The current budgetary debate (fiscal cliff, austerity bomb, whatever) is focused on the Obama Administration’s apparent insistance that they are going to force the Republicans to eat crow and publicly humble themselves by accepting rate increases on the wealthiest 2%.
As if this were some kind of great progressive liberal victory.
In fact nothing could be further from the truth. It would be a Bob McNamara body count kind of victory that wins neither hearts nor minds or even holds any ground.
The Truly Grand Bargain
By DAVID BROOKS, The New York Times
Published: December 3, 2012
This is a big political concession, but it’s not much of an economic one. President Obama needs rate increases to show the liberals he has won a “victory,” but the fact is that raising revenue by raising rates is not that much worse for the economy than raising revenue by closing loopholes, which Republicans have already conceded.
In return, Republicans should also ask for some medium-size entitlement cuts as part of the fiscal cliff down payment.
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Besides, the inevitable package would please Republicans. The House would pass a conservative bill. The Senate would pass a center-left bill. The compromise between the two would be center-right.
It’s pointless to cut a short-term deal if entitlement programs are still structured to bankrupt our children. Republicans and Democrats could make 2013 the year of the truly Grand Bargain.
NYT’s Douthat Dead Wrong on Social Security
by Dean Baker, Center for Economic and Policy Research
Sunday, November 25, 2012
The problem here is that we are not condemned to an era of “mass unemployment, mediocre wage growth and weak mobility.” This has been the outcome of inept macroeconomic policy and trade and regulatory policies that were designed to redistribute income from those at the middle and bottom to the top. Most people would look to reverse these policies rather than eliminate social insurance.
The implication of this comment, that we would somehow be able to make up substantial funding shortfalls from cutting taxes on low and middle income people by taxing the wealthy more also is not very plausible. Given the enormous political power of the “job creators” (as demonstrated by the fact that people are not laughed out of town for using this term), it is unlikely that substantially more money will be raised from the wealthy to pay for Social Security.
Sorry Dr. Baker, Ross Douthat is exactly right.
Our Enemy, the Payroll Tax
By ROSS DOUTHAT, The New York Times
Published: November 24, 2012
Franklin Roosevelt effectively disguised Social Security as a pay-as-you-go system, even though the program actually redistributes from rich to poor and young to old. That disguise has helped keep Social Security sacrosanct – hailed by Democrats because it protects the poor and backed by Republicans as a reward for steady work.
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All of the components of a sensible Social Security reform – means-testing for wealthier beneficiaries, changing the way benefits adjust for inflation, a slow increase in the retirement age – become easier if the program is treated as normal safety-net spending rather than an untouchable entitlement with a dedicated funding stream.
By cutting the tax rate and promising to make up the difference out of general revenue, the payroll tax holiday took a big step in this direction – and letting it expire would take a big step back. Republicans have every reason to recognize this reality: their long-term size-of-government goals require Social Security reform, and the illusions fostered by the payroll tax are an obstacle – originally created by their political enemies! – to any restraint in what the program spends.
In Which Ross Douthat Examines Social Security
By Charles P. Pierce, Esquire
11/26/2012 at 1:30PM
Ross Cardinal Douthat yesterday decided that the greedy olds are ripping him off, and he and Chris Van Hollen are not going to take it any more. Or something. In doing so, he masterfully delineated the actual case that conservatives have been making against Social Security since the moment it passed in 1933 – namely, that the biggest problem with the program is that it, you know, really works.
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Well, we certainly can’t have that. I also would point out that Social Security didn’t “promise post-retirement returns,” it delivered them, every last dime of them, and it pretty much eliminated abject elderly poverty in this country, which I guess is something we can’t have, either.
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Unless we all get sold out, and the government starts listening to the likes of Ross Douthat, Social Security recipients pretty much get everything that they put into the system while they were working. The CBO says the trust fund is solvent through 2038, and some minor tweaks – like lifting the cap, which Young Master Douthat declines to mention – we can push the event horizon even deeper into the future.
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The payroll tax cut was intended to be a short-term stimulus, something that, in other guises – say, like rebuilding bridges or repairing dams – His Eminence would be expected to oppose. There were those of us who pointed out that extending it would lead inevitably to some charlatan using it as a wedge to take a hack at the program itself.
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But, eventually, we get around to what’s really going on. Social Security is a government program that works. It is a government program that people like.
