Friday, December 14, 2012

The week in fiscal cliffing and Grand Bargaining

Obama's Grand Bargain to cut benefits on Social Security, Medicare and Medicaid had a bad week, it seems. Which means it was a good week for the vast majority of Americans.

After the White House floated a trial balloon to cut benefits on Medicare by raising the eligibility age from 65 to 67, by Thursday his spokesperson on austerity policy, Sen. Dick Durbin, said that the proposal is "no longer one of the items being considered by the White House" in the current negotiations.

Of course, as Digby points out (More fiscal cliff notes --- 12/13 Hullabaloo 12/13/2012), this was simultaneously an admission that Obama had been considering it.

Also, the Republicans are reported to be stubbornly refusing to propose specific spending cuts, instead demanding that Obama come up with something they can like. Unlike his performance in the 2011 debt ceiling fight, Obama does appear less willing to let the Republicans just make a fool of him, at least this month. Or maybe just this week.

But as Taylor Marsh pointed out a few days after the election, Obama showed in his first term how dedicated he was to pursue the Grand Bargain, which quickly evolved to being essentially about cutting benefits on Social Security, Medicare and Medicaid (Obama's 2011 Grand Bargain Detailed in Documents Obtained by Bob Woodward 11/12/2012):

Many people think of it [the Grand Bargain to cut benefits on Social Security, Medicare and Medicaid] as a "Nixon to China" moment, but it's not.

Obama has always been fixated on Ronald Reagan and what he did, because that’s the president that impacted, impressed and embedded most in his mind when he was coming up. So, the grand bargain is about a Ronald Reagan – Tip O'Neill moment. An "I saved Social Security" for future generations deal, which will likely include a nod to the business community, whose "fiscal cliff" is the bookend meant to push the "grand bargain" to manifestation, in the mother of all Obama – Wall Street make-up sessions imprinted for history.
So we're not out of the woods on this thing. And probably won't be as long as President Obama is in office.

But any week where the Democrats and the Democratic President are forced into the position of acting like Democrats and defending benefits on Social Security, Medicare and Medicaid instead of looking for political cover from the Republicans to cut them is a good week for supporters of those programs.

Digby also warns that we can't assume a December victory is the end of this Grand Bargain/Great Betrayal fight:

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 ... 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. [my emphasis in bold]
Obama wouldn't have played the December "fiscal cliff" negotiations the way he did, in other words, if he weren't still interested in his Grand Bargain to cut benefits on Social Security, Medicare and Medicaid.

Paul Krugman in Party of No Ideas 12/13/2012 reflects on the implications of the Republicans' playing this game:

This is not a negotiation in the normal sense, in which each side makes proposals and they dicker over the details; instead, Republicans are demanding that Obama read their minds and produce a proposal they’ll like. And Obama won’t do that, for good reason: he knows that they’ll just pronounce themselves unsatisfied with whatever he comes up with, and are indeed very likely to campaign in 2014 attacking him for whatever cuts take place.
He concludes from the Republicans' general frivolity in making budget proposals and their negotiating intransigence, "We are at a strange and dangerous place in American political life."

But on the "fiscal cliff" negotiations, the Republicans' experience in the debt ceiling fight in 2011 showed that that could punk the President in just that way. If Obama is not willing to have them jerk him around the same way any more, that's good and very understandable. But they could hardly be expected not to try it again since Obama was so willing in 2011 to beg them to let him "concede" and make benefit cuts in Social Security, Medicare and Medicaid.

David Dayen (FDL News 12/14/2012) seems to think the "fiscal cliff" farce for December is about over. The Republicans aren't going to make a deal. The Democratic base isn't being passive and compliant about accepting the Medicare benefits cut that the White House informally proposed via trial balloon. So the Bush tax cuts will expire on December 31. And Obama will be a strong position to force the Republicans to swallow his "middle class" tax cut proposal as a standalone cut. David sees the Republicans approaching the new year with this perspective:

Republicans have located their strategy in the debt limit, seeking to retreat to higher ground and use that vote, and the threat of a default, to force fiscal changes. Speaker John Boehner admitted as much yesterday, saying that he wants to use the debt limit vote to "to bring fiscal sanity to Washington, D.C." He described the vote as Congress asserting its "ability to control the purse," which is completely illogical. Congress controls the purse when it makes appropriations. The debt limit vote merely authorizes the Treasury to pay for the obligations Congress already approved. So the proper analogy with the debt limit is Congress controlling the ability to dine and ditch if it so chooses.

This probably isn't all that informative a post, but that's the state of play. In a matter of weeks, the tax-side issues will get dealt with. Then Republicans will take the debt limit hostage and try to negotiate over spending and social insurance. However they want Democrats to dictate the spending cuts so they can pin them on their opponents. In addition, they really want to attack programs for the poor, rather than those for the elderly, which represents a substantial portion of their base. And hitting the poor isn't all that popular.
The initial makeup of the new Congress also looks more favorable than the current one for defenders of Social Security, Medicare and Medicaid. Corruption happens, both the illegal kind and others, and lobbyists like the various incarnations of the Peterson Foundation will continue to push for benefit cuts on Social Security, Medicare and Medicaid. But getting past December is a real plus for those programs' supporters.

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