Budget Lunacy

04.14.13

Democrats Need to Stop Attacking Obama’s Budget and Wake Up to Reality

The Republican jeremiads were expected—but why can’t liberals see the sense in the president’s not-at-all draconian budget proposals? Robert Shrum says it’s time to face reality.

You would think President Obama was proposing to repeal the New Deal. (Well, actually, that’s Paul Ryan.)

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President Barack Obama speaks on the budget as Office of Management and Budget Acting Director Jeffrey Zients watches, in Rose Garden of the White House on April 10,2013 in Washington, DC. (Mandel Ngan/AFP/Getty )

This wasn’t the Republican reaction, of course, to a budget that was pre-dead on arrival, dismissed in advance by House Speaker John Boehner and disdained by the Tea-spooked Senate Republican leader Mitch McConnell, who couldn’t take yes for an answer when the president called for the entitlement changes McConnell had previously promised “would get Republicans interested in new revenue.” Aside from the fiscal fallout of a failed budgetary process that could slow the economic recovery, the episode points to a likely and grim outcome of these two years—that not much will emerge living or lasting from this Congress.

And don’t just blame GOP members, largely trapped in their gerrymandered red districts, incapable of doing right even if they recognize it, as they cower before the threat of primary challenges. The Democratic base, and prominent Democrats in the Senate and House, rushed to scorn the president’s Social Security and Medicare reforms as a betrayal of progressive principle. Massachusetts Sen. Elizabeth Warren was “shocked,” which presumably means she hadn’t been reading the wave of advance stories on the Obama budget. Iowa’s Tom Harkin denounced “an unnecessary attack on a critical program.” And Rhode Island’s Sheldon Whitehouse insisted that Social Security “has no place in this debate over federal spending.”

That’s an amazing statement, given that Social Security and Medicare account for 35 percent of federal outlays, and the trust funds for both are in serious and not-so-long-term trouble. We are far from the bipartisan moment in the 1980s when Ronald Reagan, House Speaker Tip O’Neill, and Alan Greenspan rescued Social Security—by, yes, gradually raising the retirement age.

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President Barack Obama speaks on the budget as Office of Management and Budget Acting Director Jeffrey Zients watches, in Rose Garden of the White House on April 10,2013 in Washington, DC. (Mandel Ngan/AFP/Getty )

In the face of the Obama reforms, the instant rhetoric and reactions were purple—among many, but not all, Democratic officials and across the liberal blogosphere. But what’s the reality, not the abstract jeremiads about a sacrosanct safety net, but the specific dollars-and-cents impacts of the proposals? The president didn’t ask for any fundamental changes in either Social Security or Medicare, which the House Republican budget would voucherize.

Obama would shift the annual cost of living increases for Social Security to a new formula with the unfortunate name “chained CPI.” But the consequences for benefits are not draconian, or even substantial—and as I’ve argued before, the formula has been altered in the past. It’s not sacrosanct, a matter of basic principle, even if the program is. Chained CPI would initially yield about $2 less a month in the average Social Security check. And as its effects multiplied, in 20 years, the difference would be $126—approximately $2,100 instead of $2,200 a month.

Beyond that, the president of the Center on Budget and Policy Priorities Bob Greenstein, one of the landmark defenders of the safety net and a passionate advocate but a cooler head, pointed out that Obama was offering essential offsets to chained CPI: “[His] budget includes a series of adjustments and protections for the very old and for people with low incomes... It should prevent an increase in the overall poverty rates among the very old.”

Just because the GOP is unserious about government doesn’t mean Democrats should be unserious too.

As for Medicare, the president is seeking cuts in payments to providers, especially the pharmaceutical industry. Good for him. He also wants wealthier seniors to pay higher premiums and he proposes a surcharge on those who buy the most generous and expensive Medigap insurance to cover out-of-pocket costs that Medicare doesn’t. That seems fair. Deductibles would rise modestly for new recipients and so would co-pays for home health services. Some of this I’d prefer not to do, but overall it’s a pretty reasonable version of what has to be done. It’s certainly not the end of Medicare as we know it but a sensible path to strengthening this basic guarantee for future generations.

