Monthly Archives: November 2012

Obama’s “fiscal cliff” road-show: Friday 11/30

President Obama spoke in Hatfield PA Friday, Remarks by the President in Visit to Rodon Group Manufacturing Facility 11/30/2012. He’s promoting his current plan to avoid the fake “fiscal cliff”.

The first thing to note is that this speech contains no defense at all of Social Security, Medicare and Medicaid.

Here’s what it does contain:

Now, on this last point, you’ve probably heard a lot of talk in Washington and in the media about the deadlines that we’re facing on jobs and taxes and investments. This is not some run-of-the-mill debate. This isn’t about which political party can come out on top in negotiations. We’ve got important decisions to make that are going to have a real impact on businesses and families all across the country.

Our ultimate goal, our long-term goal is to get our long-term deficit under control in a way that is balanced and is fair. That would be good for businesses, for our economy, for future generations. And I believe both parties can — and will — work together in the coming weeks to get that done. We know how that gets done. We’re going to have to raise a little more revenue. We’ve got to cut out spending we don’t need, building on the trillion dollars of spending cuts we’ve already made. And if we combine those two things, we can create a path where America is paying its bills while still being able to make investments in the things we need to grow like education and infrastructure. So we know how to do that.

But in Washington, nothing is easy, so there is going to be some prolonged negotiations. And all of us are going to have to get out of our comfort zones to make that happen. I’m willing to do that, and I’m hopeful that enough members of Congress in both parties are willing to do that as well. We can solve these problems. But where the clock is really ticking right now is on middle-class taxes. At the end of the year, middle-class taxes that are currently in place are set to expire — middle-class tax cuts that are currently in place are set to expire. [my emphasis]

Here there are several reasons for concern in what he says there:

“This isn’t about which political party can come out on top in negotiations.” Actually, yes, it is. The President and his Democratic Party just won a national election decisively. They should “come out on top” with a victory that reflects the program on which they ran successfully in the election.
“a little more revenue”: Whenever we’re talking about the wealthiest people in the country, the ones who are getting the greatest material benefit from what the US has to offer in terms of opportunity, Obama consistently talks about it needing to be “a little bit more” or some similar term. If he asks for “a little more”, he may get a little more. But it doesn’t really have the feel of aiming high, does it?
“We’ve got to cut out spending we don’t need”: more of Obama preaching austerity economics during this depression
“all of us are going to have to get out of our comfort zones to make that happen. I’m willing to do that”: Obama has made it clear in past years that he expects supporters of Social Security, Medicare and Medicaid to “get out of our comfort zones” and not complain when he pushes completely unnecessary and highly destructive cuts in benefits to Social Security, Medicare and Medicaid. When he says, “I’m willing to do that,” that’s presumably what he means. But Obama is actually in his comfort zone pushing such cuts. A full-on defense of benefits on Social Security, Medicare and Medicaid would be him getting out of his comfort zone.
“the clock is really ticking right now”: maybe in David Brooks’ head. But there is no actual “fiscal cliff” from which the economy will fall on January 1. Obama is promoting a sense of urgency which is likely to facilitate only the promotion of bad policy ideas.
“investments in the things we need to grow like education and infrastructure”: this has become such a stock phrase, “education and infrastructure,” that one hardly notices it any more. But this is a favorite part of “left” neoliberal ideology of deregulation and de-unionization and civilian government austerity. Health care and income support for old people are a waste of public money in the neoliberal view. But the promise to the public is that we’re going to spend some of that money instead on “education and infrastructure” and that will bring pie in the sky by and by for everyone!

I want to reward manufacturers like this one and small businesses that create jobs here in the United States, not overseas. (Applause.) And by the way this is a company — one of the few companies in the toy industry that have aggressively moved jobs back here. (Applause.) That’s a great story to tell because we’ve got the best workers in the world and the most productive workers in the world, and so we need champions for American industry creating jobs here in the United States.

