“Budgets are moral documents,” Martin Luther King once said. As part of the fiscal cliff deal, budget talks were pushed back to March. The other shoe dropped on Wednesday as President Obama released his proposed 2014 budget. What stories does it tell?
For one, it shows beyond a reasonable doubt that Obama is actually negotiating with Democrats – and he’s really good at it. Last week, the administration leaked news of unprecedented cuts to Medicare and Social Security. For the first time since Obama’s election, prominent Democrats haven’t been shy about their outrage. As MoveOn executive director Anna Galland put it, “Millions of MoveOn members did not work night and day to put President Obama into office so that he could propose policies that would hurt some of our most vulnerable people.” It’s funny she should say that, because as I and others have been pointing out for some time, that’s exactly what they did.
There’s simply no rational way to blame this so-called Grand Bargain on Republicans, and there are a few reasons why that is. One is that Obama himself has said over and over that he wants to cut “entitlements”, and stacked his debt commission with deficit hawks to make sure it would do just that. It should also go without saying that this proposal isn’t the end result of some long and grueling deadlock. This is the administration’s opening bid. Suppose these massive cuts – $100 billion to Social Security, $370 billion to Medicare, $19 billion to Medicaid – aren’t something Obama wants to do, but is willing to “concede” to Republicans. Why on earth would he open negotiations by offering them up? And by what perversion of liberalism is raising taxes on the rich a reasonable trade for cuts to the very social programs that rich people’s taxes are supposed to finance?
Another obvious reason why the cuts aren’t a “concession” is that Republicans didn’t ask for them. Even Paul Ryan’s budget, decried as “far-right” Social Darwinism during the election, didn’t cut Social Security. It didn’t make a single cut to Medicare beyond the ones in the President’s health care law. Aren’t these cuts exactly what Democrats said would happen if we didn’t vote for Obama? I’m sure Republicans love this part of the budget, but they’re in no position to negotiate for it. And not just because of the election. After all, President Bush tried to privatize Medicare and Social Security and failed when he met with huge backlash. It turns out that broad majorities of the voting public (including majorities of self-identified Republicans) are against shrinking or privatizing those programs. Like fracking and deportations, these cuts are an Obama policy.
There’s only one political reason Obama had to make this offer: The corporate class has been itching for decades to dismantle our already limited “social safety net”. We now call the progressive reforms of the 20th century (known to the rest of the world as the welfare state) the New Deal and the Great Society. Passed by the Democratic administrations of FDR and LBJ under intense pressure from labor and the left, they gave us Social Security, Medicare, and Medicaid (plus unemployment benefits and millions of jobs). As economist Robert Pollin explains, neoliberal policies like austerity and union-busting ”permanently shift the balance of power in favor of the wealthy”: rising productivity, low wages, high unemployment, and no bargaining power for workers.
The neoliberal turn began under Nixon and hit its stride during the Reagan administration, but the first President who managed to gut the safety net was Clinton. One of many Republican policies Clinton co-opted and embraced, welfare reform has been a disaster. Welfare now reaches fewer and fewer of the people who need it most, and gives them less and less. But because the media and both parties cast Clinton, and now Obama, as “liberals”, Democrats have been able to advance the right’s agenda in ways Republicans could only dream of. Glen Ford was right when he said that elections aren’t about who’s “less evil”, but who is the more effective evil. After the catastrophic Bush years, the Obama personality cult is just what the elite ordered.
But are these cuts really so bad? Aren’t these programs unsustainable, and a major cause of the deficit? No, in fact, they aren’t, and neither party seriously believes that. Even Reagan said in 1984 that “Social Security has nothing to do with the deficit.” There is no Social Security “crisis”. As for health care, economist Dean Baker wrote on Al Jazeera that “[m]ost of the projected rise in the cost of these programmes comes from the projection that rising per person health care costs will drive up the cost of Medicare and Medicaid, not the ageing of the population.”
The answer is to fix our health care system. Negotiating drug prices with pharmaceuticals is a start. If our health care system were more like that of every other industrialized country, our projections would show a surplus. And, by the way, the only cause of the sharp increase in the deficit was the Wall Street crash of 2008 and the Great Recession.
The cut to Social Security is called the “chained CPI”. Since Social Security benefits rise with inflation, the Consumer Price Index measures the cost of living for recipients. The “chained” CPI is a deliberate underestimate that will shrink the program by 3% at a time when almost 70% of seniors rely on it for at least half of their income. The Medicare cuts are split between increases in out-of-pocket costs for seniors and payments from providers. The expansion of means-testing ensures Medicare will be subject to future cuts by making it more of an anti-poverty program, like Medicaid.
Liberals, if they’re really genuine, are right to be furious. However, to treat the Grand Bargain as a betrayal is to miss the point. Democrats have bent over backwards to be given their due as the party of Wall Street and austerity. Their image as a moderate party allows them to get away with an assault on the welfare state that will only become more extreme. Obama is now the first President in history to cut Social Security, and the floodgates have been opened. This also helps Republicans, by the way, by forever marking Democrats as the party that began to chip away at these cherished social programs.
The President is not on our side. Nancy Pelosi is not on our side. Democrats’ habitual “concessions” to Republicans are just deals among friends, and our approach to them has to reflect that. We should, of course, make demands of Obama – but not as one of us.