Obama and "Obamaism" after the non-negotiating negotiations and budget/debt deal this past week

This is excellent news: Labor puts Dems on notice: Don't touch Medicare and Social Security benefits Washington Post Plum Line by Greg Sargent 10/17/2013.

Robert Reich explains why that timely in What to Expect During the Cease-Fire 10/17/2013:

We know the parameters of the upcoming budget debate because we’ve been there before. The House already has its version — the budget Paul Ryan bequeathed to them. This includes major cuts in Medicare (turning it into a voucher) and Social Security (privatizing much of it), and substantial cuts in domestic programs ranging from education and infrastructure to help for poorer Americans. Republicans also have some bargaining leverage in the sequester, which continues to indiscriminately choke government spending.

The Senate has its own version of a budget, which, by contrast, cuts corporate welfare, reduces defense spending, and raises revenues by closing tax loopholes for the wealthy.

Here, I fear, is where the President is likely to cave.

He’s already put on the table a way to reduce future Social Security payments by altering the way cost-of-living adjustments are made – using the so-called "chained" consumer price index, which assumes that when prices rise people economize by switching to cheaper alternatives. This makes no sense for seniors, who already spend a disproportionate share of their income on prescription drugs, home healthcare, and medical devices – the prices of which have been rising faster than inflation. Besides, Social Security isn’t responsible for our budget deficits. Quite the opposite: For years its surpluses have been used to fund everything else the government does.

The President has also suggested "means-testing" Medicare – that is, providing less of it to higher-income seniors. This might be sensible. The danger is it becomes the start of a slippery slope that eventually turns Medicare into another type of Medicaid, a program perceived to be for the poor and therefore vulnerable to budget cuts. [my emphasis]

President Obama's remarks on Thursday after the debt ceiling crisis had passed for the moment (Remarks by the President on the Reopening of the Government, 10/17/2013) don't give defenders of Social Security, Medicare and Medicaid a lot of comfort.

There are a number of disturbing things about the speech.

There's consistency. He gets harsh with the Republicans here: "But probably nothing has done more damage to America's credibility in the world, our standing with other countries, than the spectacle that we've seen these past several weeks. It's encouraged our enemies. It's emboldened our competitors. And it's depressed our friends who look to us for steady leadership."

But a few sentences later, he's saying: "And when we disagree, we don't have to suggest that the other side doesn't love this country or believe in free enterprise, or all the other rhetoric that seems to get worse every single year."

My fingertips would no doubt burst into flames if I were to say anything that sounded like it was even slightly taking the Republicans' side of this. But it is Obama's chronically inconsistent messaging to the Republicans. I actually doubt that the budget debacle "encouraged our enemies." What, the hardcore Islamist militants in Yemen trying to avoid drone-strike assassination have spent the last two weeks charged up over the US debt ceiling?

But if you're going to slap the Republicans with that kind of thing, you don't then need to turn around and say, oh, it's naughty "to suggest that the other side doesn't love this country." It certainly would be reasonable to conclude that the Tea Party Republicans don't have much love for the people of this country, at least the ones that aren't filthy rich white Christians.

He cites a credit-rating agency as an authority that he thinks we should actually pay attention to:

And you don’t have to take my word for it. The agency that put America's credit rating on watch the other day explicitly cited all of this, saying that our economy "remains more dynamic and resilient" than other advanced economies, and that the only thing putting us at risk is -- and I'm quoting here -- "repeated brinksmanship." That's what the credit rating agency said. That wasn't a political statement; that was an analysis of what's hurting our economy by people whose job it is to analyze these things.

First of all, the credit ratings agencies proved that they had, shall we say, quality and accuracy issues in the run-up to the start of the depression in 2007-8. Their ratings would have real-world effects if they downgraded US government bonds to non-investment grade, because it would force pension funds and others who have requirements for maintaining a certain portion of investment-grade securities. Otherwise, why is the President citing one of those organizations as an authority? It just reinforces the non-chronic Democratic habit of apologizing for being a Democrat, i.e., his statement implies that people should believe a solid bitness organization (in this case one of the clueless credit-rating agencies!) over the Democratic President. Just stop it, please!

He repeats the tiresome, abstract complaint about "Washington": "And, of course, we know that the American people's frustration with what goes on in this town has never been higher. That's not a surprise that the American people are completely fed up with Washington."