As long as he’s pushing the incentives for corporations to export jobs overseas that he’s been supporting in the Trans Pacific Parnership (TPP) negotiations so far, I’m not able to take talk like this seriously from Obama.

So that’s one path: Congress does nothing, we don’t deal with this looming tax hike on middle-class families, and starting in January, everybody gets hit with this big tax hike and businesses suddenly see fewer customers, less demand. The economy, which we’ve been fighting for four years to get out of this incredible economic crisis that we have, it starts stalling again. So that’s one path.

Fearmongering. If Obama is serious about ending the Bush tax cuts and getting prolonged middle-class tax reductions, he can just let the Bush tax cuts expire at the end of the year and then propose the ones he wants. The idea that calamity will set in January 1 as a result of the end of the Bush tax cuts and the start of the spending reduction triggers is not credible.

This is bad:

The sooner Congress gets this done, the sooner our economy will get a boost. And it would then give us in Washington more time to work together on that long-range plan to bring down deficits in a balanced way: Tax reform, working on entitlements, and asking the wealthiest Americans to pay a little bit more so we can keep investing in things like education and research that make us strong. [my emphasis]

Given Obama’s history of pushing to cut benefits on Social Security, Medicare and Medicaid, every time Obama says the word “entitlements” – which in any case is a propaganda term to diminish the value of Social Security, Medicare and Medicaid in people’s minds – I assume he means he intends to keep pushing to cut benefits on those programs.

We’ve got some disagreements about the high-end tax cuts, right? Republicans don’t want to raise taxes on folks like me; I think I can pay a little bit more to make sure that kids can go to college and we can build roads and invest in NIH so that we’re finding cures for Alzheimer’s. And that’s a disagreement that we’re going to have and we’ve got to sort out.

It always bothers me when Obama refers to the wealthy as “folks like me.” It always sounds to me as though he’s emphasizing his identification with the wealthiest.

The bottom line is that the Democratic President should be defending immediate stimulus spending, and defending benefits on Social Security, Medicare and Medicaid instead of promoting phony scares about The Deficit and trying to out-Republican the Republicans talking about tax cuts. And he shouldn’t be pushing austerity economics at all.

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Greece and the politics of austerity

Georgios Papandreou was the social-democratic Prime Minister of Greece for the PASOK party from 2009-2011. By caving in to German Prime Minister Angela “Frau Fritz” Merkel’s demands for destructive austerity policies in response to the Greek debt crisis, Papandreou put his party on the fast track to non-existence. PASOK is a junior member of the current conservative-led Greek government. But polls show it now polling around the 5% range. The Syriza coalition has emerged as the main left party now, and polls are showing it as having the largest support of any party at the moment.

So, for putting his country under Frau Fritz’ economic jackboot and ruining his own political party, he now gets to appear as statesman-at-large.

He provides a vapid statement of why it would be nice if the eurozone and the European Union The Politics of Fear 11/29/2012:

Like ghosts from the past, we see political violence, xenophobia, migrants being scapegoated and extreme nationalism creeping into our public debates — even into our parliaments. This is a Europe diverging from its founding principles. Principles that rendered nationalistic hatreds an anathema.

But it is these politics of fear that seem to have incapacitated Europe. A Europe seemingly incapable of ending this crisis, a fractious Europe. This has undermined a sense of trust between us and in our European institutions. This climate does not inspire confidence either in our citizens or the markets. Nor will our retreat into a renationalization of Europe be the solution.

My recent experience in dealing with the financial crisis in Greece and in Europe has confirmed my belief that this is a political crisis more than a financial one.

I am convinced that, with the political will, we could have avoided much pain, squelched market fears and stabilized the euro, while at the same time reformed ailing, unsustainable economies such as ours in Greece.

Despite media hype to the contrary, it is the Greek people who first and foremost have wanted this change.

There’s additional blather about “real, necessary reform and fiscal responsibility.”

