April 7, 2013 |
There is no more pretense possible. As we’ve warned for some
time, Obama is eager to put a notch on his belt by being the President
that rolled back the New Deal programs that helped create broad-based
middle-class prosperity and dignity. He’s cast himself as an adult
inflicting discipline on profligate Americans. But in reality, the
profligacy was most concentrated among elite financiers who used
leverage on leverage vehicles to stoke liquidity that led to worldwide
underpricing of risk. They paid themselves record bonuses in the years
immediately preceding the crisis, and then in a grotesque display of
ingratitude, did so again in 2009, able to do so only thanks to massive
taxpayer support, alphabet-soup special borrowing programs, and the tax
on savers known as ZIRP. And the direct result of their looting exercise
that produced the crisis was the explosion in government deficits, due
to a collapse in tax revenues and a rise in payments under
countercyclical programs such as unemployment insurance and food stamps.
But
are the real perps the object of Obama’s disciplinary impulses? No. He
seems spectacularly unwilling to take on anyone even remotely
approaching his size (as if a President should be cowed by senior banker
bullies like Jamie Dimon). The President’s failure to reprimand the
financial CEOs who dissed him by refusing to attend his address on the
first year anniversary of Lehman was a tacit acknowledgement that they
were really in the driver’s seat.
Keep in mind what is happening here. We are not in the realm of Obama
kayfabe,
where he pretends that those big bad Republicans forced him to do what
he wanted to do all along. This is Obama’s budget offer, not the result
of pretend hard fought battles over positions that are at most
10 degrees apart.
As the Grey Lady describes it:
President
Obama next week will take the political risk of formally proposing cuts
to Social Security and Medicare in his annual budget in an effort to
demonstrate his willingness to compromise with Republicans and revive
prospects for a long-term deficit-reduction deal, administration
officials say…
Besides the tax increases that most Republicans
continue to oppose, Mr. Obama’s budget will propose a new inflation
formula that would have the effect of reducing cost-of-living payments
for Social Security benefits, though with financial protections for
low-income and very old beneficiaries, administration officials said.
The idea, known as chained C.P.I., has infuriated some Democrats and
advocacy groups to Mr. Obama’s left, and they have already mobilized in
opposition…..
Mr. Obama will propose other spending and tax credit
initiatives, including aid for states to make free prekindergarten
education available nationwide — a priority outlined in his State of the
Union address in February. He will propose to pay for it by raising
federal taxes on cigarettes and other tobacco products.
I
assume Obama’s flacks understand full well what an extreme porcine
maquillage exercise “in an effort to demonstrate his willingness to
compromise” is. We now have the absurd spectacle of Paul Ryan’s budget
being to the left of Obama’s on the issue of Social
Security and Medicare. If the Republicans have an iota of sense, they’ll
take full advantage of the weapon Obama has handed them. Every poll
ever done over the last 50 years shows substantial majorities favoring
continuing and increasing Social Security and Medicare provisions, and
either increasing taxes or cutting other spending to do so.
And Obama will pay for kiddie photo ops by increasing regressive taxes.
Charming.
If
it is any consolation, the chattering classes are ripshit. The article
went up at the Times after 12:30 AM. By the time I saw it, about an hour
later, it had 48 comments. Of them, 46 were disapproving, ranging from
resigned to ripshit. A few examples:
J Wolfe: Keep the
stupid stuff but get rid of things people really need. Free pre-k
schooling (ie., free daycare) but toss retirees (ie, boomers) under the
bus. Nice. Does this president have any clue at all how to lead and
manage anything more than a street rally? He is one of the most
clueless, inept and unqualified presidents ever. I don’t see any
cutbacks in his lavish 1% lifestyle even though people can barely afford
to buy food and gas these days. Pathetic.
kamilyon: I am outraged: We don’t need a deficit reduction deal at all!!!
We
need a strong economy through jobs, jobs, jobs! And reducing wealth
inequality! And providing strong financial foundations for our people
through safety-net programs so that we can be healthy, provide for our
children, and take business risks, all while knowing we can survive with
dignity into our old age!!!
Why did you even run as a democrat?
Thom:
All democrats should be livid that President Obama is the one to
propose the beginning of the end of important social programs such
as Social Security and Medicare.
This is yet another example of
Obama saying one thing and doing the opposite – Gitmo, transparency,
saving the middle class; now Social Security and Medicare.
Shame
on you President Obama, once again you betray the ideals and hard work
of the democratic party and the needs of the vast majority of Americans.
There was a lonely true believer:
HB: I don’t like these cuts, but I trust President Obama.
Maybe
he’s making this compromise because he thinks it’s better for ordinary
Americans on net, or maybe he’s bluffing as part of a political strategy
to box in the other side. Either way, I won’t pretend to know better.
He understands the issues, he understands the politics, and he cares about ordinary families. I trust my president.
And
the other approving comment was from someone taking the realist line.
The thumbs ups on the comments so far were consistent: lots of approval
from the readership for the critics, no affirmation for the lonely Obama
stalwarts.
But Obama wants his legacy and the public be damned.
And Bill Clinton proves that being a front person for neoliberalism is a
very lucrative post-Presidential line of work.
So the question is
who is going to join Obama in this wildly elite-serving budget? Will
Congresscritters fall in line with what big donors want, or will they be
chastened enough to remember the 2010 midterms, where the Obama-aligned
Blue Dog Democrats were routed, but the more liberal Dems for the most
part survived? Obama has never been very good about taking care of
anyone but Obama, and Jeff Connaughton’s book The Payoff made clear that
goes double for Biden.
In other words, the battle to get Obama’s
fondly-desired Social Security cuts passed means persuading legislators
to take a memorable vote that their constituents are likely to hold
against them. Obama, as a lame duck, has fewer levers to pull than he
once did. So this will be a test of the 11 dimensional chess view of
Obama. Does he have the authority and bargaining skills to pull this one
off, or will he beat a retreat and need to pretend it was a victory?
To
be honest, I’ve never bought the 11 dimensional chess palaver. My wee
theory is that Obama has a picture in his closet. In Oscar Wilde’s
story, Dorian Gray sells his soul so that his portrait will age while he
remains the beauty of the original image. Gray becomes increasingly
debauched and his picture becomes more grotesque. Even an effort to
reform makes the picture more frightful since Gray took up the idea only
to see if it might reverse the uglification of his painting. Grey stabs
the painting. His corpse is so withered and aged that it barely
identifiable, but his picture has reverted to its former beauty.
My
pet construct is that Obama has a picture too, but it’s a lucky
paining, not a beauty painting. It makes Obama look like a winner, so
Obama wins. His bad luck goes into that portrait in his closet. But I’m
not sure he sold his soul (maybe it was just in indentured servitude)
since it does not seem to be working so well of late. Obama had a
reversal of his characteristic good fortune when the Supreme Court
declared recess appointments to be invalid, which is a serious
complication for him.
This “have old people die faster” plan will
be contested. The normally complacent public is unlikely to sit by
quietly and have its ox gored. Even the Times is not trying to soft
pedal what is going on; it’s not using the anodyne language of “chained
CPI” but “cutback” and in the headline, no less. Obama may still pull
this off, but this will be his most uphill battle to date, and the
second-term timing does not favor him. And we can only hope that any
magic on his side is ebbing as well.
Read more at
http://www.nakedcapitalism.com/2013/04/now-its-official-obama-sells-catfood-futures-um-social-security-and-medicare-cuts.html#kkazAiqASe40w3m5.99
Yves Smith is the founder of
Naked Capitalism and the author of 'ECONned: How Unenlightened Self
Interest Undermined Democracy and Corrupted Capitalism.'
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