Barak Obama is the first Democratic president to advocate cutting Social Security benefits. Whatever happens next, this is a historic change of direction for his party and an ominous turning point for the American social/economic compact.
In the Bible—Book of Genesis, to be precise—Esau returns, exhausted and famished, from working in the fields, and sees his brother Jacob eating. He asks if he can share, and Jacob says yes—but as the price of his “mess of pottage,” he must give Jacob his birthright. He agrees, and thus is inaugurated the prosperity of the descendants of Jacob and the impoverishment of Esau’s.
This ancient tale is being repeated today in Washington, where the first months of the second Obama administration are shaping up as a historic disaster for American working people. It’s also a momentous turning point for the Democratic Party, now led by a business and professional elite convinced that to survive as a brand, the party must serve as executioner of the social contract that created that brand to begin with.
First, the Obama administration, and congressional Democrats, agreed to a deal to end the artificial “fiscal cliff” crisis that made the vast majority of the Bush tax cuts permanent—in fact, rescued them from imminent expiration. In return, they got a temporary extension of unemployment benefits, a two-month delay of sequestration, and extension of child care and tuition tax credits. All of which are quite nice in their own way, but small potatoes—nothing that Washington couldn’t easily scuttle at some point in the near future, just as it cast aside Obama’s signature anti-poverty measure, the Making Work pay tax credit, when that one became inconvenient.
The president, in other words, received a “mess of pottage” in return for surrendering something of inestimable value to the Republicans, something the GOP had been fighting for a decade to consummate. Crucially, only nine of the 77 members of the House Progressive Caucus voted against the bill, encouraging the White House that it could go further and making clear to voters from working households that their ability to hold their alleged champions in line is fading. The fiscal cliff drama served notice that less and less of an effective countervailing force exists to the Washington consensus, deepening the chasm that separates The Village from any meaningful connection with the 99%.
Now, it’s happening again, via the president’s budget. This time, the deal is for another $680 billion-some in revenues over 10 years by limiting tax breaks. This is calculated to please the deficit hawks by raising Obama’s 10-year deficit reduction total to $4.3 trillion, topping the $4 trillion that the center-right cargo cult has touted as its magic number. In return, the White House proposes, quite literally, to surrender the Democratic Party’s birthright—its stewardship of Social Security, the capstone of the New Deal and the foundation of working Americans’ party loyalty—what remains of it, that is.
By beginning the process of redefining Social Security downward, the Obama administration is taking the first major step toward dismantling the Democratic “brand”—its commitment, never perfect to begin with, to provide a social underpinning to American capitalism. For the vast majority of Americans, the “Democratic Party” label means less and less.
The president’s budget doesn’t even prescribe a 50/50 split between spending cuts and tax increases—it’s severely skewed toward spending cuts, and thus would worsen the cumulative effects of the last couple of years of Democratic budget concessions, rather than easing them. According to Dean Baker’s analysis at the Center for Economic and Policy Research, the hit that the typical retiree would take from the application of the chained CPI would amount to 3% of their benefits over time, or some 2% of their total income, which is about 70% accounted for by Social Security; couples making a cushy $500,000 a year or more, by contrast, will sacrifice only 0.6% of their after-tax income as a result of the fiscal cliff deal.
On balance, then, Obama is calling for a greater sacrifice from those who can least afford it than from those who’ve spent the last dozen years benefiting from a tax-advantage windfall that was not even written into law as permanent. This is not just unfair, it’s playing with human lives. As Digby helpfully points out,
Even for [middle-income seniors] still living mostly on Social Security, they are not living in luxury, they are in fact just making it. When groceries or utilities or out-of-pocket health care expenses spike, it hurts and hurts bad. I have been in the apartments of seniors when utility prices were going on one of their periodic jumps, have seen what they can afford to eat, have felt the cold in their apartments in the winter because they can’t heat their place. I know in my heart, because I have seen the evidence up close and personal, that for a lot of seniors the $500 a year they will have lost from chained CPI a few years from now if this cut goes into effect will result in more seniors dying of hypothermia or malnutrition.
Once again, a mess of pottage. In exchange for some token stimulus spending and tax hikes that could be easily reversed by the next Republican president, Obama is proposing to take the first, sacrificial stab at the goose that laid the Democrats’ golden egg. Put this in perspective: The New Deal and subsequent reforms during the Truman and Johnson administrations created the postwar American middle class through housing and family subsidies, retirement benefits, health care, veteran’s benefits, public education, and a multitude of other programs. Much of this grew directly out of the Social Security Act of 1935 and successive amendments to that original law.
