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Thursday, December 13, 2012

More fiscal cliff notes --- 12/13

by digby

First this good news. This is so unequivocal that I have to think it must be the case:

One of President Barack Obama's top Senate allies says he's been assured by the White House that the president won't yield to GOP demands to increase the eligibility age for Medicare.

Fellow Illinois Democrat Dick Durbin made the revelation to reporters after a Capitol Hill news conference.

Increasing the eligibility age is a key demand by Republicans seeking cost curbs in popular benefit programs in exchange for higher tax revenues.

Durbin said he's been told that increasing the eligibility age from 65 is "no longer one of the items being considered by the White House."

Considering that he admits that it was under consideration, I we blew up that trial balloon successfully. Huzzah. Unfortunately, there's still a whole boatload of odious cuts to fight against.

Democrat Xavier Becerra: We are willing to make sure that everyone in America sacrifices a little bit. Even though who have been struggling.

Democratic Senator Ben Cardin: If speaker Boehner exercises the leadership and brings in a balanced program, he can pass that don't do it by getting the support of within your own party, you need reach out to Democrats.

Republican Congresswoman Cathy McMorris Rodgers: To get something through the house and the senate it's going to take both. The revenue and the spending cuts.

How soothing.

NBC yesterday made a fetish out of their new polling which allegedly showed that Americans are desperate for "compromise" which is increasingly defined by the pundits as a tax hikes and cuts to the so-called entitlement programs. (Everyone in America has to sacrifice a little bit --- the millionaires have to give up some tip money and the poorest seniors have to give up medication and eating breakfast.)

Anyway, here's how it's being interpreted by the Villagers:

