The articles about deficit reduction talks from the NYT and the WaPo. The NYT – Obama to Push for Wider Deal With G.O.P. on Deficit Cuts
The president’s renewed efforts follow what knowledgeable officials said was an overture from Mr. Boehner, who met secretly with Mr. Obama last weekend, to consider as much as $1 trillion in unspecified new revenues as part of an overhaul of tax laws in exchange for an agreement that made substantial spending cuts, including in such social programs as Medicare and Medicaid and Social Security — programs that had been off the table.
It is the idea of cuts to Social Security and Medicare that Democratic bloggers and their commenters are most concerned about. Certainly cutting benefits to Social Security to those within 20 years of retirement might well be considered theft. Social Security is popularly thought of as a kind of retirement program. It is not. It is an insurance program. FDR and New Deal Democrats, as well as some Republicans at the time saw the kind of tail spin the economy could take. These tail spins have become a regular feature of the economy. As much as we all like free markets economies they are badly flawed. They are open to manipulation to the point of failure. Government officials who are supposed to enforce the regulations which protect average Americans from the greed and poor judgement of the too big to fail financial institutions – as the Bush administration showed – frequently fail to do their job. Those officials and Wall Street do not pay the price for financial negligence, average Americans do. Thus we have at least a little bit of a safety net. The Right and many libertarians have always thought these protections were a form of communism. So if they can weaken the safety net in any way they inevitably start to drool at the prospects. Democrats and most independents are aware that any erosion of that very thin safety net – in comparison to countries such as Germany and Sweden – is a very real threat to the average American’s ability to have the minimum necessities to live with dignity during our senior years. So across the net a lot of suspicious, anger and disappointment. Before I get to more about that, let’s go to the WaPo article covering the budget talks, In debt talks, Obama offers Social Security cuts
As part of his pitch, Obama is proposing significant reductions in Medicare spending and for the first time is offering to tackle the rising cost of Social Security, according to people in both parties with knowledge of the proposal. The move marks a major shift for the White House and could present a direct challenge to Democratic lawmakers who have vowed to protect health and retirement benefits from the assault on government spending.
“Obviously, there will be some Democrats who don’t believe we need to do entitlement reform. But there seems to be some hunger to do something of some significance,” said a Democratic official familiar with the administration’s thinking. “These moments come along at most once a decade. And it would be a real mistake if we let it pass us by.”
Rather than roughly $2 trillion in savings, the White House is now seeking a plan that would slash more than $4 trillion from annual budget deficits over the next decade, stabilize borrowing, and defuse the biggest budgetary time bombs that are set to explode as the cost of health care rises and the nation’s population ages.
That would represent a major legislative achievement, but it would also put Obama and GOP leaders at odds with major factions of their own parties. While Democrats would be asked to cut social-safety-net programs, Republicans would be asked to raise taxes, perhaps by letting tax breaks for the nation’s wealthiest households expire on schedule at the end of next year.
About the frustration and anger. Steve Benen has a little more of an insider track on these things and here is his opinion, Welcome to the Grand Bargain
Up until now, the projected goal has been a deal that would reduce the debt by (roughly) $2.4 trillion over (roughly) 10 years. But President Obama, who spoke Tuesday about “a unique opportunity to do something big,” apparently intends to go even further, eyeing a $4 trillion deal.
[ ]…To state what’s painfully obvious, the details mean everything. We don’t know what kind of revenue, if any, Republicans would agree to, and we don’t know what kind of entitlement cuts the president is prepared to accept. There’s apparently some talk about means testing Medicare, but it’s hard to say whether that’s just scuttlebutt.
To be sure, if this is the deal that’s taking shape, it would serve as a stunning development, but at this point, I’d recommend caution and patience. Indeed, if I were a betting man, I’d say the most likely scenario is that these leaks are coming from the White House with the intention of making Republicans look even worse if the talks break down. “Democrats offered the GOP everything,” the argument will go, “and Republicans still said no.”