So the importance of Obama’s proposal to change the formula used to calculate coast-of-living increases for Social Security, veterans’ benefits, and a host of other federal government programs, is both practical and symbolic. Because aside from its immediate ill effects on retirees and near-retirees, the president’s embrace of the chained CPI opens the door to further cuts. As Salon.com’s Blake Zeff reminds us,
The first cut to popular, essential programs is always the most difficult; once it’s been done, and that toe is in the water, there’s the concern that future reductions could be more easily achieved. That’s why the symbolism of a Democratic president attaching his name to – and owning – the cuts is so controversial and worrying for liberals. How hard would it be for Republicans to push future cuts through, when this is now a mainstream Democratic policy?
The chained CPI erodes the principle that Social Security should provide an adequate income for the elderly. From now on, this will be something not to be honored, but finessed. Even the “bump-up,” the administration’s still-to-be-fleshed-out proposal to make up for some of the benefits erosion for the oldest retirees, contributes to this troubling pattern, because it recasts part of Social Security as welfare—not social insurance, but an exception to the rule for a certain class of participants. Social Security has always been different from “welfare” because workers earn their benefits, which they receive according to a set formula. The chained CPI blurs this vital distinction.
The political nitty-gritty
Unlike our president and the Democratic center-right, the GOP, with its greater ideological cohesion and less muddled comprehension of the historical importance of the New Deal, understands perfectly the implications. As New York Times columnist Ross Douthat argued last fall,
All of the components of a sensible Social Security reform—means-testing for wealthier beneficiaries, changing the way benefits are adjusted for inflation, a slow increase in the retirement age—become easier if the program is treated as normal safety net spending rather than an untouchable entitlement with a dedicated funding stream.
Or, to quote an email that Pete Peterson’s deficit-hawk advocacy group, Fix the Debt, blasted out to its members on Monday, “Keeping ideas like ‘chained CPI’ on the table is key to moving towards larger entitlement reforms.”
The Republican leadership understand that cleansing government of the very concept of social insurance is vital to achieving their long-term vision of the State’s role in the economy. They also understand that the chained CPI is an important step in this direction, because it erodes the principle that Social Security should provide an adequate income for the elderly. From now on, this will be something not to be honored, but finessed.
But the GOP leaders also understand, correctly, that the chained CPI is only a small step toward their objective. A deal with the White House would make sense if it was combined with means-testing of Social Security and a hike in the retirement age. By itself, however, it doesn’t cut deep enough. They want legislation that aligns fully with what they believe is needed to phase Social Security out over the next few decades, and they want a Democratic administration as full partner in achieving it—in fact, to be out front. If not, they see no sense in sticking their necks out (they learned a lot from George W. Bush’s disastrous effort to lead the way in 2005, it seems).
Contrast this coherent political strategy with the Clinton and Obama administrations, with their chronic inability to understand their enemies—or even that they have enemies. Emboldened by their success in passing a deficit reduction bill in 1997 in partnership with Republican congressional leaders, the Clintonites, and especially economic advisor Gene Sperling, attempted to make a deal to “reform” Social Security the following year. When they finally released their plan in Clinton’s 1999 State of the Union address, they were surprised to find the GOP leadership denouncing it, along with all the Republican lawmakers they had been negotiating with for months.
The Obama administration has spent the better part of its time in office pursuing just such illusory “bipartisan” deals. First, it allowed Republican pseudo-negotiators to hang it out to dry when it was developing its health care reform plan in 2009-10. Fairly publicly, it is now hoping to peel off a few Republican senators to support its chained-CPI-for-tax-hikes deal. Once again, Gene Sperling is involved. Once again, the White House will fail—the GOP are far more disciplined than that. The Democrats will have exposed themselves to charges from Republicans in the 2014 mid-term elections that they want to cut Social Security without actually “saving” it.
This has already started to come true, as one Republican after another yesterday accused the president of, in the words of National Republican Congressional Committee head Greg Walden, “trying to balance this budget on the backs of seniors.” Shameless coming from the GOP, of course, but entirely predictable, since it worked for them in 2010, in the aftermath of Obamacare’s cuts to Medicare Advantage. The charges may well stick, because the administration has now made a formal proposal to cut Social Security—something it avoided in previous stages of its mating dance with John Boehner and company.
Pundits have offered a variety of explanations for why Obama is pursuing this course: He wants to neutralize Republicans’ fundamental opposition to Social Security and Medicare by offering what he regards as the least harmful of cuts to the programs, one that can be tagged as a technical correction. But it won’t work. Social Security’s opponents will keep raising the bar, as they have for over 30 years, redefining upward the hurdles the program has to meet to be considered healthy. This is simply the nature of this game, given that the Social Security debate has always been founded on the very squishy foundation of actuarial projections into the future.
Or perhaps Obama’s faking it—offering a compromise he knows the GOP won’t accept, so that they’re left looking like the side that let the sequester stay in place? That’s the view of the Washington Post’s redoubtable Ezra Klein:
For liberals, this is close to an ideal situation. The Republican Party’s brand continues to worsen. The Democratic president manages to look reasonable without ever actually signing a painful compromise into law. And Medicare and Social Security remain safe.