It was "this town" that caused the problem. Not, you know, the Republicans who wanted to force the world into a new financial crisis. It was "Washington." How did the President and head of the Democratic Party deal with the opposing party that was fully responsible for the recent crisis? Here are his mentions of the word "Republican" in this statement:

Because Democrats and responsible Republicans came together, the first government shutdown in 17 years is now over.

And I want to thank those Democrats and Republicans for getting together and ultimately getting this job done.

First, in the coming days and weeks, we should sit down and pursue a balanced approach to a responsible budget, a budget that grows our economy faster and shrinks our long-term deficits further.

At the beginning of this year, that’s what both Democrats and Republicans committed to doing.

Again, the Senate has already passed a solid bipartisan bill. It's got support from Democrats and Republicans. It's sitting in the House waiting for passage. If House Republicans have ideas that they think would improve the farm bill, let's see them. Let's negotiate. What are we waiting for? Let's get this done.

I understand we will not suddenly agree on everything now that the cloud of crisis has passed. Democrats and Republicans are far apart on a lot of issues. And I recognize there are folks on the other side who think that my policies are misguided -- that's putting it mildly. That's okay. That's democracy. That’s how it works. We can debate those differences vigorously, passionately, in good faith, through the normal democratic process.

The American people's hopes and dreams are what matters, not ours. Our obligations are to them. Our regard for them compels us all, Democrats and Republicans, to cooperate, and compromise, and act in the best interests of our nation –- one nation, under God, indivisible with liberty and justice for all.

How many times is he going to rehash his famous 2004 no-red-America-no-blue-America speech? Forever, apparently. In the face of the most blatant attempts to politically sabotage the national government since before the civil war, the Democratic President presents the Republican Party as:

• A party that deserves equal credit with the Democrats for ending the crisis (Mark Shields on the PBS Newshour 10/18/2103, Shields and Brooks on who will come out ahead after the shutdown 'cease-fire': "John Boehner, after all of this, standing at the precipice, about to plunge over, to send the country into default, only one-third of his entire caucus supported the resolution and the compromise crafted by the Senate.")
• A party that contains some meaningful faction that deserves the label "responsible"
• A party with which the Democrats share a commitment to concentrate on reducing budget deficits in the middle of a depression, with a weak recovery already seriously endangered by the drastic cuts made just this year
• A normal party that can be expected to work in a "bipartisan" basis, at least on farm legislation
• A party committed to "democracy," to debating differences "in good faith," a party willing to work within "the normal democratic process"

Only one of these even comes close to describing the real existing Republican Party as we've seen it in action this year, the part about an irresponsible joint commitment to focusing on minimizing federal spending during a depression and weak recovery. In other words, the one on which the corporate Democrats have successfully persuaded the People's Party to adopt a Herbert Hoover austerity economics perspective.

We just do not need any more Democratic Presidents that spend so much time trying to minimize the partisan advantages that the Democratic Party stands to gain from the most irresponsible kind of behavior by the Republicans. We really do not need another one.

I don't recall noticing the phrase "Obamaism" before I saw Rick Perlstein using it recently. "Even if Obamaism works on its own terms," he wrote, "it can't stop Republicans from wrecking the country. Instead, it may end up abetting them." (Why Obama Needs to Change to Win Rolling Stone 02/28/2013)

For me, there are two basic elements of "Obamaism" in the sense Rick uses it. One is his habit of framing issues in Republicans terms. In his Oct. 17 statement, he defended a moderately-conservative deficit policy by invoking the hardcore Reaganite attack on earned-benefits programs, "The challenges we have right now are not short-term deficits; it's the long-term obligations that we have around things like Medicare and Social Security."

Second is his obsession with bipartisanship with the Republican Party as a good thing in itself. Bipartisan agreement on policy is only as good as the policy being agreed upon. And by making holy bipartisanship a key goal of his Presidency, he gives the Republicans a club to beat Democratic policy into the ground with. Because if bipartisanship is an end in itself, he by definition has to have Republican cooperation to achieve it.