But it’s all more than a bit disgusting from a leader who was democratically elected to represent the people of Greece and tossed his responsibilities onto the funeral pyre of a destructive neoliberal notion of “Europe.” And thereby contributed mightily to the likely disintegration of the EU, both its neoliberal reality and the democratic hope that remains.

Here is a video of him, sounding like one of the American CEOs who we hear lobbying for austerity economics from a presentation of 10/31/2012, Is Europe a straitjacket or is it empowering us? – Giorgos Andrea Papandreou Berggruen Governance:

New Poll Confirms Rise of Extremes in Greece The New Athenian 11/29/2012 reports on poll results he sources to Δημοσκόπηση VPRC για τα “Επίκαιρα”: Πάνω από 30% ο ΣΥΡΙΖΑ Επίκαιρα Online 28.11.2012:

The poll, which appears in the weekly magazine Epikaira, gives conservative New Democracy 26.5 percent of the popular vote, and Syriza 31.5 percent. It also confirms the oft-predicted rise of the far-right Golden Dawn party to third place with 12.5 percent.

Beyond these three, the field is flat, with a clutch of four small parties claiming between five and 6.5 percent. This is important for three reasons. First, it sinks New Democracy’s main coalition partner, the socialist Pasok, to the order of five percent, even lower than its lowest ever election showing of 12 percent last June, and indistinguishable from the likes of other small fry. Pasok had already been cast down from the ranks of potential ruling parties; now it is also on death row. This now should mean that both Pasok and the third coalition partner, the Democratic Left, ought to be more deeply invested in the ruling coalition, for the wilderness awaits them after a Syriza victory …

Second, the poll implies that, unless something radical happens, the next parliament will also have seven parties, making it almost impossible for one of the two big players to secure single-party rule. New Democracy has picked its friends. Syriza has taken a step towards doing so. In a press conference two weeks ago its leader, Alexis Tsipras, opened the door a crack to a possible collaboration with the anti-austerity Independent Greeks. The party’s main obsessions since it entered parliament in May have been charging the Germans reparations for illegal wartime loans, drilling for mineral resources and hauling off socialist and conservative politicians to the gallows for bringing the country to this pass. The two parties may come from opposite sides of the ideological divide, but they are both reactionary and possibly vindictive.

Syriza leader Alexis Tsipras was pointing this week to the leadership failures of Papandreou and his PASOK party, as Andy Dabilis reports in SYRIZA Bid for Greek Bailout Probe Nixed Greek Reporter 11/30/2012:

To no surprise, a request by the major opposition Coalition of the Radical Left (SYRIZA) to investigate the decisions that led to Greece seeking bailouts from international lenders was easily defeated in the Parliament controlled by the ruling coalition government.

The three ruling parties, the New Democracy Conservatives of Prime Minister Antonis Samaras, the PASOK Socialists and Democratic Left [the three governing parties] all voted against the proposal, which got only 119 votes in the 300-member body. Before the June elections, New Democracy and the Democratic Left said it would support the investigation but reversed themselves. …

SYRIZA wanted to know how the government in 2010, then led by former PASOK head George Papandreou, came to ask the IMF initially for aid after the prime minister said repeatedly that there was plenty of money to run the country. The leftists had wanted former Finance Minister Giorgos Papaconstantinou and Papandreou to be questioned. SYRIZA leader Alexis Tsipras lambasted the government for refusing an inquiry.

“It may be the case that those responsible will not sit in court, but they will sit – some are already sitting – in the margins of history,” said Tsipras, who accused the coalition of maintaining an “omerta,” or code of silence, on the issue. Earlier the rapporteur for the proposal, SYRIZA’s Yiannis Dragasakis, had described the coalition as being the product of a “business relationship.”

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The “fiscal cliff” negotiating dance

As President Obama undertakes his national tour to promote his passionate conviction that we should be “asking the wealthiest Americans to pay a little more,” there is a confusing flow of leaks and trial balloons and so forth on who’s angling for what in the “fiscal cliff” negotiations.

