The "fiscal cliff" negotiating dance

As President Obama undertakes his national tour to promote his passionate conviction that we should be "asking the wealthiest Americans to pay a little more," there is a confusing flow of leaks and trial balloons and so forth on who's angling for what in the "fiscal cliff" negotiations.

So it's well to keep in mind through this messy farce what Jamie Galbraith wrote about it this month 6 Reasons the Fiscal Cliff is a Scam Alternet 11/22/2012):

Stripped to essentials, the fiscal cliff is a device constructed to force a rollback of Social Security, Medicare and Medicaid, as the price of avoiding tax increases and disruptive cuts in federal civilian programs and in the military. It was policy-making by hostage-taking, timed for the lame duck session, a contrived crisis, the plain idea now unfolding was to force a stampede.

Our plutocrats will keep right on lobbying for their preferred tax breaks, because that's just what they do.

Plus, the arguments over the fiscal cliff are premised on the absurd assumption that the austerity that will kick in with the "fiscal cliff" triggers in January would be very harmful to the economy, so we need to quick replace them with even more drastic austerity measures! The premise is false, and the conclusion doesn't make jack for sense.

It's a real problem that the Obama Administration is focusing its push for a "fiscal cliff" deal on taxes, without so far prominently defending benefits for Social Security, Medicare and Medicaid. So we have to pay some attention to pieces like this one from Jim O'Sullivan, Social Security: Still Off-Limits? National Journal 11/29/2012, which argues that cutting benefits on Social Security could very well end up as part of the "fiscal cliff" deal.

The faith of the "Professional Left," to borrow a phrase, in Obama’s progressivism has always been warped to the point that its vision has been obstructed. And, despite the dispositive support he received from liberals earlier this month, Obama could spot in Social Security the sort of proactive, rather than react-and-rescue, initiative scarce elsewhere on the docket.

Don't anyone tell O'Sullivan, but anyone who might self-identify as part of the "Professional Left" is extremely skeptical of Obama, especially on the Grand Bargain to cut benefits on Social Security, Medicare and Medicaid.

I hope his closing observation is nothing more than wishful thinking by corporate Democrats, one of which he quotes at the end:

A "hands-off" opening bargaining position makes sense, because the Left is mortified of what could happen; labor activists fanned out on the Hill on Wednesday to lobby against cuts to the safety net. But Obama also has incentives to bargain, and progressives to assent: Packaging Social Security reform with Medicare and Medicaid, effectively aggregating the savings, could soften the health care cuts by imposing tax hikes on higher-income seniors.

That means that Social Security could end up as part of a big deficit-reduction deal after all. Decoupling the issue now from the fast-track negotiations will only delay reform but not necessarily shelve it. The breadth of the gyre of deficit-reduction decisions that must be, or could be, made might increase the prospects for bipartisan Social Security reform, argued Jim Kessler, senior vice president for policy at Third Way, the center-left think tank. “It’s rare that you see members of Congress rushing to raise taxes,” he said. "That’s happening right now. And people are supporting it. So this is a special time right now."

"Reform" of Social Security in Beltway-Speak is a variation of "entitlement reform" which means "cut benefits on Social Security, Medicare and Medicaid."

Part of the Administration's posturing on this is to make cutting benefits on SocSec, Medicare and Medicaid the "moderate" position, so they are positioning the pro-Social Security posture as "left" or "Left", which I think is supposed to look more ominous. That last quote reminds me of one of the only decent things David Frum ever said: the Republicans are afraid of their base, the Democrats hate theirs. Overgeneralized but too true for comfort.

And could anyone but a star pundit or a corporate Democrat who has actually drunk the Kool-Aid actually think that this unintelligible argument - "Packaging Social Security reform with Medicare and Medicaid, effectively aggregating the savings, could soften the health care cuts by imposing tax hikes on higher-income seniors" - could be a reason to support benefit cuts in Social Security, Medicare and Medicaid?

Ryan Grim reports on the Administration's formal opening offer in the negotiations to the Republicans, which in itself isn't bad, in Fiscal Cliff Talks: Behind Obama's Opening Bid Huffington Post 11/29/2012. Charlie Pierce in How We Can Help President Obama Today Esquire Politics Blog 11/30/2012 explains that he wants Obama to keep acting like a Democratic President who just decisively won re-election:

It should be made plain to them [the Republicans], by the president, and by the 53 percent of the people who voted for him, that what was presented to them yesterday are the basic parameters of any deal. Period. There will be increases in the tax rates, no phony gobbledegook about "reforming the tax code." Some people will pay more, and it will be the people who can best afford to do so. There will be stimulus spending, and a lot of it, to fix all the broken stuff we have in this country. ... The deal will lean more than a little on the side of middle-class families and it will spend a lot less time soothing the wounded fee-fees of Geithner's lunch buddies. And later, when everything cools down, and enough Republicans have regained their sanity, John Boehner has regained his balls from the mason jar in which Eric Cantor has buried them out in the back yard, maybe we'll talk about some spending cuts and some careful changes in how Medicare is administered.

This should not be the "opening bid." This should be the deal. There inevitably will be tinkering around the edges, but the basic principles and parameters established yesterday should be the foundation of any agreement. Failing that, down the Gentle Fiscal Incline, we slide. But, as the president seems to be acknowledging by taking his act on the road again, much to the dismay of Mitch McConnell, it is up to the country to explain to the Republicans (again) that they lost the election, and to explain the consequences of that loss, and to explain precisely why the loss happened. It was because the country chose to support policies that are closer to the ones that the president sent up the Hill yesterday rather than support the ones to which the congressional Republicans cling. It is up to the country to own its decision, and to see that the ideas that the country so clearly supported are carried out. It is not entirely the president's job to call this bluff. It is ours, too. [my emphasis]

Tags: austerity economics, barack obama, fiscal cliff, grand bargain, medicaid, medicare, social security

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