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Is Obama On The Brink Of Cutting Social Security? The Dangerous Game Over the Debt Ceiling

The administration floated the idea of cutting Social Security, then denied it just as quickly. What's really going on with all this debt ceiling brinksmanship?
 
 
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On Thursday, a media frenzy followed a report in the Washington Post, citing anonymous sources, that Barack Obama offered to include unspecified cuts to Social Security and Medicare in negotiations with Congressional leaders over raising the debt ceiling and heading off the economic disaster that a default would trigger.

This, according to multiple reports, would represent the administration's plan to “go big” in a deficit reduction deal, a kind of Hail Mary pass as the clock ticks down. Republican leaders and the White House had been wrangling over a package that would reportedly have knocked $2.4 trillion off of the projected deficits over the next 10 years. Now, with the deadline looming and both sides moving further apart, the White House, according to the Post story, is looking at going for a package worth $4 trillion over the next decade.

Progressives responded with appropriate outrage. Moveon released a survey showing that three-fourths of its members would be less likely to donate time or money to Obama's re-election if he messed with the crown jewels of America's social safety net. House Democrats told Talking Points Memo they'd been “caught off guard” by the announcement, and “progressives aligned to warn Obama and Republicans not to go too far, or they'll lack the support to pass the plan through the House.” Judging by his Twitter feed, Salon columnist David Sirota nearly had a stroke.

The White House moved quickly to control the damage in an afternoon presser. "There is no news in the story that purports to be news this morning," said press secretary Jay Carney. "The fact is that the president's position has not changed, at all, since January," he added, referring to Obama's statement during the State of the Union that “we should... find a bipartisan solution to strengthen Social Security... without slashing benefits for future generations.” (Pressed by ABC's Jake Tapper about whether “cutting” benefits was different from “slashing” them, Carney demurred.)

So they floated a trial balloon, a time-honored Washington tradition this White House has always been especially fond of. A senior official whispers anonymously into the ear of a prominent Beltway reporter, the White House denies the story, and that sends the pundits into a frenzied discussion of What It All Means. Such leaks are always done in the service of influencing the public debate, and the question is what the ultimate goal of the administration is with this latest one.

There are three ways of looking at the game. The most cynical is that Obama genuinely wants to make deep cuts to Social Security and Medicare and is laying the groundwork for blaming a move he knows will outrage his base and cause a revolt in the Congressional Democratic caucus on Republican intransigence. There is little evidence in Obama's public statements to support the idea that he has a heartfelt desire to do that -- beyond, perhaps, minor tweaks to shore up their long-term solvency -- but some disheartened progressives are nonetheless convinced that's the case.

Occam's Razor suggests that Obama, surrounded by genuine deficit hawks, is indeed willing to tolerate some cuts in the programs most important to Democrats in order to head off the potentially catastrophic consequences of a default going into the 2012 election season, and thinks that offering some incremental “entitlement reform,” long a top goal of conservatives, is a necessary concession to break the deadlock. The administration may also genuinely believe that making modest adjustments in the programs now would help head off deeper cuts later.

This administration has certainly shown itself to be enthralled by the idea of scoring big, “bipartisan” legislative victories on what the chattering class considers the most pressing issues facing the country, and a Beltway consensus has (unfortunately) gelled around the idea that reducing the deficit in the near term, rather than getting people back to work, is a top priority.

Finally, the White House may have surveyed the lay of the land in Congress and concluded that cutting a deal to head off default is unlikely. As polling guru Nate Silver notes, “The Republican Party is dependent, to an extent unprecedented in recent political history, on a single ideological group,” and that group is hard-core conservatives. The Tea Party base has taken on so much influence within the party that the GOP leadership can't “compromise on something like the debt ceiling, even when it might seem they have substantial incentive to do so,” writes Silver. As a result, the GOP's leadership is being forced to hew to an absolutely pure position that no increases in tax revenues can be included in a deal.

And that internal struggle between the GOP establishment and its Tea Party-infused base is only one of the divides that would have to be bridged in order to come to a last-minute agreement. Speaker John Boehner, R-Ohio, doesn't have enough votes within his own caucus to move any debt limit deal that would have a chance of passing the Democratically controlled Senate – which is debating its own, more balanced plan – and gain the president's signature. He needs some Democrats. But the Dems, having offered most of what the GOP wants only to see them walk away from the table, refuse to accept any deal with a lot of painful cuts but zero new revenues.

Rep Raul Grijalva, D-Arizona, told TPM that "without overwhelming support from our caucus I think it will be a hard deal to pass," and 24 house progressives sent a letter to the White House on Thursday demanding revenue increases and insisting that “no cuts to Medicare, Medicaid or Social Security” be included in a debt deal.

If the White House has come to see a deal to raise the debt limit as unlikely, then this leak is about positioning itself politically for the fall-out. The consequences of a default aren't precisely known, but it would certainly be disastrous for the recovery, and this move would allow the Democrats to say that they put everything on the table, including the social safety net programs they cherish most, but the GOP refused to budge if it entailed closing a few loopholes for the wealthy.

It's what James Baker, writing about the fundamentals of complex, multilateral negotiations, called “laying the dead cat at the door” of your opponents – making sure they take the blame for the consequences of failing to come to an agreement. During Thursday's press conference, Carney talked a lot about how “both sides need some skin in the game” and said, “the reasonable thing to do here is be willing to accept less than your ideal outcome, because you acknowledge that the only possible outcome if you hope to achieve something significant is a compromise.” The White House, in this view, is positioning itself to look like the only grownups in the room.

These three possibilities provide a kind of Rorschach test for one's views of the administration – Obama is either a Manchurian progressive, the capitulator-in-chief, or is cunningly playing the game two steps ahead of the crowd.

Whatever the case, it's a volatile and dangerous situation. While House Republicans are taking an intractable stance, the leadership is also using their caucus's hardline position as a negotiating tactic, telling the White House that even if they wanted to play ball, their members won't let them. It's unclear to what extent that's true, as Nate Silver suggests, and to what extent it's bluff – time will tell.

At the same time, Congressional Democrats have made it very clear that the consequences of default would be catastrophic, which makes it difficult for them to reject even a terrible deal.

And, setting the politics aside, that's what we're talking about – a terrible deal. Making deep cuts to public spending in the middle of a grindingly slow, largely jobless “recovery” is crazy enough. Messing with Social Security and Medicare, which add nothing to the deficit for at least the next 13 years, is a concession too far, and one that would result in real pain for American seniors. And giving in to Republican hostage-taking, again, will only lead to more stand-offs down the road, more demands. A budget for 2012 has to be passed in the coming months.

We would not be at this difficult juncture, however, had the administration not embraced inherently conservative narratives about the deficit months ago. During Thursday's presser, Carney said, “Often you get a situation here where one side thinks something is a very, very important issue and a big problem that needs to be solved, and the other side doesn’t even accept the premise that there’s a problem. And that’s just not the case here.”

But it is the case – outside of the Beltway, the vast majority of progressive and middle-of-the-road economists agree that putting the economy back on track and getting people back to work by spending money over the short term is the only rational way to reduce the deficit over the longer term.

Ultimately, trial balloons are a way of gauging public reaction to proposals, so this is a good time to react. If you oppose balancing the budget in the middle of a downturn by making cuts to popular programs that help the elderly and the most vulnerable just so the wealthiest Americans can keep their taxes low, then let your representatives know. You can contact members of the House here, and your senators here. And you can send a message directly to the White House here.

 
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