A bit of fiscal filosophy before running up to NYC for meetings and TV tomorrow.
Rep Paul Ryan has described his budget as a “vision document.” A very dark vision, IMHO. But OK, I can see where instead of a more pragmatic set of ideas that might see the light of day, he’s laying out the sharply diminished government vision that he and Mitt Romney ran (and…um…lost on).
In this sense then, the President’s budget should perhaps be thought of as less visionary and more strategic. It’s a budget that offers both sides some of what they want and what they don’t want—a compromise package that, in more normal times, could find its way into a debate that could lead somewhere useful.
Where would that be? Away from fiscal cliffhangers every few months, away from years of mindless sequestration cuts, towards some near term jobs measures, some additional revenues, and a better budget path. For that, the cost would be the much touted cuts to Medicare and Social Security (chained CPI), a very high cost by many progressives’ estimation.
I agree, but a number of points to consider. First, assuming what we see for Medicare is much like what was in his last budget, those savings mostly come from delivery efficiencies that progressives should support, like letting Medicare use its market clout to bargain for lower drug prices. There will likely be higher premium costs for wealthier recipients. I’ll hold my fire here too until I see the income levels at which higher contributions kick in, but that doesn’t seem too odious either.
The chained CPI is, of course, a huge bone of contention. My colleague Bob Greenstein has an interesting post on this today, in which he offers a strategic (that word again) analysis wherein we accept what he acknowledges is a policy with clear drawbacks–“the chained CPI probably does not more accurately measure inflation for the elderly; in fact, it may well be less accurate”—in exchange for a) a benefit increase for those most vulnerable to the shortcomings of the new index, and b) a budget agreement that stabilizes the debt by balancing revenue increases with spending cuts, “one that replaces sequestration and includes substantial revenue from scaling back wasteful, inefficient, or low-priority tax deductions, exclusions, and other tax expenditures.”
So here’s the tradeoff, as Bob sees it:
Progressives who strongly dislike the chained CPI proposal should consider whether there is any chance that congressional Republicans will agree to raise revenues by curbing tax expenditures without some significant entitlement changes. And if (as I believe) there is no real chance, what’s preferable: the chained CPI with protections for the very old and the poor, or measures such as converting Medicare to premium support, raising the Medicare eligibility age to 67 and risking having some 65- and 66-year-olds go uninsured, and cutting Medicaid deeply and making ours more of a two-tier health care system based on income?
If, as Bob and I see it, those are the dynamics in play, then the President’s budget is a strategic offer to advance the debate, given its cramped and conservative parameters. He’s playing the hand he and his team believe they’ve been dealt, and they think they can maybe snag a few other, diverse players to join the hand. Meanwhile, Paul Ryan is sitting at an empty card table in the corner of the room cheered on by a few Tea Partiers, espousing a vision that a solid majority of the nation has rejected.
Many progressives disagree, however, and see a very different set of dynamics in play. In their view, we advance the causes of lasting retirement security, adequate revenue collection, and the protection of other social spending, without compromise, especially on social insurance. That may be right, but that path is not clear to me, or more importantly, to the President.
Again, I say with not a trace of snark, progressives who disagree with the tradeoffs for which the President is making a play may be right. I too have argued that I wouldn’t start out the negotiations where I hope to end them, especially not with this Congress. This “come on, guys, we’re all grown-ups here so let’s cut the crap and hammer out a deal” stuff doesn’t work with these folks.
But the better question, one I suspect we can all agree on, is how the heck did we get stuck within these “cramped and conservative parameters” and how do we get out?! There are no good paths forward on this budget debate (which is not the same as saying there are no good budgets, e.g., the CPC one). Obama’s trying to find one that helps in ways noted above, though it’s unlikely he’ll get very far with it.
So, in the words of the great philosopher Donny Rumsfeld, when you can’t solve a problem, make it a bigger problem. When it comes to good fiscal policy, we may well not be able to get there from here. So we need to start from somewhere else.
Remind me why it’s necessary to focus on the deficit at the moment. You’re playing on the Republican’s turf and can’t win. Shifting the conversation is the only hope.
How about proposing an increase in Social Security (perhaps by increasing the cap). This would be a hugely popular proposal (look at just about any poll on the subject) and would help in retaking the House in 2014.
If you retake the House, you can do something useful. If not, you’re no worse off than today.