The two weaknesses of "Obamaism" come together nicely in his drive to cut benefits on Social Security, Medicare and Medicaid, known in the Beltway Village and the business press as "entitlement reform," aka, the Grand Bargain. It's a Republican goal, and to achieve it he has to have substantial Republican support. Teaming with the Republicans will anger something like 99% of the Democratic Party's voting base, which is a good thing in Obama's view of holy bipartisanship. He regularly brags about his own voting base being upset with him over something. That is a virtue in the eyes of this particular Democratic President.

We see that kind of Obamaism at work when he said during the run-up to the debt ceiling deadline, "When you hear government not compromising, we're compromising so much we're willing to open the government at funding levels that reflect Republican wishes, that don't at all reflect our wishes." (Obama: We're Willing To Fund Government With Republican Priorities TPM 10/07/2013) Rick posted a Facebook comment about that story the same day saying, "Even our wins are losses."

And, in fact, that what this past week's deal did. It funds the government at sequester levels, with new sequester cuts still scheduled, funds it only until mid-January when another continuing resolution will be needed, and sets up another debt ceiling fight for mid-February.

Obama endorsed the false equivalence the Beltway Villagers love so much: "There's a lot of noise out there, and the pressure from the extremes affect how a lot of members of Congress see the day-to-day work that’s supposed to be done here." It plainly was not "the extremes" that brought on the debt ceiling crisis, it was the "the extreme" otherwise known as today's Republican Party in Congress.

The following is a statement of a key idea of the neoliberalism that is not a distinctive features of Obamaism, it's the ideology that has corrupted large portions of the Democratic Party, as well as center-left parties in Europe:

And we shouldn't approach this process of creating a budget as an ideological exercise -- just cutting for the sake of cutting. The issue is not growth versus fiscal responsibility -- we need both. We need a budget that deals with the issues that most Americans are focused on: creating more good jobs that pay better wages. [my emphasis]

Now, he's right that we should be reducing the federal budget "for the sake of cutting." But the striking thing is his comment that "creating a budget" should be no "ideological exercise." This is the neoliberal idea, the End of Ideology, the End of History. Issues of government become non-ideological, a matter of technical management - because both "left" and right should agreement with Calvin Coolidge's ideal that the bitness of America is bitness, and that what's good for the Koch Brothers and Goldman Sachs is good for America. Everything else is the whining of malcontents who worry about labor rights, jobs, decent pay, women's rights, etc. Unimportant distractions from the Real Business of making gubment the best servant possible to bitness.

In an interview with Jann S. Wenner in the spring of 2012, Obama expressed this hope for the period after his reelection (Ready for the Fight: Rolling Stone Interview with Barack Obama 04/25/2013):

My hope is that if the American people send a message to them that's consistent with the fact that Congress is polling at 13 percent right now, and they suffer some losses in this next election, that there's going to be some self-reflection going on – that it might break the fever. They might say to themselves, "You know what, we've lost our way here. We need to refocus on trying to get things done for the American people."

Frankly, I know that there are good, decent Republicans on Capitol Hill who, in a different environment, would welcome the capacity to work with me. But right now, in an atmosphere in which folks like Rush Limbaugh and Grover Norquist are defining what it means to be a true conservative, they are lying low. My hope is that after this next election, they'll feel a little more liberated to go out and say, "Let's redirect the Republican Party back to those traditions in which a Dwight Eisenhower can build an interstate highway system."

It doesn't seem to me that the post-election Republican Party reflects any of those hopes. Yet there was the President on Thursday, talking about them in much the same vein. Dwight Eisenhower? Interstate highway system? There was no good reason to expect that in 2012 and even less to expect it now.

Kathleen Hennessey wrote of those groundless 2012 hopes recently (Obama's reelection did little to 'break the fever' in Washington Los Angeles Times 09/30/2013), "Whether the president’s thesis misjudged his opponents or was merely wooing supporters with wishful thinking is an open question." Actually, I don't think it's much of an open question. While he put up more resistance to being jacked around over the debt ceiling this time compared to 2011, it's hard to avoid the conclusion that his hopes for Republican rationality are boundless.

She also wrote:

Now, several months into his second term, with Washington on the cusp of the first government shutdown since 1996, the fever of brinkmanship has spiked. ...

Even as Obama campaigned on the notion, few in Washington agreed with the president’s analysis. The 2012 election never looked like a power-shifting election, and it wasn’t. Republicans lost a handful of seats but easily maintained their majority in the House. The Democratic majority in the Senate grew only slightly. The balance of power remained the same, and for the most part so did the politics.