I disagree. First, Gene Sperling is a true believer in bipartisanship. Second, even Washington politics sometimes has to make concessions to reality, and the sequester is a very bad reality. For it to stay in place means, as the Washington Post’s Zachary Goldfarb accurately notes, that Obama’s capacity to propose new policy directions for the country is spent. The fiscal cliff deal and the sequester leave no room for early childhood education, infrastructure investment, or any of the other building-blocks-of-the-future about which the president likes to wax visionary. At best, the remainder of his term will be a carbon copy of the second Clinton administration, in which the Man from Hope successfully fought off annual Republican efforts to pass a massive tax cut—but otherwise was hamstrung domestically.
The Long View
My guess is that Obama miscalculated, misunderstood his opponents, and painted himself into the corner that will define the rest of his presidency. But in the end, the exact circumstances, his precise motivation, and how deliberate this all was, don’t matter very much. What will be remembered 10, 20, 30 years from now is that Obama played the key role in a process that extends back at least to the Carter administration, in which Democratic presidents and Republican lawmakers have collaborated to dismantle the economic structure of New Deal industrial America.
For progressives who want to end the three-decade political siege of Social Security and Medicare, expand them to meet the needs of a changing economy, and put government back in the business of breaking down racial, class, wealth, and gender barriers, the challenge is not to persuade Obama to be more progressive, or even to elect progressive candidates. It’s to reverse a long-term trend in government that goes back almost 40 years now and that has proceeded regardless of which party is in power.
And that’s likely to continue, thanks to the Republicans’ success at gerrymandering congressional voting districts following the 2010 election. That operation adjusted boundaries to lower Democrats’ chances of making a run at formerly contestable seats. Last year’s election actually produced a marginally more progressive House and Senate, bolstering the argument that Centrist Nation is a chimera—but that’s not the conclusion the Democratic leadership drew. The Democratic Congressional Campaign Committee, run by center-rightist Rep. Steve Israel, continues to follow the Rahm Emanuel formula of handpicking “problem solver” candidates with no ideological markings in the continuing effort to capture the amorphous “center” for the Democratic Party (one of the committee’s prize candidates this year is Sean Eldridge, who runs an investment fund and is married to Facebook billionaire Chris Hughes).
As for Social Security’s prospects in the more immediate future, Zeff tells us that “a key congressional source” says opposition to the chained CPI “will hold, if a vote ever came to the floor.” This may be true. But then again, the chained CPI would never come to the floor all by itself, only as part of a Grand Bargain strategically stuffed with goodies that progressives would have a hard time voting against it—the party’s next mess of pottage.
A more likely scenario is that no Grand Bargain of any sort will be voted on this year, since the GOP leadership—as opposed to the handful of habitual bargainers the White House covets—are unwilling to accept the chained CPI in place of a broader restructuring of Social Security. But for working Americans, and for progressive politicians whose position in the Democratic Party is becoming ever more tenuous, the harm has already been done by Obama’s acceptance of the change in concept. Zeff crisply outlines the difference between Democratic progressives and the Democratic center-right on issues like the chained CPI. For progressives,
“balance” must incorporate the broader circumstances of those impacted by the policy in question. If rich people have every advantage in life – wealth, tax breaks and loopholes, healthcare, food security, the ability to influence political campaigns, etc. – and less well-off folks are disadvantaged in all the same categories, then balance calls for a policy that helps to shift things in the other direction a bit. In other words, [the center right] sees balance as a political end (which, incidentally, can be easily manipulated by positioning and negotiating strategies) and the other [side] sees it as a policy imperative with real-world implications.
The latter position—the one that actually takes the real-world consequences of the chained CPI into account—has long been marginalized in Washington, and is being driven even further out of the alleged mainstream by Obama’s latest act of bipartisan wish fulfillment. The explanation, oddly enough, has little to do with Washington itself.
Why was it possible to pass the Social Security Act in the 1930s, when merely keeping Social Security from being whittled away to nothing is becoming harder and harder in the 2010s? What was different then? Principally, the existence of a political left that was actively engaged with the issue of retirement security. The Townsend movement for a guaranteed income for the over-65s, Huey Long’s Share Our Wealth movement, not to mention lively communist and socialist movements with grassroots followings, were coming up with their own ideas, making it far easier for Washington to see social insurance for what it was—a middle-of-the-road response to the demand for some form of collective support against the innate violence of capitalism.
If Social Security is going to be saved from the chained CPI and any number of other destructive gimmicks, the tool that does the job will not be lawmakers’ ability to forge creative compromises, but the power of our imaginations to conceive of something better—something that puts a scare into those lawmakers. As Che Guevara said, “Be reasonable. Demand the impossible.” Otherwise, all we’ll ever get is another mess of pottage.
Image by Hendrick ter Brugghen