Nope, the real problem is that President Obama, his Administration, and the institutional Democratic Party agree with Ross Douthat.
The Real Problem with Simpson and Bowles
By Charles P. Pierce, Esquire
11/28/2012 at 11:42AM
The commission crashed and burned, although you would never know it from the cargo cult that has sprung up around it within our political elites. It produced a “plan” that so many members of the commission hated that the “plan” never really was submitted to Congress. Every single Republican on the commission walked away from it. It was a thoroughly rotten deal for poor people and for the middle class, the living embodiment of Alan Simpson’s obvious contempt for everyone who is not him, as a number of progressive politicians pointed out. Undaunted, Simpson and Bowles pretended that their “plan” actually was a working document. It was a remarkable act of political faith-healing and, over the past couple of years, the “plan” that the builders rejected has become the cornerstone of the pitch for “bipartisan” “compromise. Senator Richard Durbin,supposedly one of the lead progressive voices in the Senate, can’t shut up about the bloody thing.
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Only in the funhouse mirror that is the Beltway media are these two guys an “improbable buddy act.” Only in that same mirror are they an “odd couple.” (And the fact that “business groups” pay them 40-grand a pop proves nothing except the fact the two of them shouldn’t be trusted as far as you can throw Lloyd Blankfein’s desk.) Both of them are tools of the financial power that has come to be the ruination of the nation’s economy and is more than halfway toward ruining the nation’s democracy as well. For example, the nation’s tattered social safety net is in as much danger from the two of them as it is from the outright zombie-eyed granny-starver, Paul Ryan, who personally walked away from the Simpson-Bowles “plan” because not enough grannies were being starved. Bowles just wants to hand the entire social insurance system over to his financial masters. (He’s one of the masterminds behind the Fix The Debt scam by which we are supposed to believe that a passel of avaricious CEOs have the country’s best interests at heart.) The financial elites, for whom Erskine Bowles would run the Iditarod if you put him in harness, loved it, which should have been a warning to everyone. Simpson hates the people who depend on the programs. But one of them is a lot taller than the other one so – bipartisanship! The plan lives!
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It is everything that has been wrong with this enterprise from the start. It is an exercise in Beltway wankery that hasn’t even bothered to pause to estimate the human cost of the deal it is seeking to foist on the American people. (And of which Alan Simpson is indecently contemptuous.) It traffics in the spurious notion that any deal with which “”both sides” are angry must be the right deal. (Can we please have an honest assessment of credibility here? If billionaires are angry because they might have to chip in some boutonniere money on April 15, and a middle-class family is angry because their 82-year old grandmother with Alzheimer’s is lying in her own filth in a substandard nursing home because of Medicare “reforms,” are we honestly saying that the anger of both sides is equally justified? Has anyone even asked that question?) It is the product of a heedless national elite so insulated from the consequences of its actions, and so coddled by a feckless national political media, that its actions are seen to have no consequences that matter once you cross the Potomac. (I’d have felt better about the whole deal if there were one nurse, one urban health-director, one social-worker on the entire commission.) The primary constituencies upon whom this “plan” will fall hardest were not even represented in its development, and they do not seem to factor in at all in the effort to implement it. The whole debate is taking place in a bell jar of unreality. Only there could Simpson and Bowles be seen as honest brokers, and only there could their “plan” be seen as anything except a new front in the steady looting of the national wealth, a “compromise” between lions and sheep.
How Obama Tried to Sell Out Liberalism in 2011
By Jonathan Chait, New York Magazine
3/19/12 at 6:21 PM
Last summer, President Obama desperately attempted to forge a long-term deficit reduction deal with Congressional Republicans. The notion that he could get the House GOP to accept any remotely balanced agreement was preposterous and doomed from the start, but Obama responded to the increasingly obvious reality by reducing his demands of the Republicans to virtually nothing.
The Washington Post has a long narrative report about the negotiations between Obama and the House Republicans. The narrative frame of the Post’s account is that Obama blew the potential deal at the last minute. That’s a story that people close to Obama’s fired chief of staff, Bill Daley, have been peddling for a long time. But that conclusion is utterly belied by the facts in the Post’s own account. But let’s put that aside for now, because the facts in the Post’s account support a different and far more disturbing conclusion: Obama was even more desperate to cut a deal than previously believed – dangerously desperate, in fact.