So it’s well to keep in mind through this messy farce what Jamie Galbraith wrote about it this month 6 Reasons the Fiscal Cliff is a Scam Alternet 11/22/2012):

Stripped to essentials, the fiscal cliff is a device constructed to force a rollback of Social Security, Medicare and Medicaid, as the price of avoiding tax increases and disruptive cuts in federal civilian programs and in the military. It was policy-making by hostage-taking, timed for the lame duck session, a contrived crisis, the plain idea now unfolding was to force a stampede.

Our plutocrats will keep right on lobbying for their preferred tax breaks, because that’s just what they do.

Plus, the arguments over the fiscal cliff are premised on the absurd assumption that the austerity that will kick in with the “fiscal cliff” triggers in January would be very harmful to the economy, so we need to quick replace them with even more drastic austerity measures! The premise is false, and the conclusion doesn’t make jack for sense.

It’s a real problem that the Obama Administration is focusing its push for a “fiscal cliff” deal on taxes, without so far prominently defending benefits for Social Security, Medicare and Medicaid. So we have to pay some attention to pieces like this one from Jim O’Sullivan, Social Security: Still Off-Limits? National Journal 11/29/2012, which argues that cutting benefits on Social Security could very well end up as part of the “fiscal cliff” deal.

The faith of the “Professional Left,” to borrow a phrase, in Obama’s progressivism has always been warped to the point that its vision has been obstructed. And, despite the dispositive support he received from liberals earlier this month, Obama could spot in Social Security the sort of proactive, rather than react-and-rescue, initiative scarce elsewhere on the docket.

Don’t anyone tell O’Sullivan, but anyone who might self-identify as part of the “Professional Left” is extremely skeptical of Obama, especially on the Grand Bargain to cut benefits on Social Security, Medicare and Medicaid.

I hope his closing observation is nothing more than wishful thinking by corporate Democrats, one of which he quotes at the end:

A “hands-off” opening bargaining position makes sense, because the Left is mortified of what could happen; labor activists fanned out on the Hill on Wednesday to lobby against cuts to the safety net. But Obama also has incentives to bargain, and progressives to assent: Packaging Social Security reform with Medicare and Medicaid, effectively aggregating the savings, could soften the health care cuts by imposing tax hikes on higher-income seniors.

That means that Social Security could end up as part of a big deficit-reduction deal after all. Decoupling the issue now from the fast-track negotiations will only delay reform but not necessarily shelve it. The breadth of the gyre of deficit-reduction decisions that must be, or could be, made might increase the prospects for bipartisan Social Security reform, argued Jim Kessler, senior vice president for policy at Third Way, the center-left think tank. “It’s rare that you see members of Congress rushing to raise taxes,” he said. “That’s happening right now. And people are supporting it. So this is a special time right now.”

“Reform” of Social Security in Beltway-Speak is a variation of “entitlement reform” which means “cut benefits on Social Security, Medicare and Medicaid.”

Part of the Administration’s posturing on this is to make cutting benefits on SocSec, Medicare and Medicaid the “moderate” position, so they are positioning the pro-Social Security posture as “left” or “Left”, which I think is supposed to look more ominous. That last quote reminds me of one of the only decent things David Frum ever said: the Republicans are afraid of their base, the Democrats hate theirs. Overgeneralized but too true for comfort.

And could anyone but a star pundit or a corporate Democrat who has actually drunk the Kool-Aid actually think that this unintelligible argument – “Packaging Social Security reform with Medicare and Medicaid, effectively aggregating the savings, could soften the health care cuts by imposing tax hikes on higher-income seniors” – could be a reason to support benefit cuts in Social Security, Medicare and Medicaid?

