Stuck with Obama

Do elections matter? This was the question that preoccupied me during the fiscal cliff standoff last December. Obama won a significant victory, certainly what would have been declared in prior decades a "mandate" election, yet for Republicans it was business as usual. The GOP ended up buckling a little, giving in on a tax increase for those earning above $400,000 a year which will end up raising $600 billion in revenue over 10 years. But now as Obama continues to chase after his Grand Bargain grumbling has begun in the Democratic caucus over the deal to avert the fiscal cliff. This from a story today by Richard Stevenson and John Harwood, Obama Seeks to Bridge Partisan Divide in Search of a Budget Deal:

The second-guessing extends to virtually every aspect of the deal: its failure to postpone the automatic budget cuts for more than two months, its failure to raise the federal debt limit and its yield of $600 billion in new tax revenue over 10 years out of $4 trillion of new taxes that would have taken effect had the Bush tax cuts been allowed to expire. 

Senator Amy Klobuchar, Democrat of Minnesota, said the White House should have negotiated after the election with the bipartisan group of senators that he is courting now, rather than resuming the talks with Speaker John A. Boehner that failed in 2011. In the agreement that concluded that 2011 standoff, said John D. Podesta, a former White House chief of staff for President Bill Clinton, the administration committed a “fundamental miscalculation” by believing Republican opposition to automatic Pentagon cuts would compel them to accept tax increases. 

Other Democratic critics say the president should have ratcheted up pressure on Republicans by allowing all the Bush-era tax cuts to expire, even at the risk of saddling middle-class families with tax increases and inflicting harm on the economy. 

“Thinking they’d have a second bite of the apple was a real mistake,” said Robert D. Reischauer, a former director of the Congressional Budget Office.

What Obama has put on the table now, in hopes of securing a big budget deal with Republicans, is Medicare and Social Security:

Mr. Obama has signaled a willingness to reduce cost-of-living increases for Social Security by using a less-generous measure of inflation. He has indicated openness to imposing means-testing on Medicare beneficiaries so that high-income retirees would pay more for their medical care, and he has put on the table $400 billion of cuts in Medicare over the next decade. 

Republicans say they are looking for more, including two elements they discussed with the White House during failed talks in 2011: raising the eligibility age for Medicare and cutting federal costs for Medicaid. 

White House officials said that those proposals were deeply flawed as a matter of policy and that they did not intend to submit any more offers until Republicans expressed some willingness to make tax revenue part of the equation. 

But Mr. Cantor raised an idea last month that had been endorsed by the Bowles-Simpson deficit-reduction commission: merging Medicare’s hospital and doctor coverage into one program in a way that could generate savings. Some Democrats also see that kind of proposal — in which Medicare is left fundamentally intact but is overhauled to become more efficient and which could potentially charge the affluent elderly more — as the basis for negotiation.

On the Counterpunch web site this past weekend in an article titled "The Grand Bargainer: Elections Have Consequences, Right?" Andrew Levine concludes that elections don't matter; that by now it should be clear to all those Liberals and Progressives who have supported Obama that he is not governing with their interests in mind. Case in point is entitlement cuts. Obama ran as the candidate who will protect Social Security and Medicare. Now he is negotiating to cut those programs. Levine calls for radical action without specifying what that means:

This is why elections hardly matter any more, why their consequences are superficial and cosmetic at best. 

It is not hard to imagine ways to pursue peace, abandon austerity, protect the environment, and restore the rule of law while leaving basic economic and political structures intact. Palliatives abound. 

But with capitalist power so overwhelming, even palliatives are unreachable in the usual way – through elections. 

Three decades ago, at the dawn of the neoliberal era, Margaret Thatcher famously declared: “there is no alternative.” She meant no alternative to the economic system that goes by her name and Ronald Reagan’s. She was wrong of course; there are alternatives, plenty of them. Because they are obvious, everyone knows what they are. 

But because capitalism has undermined democracy to such an extent that we cannot now get from here to there – indeed, from here to anywhere capitalist grandees don’t want to go — it is fast becoming true that the only solutions are radical ones.

But radical action rejecting the normal political process was tried recently. It was Occupy Wall Street. And, as Jeff Madrick writes in the march issue of Harper's, it was crushed by police action:

But it has become increasingly clear that OWS didn’t fizzle because its objectives were too muddled or its talk too abstract or its organization too chaotic. In fact, the movement was undone by a concerted government effort to undo it.

That's why so much of the Left is still with Obama. He's the only game in town. We'll see. If he folds and ends up agreeing to an increase in eligibility age for Medicare, I think there will be a huge ruckus in Democratic ranks and the abandonment of Obama will rapidly commence. For that reason, since it is still early in his second term, I don't think he will agree to an increase in eligibility age. A chained CPI, yes; he has already agreed to that (which is not good because it amounts to a benefit reduction). But for the time being we're stuck with Obama and the hope that he's not going to sell us down the river like Clinton did in his second term with the repeal of Glass-Steagall and his war on Yugoslavia.

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.