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

Tamron Hall: House members are willing to compromise to avert the fiscal cliff. what are the people at home thinking of their actions. we have a preview for a poll that debuts tonight. part of that is compromising what folks want to see from the lawmakers. Mark Murray: A lot of Americans want to see compromise. According to the poll, 65% want a compromise balanced deal to reduce the deficit. Even if they have to reduce the entitlement program like Medicare and Social Security and the Republicans on have to support increase in tax rates for the wealthy. Of course you were playing a lot of clips from people open to compromise. It does seem to be the broad parameter that want a balanced deal. That's what John Boehner and President Obama are currently arguing about.
That's not true, actually. Everyone wants compromise in theory, but in reality they don't want vital programs cut. From the Pew Poll also released yesterday:
The polling also suggests that the public generally supports the budget priorities that have been outlined by Democrats. Nearly seven in 10 voters want to raise income tax rates on incomes of more than $250,000, while 54 percent support limiting deductions and 52 percent want to raise the tax rate on investment income. The only entitlement reforms to receive support from more than half of all Americans are reductions in Medicare and Social Security benefits for high income seniors. Majorities of those surveyed oppose raising the Social Security or Medicare eligibility age, and 52 percent say they do not want to limit the home mortgage interest deduction. Also unpopular are opposed cuts to the defense budget and welfare programs. More than two-thirds of Americans also object to infrastructure and education cuts.
The confusion is among the Villagers. They seem to think that the proper "compromise" must consist of millionaire chump change in exchange for suffering from the elderly and the sick. (And apparently, many Democrats have signed on to that too --- "everyone has to suffer sacrifice a little bit.") Sure people want compromise --- if it ends up with policies they like. When it doesn't, they think it was a sell-out. The politicians usually know this even if the pundits don't. And this is one reason why I've been pessimistic that the Democrats were going to hold a tough line on the "entitlements." They've been signaling for months that they would be willing to cut them if they can only get these tax hikes from millionaires. And yet, the tax hikes that were going to happen anyway. Can we all see the problem with that? I suppose that's a smart thing to do: set yourself as winning a big victory even if it was inevitable. That way you really can't lose. But it also begs the question: why put spending cuts on the table in the first place? True, much of that came out of the failed debt ceiling talks in 2011, but that was the result of a proposed Grand Bargain that was endorsed by the Democratic leadership. You can call that a mistake, but I don't think it makes a lot of sense to get back in the same position unless this is a result you truly seek. Whatever, it is what it is and there's no going back in time to change it. But if we could, this might be the better way to frame this negotiation:
The New Mandate on Defense No, it’s not to spend more—it’s to spend less, and liberals should not flinch from that position. Barney Frank There were so many encouraging signs for liberals in the election results this year that one of the most significant has been overlooked. For the first time in my memory, a Democratic candidate for President argued for less military spending against a Republican candidate who called for great increases—and the Democrat won. George McGovern was the last Democratic candidate to talk about spending less on the military. Subsequently, every Democratic presidential candidate was told that he had better look sufficiently tough on national security because a perception that Democrats were too weak vis-à-vis the Soviet Union was a major point of vulnerability. That is why Michael Dukakis, a public official with an extremely distinguished record, and a man of great dignity and integrity, staged an ill-conceived photo-op of himself wearing a helmet and riding in a tank, which became a negative factor in his campaign. The collapse of the Soviet Union in 1991 reduced this pressure to some degree. Indeed, Bill Clinton was able to follow George H.W. Bush in beginning to reverse the enormous buildup in military spending dating to the Reagan Administration. The restraint on military spending that occurred was a significant factor in Clinton’s ability to reach balanced budgets in his last years. And then came September 11, which had two significant—and very adverse—budgetary impacts. First, we entered two wars—financed, in a novel economic approach, by several large tax cuts—which led to upwards of $150 billion a year over and above the base military budget. (The public does not fully understand that the defense budget is paid for to a certain extent as people pay lawyers who are on retainer, but who then get extra funds if they have to go into court.) Secondly, the base budget itself was sharply inflated, and the moderating trends implemented by George H.W. Bush and Clinton were reversed as terrorism was cleverly used by the neoconservatives in the Bush Administration to substitute for the Soviet Union as an existential threat to the United States. Under President George W. Bush, the base budget steadily rose from $287 billion in fiscal year 2001 to $513 billion in fiscal year 2009, and this increase continued in President Obama’s first term, reaching $530 billion in fiscal year 2012. The combination of the two—the base budget and “emergency” war spending—led at the height of the “surge” in Afghanistan in fiscal years 2010 and 2011 to yearly military spending totaling about $700 billion, far more than Medicare outlays, which totaled $452 billion in 2010 and $486 billion in 2011. In fact, of course, the terrorists are murderous thugs whom we must combat, but who do not remotely present the kind of threat to our national security that came first from Hitler and then Stalin and his successors—the reason historically that America got in the position of being by far the world’s major military power. I have been greatly frustrated in the conversation about the need to do long-term deficit reduction by the extent to which establishment opinion focuses on “entitlements”—namely efforts to provide decent means of support for Americans in our retirement years—as a major cause of the deficit, and ignores the extremely large contribution made to this problem by military expenditures that are far beyond any rational assessment of our national security.
Read it all, it's just great. The president said quite openly that "as commander in chief" he couldn't stomach big cuts to defense, so that's that. And while people will almost certainly argue that the Democratic party under Obama has finally shed its reputation as a bunch of hippie cowards and it can't afford to go back now (talk about a slippery slope ..) the truth is that raising taxes on the rich and cutting the bloated defense budget are the obvious first step to deal with the debt, if that's what concerns you the most. (I'd add the almost completely unaccountable Homeland Security police apparatus to that as well.) Unfortunately, these are areas of the budget that are the real third rails --- they are considered to be so dangerous that cutting them makes SS and Medicare look like expendable foreign aid programs by comparison. So much so, that it never even comes up in the public conversation around this allegedly perilous deficit, while starving grannies is considered simple common sense. And yet .... the level of corruption and waste in that sector is almost unimaginable, not to mention that its very existence creates the motivation for expanding the American Empire beyond all rational --- and affordable --- bounds. It's nuts. This entire discussion about debt shouldn't even be considered without a deep and serious look at the amount of money we have been throwing away on "national security" over the past decade. You'd think anyone with a heart would at least put the killing machine on the table before they start contemplating cutting back on the old and the sick. But the sad truth is that because of the mere possibility of defense cuts happening, the sequester has always been a joke. Nobody from either party would ever let that happen. And that's the problem.