Ryan Grim reports on the Administration’s formal opening offer in the negotiations to the Republicans, which in itself isn’t bad, in Fiscal Cliff Talks: Behind Obama’s Opening Bid Huffington Post 11/29/2012. Charlie Pierce in How We Can Help President Obama Today Esquire Politics Blog 11/30/2012 explains that he wants Obama to keep acting like a Democratic President who just decisively won re-election:

It should be made plain to them [the Republicans], by the president, and by the 53 percent of the people who voted for him, that what was presented to them yesterday are the basic parameters of any deal. Period. There will be increases in the tax rates, no phony gobbledegook about “reforming the tax code.” Some people will pay more, and it will be the people who can best afford to do so. There will be stimulus spending, and a lot of it, to fix all the broken stuff we have in this country. … The deal will lean more than a little on the side of middle-class families and it will spend a lot less time soothing the wounded fee-fees of Geithner’s lunch buddies. And later, when everything cools down, and enough Republicans have regained their sanity, John Boehner has regained his balls from the mason jar in which Eric Cantor has buried them out in the back yard, maybe we’ll talk about some spending cuts and some careful changes in how Medicare is administered.

This should not be the “opening bid.” This should be the deal. There inevitably will be tinkering around the edges, but the basic principles and parameters established yesterday should be the foundation of any agreement. Failing that, down the Gentle Fiscal Incline, we slide. But, as the president seems to be acknowledging by taking his act on the road again, much to the dismay of Mitch McConnell, it is up to the country to explain to the Republicans (again) that they lost the election, and to explain the consequences of that loss, and to explain precisely why the loss happened. It was because the country chose to support policies that are closer to the ones that the president sent up the Hill yesterday rather than support the ones to which the congressional Republicans cling. It is up to the country to own its decision, and to see that the ideas that the country so clearly supported are carried out. It is not entirely the president’s job to call this bluff. It is ours, too. [my emphasis]

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The Grand Bargain to cut benefits on Social Security, Medicare and Medicaid is alive and prospering, according to Politico

Medicare opponent and Senate Democratic Chair of the Budget Committee Kent Conrad, who is not standing for re-election and therefore has substantial financial incentive to make himself attractive to One Percenter lobbies, appeared today on MSNBC talking up the “fiscal cliff” deal. Chairman Conrad Appearance on MSNBC Live 11/29/2012:

Digby notes on Twitter today, “I hate to say it but MSNBC is almost as bad as Fox and CNBC on ‘fiscal cliff’ stuff. CW [conventional wisdom] crapola all the way.”

There’s certainly no hint in the Conrad interview that the “fiscal cliff” drama is a staged drama.

Medicaid opponent Conrad griped about “some on our left” who “have their shoes in concrete” because “they don’t want to touch any spending.” No doubt warming David Brookes’ heart, he appealed to “people in the sensible center,” by which he means people who take the very unpopular, minority position among the American public that it’s good policy to cut benefits on Social Security, Medicare and Medicaid as Social Security opponent Kent Conrad does.

Politico über-hacks Jim VandeHei and Mike Allen give their description of the current state of the negotiations, either leaked from who-knows-who or concocted from Beltway gossip of the day, Inside the talks: Fiscal framework emerges 11/29/12

Cut through the fog, and here’s what to expect: Taxes will go up just shy of $1.2 trillion — the middle ground of what President Barack Obama wants and what Republicans say they could stomach. Entitlement programs, mainly Medicare, will be cut by no less than $400 billion — and perhaps a lot more, to get Republicans to swallow those tax hikes. There will be at least $1.2 trillion in spending cuts and “war savings.” And any final deal will come not by a group effort but in a private deal between two men: Obama and House Speaker John Boehner (R-Ohio). The two men had a 30-minute phone conversation Wednesday night — but the private lines of communications remain very much open.

The core of this fiscal cliff farce is beginning the process of cutting benefits on Social Security, Medicare and Medicaid. Any Democrat who votes for the following should face a major primary challenge in their next election:

There is only one way to make the medicine of tax hikes go down easier for Republicans: specific cuts to entitlement spending. Democrats involved in the process said the chest-pounding by liberals is just that — they know they will ultimately cave and trim entitlements to get a deal done.

