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Hullabaloo


Thursday, March 07, 2013

 
The Village: "very, very privileged people wanting to make sure they cut spending on everybody else?"

by digby

Greg Sargent games out what I believe to be the Obama administration's most plausible definition of "success":

The ultimate irony in such an outcome is that Republicans could plausibly declare victory. If they accepted Obama’s current offer as is, that alone would amount to a short term victory, since it contains far more in spending cuts (over $900 billion) than new revenues (nearly $600 billion). According to Paul Van de Water of the Center on Budget and Policy Priorities, this would mean that overall, we would have achieved nearly $4 trillion in deficit reduction, through a cuts-to-revenues ratio of 1.8 to one — nearly $2.5 trillion in cuts, versus nearly $1.4 trillion in revenues — after Obama decisively won an election about these matters. Republicans could say they forced Dems to accept entitlement cuts and got significantly more in cuts than they gave away in revenues.

If Republicans really want to tackle the deficit, they just have to accept Yes for an answer.

Indeed. That's been true since 2011. The problem is that while Greg says that experts have agreed that 4 trillion in deficit reduction is necessary, I don't think it's a true consensus. There are plenty of experts who think this fetish with the deficit is daft. Here's one:

Visit NBCNews.com for breaking news, world news, and news about the economy

But he's right that the consensus among politicians and DC pundits is that this arbitrary figure of 4 trillion is written in stone and much be achieved somehow or the world will end. And at this stage the only question is whether or not there will be any more revenue on top of the inevitable addition of spending cuts. That's an accurate reflection of how the discussion is going. What we've been hearing lately is that the Republicans just didn't really know how much the president was offering until now, which strikes me as somewhat unbelievable. But nonetheless, it's true that he's been offering up a lot of things they can easily say yes to and achieve their own unpopular and destructive policy goals while being able to blame the Democratic president for doing them! You would think they'd jump at the chance. And who knows, someday they might just wise up. Here's a a good article in The Nation today talking about this phenomenon which recounts a call to C-Span this morning:
I hope Republicans do the right thing, take care of the people—you know who we are. And I don’t want anything from the government, I’ve been working all my life and so has my entire family, so I hope that you guys stick to your guns, no matter what the cost, and please bring us back from the brink of disaster. And don’t set up that CPI, that chained CPI that the president wants. And would you explain the Chained CPI a little bit?
Can you see what's wrong with that picture (aside from the very serious cognitive dissonance?) I knew that you could. But all that is abstract, inside baseball. Another article in today's New York Times should be what everyone is reading in order to see why this entire debate is such a tragedy for our country. This one's by highly respected political reporter Tom Edsall and it's called "The War on Entitlements". It lays out all the reasons in clear detail why this obsession with reducing the so-called entitlements is going to badly hurt millions of people. And, most interestingly, he lays the responsibility for its perpetuation exactly where it belongs:
The debate over reform of Social Security and Medicare is taking place in a vacuum, without adequate consideration of fundamental facts. These facts include the following: Two-thirds of Americans who are over the age of 65 depend on an average annual Social Security benefit of $15,168.36 for at least half of their income. Currently, earned income in excess of $113,700 is entirely exempt from the 6.2 percent payroll tax that funds Social Security benefits (employers pay a matching 6.2 percent). 5.2 percent of working Americans make more than $113,700 a year. Simply by eliminating the payroll tax earnings cap — and thus ending this regressive exemption for the top 5.2 percent of earners — would, according to the Congressional Budget Office, solve the financial crisis facing the Social Security system. So why don’t we talk about raising or eliminating the cap – a measure that has strong popular, though not elite, support? [...] Cutting benefits is frequently discussed in the halls of Congress, in research institutes and by analysts and columnists. The idea of subjecting earned income over $113,000 to the Social Security payroll tax and making the Medicare tax more progressive – steps that would affect only the relatively affluent — is largely missing from the policy conversation. The Washington cognoscenti are more inclined to discuss two main approaches that are far less costly for the affluent: means-testing of benefits and raising the age of eligibility for Social Security and Medicare. (Sidenote: policy makers and national journalists who weigh in on this issue generally earn more than $113,700 a year.) Means-testing and raising the age of eligibility as methods of cutting spending appeal to ideological conservatives for a number of reasons. First, insofar as benefits for the affluent are reduced or eliminated under means-testing, social