Wednesday, April 13, 2011

Obama's deficit speech

If we're very lucky and the Democratic Party negotiates much more responsibly and aggressively than they did on health care reform, the extension of the tax breaks for billionaires and last week's budget deal, the position struck by President Obama today could lead to a strong Democratic defense of Medicare and Social Security against Republican attempts to destroy them. If it goes the way those other negotiations went, it's more likely to wind up being the beginning of the end of both programs.

As I mentioned in a post yesterday, the White House used an unusual strategy in the run-up to President Obama's speech today on deficits.

David Plouffe, a "senior advisor" to Obama, went on Meet the Press on Sunday, April 10, announcing to lipless David Gregory that last week's budget deal defeat for the Democrats should be "a model" for future budget negotiations, bragging that "we cut spending, biggest annual spending cut in the history of the country." But he also said, "I think the important thing is both parties came together."

This doesn't bode well, that the Democratic Administration is publicly saying of a bad budget deal that "the important thing is both parties came together." I'm really beginning to think that "coming together" in even bad bipartisan deals is really more important to Obama than getting *good* deals for the Democratic voting base. The Republicans definitely don't value "coming together" as such as such a lofty value. Plouffe also announced:

The president will be laying out his approach to long-term deficit reduction later this week. And I think that we have to focus on that. ...

Well, let me say what the president has done and, and will say. His budget he just put out for next year would reduce $1 trillion over the next 10 years. It would bring domestic spending to the lowest level since President Eisenhower. Many of the debt commission's and deficit commission's suggestions [the Simpson-Bowles Let-Granda-Eat-Catfood Commission] were in the president's budget. For instance, freezing the pay of federal workers for a period of time, fundamental reform of the government. We obviously, then, have to do more, and that's what the president's going to lay out. ...

Well, in terms of specifics, let me say this, he has said--he said this in the State of the Union, even though his healthcare reform plan which, by the way, many Congressional Republicans want to repeal, so they'll have to explain how they're going to make up the trillion dollars in deficit reduction. So we've had a lot of savings in health care, we have to do more. So you're going to have to look at Medicare and Medicaid and see what kind of savings you can get. First, squeezing them out of the system before you squeeze seniors. Secondly, on Social Security, what he said is that is not a driver right now of significant costs, but in the process of sitting down and talking about our spending and our programs, if there can be a discussion about how to strengthen Social Security in the future, he's eager to have that discussion. [my emphasis]
Then on Tuesday, another leak went out that Obama would confront the Republicans on Social Security and Medicare, demanding higher taxes on the wealthy to cover deficits in those programs: Peter Nicholas et al, Obama to draw sharp contrast with GOP over deficit Los Angeles Times 04/12/2011, a story sourced to anonymous "aides" of Obama's.

Howard Fineman chimed in with Obama and the Budget Civil War Huffington Post 04/12/2011, saying that Obama "and his advisors see the GOP's attack on Medicare as a fateful blunder, one that can allow Democrats to reframe the debate away from deficit-reduction to the need to preserve the social safety net and sense of one nation."

In broad outline, here's what likely to play out in this process, unless there is something like massive political resistance against Social Security Phaseout. As in, Wisconsin-style demonstrations; an obvious drop in contributions to Democrats; significant drops in Obama's favorability ratings among key Democratic constituencies.

Republican Congressman Paul Ryan has proposed drastic cuts in Medicare and Medicaid in his bogus budget proposal. The Beltway Village pundits generally regarded it as a deeply "serious" proposal. (Paul Krugman, though, accurately labels it "a fraud." )

Obama has now proposed a deficit-reduction plan which includes cuts to Medicare and Medicaid and offers "to put everything on the table" in budget negotiations.

Unfortunately, we've seen how Obama negotiates. Again, whether he's just a bad neogotiator or he's operating on a long-term strategy of establishing bipartisan harmony on the basis of "neoliberal" economics, i.e., conservative so-called "free market" economics, the prospects for the economy and the well-being of the majority are not good. Obama will "compromise" wiht he Republicans on something much closer to the Republicans' preferences than to his own official proposals. (Glenn Greenwald makes a strong case that Obama's problem is not poor negotiating skills in Obama's "bad negotiating" is actually shrewd negotiating Salon 04/13/2011.)

It could include the Catfood Commission's unofficial plan - the commission couldn't agree on a formal report - for Social Security Phaseout. They didn't call it that, of course, but it did call for cuts in benefits. Once a Democratic President signs on to Social Security cuts and it passes Congress, the political firewall around Social Security is down and the Republicans will push to phase it out even faster. It's a staged process. But it's still Social Security Phaseout. His message, as summarized by Zachary Goldfarb and Lori Montgomery in the Washington Post, isn't encouraging on his willingness to go to the wall to defend Social Security:

"Any serious plan to tackle our deficit will require us to put everything on the table, and take on excess spending wherever it exists in the budget," Obama said . "A serious plan doesn't require us to balance our budget overnight ... but it does require tough decisions and support from leaders in both parties."

Obama repeated his previous assertion that Social Security does not drive the nation's fiscal problems. But he said he would support efforts to strengthen Social Security over the long haul if these did not involve slashing benefits. [my emphasis]
Phrasing like "strengthen Social Security over the long haul" and rejected the "slashing" of benefits have become standard weasel-words in the fight to save Social Security. Anything that cuts Social Security benefits from the levels of the current program is the beginning of Social Security Phaseout. Because once the Democrats show they can be rolled on that, the Republicans will push even harder for phaseout, and Democrats will be less and less likely to resist - unless they get hammered politically by Social Security supporters.

And negotiations over Medicare could go the same way. I can't say much about the substance of his Medicare proposals at the moment. Not every cost control introduced by Medicare means a reduction in service. As a general management practice, using Medicare to encourage better cost control in American health care is a good thing. It's the potential compromises with the Republicans that are the big worry.

My concern is that the gloomy messages from Sunday and Monday are signals to the Republicans that the Administration is willing to enact significant cuts in Medicare and Social Security. It's worth noting that the unofficial recommendations of the Obama-appointed Catfood Commission were much more clear on their proposal to phase out Social Security than on controlling health care costs.

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