Charlie Pierce (The Reign of Morons: The Presidenting Esquire Politics Blog 10/17/2013) take on the notion of non-ideological federal budgets:

This is, of course, ridiculous. Everything in politics is an ideological exercise. That's the way it's supposed to be. Paul Ryan's objection to social-welfare programs is entirely ideological; he does not believe that things like Medicare and Social Security are legitimate exercises of the power of government. He wants them eliminated. He wants the ideas behind them defeated, forever. His approach is more tactically nuanced than that of Louie Gohmert -- so is a tackhammer -- but the goals are the same. If one side of these negotiations is utterly ideological, and the other side if ideologically fastidious, on which side would you put your money? [emphasis in original]

Obama's neoliberal ideology paired with his obsessive pursuity of sacred bipartisanship would be bad enough if the Republican Party were actually conservative. Since at the moment and for the foreseeable future they are screaming reactionaries with a strong tendency to bouts of collective insanity, Obama's reverence for bipartisanship bears a disturbing mirror-image relationship to the reality-denial rampant on the Republican side.

Sadly, I don't think Obama's concluding words in his post-debt-ceiling-crisis speech were just a rhetorical flourish. I think he's actually expected the Republican Party in Congress to be able and even willing to rise to them:

And those of us who have the privilege to serve this country have an obligation to do our job as best we can. We come from different parties, but we are Americans first. And that’s why disagreement cannot mean dysfunction. It can't degenerate into hatred. The American people’s hopes and dreams are what matters, not ours. Our obligations are to them. Our regard for them compels us all, Democrats and Republicans, to cooperate, and compromise, and act in the best interests of our nation –- one nation, under God, indivisible with liberty and justice for all.

Social Security, Medicare and Medicaid are good things. Obama and the Republicans want to cut them. Every month and every year that goes by without that happening is a real victory for the great majority of Americans.

Tags: austerity economics, barack obama, debt ceiling, grand bargain, medicaid, medicare, platinum coin, social security

The shutdown, the Williamsburg Accord and the President's strategy

So, the Reds have shut down the national government. (Sorry, I couldn't resist. I still think it's hilarious that conventional usage now calls the Republicans the "red" party.)

I haven't posted about the shutdown since it began early Wednesday morning. It's anyone's guess at this point how long it may go on. The analysis that sees this event as this Republican House's version of the Clinton impeachment, a kind of Constitutional coup, makes a lot of sense to me.

It seems that not only the mainstream press but much of Left Blogostan missed the significance of a Republican convocation back in January. Jonathan Chait writes in The House GOP’s Legislative Strike Daily Intelligencer 09/30/2013:

In January, demoralized House Republicans retreated to Williamsburg, Virginia, to plot out their legislative strategy for President Obama’s second term. Conservatives were angry that their leaders had been unable to stop the expiration of the Bush tax cuts on high incomes, and sought assurances from their leaders that no further compromises would be forthcoming. The agreement that followed, which Republicans called "The Williamsburg Accord," received obsessive coverage in the conservative media but scant attention in the mainstream press. (The phrase "Williamsburg Accord" has appeared once in the Washington Post and not at all in the New York Times.)

But the decision House Republicans made in January has set the party on the course it has followed since. If you want to grasp why Republicans are careening toward a potential federal government shutdown, and possibly toward provoking a sovereign debt crisis after that, you need to understand that this is the inevitable product of a conscious party strategy. Just as Republicans responded to their 2008 defeat by moving farther right, they responded to the 2012 defeat by moving right yet again. Since they had begun from a position of total opposition to the entire Obama agenda, the newer rightward lurch took the form of trying to wrest concessions from Obama by provoking a series of crises. [my emphasis]

I certainly don't want to detract from the blame that the Republican Party deserves in the shutdown. It wasn't "the politicians in Washington" who did this week's needless and destructive government shutdown. It was the Republican Party Members of the House of Representatives who shut it down.

Here's a stock both-sides-are-to-blame version from former General Electric CEO Jack Welch: Schmooze or Lose: How the Lost Art of Negotiation Led to a Shutdown Huffington Post 10/02/2013. At this point, such a position is simply a partisan Republican one. The main Republican position of course, is that it's the President's fault. By any rational standard, that's plainly ridiculous.

