Friday, February 21, 2014

Obama Has The Sense To Dump a Really DUMB Idea!

Above Obama discusses a possible "Grand Bargain" with John Boehner in 2011, which would have included the "chained CPI".

The Populist Left can now rejoice after the news has been released that  President Obama's forthcoming budget plan will not include a proposal to cut cost of living expenses from Social security, the dread "Chained CPI". Of course, this was always a dumb idea. Considering Social Security is a legacy of perhaps the most venerable Democrat, and serious cuts to it would harm seniors, the whole thing was a non-winner for Obama and the Dems and likely would have cost them both houses of congress in this year's mid-terms, as opposed to just the House.

Why would a Democratic President propose such nonsense at the outset anyway, when there was no need for it?  One plausible reason was because he wanted to act in "good faith" with a "Debt Commission" he'd appointed, headed by Alan B. Simpson and Ernest Bowles. By at least offering up cuts to Social Security he'd show he was acting in earnest with the Debt Commission, i.e. that he really wanted to do something about the deficits that the Reeps were endlessly squawking about.

In this manner, his aim was to strike a "Grand Bargain" with the Repukes which would have eliminated nearly $3.7 trillion in deficits over ten years. Never mind that a) the Reeps had generated more than 60 percent of the deficits from their unpaid for wars and tax cuts, and b) the same deficit savings could have been obtained relatively painlessly by simply not extending the Bush tax cuts for anyone, back in 2011. (A solution proposed by assorted writers, e.g. Clive Cook, Martin Wolf  in The Financial Times, and by many Left populists. But alas, the Bush tax cuts for the middle class proved too tempting an apple to exploit by the Dems, for the upcoming 2012 election.)

Since then, many Neoliberal mouthpieces (e.g. Robert Samuelson, Bob Woodward, Fareed Zakaria, Joe Klein etc.) believed the best option was to reach a big fiscal accord, built up from the baseline of higher taxes on rich people, from which Obama would agree to some entitlement cuts, Republicans would agree to close some tax loopholes, and the parties could put sequestration and budget brinkmanship behind them for years.  Obama seemed to agree with this, although again, no part of Social Security was responsible for the deficits, and higher taxes only on the rich would almost ensure having to try to gouge seniors with "entitlement cuts.'

Thus the penultimate stage led to the proposed 2014 budget, as dozens of liberal groups mounted a campaign to oppose any renewal of the Chained CPI. This included online petitions, as well as a full press mail campaign launched by the National Committee to Preserve Social Security and Medicare.  One of the White House’s most poorly kept secrets concerns Obama’s economic advisers - who have supported Chained CPI on the merits, or believed it to be the least-bad benefit cut Obama could offer Republicans.  But why support it at all, when the costs against Democrats in elections would be severe, and it was REEPs that ran up most of the deficits?  To many on the Populist Left this weasly sort of move imitated coughing up lunch money to the school bully before he even demanded it.

It showed political cowardice, and also contempt for the people that helped put Obama back in office in the 2012 election.   Hence, we who opposed it were pleased that Obama has decided to leave it out from his budget proposals to be announced in 2 weeks.  We were also quite aware there was little need to even keep it on the table given that deficits have plummeted from sequestration, and an additional $1 trillion in deficits can easily be avoided by the simple expedient of pulling out all U.S. troops from Afghanistan at the end of this year (and not leaving  7,000- 10,000 there until 2024, a foolish move if ever there was one, given nothing will stop Afghanistan from falling back into Taliban hands -- no matter how long we remain. And Karzai doesn't want us there anyway!)

The spin, of course, is that Obama pulled back from the brink because the Republicans offered nothing in return.  According to a New York Times report from yesterday:

"White House officials said on Thursday that since Republicans in Congress have shown no willingness to meet the president’s offer on social programs by closing loopholes for corporations and wealthy Americans, the proposed budget for the 2015 fiscal year will not assume a path to an agreement that no longer appears to exist."

So be it. We can live with it.   The main thing is that Obama has avoided what would have been a whopper of a mistake, not only to Democrats up for election, but to his own legacy. Let us also hope the idea has finally been put to rest- like a vampire that's had a final stake driven through its heart.

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