A short history of the Grand Bargain and why it's still biting us in the ass #2014 #ads

A short history of the Grand Bargain and why it's still biting us in the ass #2014 #ads

by digby

In the early delirious days of 2009, when liberals everywhere were streaming tears of joy at the end of the Bush reign and the beginning of a new era under President Obama, there were a few skunks at the garden party who noticed some bad news buried in all that hope and change. Before the inauguration the president-elect invited a number of Village luminaries to chat about his vision for his presidency. They were all awestruck by the wonderfulness of it all, particularly the idea of resolution to the thorniest budget disagreements and the health care crisis. It was big, it was sweeping and it transcended all that pesky partisanship that was ruining everything.

Here's how it came up in an interview with George Stephanopoulos on January 10th, 10 days before the inauguration:

I asked the president-elect, "At the end of the day, are you really talking about over the course of your campaign some kind of grand bargain? That you have tax reform, healthcare reform, entitlement reform including Social Security and Medicare, where everybody in the country is going to have to sacrifice something, accept change for the greater good?"

"Yes," Obama said.

"And when will that get done?" I asked.

"Well, right now, I’m focused on a pretty heavy lift, which is making sure we get that reinvestment and recovery package in place. But what you described is exactly what we’re going to have to do. What we have to do is to take a look at our structural deficit, how are we paying for government? What are we getting for it? And how do we make the system more efficient?"

"And eventually sacrifice from everyone?" I asked.

"Everybody’s going to have give. Everybody’s going to have to have some skin the game," Obama said.

E.J. Dionne of the Washington Post picked up the term Grand Bargain and elaborated on those plans on January 15th, 5 days before the inauguration:

Obama regularly offers three telltale notions that will define his presidency -- if events allow him to define it himself: "sacrifice," "grand bargain" and "sustainability."

To listen to Obama and his budget director Peter Orszag is to hear a tale of long-term fiscal woe. The government may have to spend and cut taxes in a big way now, but in the long run, the federal budget is unsustainable.

That's where sacrifice kicks in. There will be signs of it in Obama's first budget, in his efforts to contain health-care costs and, down the road, in his call for entitlement reform and limits on carbon emissions. His camp is selling the idea that if he wants authority for new initiatives and new spending, Obama will have to prove his willingness to cut some programs and reform others.

The "grand bargain" they are talking about is a mix and match of boldness and prudence. It involves expansive government where necessary, balanced by tough management, unpopular cuts -- and, yes, eventually some tax increases. Everyone, they say, will have to give up something.

Only such a balance, they argue, will win broad support for what Obama wants to do, and thus make his reforms "sustainable," the other magic word -- meaning that even Republicans, when they eventually get back to power, will choose not to reverse them.

Since the world was reeling in the wake of the financial crisis this seemed like a very odd discussion to be having at that moment. Unemployment was growing by the millions and they were talking about cutting spending and "sacrifice?" It was very disorienting, to say the least. Within days of taking office it was declared that the White House would host a so-called Fiscal Responsibility Summit:

Obama said that he has made clear to his advisers that some of the difficult choices--particularly in regards to entitlement programs like Social Security and Medicare - should be made on his watch. "We've kicked this can down the road and now we are at the end of the road," he said.

This plan to "make the difficult choices" on Social Security and Medicare was on the table from the very beginning as part of an overarching plan to "fix" the deficit and end all this needless bickering over the budget and taxes and "entitlements" once and for all. And once they got all that old business of the table the president would be able to do whatever he wanted. O rsomething like that.

We know what happened. The White House passed one element of its Grand Bargain which was health care reform. And that so inflamed the Republicans that it spelled the end of any hopes for his plans to "reform" entitlements and the tax code despite the fact that these were supposed to be the enticements offered to the right in the Grand Bargain. The president did everything he could to make good on his offer, putting Social Security cuts on the menu over and over again in budget negotiations and being rebuffed time and again by the Tea Partiers who came into office on the anti-Obamacare wave. They simply would not take yes for an answer.

There were some ominous signs of how all this was going to play politically as far back as 2010 when Republican PACs blanketed the nation with scary ads about the administration slashing Medicare. This one is a good example:

The truth was that there were some cuts to Medicare providers in the health care reforms. But after all the Palinesque demagoguery about death panels that fine point wasn't particularly salient.

