budget is still being drafted.

Administration officials said no one should be surprised to learn that Obama is unwilling to backtrack on one of the central tenets of his administration - protecting middle-class Americans from higher taxes - particularly after last month's tax battle with Congress.

"The president remains committed to returning to a path of long-term fiscal discipline without imposing additional burdens on middle-class families," White House spokesman Amy Brundage said. "His budget will reflect these values."

This is such a neat trick I have to give credit where credit is due. The Republicans and their Third Way allies are winning because they're just a whole lot better at politics than liberals are. See what's happened here? The Democratic President of the United States is now pushing the GOP agenda -- there will be no tax hikes, no matter what. This is his promise to the American people -- they will not have their taxes raised, none of them, not even the rich. In fact, we can't raise them because it will harm the economy. This isn't your father's Democratic Party anymore. It's your rich Uncle's.

As a result of this, the only answer to what they also agree is a looming debt crisis is to cut spending, long term. The president's opening gambit will be to cut it a little. The Republicans will demand that we dismantle everything but the military and Homeland Security. And they will have another kabuki battle in which it's pre-ordained that despite the fact that we are still reeling from a monumental recession and hovering around 10% unemployment, the only "serious" solution will be some Pentagon cuts to outmoded systems and cuts to so-called entitlements that will not directly affect people for some years in the future.

And needless to say, the Democrats will not be given any credit by the very Serious People for their fiscal rectitude and willingness to whittle away at the crown jewel of the New Deal and break their 60 year bond with the American people:

"It's a tremendous letdown," said Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget. "The purpose of the fiscal commission is to give politicians cover to do hard things, to pull back from the promises they can't stick to and to be a game-changer that promotes the real policies we need to fix the situation. If the White House returns to the stale debate over untenable promises about what they won't do, then they're not even letting the fiscal commission help them."

The fiscal commission, you'll recall, didn't actually meet its mandate for a super-majority vote and didn't publish a final report. It's completely illegitimate to use that cheap shot Simpson-Bowles monstrosity as a baseline for "common ground" but then we knew that it was a set-up from the beginning, didn't we?

So, where do we stand? There's one bit of good news, which the Democrats, if they actually wanted to stop this austerity trainwreck, could use to great advantage in the upcoming "negotiations":

At the House GOP retreat in Baltimore, "Majority Leader Eric Cantor (R-Va.) delivered a stern message that the debt ceiling will eventually have to be raised to keep the government from defaulting. But he also promised that Republicans will 'use the leverage' they have to enact at least some of their spending-reduction goals. 'It's a leverage moment for Republicans,' Cantor said in an interview Friday. 'The president needs us. There are things we were elected to do. Let's accomplish those if the president needs us to clean up the old mess.'"

I wonder what "old mess" he's talking about --- the mess the Republicans made in their eight years of useless wars and tax cuts or the old mess of "entitlement spending"? But that's beside the point: Cantor just said that they will have to raise the debt ceiling. He said it out loud and on the record. Therefore, we now know that any capitulation made by the President and the Democrats in the negotiations will be made because they wanted to make them. There can be no doubt about that.

In any case, with tax-cuts-forever being the new Obama agenda, the only thing he has left is unpopular spending cuts --- for which the Republicans want him to take credit. And after the beltway love and poll jump he got for extending the Bush tax cuts I'm guessing he thinks this is a winning strategy. And maybe it is. But he shouldn't think that enacting vastly unpopular spending cuts is going to be applauded by the Republicans in 2012. They're going to hang them around his neck and unless you think negative ads don't ever work, and the economy is going to be growing so robustly that people will not care, they will be successful. And lucky for them, in the era of Citizens' United, they don't even have to take responsibility for doing it.

Social security is in danger right now. Very serious danger. There are people in the White House who believe that "fixing" social security by cutting benefits through raising the retirement age or means testing is a legacy item that will be seen as a great progressive victory. I don't know what they've been smoking, but they really think that ordinary people will thank them for this. There are others who believe that it must be done in order to soothe markets and still others who simply think that the social safety net is outmoded and that they should be able to experiment with people's lives by creating some new system with "market incentives." (Think health care reform.) These people are the proverbial "best and the brightest" many of them veterans of the deregulation schemes of the 90s. They do not have a good track record. It's impossible to know where the president is going to come down on this at the moment because he's said conflicting things about it for the past four years. But let's just say it's not particularly comforting to know that he's even considering doing this. Certainly the fact that he's just recently hired people who are known to be sympathetic to all these ideas isn't a good sign.

The Social Security Works coalition is trying hard to get its voice in these deliberations and has launched a full blown campaign to persuade the president not to talk about Social Security in his State of the Union address. It's only step one, of course, because there are Democrats in the Senate who are determined to cut social security and see this as their golden opportunity to get it done. But it won't be as easy for them if the president publicly takes it off the table or at the very least, doesn't put it on the table.

You can read more about this at Campaign for Americas Future. If you feel like calling your Senator and telling him or her that you really want the president to remove Social Security from this debate, it's possible that they might convey this information to the White House. It certainly can't hurt to let the Democrats know that there's rumbling about this. Harry Reid said last week on Meet the press "stop picking on Social Security" because he survived a very close election in part because he was a hard core champion of the program. The White House needs that kind of reminder from many members.

President Obama could get a tremendous amount of good will from the base if he would make a ringing endorsement of the safety net and declare with the same resolve he shows with the tax cuts that he will not touch social security. I, for one, would be much more confident that he is going into 2012 as a fighter for average Americans if he did that. From what the polls indicate, most Americans would too.


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