A top Democratic official said talks have stalled on this question since Obama and congressional leaders had their friendly-looking post-election session at the White House. “Republicans want the president to own the whole offer upfront, on both the entitlement and the revenue side, and that’s not going to happen because the president is not going to negotiate with himself,” the official said. “There’s a standoff, and the staff hasn’t gotten anywhere. Rob Nabors [the White House negotiator], has been saying: ‘This is what we want on revenues on the down payment. What’s you guys’ ask on the entitlement side?’ And they keep looking back at us and saying: ‘We want you to come up with that and pitch us.’ That’s not going to happen.”

Sen. Dick Durbin (D-Ill.) told “Morning Joe” on Tuesday that he could see $400 billion in entitlement cuts. That’s the floor, according to Democratic aides, and it could go higher in the final give and take. The vast majority of the savings, and perhaps all of it, will come from Medicare, through a combination of means-testing, raising the retirement age and other “efficiencies” to be named later. It is possible Social Security gets tossed into the mix, but Senate Majority Leader Harry Reid (D-Nev.) plans to fight that, if he has to yield on other spending fronts.

Democrats want most Medicare and other entitlement savings to kick in between 10 and 20 years from now, which will make some Republicans choke. Democrats will point to the precedent set by House Budget Chairman Paul Ryan (R-Wis.) of pushing most mandatory savings off until a decade from now. [my emphasis]

Several thoughts: “The President is not going to negotiate with himself”?!? Good grief, the man pre-negotiates with himself and starts conceding from there – when it’s Republicans on the other side of the negotiation.

Is a Democratic Administration really negotiating with the loser Republicans by asking, “What’s you guys’ ask on the entitlement side?” That is truly pitiful. The only thing the Dems should be saying on that is, “Don’t even think about proposing cuts in benefits on Social Security, Medicare and Medicaid.”

“Democrats involved in the process said the chest-pounding by liberals is just that — they know they will ultimately cave and trim entitlements to get a deal done.” This is a real challenge for Democrats in Congress. The fight over the public option in the health-care reform package was a key moment for Obama’s opinion of “the left”, in this case the Progressive Caucus. After establishing the public option as a “red line” item they had to have, the Dems mostly caved and voted for the plan without that in it. If they had been as willing as the less numerous Blue Dogs to kill the law without the public option, things could well have worked out much better. But once the White House punked them on that, Obama knew he didn’t have to take them seriously and could use the Blue Dog Dems as a cover and excuse for conservative positions he preferred to take.

“It is possible Social Security gets tossed into the mix, but Senate Majority Leader Harry Reid (D-Nev.) plans to fight that, if he has to yield on other spending fronts.” If that’s true, it means: (1) Obama still wants a cut to Social Security benefits as part of the Fiscal Cliff deal; and, (2) Harry Reid has agreed to benefit cuts in Medicare and probably Medicaid.

And, once again, Dick Durbin proves that the Democratic base can’t expect anything good from him.

Where are Reid and Pelosi on this? According to Politico:

Everyone has an opinion on the grand bargain. But only two matter: Obama’s and Boehner’s. Any deal will ultimately be hammered out between the two men, whose on-again, off-again relationship is stronger than most people realize.

Maybe some Beltway hackery completely took over on that paragraph. Or maybe not. After a strong win by the Democrats in the election three weeks ago, the only person in Congress who matters in a deal to cut benefits on Social Security, Medicare and Medicaid is … the House leader of the loser party?

Bluster aside, both know they have a heavy incentive to cut a deal, and quick. Boehner knows the president isn’t bluffing on letting the Bush tax cuts lapse to get his way on raising rates on the rich. Obama knows the last thing he wants at the start of a second term is an economic funk caused by Washington dysfunction, even if Republicans get more of the blame.