And yes, the irony was thick. The party that had opposed Medicare from the moment it was conceived and which had long wanted to privatize the whole system was wringing its hands about cuts? Well, consistency isn't their strong suit. And they won a huge landslide at least partially due to a big turnout among elderly voters who'd been scared to death by this barrage of ads.

This did not stop the administration and many Democrats from continuing their Grand Bargain crusade. The President had convened the Simpson-Bowles commission to tie it all together for one big budget agreement and it twisted everyone in the capitol up in knots. The liberals and the conservatives on the commission couldn't bring themselves to sign on so the two Chairmen decided to release the report anyway and everyone pretended that it was some sort of official document. It included cuts to defense (which the president rejected) and cuts to the "entitlements" and all sorts of tax "reforms" (which, since this plan was supposed to reduce the deficit, inexplicably were "revenue neutral.")

This remained a baseline for budget negotiations going forward culminating in austerity budgets in 2011 and 2012 (you all remember "the sequester", right?) which crippled needed domestic programs. But even as the Democratic leadership and the White House nearly begged them to accept the cuts to Social Security and veterans benefits that their nifty accounting trick known as the Chained-CPI would bring, those Tea Partiers refused.

Dumb as foxes they were. Who could have ever predicted this?

Cutting federal health and retirement spending has long been at the top of the GOP agenda. But with Republicans in striking distance of winning the Senate, they are suddenly blasting the idea of trimming Social Security benefits.

The latest attack came in Georgia, where the National Republican Campaign Committee posted an ad last week accusing Rep. John Barrow (D) of “leaving Georgia seniors behind” by supporting “a plan that would raise the retirement age to 69 while cutting Social Security benefits.”

Crossroads GPS, the conservative nonprofit group founded by GOP strategist Karl Rove, has run similar ads against North Carolina Sen. Kay Hagan (D), Arkansas Sen. Mark Pryor (D) and Rep. Scott Peters (D-Calif.). Crossroads accused Hagan of supporting a “controversial plan” that “raises the retirement age.”

Pryor’s opponent, Rep. Tom Cotton, meanwhile, is one of at least three Republican candidates in competitive Senate races who have released cheery ads promising to protect Social Security. In Colorado, Rep. Cory Gardner (R) appears in a new ad with his “Grandma Betty” and vows to “honor every penny we promised today’s seniors” — a pledge that seems to conflict with demands by Republican congressional leaders for a less-generous inflation formula to calculate seniors’ cost-of-living increases.

Older voters typically dominate the electorate in non-presidential years, so the resort to Social Security as an issue in the Nov. 4 midterms is hardly surprising. But what has drawn attention – and charges of hypocrisy – is the decision by Republican groups to attack Democrats for supporting conservative ideas in a proposed “grand bargain” on the budget drafted by Democrat Erskine Bowles and former Republican senator Alan K. Simpson of Wyoming.
Here's one of them:

This was, of course, predicted by every single critic of the Grand Bargain over the years. And needless to say, it was predicted by the last mid-term which offered up similar accusations about Medicare.

It was always bizarre that a Democratic president would believe that an epic economic downturn was a good time to worry about deficits and try to strike a bargain to cut the Party's signature
domestic economic achievement --- an achievement  which had lifted massive numbers of people out of poverty. It was conceived as a "go to China" moment in which only a Democrat could cut Social Security without being demagogued by Democrats. Apparently it didn't occur to these visionaries that the Republicans were increasingly dependent on the elderly for votes and would be happy to demagogue the Democrats instead.  Certainly no one should have depended on their honesty and integrity.

There have been few more misguided initiatives than the relentless pursuit of a Grand Bargain during the president's first term. And the Party continues to pay a price for that mistake. Fortunately for the Democrats no bargain was actually struck and a light is now shining on the inequities in the funding stream for the programs and a new approach is slowly being accepted as the new agenda: raise the cap on social security taxes and raise benefits.

If the Party puts that in its platform and really gets behind it, it might even win back the support of the elderly. And then the GOP will have a real problem on its hands.