insurance programs are no longer universal and are seen, instead, as a form of welfare. Public support would almost certainly decline, encouraging further cuts in the future. Second, the focus on means-testing and raising the age of eligibility diverts attention from a much simpler and more equitable approach: raising the payroll tax to apply to the earnings of the well-to-do, a step strongly opposed by the ideological right. Third, and most important in terms of the policy debate, while both means-testing and eliminating the $113,700 cap on earnings subject to the payroll tax hurt the affluent, the latter would inflict twice as much pain. The C.B.O. estimates that elimination of the payroll earnings cap would cost the well-to-do the equivalent of 0.6 percent of Gross Domestic Product, while substantially reducing Social Security payments to the top third of the income distribution, through means testing, would only cost those better off recipients the equivalent of 0.1 percent of G.D.P. Theda Skocpol, a professor of government and sociology at Harvard and an authority on the history of the American welfare state, contended in a phone interview that policy elites avoid addressing the sharply regressive nature of social welfare taxes because, “at one level, it’s very, very privileged people wanting to make sure they cut spending on everybody else” while “holding down their own taxes.” Gary Burtless, a senior fellow in economic studies at the Brookings Institution, agrees that elite proponents of cutting benefits for the elderly have a narrow view based on their own high incomes and comfortable lives: “The median voter has a much more well-rounded sense of the risks associated through everyday life than the elite,” he said in an interview.
No kidding. And yet, as far as I can tell, the leaders of both parties see this as some kind an abstract game of chicken in which the everyday lives of average Americans are not even among their considerations. I urge you to read the whole thing and consider what this means to average people in this countrym half of whom who are going to be living on less than $30,000 at a time when they are unable to work. This program is inadequate, not overly generous and the idea that they are actually considering cutting it (and the Chained-CPI is nothing more than a disguised cut) is just appalling. They do not have to "fix" entitlements by cutting them. Indeed, the only rational "fix" is to raise social security and expand Medicare to include younger people. Instead, we are doing the opposite. It is nuts, pure and simple. This "deal" that Sargent sketches out is very likely to be considered a big win for the president among the cognoscenti. I have no doubt that we'll all be told it was the best he could do and that the Republicans are big meanies and that we just have to be realistic. But that is utter bullshit. Social Security doesn't contribute to the deficit and Medicare costs are symptomatic of much bigger problems in our medical system than anything that cutting the benefits can possibly fix. It is a phony solution to a non-problem and I suspect it comes out of a craven desire to make sure that the deficit reduction of today --- for which they believe they will be rewarded --- stays permanent and falls on people who are too old and too sick to complain when it happens to them. We're all justifiably concerned about the bipartisan expansion of presidential power and the perpetuation of the national security state. The debates about the drone war and the kill list and the War on Terror are vital. But we've had a bipartisan National Security policy for decades, one that has always placed a premium on our continued global military hegemony. There is nothing particularly new about that, as appalling as it is. But a Democratic president leading the way to cutting Social Security and Medicare is something new. There was a time when that would have been unthinkable. I've said it before, but it's more and more obvious to me that if the Democratic Party sells out its constituents on "entitlements" --- which they fought for and defended for over half a century, particularly at a time when their authentic democratic political power is stronger than it's been in over three decades, I'm hard pressed to see what the rationale for their continued existence really is. But then, as Edsall points out, "policy makers and national journalists who weigh in on this issue generally earn more than $113,700 a year" so they have their own dog in this fight, don't they? Edsall ends his piece with this:
This conflict could not have come at a more difficult time: the United States is in the midst of a zero sum struggle requiring politicians to pick losers, not winners. The population of those over 65 is set to multiply, with longevity steadily increasing even as median annual household income for the population at large has shrunk to $51,584 in January 2013 from $54,000 in 2008. In this kind of conflict over limited goods, one of the most valuable resources that can get lost in the fray is the wisdom of the electorate at large. In this case, the electorate is pointing toward progressive tax increases for those closer to the top far more readily than members of the political class, for whom high-earners are a crucial source of campaign contributions. The very nature of the basic security Americans are entitled to is at stake.

Anybody listening?

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