Friday, April 05, 2013

Social Security/Medicare wobble watch

Now that the Democratic President is endorsing cuts in benefits to Social Security and Medicare in his budget to be formally proposed next week, we're going to see various Democratic partisans, Obama admirers and left-leaning journalists who prefer to stay on the good side of White House finding ways to go wobbly on defending Social Security.

Josh Marshall's Obama’s Dangerous Game TPM 04/05/2013 shows some hints of this. He articulates what he sees as the White House position:

In conversations with the president’s key advisors and the President himself over the last three years one point that has always come out to me very clearly is that the President really believes in the importance of the Grand Bargain. He thinks it's an important goal purely on its own terms. That's something I don't think a lot of his diehard supporters fully grasp. He thinks it's important in longrange fiscal terms (and there's some reality to that). But he always believes it's important for the country and even for the Democratic party to have a big global agreement that settles the big fiscal policy for a generation and let's the country get on to other issues — social and cultural issues, the environment, building the economy etc.
Watch for those phrases like "(and there's some reality to that)."

No, actually, long-term fiscal healthy does not require cuts in benefits for Social Security, Medicare, Medicaid and veterans benefits. The long-term problems of growth in health care costs also adversely impact Medicare. But Medicare actually acts as a restraint on health care costs. And some more recent data on health care cost increases project lower growth than what has been assumed in previous years.

There's a good, very practical case for expanding both Medicare and Social Security.

But the conventional assumption is that "entitlements", the propaganda term for Social Security, Medicare and Medicaid preferred by their opponents to make them sound like "welfare", are some dire threat to the country's economic well-being. As conditions change, the justifications for cutting benefits and putting those programs on the road to abolition also shift. But they are based in Herbert Hoover economics. And more specifically in the greed of Wall Street financiers who would love to have retirement and health care fully privatized so they could take huge cuts in fees from the funds that now go to retirees and to health care costs.

At this point, I'm ready to shift by assumption about Obama's understanding of the whole framework of social insurance. I've assumed up until now that his concept of the Grand Bargain was something like Josh describes, "to have a big global agreement that settles the big fiscal policy for a generation and let's the country get on to other issues — social and cultural issues, the environment, building the economy etc." Although I would add that he seems to think this postpartisan heaven would reduce those other issues to more technical issues that reasonable elites could handle in an agreeable fashion without a lot of noisy and annoying interference by voters and ordinary workers who are the most directly affected by them. The "end of ideology," as the dream was called in an earlier incarnation, or "the end of history" in another.

But I imagined that he thought that cutbacks in benefits to Social Security, Medicare and Medicaid would be a one-time thing that would then lead to full acceptance by the Republicans of those programs.

Now I'm starting to think he buys into a more radical privatization framework. His healthy care program, which the Republicans are shrieking is a totalitarian imposition, is famously similar to that on which Bob Dole campaigned when running for President as the Republican nominee in 1994. Obama may well see 401(k)'s and the remnants of the private pension system as an adequate and preferable substitute for Social Security. And Obamacare, with its absence of a public option, as a desirable substitute for Medicare and Medicaid.

That implies even more cynicism on Obama's part than even most of his sharpest Democratic partisan critics have assumed so far. But since his course opens those programs up to even more aggressive political attacks the moment his Grand Bargain deals gets enacted, that's a straightforward possibility. Assuming he hopes for a postpartisan state of "end of ideology" harmony at least allows him a dream of a more harmonious state. But it's delusional. Take your pick.

Rick Perlstein at his Facebook page today quotes from that paragraph of Josh Marshall and gives his own translation:

Yes. Me: "There’s something so arbitrary about it, so cliché: pick the one thing that Republicans are supposed to cherish most (tax cuts!). Pick the one thing Democrats are supposed to cherish most (spending!). If you get both to give up what they cherish, something transcendent has occurred; something mystical; something deep, deep inside America's soul—healing! It’s almost as if, were the Democrats' most cherished nostrum was that the sky is blue; and if the Republicans’ most cherished nostrum were that the sky is red, Obama somehow imagines that if he can somehow get both to agree that the sky is purple, lo and behold, America will finally be a warm and conciliatory place."
Josh claims to be giving context to the proposed cuts:

First, though I think these cuts are a bad idea, they’re are qualitatively different from efforts to dismantled and phase out Social Security through privatization and private accounts.
Yes, I suppose you could say that serious and damaging cuts that make many people's lives visibly harder are qualitatively different that immediately abolishing the programs altogether.

There are also a number of progressive economists and policy analysts that think this might be a positive step in the context of other changes to get the country’s longterm financial house in order.
He doesn't name any. And since supporting cuts in benefits to Social Security and Medicare make someone by definition something other than "progressive" the way I look at it, I have no idea who or what he means here.

But that last point is key: it doesn't make sense if you just do it alone, if Social Security doesn't get anything back as part of the same bargain. Otherwise, when you do finally come to a deal that brings major new revenue in (and it will come) Social Security and other similar programs will be asked to take yet more hits.
Even the sentences don't make sense there. If we raise or eliminate the cap on Social Security taxes, that takes care of any financing problems with Social Security for upteen years and probably until hell freezes over. But he seems to be saying that it only makes sense to cut Social Security benefits unless Social Security also gets more revenue which means benefits have to be cut even more if it does. Which really doesn't make jack for sense to me.

Second, on the politics, President Obama and his advisors have made clear this isn’t what President Obama is actually for. He doesn’t think it’s a good idea.
This is generous way beyond what the facts indicate. Obama has been talking about the Grand Bargain to cut benefits on Social Security, Medicare and Medicaid since before his first inauguration. Digby at Hullabaloo has been faithfully tracking it ever since then. Maybe Josh should check out her blog occasionally.

So really this is just the President negotiating with himself, validating the wisdom of big Social Security cuts while Republicans are still saying — and show no signs of not saying — that no more taxes should ever go up ever.

Now, the counter to this is that the optics of going the extra length helps the President with swing voters who want to see he’s trying to compromise. I’m uncertain about that. But that’s certainly part of the calculus.
The whole argument is silly. Polls consistently show that cuts in benefits to Social Security, Medicare and Medicaid are very unpopular: with Democrats, with swing voters, with Republicans. Even if Josh's sources at the White House are claiming that, they have surely seen the polls. Josh is being very credulous to credit them with thinking that. Obama is trying to make a deal by doing something he knows is very unpopular because it very damaging.

Robert Reich explains why the "chained CPI" proposal is such a scam and why the benefit cuts involved in using it the way the Democratic President is now proposing is a really bad idea, Robert Reich on Chained CPI (the proposal to cut Social Security benefits) 04/03/2013:

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