My Offer Reflects the Fact That Elections Have Consequences

Interesting — after re-election we have a very different Obama that was at least formally willing to give away the store in 2011:

Treasury Secretary Timothy F. Geithner presented the House speaker, John A. Boehner, a detailed proposal on Thursday to avert the year-end fiscal crisis with $1.6 trillion in tax increases over 10 years, $50 billion in immediate stimulus spending, home mortgage refinancing and a permanent end to Congressional control over statutory borrowing limits.

The proposal, loaded with Democratic priorities and short on detailed spending cuts, met strong Republican resistance. In exchange for locking in the $1.6 trillion in added revenues, President Obama embraced the goal of finding $400 billion in savings from Medicare and other social programs to be worked out next year, with no guarantees.

He did propose some upfront cuts in programs like farm price supports, but did not specify an amount or any details. And senior Republican aides familiar with the offer said those initial spending cuts might be outweighed by spending increases, including at least $50 billion in infrastructure spending, mortgage relief, an extension of unemployment insurance and a deferral of automatic cuts to physician reimbursements under Medicare.

This is more like it. Obviously, nothing like this has any chance of being enacted, and nor will it make House Republicans more likely to make a deal.  But it is encouraging for two reasons:

• It makes it clear that Obama is willing to maximize his leverage by letting the Bush tax cuts expire.  This isn’t the proposal of someone who’s particularly interested in making a deal to avoid “going over the cliff.”   And after the Bush tax cuts have expired Obama’s hand is much stronger.
• It makes it more likely that the terrible deal he offered in 2011 was based on the idea that any “grand bargain” would help his re-election, rather than an inherent commitment to the underlying principles.   This deal has the right priorities — significant new revenue, needed stimulus spending, and to the extent that “entitlements” are cut this is done correctly:  Social Security not touched, unspecified Medicare cuts that can be progressive because they don’t necessarily entail cuts to services.

Since I’ve been meaning to get to Corey Robin’s question for a while, it’s probably as good a time as any to address it:

Doesn’t Obama have good reasons not only to lead us over the fiscal cliff, but also to keep us there? That is, not negotiate any kind of deal with the Republicans, neither before nor after January 1? Unless you assume Obama doesn’t want cuts to entitlements — which I don’t assume; I believe he’s an austerian of Reactionary Keynesianism — think about what he gets if he allows the sequester to go through: slightly higher tax rates, cuts to entitlements, and cuts to defense. Those seems like classic New Democrat/Clintonite goals.

It seems to me that the question is built around a faulty premise — that is, that the sequester has entitlement cuts.   In fact, the sequester specifically excluded entitlements and focused on discretionary spending.  Social Security and Medicare are specifically excluded from the sequester; the only “entitlement” cuts that would result from going over the fiscal cliff are the cuts to provider payments that would be scheduled to happen anyway.    This is not only important in itself, but is also an important consideration given the assumption that Obama is inherently dying to slash entitlements.  If this was true, it is (to put it mildly) hard to understand why the sequester excluded them.   And, in fact, going over the fiscal cliff makes it less likely that bad entitlement cuts will be enacted.

This isn’t to say that progressives shouldn’t worry.   Until a deal is reached, we should!   This first bid is encouraging, but until there’s an actual deal skepticism and political pressure from the left are very much in order.    However, it is important for progressives not to fall into the Pain Caucus trap of discussing the single program MedicareandSocialSecurity.    Any cut to Social Security benefits — especially a raise in the retirement age, which is the kind of thing that can get traction only because most elites have jobs that are rewarding and physically undemanding — should be fiercely resisted.   Medicare cuts, conversely, can be good or bad depending on the details.   Single payer systems are better in part because they impose “austerity” on providers, drug manufacturers, etc. — this isn’t an inherently bad thing.   As any progressive should recognize, the U.S. spends far, far too much on health care.  If Medicare is cut by paying less to drug companies,that’s good.  If it’s cut by raising the eligibility age, that’s bad (and, since Medicare is more efficient just cost-shifting.)