People involved in the talks over the past six months say House Minority Leader Nancy Pelosi is at best a bit player in the unfolding drama, and virtually certain to back any deal Obama blesses. Reid runs the Senate and has more juice than Pelosi, but he knows his role is to play bad cop until it’s time to play loyal soldier to pass the final package. Senate Minority Leader Mitch McConnell, facing a reelection two years from now in conservative Kentucky, will defer to Boehner in brokering any compromise and might even break with his fellow GOP leader on a final vote. [my emphasis]

In Politico‘s scheme, the voters don’t even exist. Reid and Pelosi are far more aware of our existence.

This sounds like Obama-like postpartisanship:

To those involved in the talks, it/s not really a mystery how big the overall hike will be. Boehner was for $800 billion before the election, and Obama slapped down an opening bid of $1.6 trillion after. So it doesn’t take Ernst and Young to add those numbers, divide by two and know the president wants to end up close to $1.2 trillion.

Except that, you know, we just had a big Presidential and Congressional election. One side won big-time, the other lost.

And since Obama has repeatedly said he is only “asking the wealthiest Americans to pay a little more” in the tax part of the deal, everyone has reason to wonder about the following:

Officials familiar with the White House position say Obama plans zero flexibility on his insistence on a higher tax rate for top earners. He plans to take what one aide called a “trust but verify” position: He will insist on a higher rate in the year-end deal. Then next year, during tax-reform negotiations, “the onus will be on Republicans to propose something that raises the same amount of revenue,” the aide said. “He’s going to pocket their rate hike on the top two brackets at first, and then he’s going to say to them in the 2013 process that we set up: If you think you can realize these same revenues in a different way, prove it to me.”

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The “fiscal cliff”: there’s reality and then there’s Beltway Village fantasy

When I was going to the National Memo to read Gene Lyons weekly column, I wound up at the National Journal instead. Which led to discovering and interesting set of contrasts.

Gene’s piece is Pity The Poor Plutocrats 11/28/2012, in which he relates the ridiculous spectacle of a courier journalist from CBS News doing a fawning interviewing with Goldman Sachs CEO Lloyd Blankfein. This is one that really needs to be read in full. But what does this leading One Percenter think the country needs to do urgently?

“You’re going to have to undoubtedly do something to lower people’s expectations,” he said. “The entitlements, and what people think that they’re going to get, because it’s not going to–they’re not going to get it.”

“Social Security, Medicare, Medicaid?” Pelley asked.

“Some things,” Blankfein said. “… You can go back and you can look at the history of these things, and Social Security wasn’t devised to be a system that supported you for a 30-year retirement after a 25-year career. So there will be certain things…the retirement age has to be changed, maybe some of the benefits have to be affected, maybe some of the inflation adjustments have to be revised.”

Gene then proceeds to explain how bogus this argument is, aside from how ludicrous it sounds coming from such a messenger:

Blankfein must think most Americans earn their first paychecks at age 42, retire at 67, and then draw Social Security until age 97.

The actuarial reality, of course, is that most Americans first go to work during their teens, pay Social Security taxes for 50 years, and then draw benefits for an average of 16 years. Twice the work, half the benefits Blankfein pretended to imagine.

But Wall Street would love to take a large cut out of what currently goes into paying payroll taxes to finance the trust funds for Social Security and Medicare.

The sad contrasting article comes from Major Garrett, former FOX News reporters who just this month became the chief White House correspondent for CBS News, Holiday Hysteria National Journal 11/27/2012 (w/ update 11/29/2012. Garrett sounds giddy in his admiration for the way opponents of Social Security, Medicare and Medicaid are exploiting this phony “fiscal cliff” scare to push their austerity agenda and cut benefits on the programs just named.

If there is one redeeming feature of the otherwise gutless and indolent sequestration process, it is the underappreciated component of hysteria.