However, Democrats and the country more generally should expect a strategy from the twice-elected Democratic President that takes full account of the Republicans' behavior. And Obama has been sadly deficient in that regard.

He said on Wednesday, "I have bent over backwards to work with the Republican Party, and have purposely kept my rhetoric down." Gee, maybe it's time for a different approach! (Sam Stein, Obama To Wall Street: You Should Be Scared Huffington Post 10/02/2013)

Obama came into office at a time of acute economic crisis. And he passed enough of a stimulus to stop the slide and allow the economy to eventually limp out of a recession. But the economy is still performing far below capacity, unemployment is high and poverty has risen.

But from the very first, even while pursuing a stimulus package, Obama framed his goals in terms of giving priority to reducing the federal deficit. Even worse, he set his longer-term economic goals as a Grand Bargain, which originally envisioned: adoption of the Bob Dole/Heritage Foundation/Mitt Romney health care plan now known as Obamacare; raising taxes on the wealthiest; and cutting benefits on Social Security, Medicare and Medicaid. He adopted a basically conservative understanding of economics in which austerity is good and virtuous even during a depression.

He didn't take it to the catastrophic extremes that German Chancellor Angela Merkel did in her management of the eurozone economy. But he relentlessly framed economic problems in terms of the virtues of austerity economics and budget-cutting. An essentially conservative framing that benefits the goals of Republicans far more than it does the goals of the Democratic base, which are generally reflected in the nominal goals of the Democratic Party.

By 2011, his Grand Bargain had come down to cutting benefits on Social Security, Medicare and Medicaid with nominal tax increases for the One Percent. That year, he tried to use the negotiations over the debt ceiling as leverage to get a consensus of Republicans and some Democrats big enough to cut benefits on Social Security, Medicare and Medicaid. It also showed the Republicans that he was willing to negotiate over the debt ceiling and forego obvious options like invoking the 14th Amendment or minting a platinum coin to make the debt ceiling confrontation meaningless.

The failure of that negotiation led to the "fiscal cliff" arrangement of late 2012. Even though re-elected by a healthy margin, he went back to pursuing the Grand Bargain even before his Second Inauguration. When the Republicans, still negotiating in bad faith, wouldn't make any kind of deal with him, the Bush tax cuts on the wealthy were set to expire at the end of 2012. At the last minute, he insisted on an agreement to restore a substantial amount of the tax cuts for the One Percent. If what he wanted was higher taxes on the wealthy, as he claimed, he could have gotten a lot more of it by just doing nothing and letting the Bush tax cuts expire.

It was after that the Republicans agreed on their Williamsburg Accord approach. They would surely have attempted something similar anyway. But his immediate postelection behavior surely served to increase their confidence that he could be rolled.

Robert Reich in Why Obama and the Democrats Shouldn't Negotiate with Extortionists 09/29/2013 recalls those previous negotiations:

Obama and the Democrats must not give in. They shouldn’t even negotiate with extortionists. ...

The President began negotiations with the Republican bullies in 2011 when they first threatened to default on the nation’s debt if they didn't get the spending cuts they wanted. He negotiated again at the end of 2012 when they threatened to go over the fiscal cliff and take the rest of the nation with them if they didn't get the budget they wanted. Now they want to repeal a law they detest. If we give in again, what’s next? A coup d'etat?

Obama is right when he claims, "I have bent over backwards to work with the Republican Party, and have purposely kept my rhetoric down."

But that's not adequate for dealing with an insurgent party intent on wrecking his Presidency. Austerity economics and credulous assumptions about the good faith of the other side aren't the likely to win this fight on any terms that Democrats can consider good.

And it's important to note that the Sequester and now the shutdown achieve the Republicans' goal of reducing government and imposing even more austerity policies than Obama wants. And, as of now, the Republicans are getting what they want.

Tags: austerity economics, barack obama, debt ceiling, grand bargain, medicaid, medicare, platinum coin, social security

The undead Grand Bargain and the platinum coin option on debt-ceiling negotiations

As a new fight over the debt ceiling approaches, it's worth remembering that President Obama has a straightforward legal power to avoid the whole farce, the ability to mint a platinum coin of any value and use it to finance debt payment obligations. The power is called platinum coin seigniorage (PCS).