It has previously been reported that Obama had offered to John Boehner to make a series of cuts to Medicare, Social Security, and the domestic budget, to reduce top-end tax rates, and to prevent the expiration of the Bush tax cuts, in return for increasing tax revenue (over current tax levels) by about $800 billion over ten years. That is a pitiful sum of new revenue, less than half as much as recommended by deficit proposals by Bowles-Simpson, the Bipartisan Policy Center, and other bipartisan worthies.
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The obvious reality is that there never has been any way to get House Republicans to agree to a balanced deficit deal. Even the capitulation Obama offered – $800 billion in semi-imaginary revenue, all raised from the non-rich – was too much for them to agree to. Locking in that low level of revenue would have required huge cuts in spending, making a decent liberal vision of government impossible. The Post is making the case that there was a potential deal, and Obama blew it by failing to properly handle the easily-spooked Republican caucus. 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.
Bargaining Among Thieves, Thugs, Cheats, Liars and Naïfs
By: masaccio, Firedog Lake
Sunday November 25, 2012 10:40 am
Obama thinks the election will encourage the Republicans to act like human beings and remember the needs of their constituents. And they will. Mitch McConnell and John Boehner can be counted on to carry the water of their billionaire constituents and screw the rest of the country. The hyper-rich may have lost the presidency, but their serving-men will fight to destroy Obama’s second term even harder than they did his first, and if the country goes into a second recession, well that’s too bad. The thieves who steal money from every human on the planet want tax cuts, dammit, and they don’t want their precious corporations to pay taxes, dammit, and the odious twins will do their damnedest to accomplish the wishes of their masters.
Across the aisle there are plenty of lame duck Blue Dog Democrats who were always willing to dishonor the legacy of the Democratic Party and screw their constituents in search of some mythical middle ground between themselves and the true believers on the back bench of the Crazy Party.
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Obama spent his first term ignoring the people who elected him, especially progressive activists, the professional left, but also all of the members of his coalition who can’t live decent lives without Social Security and Medicare. So, when Grand Bargain I, the Betrayal, came out, it did very badly with Obama’s base. There was a lot of anger and hostility among the professional left, and a lot of it carried over to that base. No one was sorry to see Grand Bargain I pulled from the stores to be replaced by the laughable Supercommittee/Fiscal Cliff.
Fresh off his electoral victory, Obama called in the leaders of groups that supported him and asked them to help him in the introduction of Grand Bargain II, Revenge on the Old. Of course, he didn’t exactly ask them to sign on to cutting Social Security, Medicare and Medicaid. Instead, he asked them to carry the message that taxes on the rich should be increased. Practically every sane American thinks that the first step in dealing with the deficit is to hike taxes on the richest among us, the people who caused the Great Crash, who sucked up all the benefits from government action to deal with it, and whose outsized influence kept the government from lifting a finger to help millions of homeowners. So these leaders signed up for this term’s version of the Veal Pen.
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The worst part of this idiot bargaining is that the President is really worried about getting the Republicans to actually do the deed. In Grand Bargain I, the Republicans were supposed to pretend to accept tax hikes, none of which were specified. That was intolerable to the worst of the crazies, and Boehner couldn’t deliver the votes. This time, the President is looking for some other idiotic sop to throw to the nutcases to conceal their defeat on the tax hike issue.
How Obamacare Came To The Fiscal Cliff
By Charles P. Pierce, Esquire
11/23/2012 at 12:15PM
Wait. Stop. The president, and the congressional Democrats, are under no affirmative obligation to make John Boehner’s life easier just because he’s got a caucus full of more nuts than a Wal-Mart fruitcake. The president, and the congressional Democrats, are under no affirmative obligation to arrange for John Boehner’s mellow to stay unharshed just because he’s dependent upon a political “base” that went to the monkeyhouse 30 years ago, pitched a tent, and never left. John Boehner’s political problems are John Boehner’s political problems. They’re not the country’s to solve, and certainly not the president’s, either. Let him solve them himself. The popular speculation is that this is all just political posturing, and sop-tossing, and ass-covering. I am less sanguine. In this atmosphere, in which the entire discussion is taking place behind closed doors and in which the general welfare of most Americans seems to be little more than a side issue, empty rhetoric has a way of becoming empirical political fact.
If you stand for nothing, you will stand for anything and that includes throwing your own babies under the bus.
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