This week, President Obama birthed a still-born budget that Herbert Hoover could have loved. With little surprise but much fanfare, Barack Obama unveiled his new call for austerity in the midst of a near-jobless recovery. The budget does nothing for the bulk of working Americans— who endured a 2 percent Social Security tax hike as the price of not tumbling over the fiscal cliff—except, of course, leaves a tax increase in place that will cost a family making $40,000 a year an extra $800 in payroll taxes.
But the Dow and the S&P have hit new highs since the budget’s Wednesday release. Obama, the self-proclaimed agent of change, has discovered establishment economics and happily embraced the creed of the grand bargain. Centrists of an elite variety are toasting the onetime Chicago community organizer who may now rightfully sit at the right hand of Pete Peterson.
Already, the Democratic left is thundering against it. Usually, it is Republicans who get zapped by stepping on the “third rail” of Social Security. But this time, it is the president who has put his foot in it.
AARP immediately attacked the budget’s call for a chained CPI—a more conservative way of measuring inflation so, in effect, a cut in future benefits—as an assault on already-retired seniors. As Cristina Martin Firvida, the senior group’s director of financial security put it: “What’s so surprising about the momentum behind chained CPI is it’s the only time anyone has put on the table a cut to current benefits for deficit reduction. It’s not a phase-in. You’re already retired.”
Shrewdly, with his eye on the 2014 midterm elections, Congressman Greg Walden, the chair of the National Republican Congressional Committee, trashed Obama’s proposals as a “shocking attack on seniors.” That is, partisan GOPers recognize that the president has given the not-so-loyal opposition a huge opening.
If Obama’s budget team is not being coached by Karl Rove, it’s apparently equated the nation’s well-being with that of America’s bondholders. George W. Bush’s post-reelection call for the partial privatization of Social Security marked the beginning of the end of his presidency and presaged the GOP’s loss of both houses of Congress in 2006.
Still, Obama sidling up to bondholders should come as no surprise. The current Treasury Secretary Jack Lew is the father of sequestration, a former Citigroup banker and an acolyte of Robert Rubin, the grand poobah of budget balancing.
Sadly, recent history shows that neither the president nor the current Republican leadership has shown much regard for the middle class. Up until now, the good news for Democrats is that the GOP had shown even less.
When the Democrats controlled both houses of Congress and Obama had his chance to impose the stimulus that he wanted, he opted for a mix of green jobs, grants to universities, and money for urban America and local and state governments. With the critical exceptions of aiding the auto industry and instituting the now-expired 2 percent payroll moratorium, he offered little else to working America.
But the Republicans were worse, treating middle-class benefits as though they were a form of welfare. Mitt Romney opposed the auto rescue, picked Paul Ryan as his running mate, threatened the home mortgage interest deduction and lambasted the 47 percent as a monolithic bloc—failing to distinguish between retirees and wards of the state. Even now, the free-market fanatics at the Club for Growth are trying to force Walden to walk back his attack on Obama’s budget.
Walden should ignore the Club for Growth as the electoral map tells a reality that is at odds with free-market fantasies. From 1952 to 1988—from Ike to Bush ’41, the GOP won seven of 10 presidential elections. It built a big coalition based on a middle class that was organically conservative—but not ideologically right-wing.
But during the Reagan years, and since, the Republicans set in motion a changed, more ideological dynamic in which Main Street conservatism was displaced by Ayn Rand libertarianism. Reagan proposed cuts in entitlement spending, and while he was rebuffed, the seed of free-market mania took hold in the party. Since 1992. the Republicans have only won the popular vote once and their share of the Electoral College has cratered.
These days, the GOP offers tax cuts to the rich, religion to the poor, and to the middle class … nothing. Bobby Jindal’s failed attempt to scrap the Louisiana state income tax and hike the sales tax to replace the revenue is a reminder of how removed the Republican policy elites are from everyday reality.
Still, it is not too late for the Republicans to get their mojo back. For starters, they should highlight Walden’s rejection of the Obama budget and in particular, the chained CPI. It’s Barack Obama, not the GOP, that now stands as the would-be destroyer of Social Security’s sacred compact. Spell out again and again and again that while Obama spares poor Social Security recipients from the chained CPI, he nonetheless sticks a shiv into those who are retired and proudly middle class.
Mindful of their voting base, Republicans should stop embracing Ryanism. Yes, the Ryan budget spells continued woe for the GOP, but hopefully the Obama budget will obscure the Ryan budget. Bluntly, Republicans win when they distinguish between work and welfare, lauding the former and damning the latter. And they lose when they collapse that distinction, as Romney did with his 47 percent comment.
Yes, the GOP was outsmarted, out-teched and out-campaigned in 2012. However, Romney’s loss was about so much more than technology or even about America’s changing demographics. It was about Republicans’ distrust in recent years of America’s working and middle classes. The Obama budget presents Republicans with an opportunity to remind America, and themselves, that they actually care about the middle class—which is also to say that they care about winning.