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Saturday, July 23, 2011

Compromising position

by digby

Via yesterday's HuffPost Hill:

Obama, to a College Park audience today: "I was actually reading an article on the way over here, and the basic notion was that, well, Obama is responsible, but he doesn't fight enough for how he believes, and the Republicans are irresponsible but all full of conviction. So this was sort of the way the article was posed. And this notion that somehow if you're responsible and you compromise, that somehow you're giving up your convictions -- that's absolutely not true."

I don't know which article he was referring to, but I think he may be missing the point. It's not that people don't understand that he has to compromise. It's that he puts the defining issues of the Democratic Party on the table in exchange for gimmicks and promises from the other side. It would be as if George W. Bush had offered to tax evangelical churches and ban private ownership of handguns in exchange for Democrats agreeing to raise the cap on Social Security. When you do something like that, you should expect some blowback. Moreover, the real question at this point is what his convictions are, not whether he's betraying them.

I think it would be different if long before the alleged default crisis he hadn't said openly that he wanted to compromise on the safety net programs. He called it a Grand Bargain and laid out his vision of "shared sacrifice" in some detail. And the problem was always that he sees such compromise as everyone having "skin in the game", when the people and ideology his party allegedly represents will suffer far more than the millionaires and corporations who are being portrayed as equal stakeholders in this "bargain." It is preposterous to say that making the elderly give up some of their already painfully meager stipends in exchange for the wealthy having to pay taxes at the rates they paid during the Clinton years is in any way a fair compromise.

The president seems to see these things as abstractions: the poor give something and the rich give something and that will make it even-steven and everyone will share equally in the pain. That might sound fine if you're talking to children, but adults surely know that the wealthy will feel no real pain from being asked to give up a slightly higher percentage of the wealth that's being taxed now at historically low rates. And the elderly and disabled and children who will be sacrificing their benefits in "exchange" for that can't work. How are they supposed to make up the difference? (This is where the catfood metaphor comes from.)

Look, I get that he thinks it would be great to tick off a bunch of items on the list of problems and say they were all solved through a a "balanced approach." That's his brand now and it works for him. But there are reasons this is so tough -- the two parties have different constituencies to serve and different ideas of what's necessary to solve them -- or at least they used to. And even more importantly, it's obvious that the Republicans are more right wing than they ever have been and are less likely to agree to anything reasonable than they ever have been before. So the idea that this, of all times, is the right time to do a Grand Bargain is the original error, as we can see by the current negotiations. His vision doesn't fit the time or the circumstances and he hasn't changed course.

The President believes that he can personally prevail with the "only adult in the room" strategy and will be rewarded by the voters in the end, no matter what deal is or isn't made. And that may end up being true, but it's not because he's demonstrated how reasonable he is by offering up deep cuts in the safety net --- it's because most people can see that the Republicans are nuts. And rather than being prudent and cautious it's actually risky as hell -- after all, they might just take the deal, which would be terrible for the country (not that he sees it that way.)

Look what that deal was (is):

[I]t was a deal that, like Obama’s previous offers, was strikingly tilted towards Republican priorities. Among the provisions Obama to which Obama had said yes, according to a senior administration official, were the following:

Medicare: Raising the eligibility age, imposing higher premiums for upper income beneficiaries, changing the cost-sharing structure, and shifting Medigap insurance in ways that would likely reduce first-dollar coverage. This was to generate about $250 billion in ten-year savings. This was virtually identical to what Boehner offered.

Medicaid: Significant reductions in the federal contribution along with changes in taxes on providers, resulting in lower spending that would likely curb eligibility or benefits. This was to yield about $110 billion in savings. Boehner had sought more: About $140 billion. But that’s the kind of gap ongoing negotiation could close.

Social Security: Changing the formula for calculating cost-of-living increases in order to reduce future payouts. The idea was to close the long-term solvency gap by one-third, although it likely would have taken more than just this one reform to produce enough savings for that.

Discretionary spending: A cut in discretionary spending equal to $1.2 trillion over ten years, some of them coming in fiscal year 2012. The remaining differences here, over the timing of such cuts, were tiny.

The two sides had also agreed upon a basic structure for the deal. The agreement was to specify the discretionary cuts and implement them right away. But the entitlement cuts and new revenue were to be in the form of instructions to Congress, leaving it committees and eventually each chamber to write the legislative language and enact the changes. To make sure Congress followed through, the agreement was to include a failsafe: If Congress failed to enact the changes and produce the necessary deficit reduction, then automatic reductions to Medicare and Medicaid as well as automatic tax increases (mainly, expiration of the Bush tax cuts for the wealthy) were to take effect.

