Thursday, July 07, 2011
The Grand Bargain Arrives
Looks like Obama's going to China
President Obama is pressing congressional leaders to consider a far-reaching debt-reduction plan that would force Democrats to accept major changes to Social Security and Medicare in exchange for Republican support for fresh tax revenue.
At a meeting with top House and Senate leaders set for Thursday morning, Obama plans to argue that a rare consensus has emerged about the size and scope of the nation’s budget problems and that policymakers should seize the moment to take dramatic action.
As part of his pitch, Obama is proposing significant reductions in Medicare spending and for the first time is offering to tackle the rising cost of Social Security, according to people in both parties with knowledge of the proposal. The move marks a major shift for the White House and could present a direct challenge to Democratic lawmakers who have vowed to protect health and retirement benefits from the assault on government spending.
“Obviously, there will be some Democrats who don’t believe we need to do entitlement reform. But there seems to be some hunger to do something of some significance,” said a Democratic official familiar with the administration’s thinking. “These moments come along at most once a decade. And it would be a real mistake if we let it pass us by.”
Rather than roughly $2 trillion in savings, the White House is now seeking a plan that would slash more than $4 trillion from annual budget deficits over the next decade, stabilize borrowing, and defuse the biggest budgetary time bombs that are set to explode as the cost of health care rises and the nation’s population ages.
That would represent a major legislative achievement, but it would also put Obama and GOP leaders at odds with major factions of their own parties. While Democrats would be asked to cut social-safety-net programs, Republicans would be asked to raise taxes, perhaps by letting tax breaks for the nation’s wealthiest households expire on schedule at the end of next year.
The administration argues that lawmakers would also get an important victory to sell to voters in 2012. “The fiscal good has to outweigh the pain,” said a Democratic official familiar with the discussions.
It is not clear whether that argument can prevail on Capitol Hill. Thursday’s meeting at the White House — an attempt by Obama to break the impasse that halted debt-reduction talks two weeks ago — will provide a critical opportunity for leaders in both parties to say how far they’re willing to go to restrain government borrowing as the clock ticks toward an Aug. 2 deadline for raising the debt limit.
Privately, some congressional Democrats were alarmed by the president’s proposal, which could include adjusting the measure of inflation used to determine Social Security payouts. But others described it as primarily a bargaining strategy intended to demonstrate Obama’s willingness to compromise and highlight the Republican refusal to raise taxes.
Obama has already spoken to House Speaker John A. Boehner (R-Ohio) about the possibility of building support for a more ambitious debt-reduction plan, according to people with knowledge of those talks, who, like others quoted in this article, spoke on the condition of anonymity to shed light on private negotiations. The two discussed various options for overhauling the tax code and cutting entitlement spending, but they reached no agreement.
Keep one thing in mind as you mull all this over. Paul Ryan didn't put Social security on the table. And even the Catfood Commission didn't portray their SS recommendations as contributing to closing the deficit. And that's because SS has nothing to do with the deficit -- the trust fund is secure for more than 30 years. Sweetening the pot with Social Security in these alleged "deficit" talks is purely gratuitous.
If I had any faith at all that they were going to get some serious tax hikes in return I'd think this was just a feint to make the GOP look intransigent. But apparently they have been finishing up the kabuki script together:
The president’s renewed efforts follow what knowledgeable officials said was an overture from Mr. Boehner, who met secretly with Mr. Obama last weekend, to consider as much as $1 trillion in unspecified new revenues as part of an overhaul of tax laws in exchange for an agreement that made substantial spending cuts, including in such social programs as Medicare and Medicaid and Social Security — programs that had been off the table.
The intensifying negotiations between the president and the speaker have Congressional Democrats growing anxious, worried they will be asked to accept a deal that is too heavily tilted toward Republican efforts and produces too little new revenue relative to the magnitude of the cuts.
Well, yeah. Especially since the last thing the economy needs at all
is spending cuts and tax hikes at the moment.
Keep in mind that "overhaul of tax laws" --- a very complicated undertaking which everyone had previously agreed was too difficult to within the time constraint of the debt ceiling talks --- does not necessarily result in increased revenue. Indeed, Eric Cantor was saying yesterday that it musn't
result in increased revenue. But I'm sure that clever politicians could make it look as though it will.