Remember 2010, in which the Republicans hammered Democrats over cuts to Medicare, even though the cuts were on the provider side? For example, here’s an ad from the tea party radical who used it to beat Russ Feingold http://2.bp.blogspot.com/-WEg1zRcexeI/UWNcfkM4M_I/AAAAAAAAMLg/-JCJJESpRG4/s1600/medicare+flyer+1.png
Think how much worse it will be if the Republicans can point to real cuts, even if they are only proposed.
How far do you expect proposals that are strongly opposed by just about everyone, especially seniors who vote, combined with proposals that go against top income earners, to go with Republican legislators?
As a progressive who strongly opposed the chained CPI, I think the response to Bob’s position is simple: once Democrats help make cuts to Social Security – let’s say in exchange for new revenue – (a) those cuts will never be unwound and (b) as soon as the Republicans have the chance (it’s inevitable that sooner or later they’ll have majorities / presidency again) will ram through tax cuts that unwind all the revenue.
I think that is stunningly obvious.
How does cutting social security help the deficit? Do not SS payroll witholgings go into the SS trust fund if they are not needed to pay benefits?
I would love to see one of these DC-based policy experts who are willing to put Social Security benefits on the table for achieving other progressive goals explain:
(1) How, even though it is specified as a matter of law that financing for Social Security is entirely separate from the general fund, and that, as a matter of law, there is no such thing as the so-called “unified budget,” discussion of a method that reduces Social Security benefits belongs in any discussion of how to reduce the long-term Federal deficit. The advocates for chained-CPI as part of the negotiation — OK, as an end-point of the negotiation, as if that matters when it’s publicly being called “more accurate” in advance by key insiders — appear to see no need whatsoever to even acknowledge the fact that, as a matter of law, Social Security has nothing whatsoever to do with the Federal deficit. It’s all la-la-la, I can’t hear you. Even Dick Durbin and Nancy Pelosi go that way, thinking they can mollify people by saying on the one hand, real toughly, that Social Security has nothing to do with the deficit, and out of the other side of their mouths that chained-CPI really isn’t a cut in benefits even though it, well, cuts benefits. Democrats in Congress run the risk of paying a big price if they do not have the guts to break with the President on this — a price even bigger than the one they have already suffered by having a Democratic president tar the Democratic Party as the party that wants to cut your Social Security benefits.
(2) How it can be accepted that the chained-CPI is “more accurate” than the CPI when, in fact, there is no objective standard to which each measure may be subjected. Saying chained-CPI is more accurate is nothing but a value judgment as to what does or does not constitute a drop in the standard of living, and a value judgment with a heavily right-wing scent from its origins. Advocates ignore the fact that BLS has substitution rules for the CPI, too. They just happen not to have the bias built into the chained-CPI for allowing beneficiaries subject to a cost-of-living measurement to see their living standards erode over time. Eating chicken is not the same as eating beef. As some would say, not without a legitimate point, neither is eating catfood.
(3) How a progressive can claim it is somehow OK to subject ONLY seniors, disabled Americans and veterans to a cost-of-living measurement that is not the primary official measurement issued by the sole agency with the responsibility to measure changes in the cost of living, and is still at best an experimental and derivative measure that apparently was inserted into the agency’s work under political pressure during a Republican administration. Are we expecting defense contractors to accept the same change in the cost-of-living adjustment in their contracts? To ask the question is to answer it. How can it be anything but a monumental and historic cave-in by progressives to long-time right-wing pressure to treat seniors, the disabled and veterans with less respect than defense contractors?
When BLS makes an official change and adopts this chained-CPI as “the” CPI, then, sure, it should be on the table. At that point, it will, in fact, be the CPI and will apply across-the-board. Until then, nobody can claim to be a progressive we should trust and advocate use of this method only for the most vulnerable people.
>In this sense then, the President’s budget should perhaps be thought of as less visionary and more strategic.
“Less visionary and more strategic” is far more diplomatic than “cowardly triangulation”, which is how I’ve been describing it.
> I too have argued that I wouldn’t start out the negotiations where I hope to end them, especially not with this Congress.
This. One of the things that really bothers me about Obama is his apparent unwillingness to stick his neck out for anything. He always seems to be attempting to pre-negotiate in order to avoid conflict. Conflict avoidance seems to have a higher priority than the substance of whatever policy he’s putting forward. When it comes to opponents who pose a legitimate challenge, he shows no spine in dealing with them.
Roger Hodge had an essay in the Feb. 2010 issue of Harper’s Magazine, “The Mendacity of Hope”. At the time I thought it perhaps a bit too cynical but I think it’s turned out to be a pretty accurate assessment of his character.
