"I’m not going to slash Medicaid to the point where disabled kids or seniors in nursing homes are basically uncared for."

In 2011, as part of the grand bargain that didn’t work, you put a lot on the table that was uncomfortable for Democrats — changes to Medicare, changes to Social Security, cuts to Medicaid. For your Democrats who are supporting you now, should they expect you to go no further than that in the second term? What is your message to them about what you’re willing to put on the table to get a deal with Republicans on entitlements?

My message to Democrats is the same message I’ve got to Republicans and independents, and that is, I want a balanced approach to deficit reduction that combines additional revenue, particularly from folks like me who can afford it, with prudent cuts on both the discretionary side and the mandatory side but that still allows us to make investments in the things we need to grow.

And that means I’m prepared to look at reforms in Medicaid. I’m prepared to look at smart reforms on Medicare. But there are things I won’t do, and this is part of the debate we’re having in this election. I do not think it is a good idea to set up Medicare as a voucher system in which seniors are spending up to $6,000 more out of pocket. That was the original proposal Congressman Ryan put forward. And there is still a strong impulse I think among some Republicans for that kind of approach.

I’m not going to slash Medicaid to the point where disabled kids or seniors who are in nursing homes are basically uncared for. We’re not going to violate the basic bargain that Social Security represents.

Now, the good news is, if you’re willing to raise taxes on millionaires and billionaires, then you can make modest reforms on entitlements, reduce some additional discretionary spending, achieve deficit reduction and still preserve Social Security and Medicare and Medicaid in ways that people can count on. The only reason that you would have to go further than that is if there’s no revenue whatsoever. And that’s a major argument that we’re having with the Republicans.

[T]hough Bartlett’s piece is about the GOP, it’s hard not to see how the Democrats have come to play the same role in the contemporary political order that Republicans once played under the New Deal.

Starting with Walter Mondale’s famous pledge in 1984 to raise taxes in order to bring down the deficit—one of Barlett’s footnotes reveals this delicious and disturbing anecdote: just after announcing his tax pledge at the DNC convention to wild applause, Mondale turned to Dan Rostenkowski and said, “Look at ‘em. We’re going to tax their ass off.”—Democrats have become the party of austerity.

Like Republicans of yore, the Democrats have repeatedly sought to reduce the debt and deficits, only to find themselves held hostage to the other side’s designs of depriving the welfare state of much needed cash.

Consider the two major presidential cycles of the last three decades: Reagan/Bush-Clinton and Bush-Obama.

During the 1980s, the Republicans cut taxes and ran up huge deficits. Then Bill Clinton came into office and announced his intention to reduce deficits. Anxious to appease Robert Rubin and the bond market, he abandoned whatever pretense of a progressive economic agenda he had set out during the campaign. He and the Democrats raised taxes and allowed government spending to decline dramatically as a percentage of GDP. By the end of his second term, Clinton had managed to generate a surplus—with the explicit purpose of not only reducing the debt but also shoring up Social Security—only to have the Bush White House squander that surplus through massive tax cuts and increased military spending.

When Barack Obama assumed office in 2008, he faced a similar conundrum as Clinton. The Bush Republicans had run up massive deficits and debt. Though the financial crisis (and his overwhelming victory) seemed to give Obama the warrant to spend—remember when we were all Keynesians again?—he was constrained by congressional Republicans and conservative elements in his own party, including the Wall Streeters who had been among his earliest supporters and happened to have a disproportionate influence in the White House. All of these forces seemed to worry more about the deficit than they did about the recession. The result, of course, was a much smaller stimulus package than many progressives had hoped for.

Then came the health care bill, which also has to be understood in the context of—indeed cannot be separated from—the politics of deficits and debt reduction. Throughout the health care negotiations, Obama took great pains to stress that his bill would not increase the deficit (CBO scores became as important to the national conversation as health care itself). Incredibly, this was an entirely Democratic, and self-imposed, constraint, which made the passage of health care reform more difficult than it might have been. As Jonathan Chait pointed out in 2010:

“Paygo” was a reform imposed by the 1990 budget agreement that required Congress to offset the cost of any new entitlement program or tax cuts with entitlement cuts or tax hikes. It was a significant factor in the decline of the deficit through the 1990s. Republicans hated it because it required them to offset the cost of tax cuts with either spending cuts or increases in other taxes, thereby making the trade-offs of tax cuts explicit. When they took control of Congress in 2001, Republicans ended the Paygo rule, which allowed them to pass a series of tax cuts along with a Medicare prescription drug benefit without any offsetting measures. The structural deficit exploded.

When Democrats recaptured Congress, they re-imposed pay-go rules, leaving an exception for extension of the Bush tax cuts for income under $250,000. That’s one reason why the Affordable Care Act had to be offset with hundreds of billions of dollars in politically-painful Medicare cuts, rather than financed solely through borrowing like the Medicare prescription drug law. Naturally, this made the Affordable Care Act much harder to pass through Congress as well as less popular — bills that hide their cost pass more quickly and with less complaint than bills that make make explicit who is going to pay for their costs.

Just as the White House and Congress were wrapping up their negotiations on the health care bill in the early months of 2010, Obama announced that the great challenge of the age was debt reduction. Though it’s often argued that Obama was pushed into that position by the Republican takeover of the House in November 2010, the fact is that he created the Bowles-Simpson Commission in February 2010, with the declared purpose of balancing the budget by 2015 and reducing the debt. The committee’s membership, chosen by Obama, included on the Democratic side deficit hawks like Max Baucus and on the Republican side…Paul Ryan.

At every step, then, of the two major initiatives of his administration—the stimulus and health care bills—Obama shouldered the load of debt and deficits. Whether that was by default or design remains the subject of much debate. But what’s not in dispute is that the debt has become the Democrats’ burden and/or vocation, which the Republicans are free to flout at will.
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So here we are, entering a campaign with Obama begging the media to recognize him and the Democrats as the party of austerity—for being willing to make difficult and deep cuts to Medicare and Social Security—and Republicans happily calling for a constitutional amendment requiring congressional super majorities for tax increases.