Wednesday, March 21, 2012

Negotiating Obama's Grand Bargain to cut Social Security and Medicare benefits

The Washington Post has an article describing, based seemingly on mostly Administration sources, how the President begged Republicans last year to accept his Grand Bargain that included Obama's offer to cut Social Security and Medicare benefits: Peter Wallsten, Lori Montgomery and Scott Wilson, Obama’s evolution: Behind the failed ‘grand bargain’ on the debt 03/17/2012.

I was struck by this paragraph describing what the President and his team saw as the stakes in that negotiation:

A president who promised to bring the country together, who confidently presented himself as the transformational figure able to make that happen, now had his chance. But, like earlier policy battles, the debt ceiling negotiations revealed a divided figure, a man who remained aloof from a Congress where he once served and that he now needed. He was caught between his own aspirations for historical significance and his inherent political caution. And he was unable to bridge a political divide that had only grown wider since he took office with a promise to change the ways of Washington, underscoring the gulf between the way he campaigned and the way he had governed.
Note that defending Social Security and Medicare benefits for the benefits of the vast majority of the American public does not appear in that list of the Democratic White House's concern. That's disgraceful.

They follow immediately with this paragraph:

In the end, that brief effort, described by White House officials as the most intense and consequential of Obama’s presidency, not only illuminated pitfalls in the road he had taken during the previous three years but also directed him down a different, harder-edged, more overtly partisan path that is now defining his reelection campaign.
They spell out one of the versions of the Grand Bargain the White House offered the Republican leadership:

A lot of red ink, the Republicans thought. But the major elements of a bargain seemed to be falling into place: $1.2 trillion in agency cuts, smaller cost-of-living increases for Social Security recipients, nearly $250 billion in Medicare savings achieved in part by raising the eligibility age. And $800 billion in new taxes. [my emphasis]

The writers accept the phony framing the White House and Republicans both used in that debt-ceiling negotiation, that the US faced "looming fiscal calamity". That was not the case, despite the hype. The White House used that to try to pressure Congressional Democrats and the Party base into accepting his disastrous Grand Bargain, which is part of his own quixotic vision for achieving post-partisan harmony with Republicans.

The article mostly puts the blame for the failure of the Grand Bargain on the intransigence of the Republicans, and that may be true. (Although Jonathan Chait and Joan Walsh cited below each have a different reading of the article's blame-targeting.) But Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi both, much to their discredit, signed off on accepting the deal that would have cut Social Security and Medicare benefits. Nowhere in this article is there any indication that the White House negotiations were worried about a revolt by any significant group of Democrats in the Congress over the Social Security and Medicare cuts.

Until President Obama knows that supporters of Social Security and Medicare will raise a bigger political stink for him that Republicans, he will keep trying to pass his Grand Bargain to cut Social Security and Medicare benefits, laying the political groundwork for a relative near-term phaseout of both programs. This is bad, bad policy. And the Democratic base and anyone else who supports Social Security and Medicare have to make it bad, bad politics for Democrats to agree on any such deals as this.

The White House spin in this article is that Obama learned from his experience and is now concentrating on jobs. "His goal now was unequivocal: to win a second term."

Nowhere does the article suggest that Obama or his White House team thought the Social Security and Medicare cuts were bad policy. That is just awful.

Jonathan Chait has written about the Post story in How Obama Tried to Sell Out Liberalism in 2011 New York 03/19/2012. Since Chait has been known as an Obama cheerleader, his closing sentence stands out: "What the story actually shows is that Obama's disastrous weakness in the summer of 2011 went further toward undermining liberalism than anybody previously knew." But I'm not sure he was thinking of the proposed cuts to Social Security and Medicare as being what would be "undermining liberalism". He seemed to be more concerned about the White House's willingness to accept bogus revenue estimates the Republicans wanted to use.

Joan Walsh has a better commentary on it in The GOP rides Paul Ryan’s road to ruin Salon 03/20/2012:

If you believe the Post's reporting ... the "deal" Obama entertained was worse than anything reported at the time: $1.2 trillion in spending cuts, reduced cost-of-living adjustments for Social Security and an unspecified hike in the Medicare eligibility age, in exchange for around $800 billion in "revenue" that relied on closing "loopholes" and (possibly) increased tax receipts thanks to an improved economy, while actually lowering top rates. [my emphasis]
I hope her confidence in the following passage turns out to be justified (but only will if the President gets sufficient pressure from supporters of Social Security and Medicare):

Democrats are being given another gift with the new Ryan budget, especially given its new assault on Medicare. I don’t care what Politifact or Rep. Ron Wyden (who co-sponsored Medicare cuts with Ryan) try to say: By giving seniors vouchers to purchase insurance on the private market, the plan would abolish Medicare. ... The GOP is against it, plain and simple. ...

Democrats need to stop sabotaging themselves and undermining their party’s signature accomplishments, including Medicare. The program needs reforms, but they will not be accomplished as long as the extremist wing of the GOP is in control. I think the president learned that the hard way, and I trust he’ll remember the lesson.
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