Barack Obama's Democrats just won a resounding triumph in what was advertised as the great ideological face-off of our times. What we the people chose, according to this viewpoint, was social insurance, universal health care, a strong regulatory state. What this town urges on President Obama, unfortunately, is something quite different: an imaginary armistice between the two parties, purchased at the cost of the very things his supporters think they just voted for.Specifically, he's talking about Obama's commitment to the Grand Bargain to cut benefits on Social Security, Medicare and Medicaid.
Another term for the Grand Bargain might be "austerity"-the punitive economic reflex that has driven much of Europe into deep recession. Austerity proceeds from the reasonable-sounding premise that government must cut back spending during hard times, just as everyone else does. However, this practice actually serves to worsen slumps and recessions rather than cure them. That in turn reduces tax revenues, thereby pumping up deficits and making the need for further austerity seem even more urgent. Such a bargain might be grand, but it might also be stupid and self-destructive.Frank wonders not only about the reasons Obama embraces such a destructive course, but also about the general assumption in the Village that cutting benefits on Social Security, Medicare and Medicaid is a virtuous, vital, necessary thing to do. "While the rest of the nation worries about unemployment and bankruptcy and the great corporate rip-off, people in D.C. worry about the deficit," he writes.
And he emphasizes how pervasive that view in among the Villagers:
Washington's most prominent residents have always had trouble understanding the economic problems of the country outside the Beltway. Other Americans grasp the symbiotic relationship between the economy at large and the government's balance sheet. Washingtonians, however, view the government's own fiscal situation - meaning the federal deficit - as something autonomous and detached from the nation's sweaty, second-wave struggles. The deficit is thought to be a problem all on its own, a disaster separate from and comparable to the recession itself.Of course, the deficit for Wall Street is an excuse to try to cut benefits on Social Security, Medicare and Medicaid so they can take a cut of some of the cash flows that go into them, especially Social Security, the Mississippi River of all cash flows, as Jamie Galbraith describes it.
Citing Obama's interview with the Des Moines Register a couple of weeks before the November election, Frank writes of him:
... his real policy ambition was the same as always: to achieve the Grand Bargain. Which is to say, a fiscal deal between the parties that would enact the centrist dream agenda all at once by cutting spending, increasing tax revenue, and (in at least one version of it) "reforming" entitlements. The Great Conciliator in the White House has longed for such a bargain for years. In pursuit of it, he created the BowlesSimpson commission, then a special committee chaired by Vice President JoeFrank is still using a more expansive version of what the Grand Bargain would be. In practice, that phrase has now come down to meaning cutting benefits on Social Security, Medicare and Medicaid.
Biden, then led his own series of meetings and horse-trading sessions. (And that's not counting the failed congressional "Super Committee" of late 2011.)
Tags: austerity economics, barack obama, debt ceiling, grand bargain, medicaid, medicare, social security