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Obama Wants to Be the President Who Rolled Back the New Deal

The president wants to cut Social Security and Medicare to protect the investor class.
 
 
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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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