Faustian Bargain

Last time we heard talk of a Grand Bargain, it was President Obama’s idea of a solution to an actual problem. The crazy party, rebelling against Speaker John Boehner, held the entire nation hostage over raising the debt limit.

Let’s give Obama the benefit of the doubt and assume that he thought a Grand Bargain would solve that problem for that time and the future, and that cutting spending in the face of massive unemployment and a shaky economy was a good idea. After all, he was advised by the great geniuses of the day, Tim Geithner, Larry Summers, Jack Lew and other disciples of the leprous Robert Rubin.

It turned out that Speaker Boehner couldn’t deliver the votes from the crazy party, and Obama had to settle for Grand Bargain I, The Sequestration. It means cutting defense spending and domestic spending, but not Social Security, Medicare or Medicaid. And it means raising taxes. Good. Obama gets the tax hikes he wants. And he seems to think these spending cuts are a good idea. And if they aren’t, just change the law. So what’s the basis for bargaining?

Well, the Sequestration has morphed into the Ewok of Terror, the Fiscal Cliff, thanks to the fools in the Village, whose last contact with reality dissolved during the Clinton Administration. I’m not that fond of the Sequestration, but after the election, it looks pretty good. And with this crowd of generals in rut, it really looks even better.

So why is there a need to bargain? Why should Obama agree to cut Social Security, Medicare and Medicaid? Why do we need Grand Bargain II, Revenge on the Old? What’s in it for the people who just elected Obama and the Democrats? Nothing.

Let’s be clear here. Obama claims that his goal is to increase taxes on the richest Americans. He swears up and down that he will not waver in this crucial cause. So why is he trying to make a deal? Everyone, including Speaker John Boehner and his crazy party, knows that taxes will go up if nothing happens. Then the crazy party has to explain why it’s better for taxes to go up on everybody than just the hyper-rich. That won’t happen, and if it does, the crazy party will seal its doom, which should suit Democrats just fine.

So why does Obama think he has to offer anything to get the outcome that he says he wants? There is no need for what Obama calls “Shared Sacrifice”. Does Obama think it’s a sacrifice by the hyper-rich to pay more taxes? It isn’t. And if this were a morality play I’d point out that increasing taxes on the villains who caused the Lesser Depression would settle out a lot of bad Karma. But it isn’t that either. As an economic matter, those who can afford to pay are the best source of funds to pay down the deficit. Taxing the rich does the least damage.

But it’s worse than that. If he agrees to any reduction in Social Insurance programs, he will force younger people to save more than they already are. That’s bad for the overall economy right now. If he follows the Simpson-Bowles model, the average person will have to save $122.65 per month, according to my calculations. My calculation assumes that your savings earn 3% interest per year. That won’t happen for the next several years, so the number is low.

But wait, that isn’t all. The latest brilliant idea is to raise Medicare eligibility to 67. That means you have to pay for two additional years of private insurance at exorbitant prices (and massive increases in income for the private health insurance companies Obama loves so much). So you need either to keep working for an additional two years, or save enough to cover five digit premiums, not to mention the FICA and Medicare taxes you pay on any income you earn. Or you could just die in the street.

That’s what Obama means by shared sacrifice. You sacrifice. The rich continue share in the proceeds.

This isn’t a bargain. A bargain is when both sides benefit. Here, one group of Americans, the group that just handed Obama and the Democrats a huge victory, is screwed into the ground. The other, consisting of worthless politicians and plutocrats, gets a huge victory.

I don’t even understand why it counts as a victory for rich people. Are they really such jerks they think we should cut retirement benefits for old people because the hyper-rich have to pay more taxes? Well, they probably are. But it doesn’t have to be that way. It wouldn’t be that way if Obama and the Democrats didn’t agree that it should happen.

The reality is this. Obama can’t just make himself beat these bastards into the ground. He can’t force himself to be a real Democrat like Lyndon Johnson or FDR, and stomp on their faces when they are down. He wants to give them something in exchange for higher taxes. But he doesn’t have anything to give the rich or to the crazy party. So he’s going to give them your Social Security and Medicare and Medicaid.