Grand Bargain Sought

Friday the sequester kicks in. Republicans aren't budging, though some in their caucus are grumbling about the Pentagon cuts. A good place to start the work week is Robert Pear's story this morning, "As Governors Meet, White House Warns Cuts Would Hurt States"; it runs down the basic math of the sequester:

On Friday, the administration said, $85 billion in cuts will automatically begin to take effect, with many domestic programs facing reductions of 9 percent and some military programs being reduced by 13 percent in the remaining seven months of the federal fiscal year.

“There are constraints to what an agency can do in taking this across-the-board $85 billion cut,” Mr. Werfel [the controller of President Obama’s budget office] said. “The way the law is written, it has to be taken from a percentage cut from every program, project and activity.”

Under the Budget Control Act of 2011, which created the latest version of the sequester, some programs, like Medicaid and food stamps, are exempt from the automatic cuts, and cuts in Medicare payments cannot exceed 2 percent. 

Social Security benefits would not be cut. But the White House said that the automatic budget cuts would force the agency to “curtail service to the public,” and that the backlog of Social Security disability claims would increase.

The Obama administration is outlining what these cuts actually mean: loss of education funding in Ohio; vaccines in Georgia; services for victims of domestic violence in Pennsylvania; etc. Republicans are crying foul; they're asserting all the doom and gloom is a public relations stunt designed to scare. But if you're a Republican what else can you say since you are unwilling to put corporate tax loopholes on the table?

But what's really troubling is Richard Stevenson's article from this past Saturday. What has not been mentioned much in the sequester coverage is what Obama is willing to give up:

Even as President Obama lashes out at Republicans over the automatic spending cuts that take effect next week, he is simultaneously sending them a strikingly different message: he is still interested in a big deficit-reduction deal and as evidence of his good faith has left on the table proposed Medicare and Social Security cuts that liberals hate.

His aides point to Mr. Obama’s continued willingness to swallow, over the intensifying objections of most of the left side of his party, a new way of calculating inflation adjustments for Social Security benefits that would reduce the growth of payments – in effect, a benefit cut. And Mr. Obama has alluded repeatedly to his willingness to re-engage with Republicans based on his last offer for $400 billion in Medicare cuts, made during the negotiations in December over the so-called fiscal cliff; that’s a level that gives heartburn to some Democrats in Congress who see no need to compromise at this point.

As the citizenry goes back to sleep after the election last November followed by the high stakes fiscal cliff negotiations in December, Obama's proposed cuts to Social Security and Medicare are flying under the radar. Here's the take from a post this morning on naked capitalism:

The only logical inference that can be drawn is that Obama remains committed to inflicting the “Grand Bargain” (really, the Grand Betrayal) on the Nation in his quest for a “legacy” and continues to believe that the Sequester provides him the essential leverage he feels he needs to coerce Senate progressives to adopt austerity, make deep cuts in vital social programs, and to begin to unravel the safety net. Obama’s newest budget offer includes cuts to the safety net and provides that 2/3 of the austerity inflicted would consist of spending cuts instead of tax increases. When that package is one’s starting position the end result of any deal will be far worse.

In any event, there is a clear answer to how to help our Nation. Both Parties should agree tomorrow to do a clean deal eliminating the Sequester without any conditions. By doing so, Obama would demonstrate that he had no desire to inflict the Grand Betrayal.

This is also Krugman's position: just repeal the sequester. But, according to today's frontpage story by Jonathan Weisman and Ashley Parker, the sequester is going forward, not so much for the reason stated by Republicans, that it is a strategy to bring Obama to the table willing to make cuts to Social Security and Medicare (because we know from the Stevenson story that Obama is already there); no, the sequester is going forward for purely political reasons. According to Weisman and Parker,

With so many rank-and-file Republicans adamant that they would rather see the cuts stand than raise any taxes, Speaker John A. Boehner finds himself in a bind. Three times this year — on the tax deal to resolve the fiscal cliff, on a measure to suspend the debt ceiling and on a package of Hurricane Sandy relief — he has let legislation pass the House against the votes of a majority of Republicans. In 2011, Republicans accepted caps on military spending as well. 

Each time, the speaker has promised to stand his ground on the next showdown with the president. That showdown comes this week. 

Representative Tom Cotton of Arkansas, an Iraq War veteran with combat experience and a rising Republican star, said that the speaker was in a “very tough position” in one-on-one negotiations with the president, and that the opportunity for a grand bargain was gone.

Republicans must feel as if they have lost the upper hand with Obama in the recent fiscal cliff and debt ceiling negotiations. Never mind the results of last November's election. But given Obama's willingness to sell the working class down the river in search of a grand bargain, I'd say the House GOP is doing all of us a favor.