And this is a good thing. After all, everything else in this great nation’s political tool kit has failed. Governing for governing’s sake is dying, if not dead. Bipartisanship and compromise as legislative art forms are more lost than Jon Stewart at CPAC. And politics as a means of comprehending and responding to economically transformational technologies has never been our strong suit (See: Gilded Age, the)—it’s just worse and more dangerous now.

So, hysteria is all we’ve got left. The politicians want it and need it to cut a fiscal-cliff deal.

Is Garrett completely out of it and really believes what he’s writing, or is he just reflexively parroting Washington Beltway conventional wisdom? Where Gene Lyons explains to his readers early on that the so-called fiscal cliff is “the latest phony, made-for-TV Washington melodrama,” Garrett has the following to say:

Washington, if it remains paralyzed, will sentence the country to the first premeditated recession not imposed by German bankers (pity the Greeks) in the history of Western civilization.

America won’t stand for it. Not this time. The hair-trigger loathing of Congress is real. President Obama, though reelected, has no hope of a second-term legacy of immigration reform, tax reform, or climate-change legislation (if he even wants it) if he drives the nation off the cliff.

And who’s really hot for the big deal? Garrett is much closer to reality on that score:

… Republicans and their backers in business crave a big deal. They’ve held off the higher tax revenue wave as long as possible. They will trade it for entitlement savings and less-aggressive defense cuts. U.S. Chamber of Commerce President Tom Donohue met on Monday with Obama’s top economic advisers in sessions that Donohue’s allies describe as “very constructive.” Donohue wants a grand bargain and may be asked to provide political cover to Republicans who support raising taxes. John Engler, head of the Business Roundtable, got similarly good vibrations from White House meetings on Monday. Together, the two business groups could provide more political cover than Chris Christie’s fleece.

But it’s unusually hard to tell what the various players are doing with their positioning in this “fiscal cliff” farce. President Obama is also hyping the sense of panic over what is not a crisis situation except in Washington’s staging of it. Robert Reich observes of the current moment in these negotiations (Bungee-Jumping Over the Fiscal Cliff 11/28/2012) :

Obama’s only real bargaining leverage comes from the fact that when the Bush tax cuts expire at the end of December, America’s wealthiest will take the biggest hit. The highest marginal income tax rate will rise from 35 to 39.6 percent (for joint filers), and the capital gains rate from 15 to 20 percent.

This will happen automatically if nothing is done between now and then to change course. It’s the default if Republicans won’t agree to anything else. It’s Obama’s trump card.

So rather than stoking middle-class fears about the cliff, the White House ought to be doing the opposite – reassuring most Americans they can survive the fall. To utilize his trump card effectively, Obama needs to convince Republicans that the middle class is willing to jump.

It has been clear since the debt-ceiling fight in 2011 that Obama wants to make a Grand Bargain to cut benefits on Social Security, Medicare and Medicaid and was willing to hype the deficit crisis to get that in place. Why he is so dedicated to that is another question. It’s presumably some combination of bad policy ideas and a vain hope that cutting benefits on Social Security, Medicare and Medicaid would usher in a technocratic dream era of postpartisan harmony.

Obama seems to be comfortable with the “fiscal cliff” arrangement that was part of the agreement over the debt ceiling. It gives advocates of the Grand Bargain to cut benefits on Social Security, Medicare and Medicaid a chance to jam through drastic changes in a period where the public’s attention to the harm being done might not be as intense as other times. Also now, the election results mean that the more Democratic Congress coming in January will likely to be less favorable to cutting benefits for Social Security, Medicare and Medicaid than the current one.

So Obama is hyping the phony “fiscal cliff” non-crisis big time. And given his famously disastrous negotiating skills shown in the debt-ceiling fight, it’s no cause for relief for supporters of Social Security, Medicare and Medicaid that Obama is framing his opening demand in the negotiations as “asking the wealthiest Americans to pay a little more.” (Remarks by the President on Extending Tax Cuts for the Middle Class 11/28/2012)

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Posted in Liberal Thoughts