The main difference, as both sides acknowledge, was over the size of the new revenue. They’d basically settled the basic principles of how to get the money: By closing loopholes, broadening the base, and lowering rates overall. Boehner had offered $800 billion, or roughly the equivalent of letting the upper income tax cuts expire. Obama had counter-offered $1.2 trillion. But even the $1.2 trillion Obama was seeking – and remember, this was a proposal over which the White House says it expected to keep negotiating – was still far less than the revenue either the Bowles-Simpson chairmen or the Senate’s Gang of Six, two bipartisan groups, had recommended.

As Krugman says this morning, "it's horrifying":

Above all, the proposed rise in the age of Medicare eligibility was a real betrayal of both Democratic principles and good government.

Let’s recall how the health care debate went. Progressive reformers, myself included, would very much have preferred a simple single-payer system — Medicare for all. And there’s a reason: Medicare has lower costs than private insurance, and it’s also a much better vehicle for cost control. Also, the simplicity — if you’re a citizen, you’re covered — makes it much less likely that people will fall through the cracks.

Most of us were willing, however, to accept the Rube Goldberg scheme actually passed — in which community rating, a mandate, and subsidies are combined to more or less simulate the effects of single-payer — as much better than nothing. If political reality dictated that health care be directed through private insurance companies, even though this made no sense in policy terms, well, that was a price we were willing to pay.

But it’s quite something else to take people who are currently being covered by a rational single-payer system, and force them back into the inefficient, parasitic world of private insurance. That’s terrible. And it’s also politically stupid: if you think for a minute that Republicans wouldn’t turn right around and run ads about how Obama is taking away your Medicare, you’ve been living under a rock.

There's compromise and then there's giving away the store. Even if the Republicans agreed to the revenue in this deal, it could not in any way be seen as shared sacrifice. The cuts are far more onerous to average Americans than whatever "revenue enhancements" they come up with. (This notion of broadening and flattening and lowering rates is a recipe for bullshit, not deficit reduction.)

And sadly, even if the deal never materializes, by putting these drastic cuts on the table they are going to become the centrist and conservative baseline going forward. After all, "even the liberal Democrat Barack Obama thought this needed to be done." I had not heard anything about raising the age of Medicare eligibility before this debate and now it's everywhere, pushed by the White House and by the health care technocrats who think that everyone should be thrilled to get into the untested Rube Goldberg health care program as soon as they can buy their way in.(If they can afford it.)

And as Krugman points out, the Republicans may solemnly promise that they won't use any of this against the Democrats if they all agree, but I don't think Karl Rove or the Koch Brothers have signed on. In the age of Citizens United there is no political advantage to "holding hands and jumping together." Since the White House is not staffed with children or the developmentally disabled, I assume they know this, which means the White House thinks that citizens either want these cuts or they are willing to take the political heat to get it done because they really believe this policy is the correct one.

The President has mostly been relying on talking points about the need for compromise and balance up to now, but recently he's been making the affirmative case that we should be happy about these cuts. He bragged about it in his press conference yesterday saying that he was willing to persuade progressives that they should want to do it (even as he made a good case for why these cuts are especially painful to seniors, the poor and the sick!?)So, at this point it's really not shrill to conclude that the politics of this are secondary to the policy objectives. Otherwise none of this makes a lot of sense. (After all, we would be no worse off today if the President had said that he wouldn't allow the debt ceiling to be held hostage and used the bully pulpit to draw a line in the sand.)

That's why the President's liberal critics are mad, not because they don't believe in compromise. They simply don't agree that we should "want to get our fiscal house in order" by cutting SS benefits or raising the Medicare age or throwing a bunch of poor people off the health care rolls while the wealthy are making huge profits and income inequality grows and grows and grows. And we certainly aren't persuaded that once we do that we will be able to pursue all kinds of wonderful programs that require new spending. That's fatuous and frankly, insulting.

There are alternatives out there if deficit reduction is so damned important. The House Democrats' plan, for instance, which I doubt the White House has even bothered to read since they had already offered up half the New Deal before it even came out. There's also the pending expiration of the Bush tax cuts. The fact that their reinstatement alone would substantially solve the problem should tell people something about the cause of the deficit. I realize that nobody wants to raise any taxes, ever, but nobody's even tried to make the argument for doing it to solve the deficit so we don't have any clue how it would come out.

And in any case, the deficit issue itself is a disaster capitalist construct designed to confuse people into thinking that this is the cause of their problems when it is actually a symptom of a larger one that nobody wants to deal with. Even engaging in it at this point it is a capitulation to magical thinking and up-is-downism along the lines of the Iraq war debate. It seems this is what we do now (on a totally bipartisan basis, so that's nice): we make our serious problems worse by putting all our energies into "solving" those that are irrelevant.(And botching even that.) It's the sign of a totally dysfunctional system led by people who either don't know or don't care enough to fix it. It's monumentally depressing.