The so-called trial balloon in black and white: the original Grand Bargain

The so-called trial balloon in black and white

by digby

Bob Woodward said yesterday that he'd received the private negotiating documents outlining what the White House was prepared to agree to in the 2011 budget showdown. Here's what he said:
"This is a confidential document, last offer the president -- the White House made last year to Speaker Boehner to try to reach this $4 trillion grand bargain. And it's long and it's tedious and it's got budget jargon in it. But what it shows is a willingness to cut all kinds of things, like TRICARE, which is the sacred health insurance program for the military, for military retirees; to cut Social Security; to cut Medicare. And there are some lines in there about, "We want to get tax rates down, not only for individuals but for businesses." So Obama and the White House were willing to go quite far."

You can see the documents here:

I was assured by insiders and professionals over the past year that I was wrong to believe that the White House had ever put SS and other vital programs on the chopping block. I was told that this was merely a trial balloon which was immediately shot down. It didn't look that way to me at the time, the reporting didn't indicate that and doesn't look that way to me now. This was a real offer.

The question now is whether or not the Democrats are willing to go that far again in order to avoid the "fiscal cliff" (assuming that we get the holy grail of millionaire tip money, which looks likely) or whether they will pull some of this back. One can certainly see Republicans shrieking like banshees that they made the supreme, ultimate sacrifice of asking the rich to pay a teensy bit more in taxes and now the Democrats won't "meet them halfway." But you never know. Let's just say this doesn't make it any easier.

Incidentally, in case you are wondering what the "Superlative CPI" is, it's another word for the Chained CPI, which Social Security expert Eric Kingston explains here:
(T)he chained CPI or also called the superlative CPI that’s being proposed by some members of the “super committee” and has been discussed in the deficit reduction discussions, that alternative simply does not pass the smell test. It would only make a situation we have today worse. We are not adequately in my opinion and in the opinion of others adjusting for inflation. Today the chained CPI, if it’s implemented, will further reduce benefits. A woman who retires at age 65 living ’til age 75 will get a benefit of about $600 less in real dollars 10 years later at age 85, about $950 or so less at age 95 – if she lives so long – it would be roughly $1,400 less than it would have been if the chained CPI is put into effect.

“The consumer price index for the elderly which the Older Americans Act asked to be developed by the Bureau of Statistics. CPI-E for Americans over 62 is a far superior measure of inflation, but it too is less than perfect but it’s certainly better than what we have in play today.

“In terms of the impact of inflation on older households and on persons with disabilities, the public would be very well served if initially the CPI-E were to put into effect and if Congress requested further development and testing of price indices.

“We all have an interest in an accurate CPI. Democrats and Republicans all have an interest in that. The problem I think we have today is we do not have an accurate CPI. I think if we get a more accurate CPI, it would in fact not increase but adjust benefits. We don’t want a national policy that says the longer you live the less purchasing power your Social Security has. That’s what we will have if we implement the chained CPI. It is also arguably what we still have today because the current CPI does not fully adjust for it.

“The implications, by the way, of the chained CPI on the SSI program are even more deleterious, because it would both cut benefits in the beginning – before people get benefits – and it will also be cutting their benefits after that. Whether implemented in 2011 or 2021, the chained CPI will violate promises that Congress and the president have made that there would be no changes to Social Security benefits affecting people 55 and over. It’s bad policy, and it’s also terrible public relations.
According to that document, the White House proposed to implement the chained CPI starting in 2015, although they said they'd cushion the blow for the poorest among the beneficiaries so that's nice.

Oh, and they agreed to "alter" the medicare eligibility age. I have to assume they didn't mean to lower it.

Now perhaps they can get the Republicans to kick in a little bit more millionaire chump change this time so the cuts to vital programs aren't so drastic. But if this offer is still on the table --- which it was as recently as last spring --- I think we have the baseline from which they are all working from.

I can certainly see why, with the election over, Republicans like Bill Kristol are saying to take the deal. It's a great deal for them.  I always figured they'd pull that trigger eventually. They aren't that stupid.