And what’s the alternative to calibrated entitlement reforms that reform rather than gut Social Security and Medicare? Virginia Democratic Sen. Mark Warner explains: “You squeeze early childhood programs, you squeeze Head Start, you squeeze education and veterans.” Or now, or later, Congress could lift the eligibility age for Medicare to 67 or beyond, potentially leaving millions of seniors without any coverage while saving hardly any money.

The question here, the question the president had to answer, is what’s both acceptable and attainable. Progressives, for example, favor abolishing the limit on income subject to Social Security payroll tax—currently $113,700. Everyone would pay on every dollar. Fat chance that would get through this, or perhaps any, Congress.

The Obama budget does raise taxes on the wealthy by capping their deductions—which is one reason Democrats should rally to it. And there’s another: it increases spending now, while back-loading steeper deficit reduction, to support and speed the pace of the recovery. Do Democrats really think it’s smart to go into the midterms weighed down by the vulnerability of a sluggish economy? That didn’t work out so well for them in 2010.

They are concerned about another vulnerability—being tagged as the Social Security, Medicare-cutting party. The chairman of the House Republican campaign committee promptly and predictably assailed the president’s budget as “a shocking attack on seniors.” It was high hypocrisy: he had voted for the Ryan budget’s thermonuclear attack on seniors.

So Democrats, fearful for different reasons than the GOP, are now distancing themselves from Obama. More than 30 of them in the House have pledged to “vote against any and every cut to Medicare, Medicaid or Social Security benefits”—and you can be sure that their definition of cut encompasses almost any change, no matter how limited, cushioned, or sensible. If Democrats had taken this attitude in the 1980s, Social Security today might be a hollowed-out shadow from the past.

Just because the GOP is unserious about government doesn’t mean Democrats should be unserious too. The president has been responsible and brave. In any event, his party could fight out 2014 on Medicare and Social Security against an opposition that has a long record, and a contemporary one, of inveterate hostility to the social safety net.

Democrats could prove willing, as they showed during the battle at the fiscal cliff, to compromise—and settle for the Obama budget. They should. But what then would happen in the Republican House of hard-core reactionaries, where all good ideas seem to go to die? The columnist Jonathan Alter makes the case that Congress conceivably may agree on a “B.I.G.” agenda—that with a “cracking of gridlock,” a decent budget, real immigration reform, and some gun-control could pass. I hope I’m wrong, but I’m convinced we’re doomed to see a season full of sound and fury, legislating nothing big.

Would Republicans ever accept a chained CPI that also applies to, and in effect raises, taxes—and would they concede the limits on deductions for higher earners that Obama demands as a condition of a balanced bargain that includes entitlements?

Similarly, the media may highlight the modest agreement between two senators, a conservative Democrat and a conservative Republican, both self-proclaimed paladins of the Second Amendment, for wider if not entirely universal background checks on gun sales. It’s not enough—assault weapons are untouched—but it probably will pass the Senate. On the other side of the Hill, where GOP could be spelled NRA, the speaker claims he will “review” the bill; the odds are that he won’t dare anything more than dispatching it to a committee to be eviscerated.

And Florida Sen. Marco Rubio may “go all in to support sweeping immigration reform,” but House conservatives are in a state of anger and mounting rebellion against any path to citizenship. Imagine the venom they will spew as the debate is joined. And consider whether, in the end, congressional Republicans will defy the anti-immigrant fervor of their base constituency.

Immigration reform is an absolute political necessity for the post-Romney GOP, but it may very well be a primary impossibility. Here, on guns, even on the budget, Boehner might get around this by letting legislation passed with a minority of his majority plus Democratic votes. He might thereby also slide himself right out of the speaker’s chair.

The economy could recover anyway, despite Washington. Enough Democrats could stand with Obama on his budget. Republicans could flout their own resentments and true believers. Could is the right word. And at least until then, in a phrase Winston Churchill borrowed from Scripture in 1937, this period in our public life will be “the years the locusts have eaten.”