I’m in no mood to take up for President Obama so this is not a defense of him. Even without touching Social Security, Medicaid and Medicare the deal he is offering is far Right supply-side economics that literally make Reagan, Bush 41 and Bush 43 look like economic liberals. Social Security is in good shape until about mid-century. The Bush tax cuts alone equal the projected short-fall Social Security might have down the road. If Obama’s proposal – we’re lacking details – for cuts to Social Security are by way of adjusting the inflation index that is tied to increases in Social Security payments that would not be the end of the world. There is some suspicion that is what he is offering. Then there is Medicare. Political junkies are already aware that a trail balloon has been floated several times over the last year in which Medicare eligibility and/or payments are means tested. In other words wealthier recipients would pay more out of pocket. Again, this would not be cause for panic or feeling betrayed. When, in my opinion should Democrats start to feel betrayed? When and if the Bush tax cuts are taken off the table once again for yet another extension. That is not to say this would not be a good time to contact your representatives and Senators about protecting entitlements and urging the Bush tax cuts be allowed to expire on schedule in 2012. These leaks are a regular feature of poltics. They are frequently used to make one party look like it is fighting for its base – Republicans are obviously doing that with their no compromises posture. It would be a clever bit of political Jiu-Jitsu for President Obama to take that venality and intransigence and use it to his advantage. If Democrats are willing to put programs on the table which are sacrosanct, than Republicans are forced to counter. Republicans wanted $2 trillion in cuts. Obama is offering $4 trillion. If we’re playing the RPG game called Spending Cuts and Compromise, who looks like the reasonable adult today. As long as we’re playing let’s look at long term straegy and payoffs. President Obama and Democrats make those acceptable if imperfect cuts to Medicare and Social Security, plus get what could be hundreds of billions in revenue. Then you’re looking at a Democratic majority once again in the House and the Senate. That sets us up for four years of reasonable budget tweaks along with the expiration of the Bush tax cuts ( still supported by a solid majority of voters). Before I leave off and sound too optimistic, the Bush cuts are also said to be on the table. That makes for a good sound bite but if Obama is serious, he and Democrats are toast, What Obama Can Give Away, And What He Can’t
I’m not freaking out, because this is a hazy description of a possible element of fluid negotiations. But I can’t emphasize strongly enough that Obama cannot agree to anything that locks in any part of the Bush tax cuts. To do so is to abandon the only leverage he could obtain and guarantee either the starvation of government or continuing massive deficits. If Obama wins election, he needs the ability to use the GOP’s opposition to any middle class tax cut extension without an extension for the rich as leverage to let Republicans kill the whole thing for him. And if he loses reelection, then the Republican who beats him will just reinstate the tax cuts. Either way, negotiating a partial end to the Bush tax cuts harms Obama. It’s the red line.
Despite Obama’s debt ceiling blundering, even a budget deal heavily tilted toward spending cuts could be justified if it is the first step of a larger plan. The plan would be to first cut a deficit deal that eliminates the Republican threat to torpedo the economy and establishes his centrist bona fides, which would help him win reelection, after which he’d have full leverage to face down the Republicans on the tax cuts.
I think Jonathan Chait strikes just the right balance between hold on and hope for the best but realize the worse could happen.
While they may seem and act like emotionless robotrons at times the inhabitants of Wingnuttia are all about feelings when it comes to many, if not most of their arguments. After all greed, decadence, venality, arrogance and contempt for the suffering of others are feelings in addition to be acts. Conservatism is foremost based on those qualities, not the elegant theories of democracy and republicanism put forth by great thinkers such Jefferson, Hamilton, John Locke and Thomas Paine. After every Obama speech Rethuglicans spew forth the usual he didn’t do enough to project rabid nationalism, he did not sell American exceptional-ism hard enough and so forth. So it goes with the economy and “confidence” game, Did Obama kill the confidence fairy? Employers aren’t hiring, says the GOP, because big deficits breed “uncertainty.” But who is to blame for that?
So — just cut the deficit, and along will come the confidence fairy, waving her wand to usher in a magical “expansionary fiscal contraction.” A little (or a lot) of austerity, and all will be well.
One almost never hears this theory get much airtime when Republican presidents are busting budget surpluses and running up big deficits. Back when George Bush was cutting taxes, there wasn’t a peep from the business community or Republican legislators warning about the dire impact that future deficits would have on business confidence. Quite the opposite — as Dick Cheney so famously said: “deficits don’t matter.”
[ ]… Have we forgotten that just last December, Republican legislators overwhelmingly approved a package of tax cut extensions and brand new tax cuts that immediately made the nation’s deficit larger? Is there anything that could possibly be more psychologically debilitating to our national sense of self-confidence than the idea that our government might willingly fail to raise the debt ceiling and plunge our nation into utterly uncertain fiscal waters? President Obama has put on the table a budget deal sacrificing so many core Democratic priorities that a large swathe of his own party feels betrayed — and Republicans still won’t agree to it. That, surely, is something that many Americans find quite nerve-racking.
[ ]…The longer you look at this argument the nuttier it gets. As a percentage of GDP, federal taxes are lower now than they’ve been in 60 years. As percentage of personal income, federal, state and local taxes combined are also at a 60-year-low. Businesses should be shouting hallelujah, investing their money right and left with abandon, and going on wild hiring sprees because this is as good as it is going to get. Republican success at bringing taxes down so low has guaranteed that taxes must rise in the future. There’s nothing uncertain about that.
Demand creates jobs. If people do not have jobs or they are afraid they will be laid off any day they do not create demand. Gives them jobs, give them some economic security and average Americans will rescue the economy. Republicans really do think if you give billionaires even more money they will let some of the crumbs trickle down. That was the economy of southern plantation owners and 18th century European despots. Hardly the egalitarian ideals on which the U.S. was founded.