Link = http://harpers.org/archive/2010/02/the-mendacity-of-hope/
Also, have I missed it or has there been a profound lack of discussion about the merits of eliminating the wage cap (with respect to paying Social Security taxes)?
See, for example, Nancy Folbre’s piece in the NY Times a few days ago re eliminating the wage cap – http://economix.blogs.nytimes.com/2013/04/08/the-peoples-choice-for-the-peoples-pension/
Right, let’s take something that has nothing whatsoever to do with the federal budget, deficit, or anything else and cut it so that a bunch of bomb throwers can continue to destroy the country.
Average monthly Social Security benefits are roughly $1,264 per month, $15,168 per year. This is just over what a mythical, full time minimum wage position would be for the year ($7.25x40x52= $15,080) Check your own damn CBPP information ( http://www.cbpp.org/cms/?fa=view&id=3261 )to see why Chained CPI is a bad idea.
I do wonder why folks who will probably NOT need Social Security seem to have this fixation on making sure the people who DO and WILL need it get less and less available to them when it is barely enough right now. Try to live a year paying all your bills – housing, heating and cooling, doctors’ visits, food, toiletries and cleaning supplies, gasoline, insurance on the amounts as they are then as prices rise, you limit the increase available to pay for these items and stay alive.
If it is so critical, raise the cap on earnings paying in. As I said in a blog post Saturday, IF YOU HAVE TO MAKE SPECIAL PROVISIONS FOR A CLASS OF PEOPLE, YOU ARE DOING IT WRONG! http://dakine01.blogspot.com/2013/04/a-bad-idea-is-bad-idea-no-matter-who.html
Why are we having problems? Because we are not talking about what an economy in an age of microprocessors, networks, vast telecom infrastructure, and breakthroughs in applied science actually looks like. In that economy, seniors with disposable income are a huge, huge economic asset. But you’d never have a clue about that from the chatter coming out of D.C., where this potential asset is viewed only as a ‘cost’.
As I said above, it’s still la-la-la I can’t hear you.
You can’t compete with the R’s on the vision platform. It may seem like a losing strategy but fudging the numbers is how they make their stuff look better than it is. So of course they are going to be better at the vision=thingy than Democrats. When you’re trying to escape reality, you have the most incentive to tell the best lies.
Democrats have to be the party of facts, of analysis, of hard-nosed realists who incorporate reality into their idealism. That’s why Obama’s insistence on trying to steer towards the R’s is backfiring. He can’t win trying to compromise with people who only think that everything supports their side. Obama stays where he is at ideologically, he’s a socialist. He moves towards the right, he is weak and responding to the people who know the most, as he should. Everything supports the paradigm, there is no conflict. That’s why, when they lose, they have no idea why it happened.
You can’t compromise with them when they win, you can’t explain it to them when they lose. You have to simply push past them, realize they can’t be dealt with, that they don’t want to be dealt with. Winning reinforces the paradigm, losing causes them to work harder to win. Nothing affects the paradigm. Obama is trying to deal with R’s on their home turf, the limited halls of political power. Subvert that power, bypass them and take it to the people directly. If you can’t affect the congress, affect the people who can affect the congress. You never win a fight by accepting the limits your enemy places on you.
So. to put things briefly the current strategy seems to be:
1. Set up a false dichotomy- the republicans are intransigent and will not agree to any tax revenue increases, so we have to offer them entitlement cuts.
Add some scaremongering about raising medicare eligibility ages.
2. Claim the chained CPI is bad but not all that bad; it is just a tiny benefit cut for seniors plus we get to raise taxes on a few rich people.
This is morally bankrupt. The “pain” of increasing taxes on a few rich people is not the same as starving financially vulnerable old people-yet this is an argument Obama has made in support of his budget.
Further, there has been no serious attempt to propose anything alternative on the part of the administration-no increases in the income cap for social security; no serious arguments for spending on jobs programs. Instead we have the stupidity of deficit hawks and debt, and a president trying to cut entitlements which are one of the few remaining protections for ordinary people.
Why are we treating social security like it has anything to do with the deficit. And why are we focusing on the deficit. It seems as though republicans create a tar pit and the democrats are more than willing to jump face forward into it. Slapping the hand of the very people who supported you is not the way to win a 2014 election, oh right Obama doesn’t have to run again. He left the dems in the lurch in 2010 why should this be any different…