So if there is a negotiation in which Obama and the Democrats make concessions to Republicans, it's because Obama has chosen not use the power he has to avoid it. In other words, he wants the confrontation for some purpose, like putting through his Grand Bargain to cut benefits on Social Security, Medicare and Medicaid.

Paul Krugman has discussed the platinum coin option in Be Ready To Mint That Coin 01/07/13:

There's a legal loophole allowing the Treasury to mint platinum coins in any denomination the secretary chooses. Yes, it was intended to allow commemorative collector’s items — but that's not what the letter of the law says. And by minting a $1 trillion coin, then depositing it at the Fed, the Treasury could acquire enough cash to sidestep the debt ceiling — while doing no economic harm at all.

So why not?

Yes, it's that straightforward.

Also on the platinum coin option:

Beowulf, FDL Coin Seigniorage and the Irrelevance of the Debt Limit 01/03/2011

Joe Firestone (letsgetitdone), Coin Seigniorage: A Legal Alternative and Maybe the President's Duty Corrente 07/17/2011

Joe Firestone, End the Austerity War Against the People: Mint the Platinum Coin! Corrente 08/05/2011

Joe Firestone, Beyond Debt/Deficit Politics: The $60 Trillion Plan for Ending Federal Borrowing and Paying Off the National Debt Corrente 08/01/2012

Joe Firestone, A Counter Narrative to Peterson's New Economic Perspectives 10/30/2012

Paul Krugman, Rage Against the Coin 01/08/2013

Paul Krugman, Barbarous Relics 01/09/2013

Mike Sandler, Beyond Debt Ceiling, Trillion Dollar Coin Offers New Economic Paradigm Huffington Post 01/10/2013

Joe Weisenthal, COINTASTROPHE: White House Rules Out The Trillion Dollar Coin Option To Break The Debt Ceiling Business Insider 01/12/2013

Mike Konczal, The Game Theory of the Post-Platinum Coin Debt Ceiling Rortybomb 01/14/2013; this should be read in combination with Gene Lyons, Obama Has The GOP Right Where He Wants Them National Memo 01/16/2013.

Ezra Klein, Treasury: We won’t mint a platinum coin to sidestep the debt ceiling Wonkblog 02/12/2013

And as Firestone reminds us in Declaring the Grand Bargain Dead Is Premature FDL 08/31/2013, what Obama would be offering up in such a standoff would be cuts in benefits to Social Security, Medicare and Medicaid. This is his Grand Bargain, at this point a painful misnomer. It would only be "grand" for investment banker and insurers who collected fees and bonuses while delivering substitute products for the cut programs that provide inferior service, even for those who can afford it, compared to the current arrangement.

And it this point the only real "bargain" seems to be that both Democrats and Republicans would agree to support cuts to benefits on Social Security, Medicare and Medicaid. What those would would lose from the cuts would get in the "bargain" is pretty darn vague at this point.

Lori Montgomery reports in White House, Republican senators give up on budget talks Washington Post 08/29/2013, Obama has been offering up the Grand Bargain in negotiations with Republicans even this past week:

Through multiple meetings with White House Chief of Staff Denis McDonough, Deputy Chief of Staff Rob Nabors and Budget Director Sylvia Mathews Burwell, the group discussed a range of options, including a “grand bargain” that would involve a complete restructuring of Medicare, according to people familiar with the meetings, who spoke on the condition of anonymity to describe the private talks.

The group also discussed a smaller deal that would replace much of the remaining sequester savings — about $500 billion over the next eight years — with narrower reforms to Medicare, Social Security and other ­mandatory-spending programs, such as farm subsidies.

But the talks never really gelled, in part because Republicans would not consider raising taxes on the wealthy or corporations as part of the smaller deal, arguing that congressional Republicans as a whole would never agree to replace sequester cuts with higher taxes. Nor did they offer a specific strategy for raising taxes as part of the larger deal.

In the current vocabulary of our political elites, certainly including Obama loyalists, "reform" for Social Security, Medicare and Medicaid means "cutting benefits."

Tags: austerity economics, barack obama, debt ceiling, grand bargain, medicaid, medicare, platinum coin, social security