And in any case, considering what we've been hearing from the Republicans for the past two weeks, we have to assume that the only possible deal is to give away the fundamental New Deal compact in exchange for closing the tax loophole on corporate jets and maybe some accounting gimmicks. John Kyl suggested yesterday that he might go along with selling off federal assets to raise some money. (I hear the grand canyon brings in some serious change...) Somehow I have a feeling that Boehner's going to be able to find enough GOP votes to put that sort of Grand Bargain over the top. (The Democrats, of course, will be forced to vote for it or risk having Gloria Borger blame them for crashing the world economy because they are being childish.) It's all very "Big" indeed.
Still, the only real change from what we knew yesterday is that the president himself
is blessing the Social Security element that was already on the table and has decided to spin this deal as his Grand Bargain. Other than a few details, this looks the same as it has for quite some time.
The president wants to go to the country in 2012 as the man who wrapped up all of our supposed long term problems in one Big Deal. (No word yet on the acute short term problems --- maybe he'll have time for that in the second term.) He said he was going to do this even before he was inaugurated and nothing, not lunatic Republicans or an epic economic crisis, has deterred him from his goal.
Here's what I wrote at the time:
Everyone's always trying to figure out what Barack Obama really wants. But it's not a mystery. He's been clear about it from the very beginning. What people have to face is the fact that he is a rigid leader who refuses to change course in the face of changing circumstances. Perhaps that's a strength at times. But in this one, it's a tragic weakness.
Thursday, January 15, 2009
Obama Goes To China
EJ Dionne was at the meeting of less conservative writers yesterday (less conservative by contrast to the George Will dinner the night before, anyway) and he came away with a little character study that is quite interesting. First, he discusses the fact that Barack is non-ideological, which I think is quite clear. But he says it in an interesting way that's worth examining:
There are at least three keys to understanding Obama's approach to (and avoidance of) ideology. There is, first, his simple joy in testing himself against those who disagree with him. Someone who knows the president-elect well says that he likes talking with philosophical adversaries more than with allies.
This part of him was once the detached writer and professor who could view even his own life from a distance and with a degree of abstraction. Seen with perspective, after all, the ideological differences in the United States are rather small. We have no major socialist party, and when it comes down to it, even conservatives are reluctant to dismantle our limited social insurance and welfare programs.
But Obama's anti-ideological turn is also a functional one for a progressive, at least for now. Since Ronald Reagan, ideology has been the terrain of the right. Many of the programs that conservatives have pushed have been based more on faith in their worldview than on empirical tests. How else could conservatives claim that cutting taxes would actually increase government revenue, or that trickle-down economic approaches were working when the evidence of middle-class incomes said otherwise?
I would guess that it will remain the terrain of the right because there is no ideology on the left, at least among politicians. At this point I'm not sure there is such a thing as liberal ideology at all.
The fact that Dionne says this is temporary puzzles me. How exactly does one change the fact that Republican ideology is the default position in American politics unless it's challenged? Is it not just as likely that in the event that Obama is successful, the public will believe that conservatism is "what works" since nobody tells them differently? And will they not be inclined to vote for someone who offers a more pure version of what they believe is "what works" once their memories of the loathed Bush fade away?
I suppose this all depends upon whether or not you think that politics is a matter of smart people getting together and agreeing on how the world should be run or whether you think it's a system designed to organize society and government by testing and challenging varying ideologies and worldviews against competing interests and values. The first is a very nice, clean way of doing things and the second is somewhat messy and difficult. But the truth is that I've never seen the first kind of politics work. (Indeed, Obama would be wise to put down his Lincoln histories for a few minutes and pick up a copy of The Best and the Brightest.)
Even the most pragmatic of presidents, Franklin Roosevelt, had no illusions about the forces arrayed against his programs (and against him personally) and he wasn't afraid to lay it out for the American people:
For twelve years this Nation was afflicted with hear-nothing, see-nothing, do-nothing Government. The Nation looked to Government but the Government looked away. Nine mocking years with the golden calf and three long years of the scourge! Nine crazy years at the ticker and three long years in the breadlines! Nine mad years of mirage and three long years of despair! Powerful influences strive today to restore that kind of government with its doctrine that that Government is best which is most indifferent.
For nearly four years you have had an Administration which instead of twirling its thumbs has rolled up its sleeves. We will keep our sleeves rolled up.
We had to struggle with the old enemies of peace--business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.
They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.
Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me--and I welcome their hatred.
I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match. I should like to have it said of my second Administration that in it these forces met their master.
Under pressure from the right, he pulled back a lot of New Deal programs the next year and it caused unemployment go back up, so rhetoric isn't everything. But he had no illusions about how political power is won and used for the greater good and he didn't give the Republicans tools to gain political power by pretending they were anything but the opponents they were. His lasting legacy, however pragmatically it was envisioned and implemented, was that people trusted the Democrats for generations and the New Deal programs were woven into the fabric of America. Liberalism, not conservatism, was the default ideology because Roosevelt made his arguments in stark and clear ideological terms.
It has been my experience, and reading of history generally, that politics is rarely a gentlemanly debate about the public good but is rather a struggle between competing interests. And ideology is usually what binds these interests together through common values and worldviews. In our system those interests have historically formed coalitions within the two political parties which fight it out before the public. I'm sorry that's unpleasant, but it's usually the best humans can do short of killing each other.
But perhaps change is upon us and for the first time in history we will have a functional one party government of earnest like-minded public servants dedicated to the betterment of the people. (We have had a functional one party government of like-minded public servants dedicated to the continuation of the ruling class and the status quo many times, so that much is certainly possible.) But everybody calmly sitting down together and agreeing on "what works" would be a first.
Unfortunately, it would appear that Obama is going to go to China --- or rather, he's going to "reform entitlements," which is the Democratic equivalent. Dionne reports that they've adopted Stephanopoulos' characterization of a Grand Bargain (which just shows that the beltway echo chamber is in full effect.) Obama told the Washington Post today that he's doing this in order to prove to somebody (who I'm not sure) that he is "serious."
Obama To Hold Fiscal Responsibility Summit
President-elect Barack Obama will convene a "fiscal responsibility summit" in February designed to bring together a variety of voices on solving the long term problems with the economy and with a special focus on entitlements, he said during an interview with Washington Post reporters and editors this afternoon.
"We need to send a signal that we are serious," said Obama of the summit.
Obama said that he has made clear to his advisers that some of the difficult choices--particularly in regards to entitlement programs like Social Security and Medicare - should be made on his watch. "We've kicked this can down the road and now we are at the end of the road," he said.
Normally another Democratic run bipartisan commission on social security reform wouldn't alarm me so much as annoy me. After all, Clinton was forced by the incoherent "centrist" Bob Kerrey into appointing a social security commission and Bush promised to appoint one after the failure of his attempt to privatize the system. But this time could be different. The scope and complexity of the economic crisis could lead to politicians rushing forward with some bad plans just to appear to be doing something.
I believe that everything about this is a huge mistake. It validates incorrect right wing economic assumptions, incorporates their toxic rhetoric about "entitlements," focuses on the wrong problems and continues the illusion that social security is in peril when it isn't. The mantra of shared sacrifice sounds awfully noble, but it isn't very reassuring to talk about the government going broke at the moment, particularly when the cause of our problems isn't the blood-sucking parasites who depend on government insurance when they can't work, but rather the handiwork of the vastly wealthy who insist on operating without restraint and refuse to contribute their fair share. I would have thought that a bipartisan commission on financial system reform might have at least been on the agenda before social security.
Obama is empowering the Republicans and the Blue Dogs with this fiscal responsibility rhetoric and perhaps he believes they will reward him by acting in good faith. And maybe they will.Or perhaps he thinks he can jiu-jitsu the debate in some very clever way to actually bolster social security and enact universal health care. But it's a big risk. I believe that all this talk about "entitlements" and fiscal responsibility will make it much tougher to sell universal health care and easier to dismantle some of the safety net at a time when many people have just lost a large piece of their retirements, their jobs and their homes. It's very hard for me to understand why they think it's a good time to do this.
I know it's probably right that we give him a chance before we completely go postal about this, but I also know that if this were a Republican saying these things I'd certainly be doing everything in my power to oppose it. But then that's the beauty of the Nixon goes to China gambit, isn't it? It neatly shuts down the most fervent opposition. That's why it's so frightening. He might just get it done.
We have over 9% official unemployment and probably double that in reality. The housing sector is still dead. Growth is anemic and very possibly about to go south. His grand bargain vision from 2009 was always anathema to the liberal project. Today it is destructive on an entirely different level.
digby 7/07/2011 07:20:00 AM