Saturday, November 24, 2012

The Fiscal Clift

    Eleanor Clift, writing at the Daily Beast, gamely tries to split the difference in the "fiscal cliff" debate, suggesting that voters are far ahead of the politicians in seeing the need to address entitlements as part of the solution to the ongoing budget debate.  But she begins her argument giving the president far too much credit:
The voters gave President Obama a second term, and now he’s counting on them to help him resolve the fiscal cliff in a responsible way...
Obama spent the better part of this year campaigning for a balanced approach to bring down the deficit. That means reining in the country’s most cherished entitlement programs—Social Security, Medicare, and Medicaid—in addition to raising taxes on the top 2 percent of households. 
    In fact, the president's "balanced approach" consisted largely of raising taxes $3 for every $1 in promised spending cuts, with the accent on "promised."  Entitlement reform largely received lip-service, mainly vague promises to cut Medicare and Medicaid costs by simply paying providers less.  (This is like a family reforming "housing costs" by sending the mortgage company $100/month less, without actually securing the bank's agreement first.  Doctors may not have as much sway over the government as banks have over a mortgagee, but they won't just sit and take it either.)  Social Security reform is virtually invisible on the White House's agenda.  If entitlement reform made it into the great electoral conversation at all, Paul Ryan, whom Clift does not even mention, deserves the credit.

    Clift goes on to site the president's challenge:
The expectation is that the real faceoff is between Obama and the Republicans over taxes, but the president faces an equally daunting challenge to convince liberal groups that they too will have to yield.
    However, there is no evidence that President Obama has any intention of challenging the AFSCME, SEIU, and NEA (three unions Clift lists,) or any other group on the left.  After all, they were part of the e pluribus coalition that gave him another four years.  More than six million voters from 2008 deserted Barack Obama in 2012, but not the unions.  And as Clift notes:
AFSCME, SEIU, and NEA—three powerful unions—launched an ad campaign this week in several states aimed at key senators calling for “Jobs Not Cuts,” urging that Medicare, Medicaid, and federal funds for education be protected.
    So what does Clift see as the game changer?  In spite of acknowledging that "the election results are being read by many Democrats as evidence that Obama should hold firm and resist any meaningful changes to Social Security, Medicare, and Medicaid," Clift seems to see promise in the Third Way:
That’s where Third Way comes in as the only Democratic leaning group that is actively working toward a major deal, or grand bargain. Beginning in August, Kessler and his colleagues visited 100 congressional offices on Capitol Hill, 90 Democrats and 10 Republicans, making the case for increased tax revenue, spending cuts, and entitlement reform...
[E]ven that party’s most left-leaning members no longer say entitlements are off the table, a sea change in partisan thinking. “I could be hallucinating,” [senior vice president for policy at Third Way Jim] Kessler concedes, but he finds the Democratic caucus moving toward acceptance of changes in the programs they hold dear, bolstered by an increase in moderate New Democrats. They went from 42 before the election to over 50, making them a quarter of the caucus and a potentially decisive voting bloc. 
    The addition of a whopping 9 or so "moderate New Democrats" does not exactly strike me as a mandate for entitlement reform.  (To be fair, Kessler did admit "I could be hallucinating.")

    Clift and Kessler do deserve credit for highlighting the extent of the entitlement crisis:
 In the mid '60s, when these programs [Great Society, New Frontier] came into being, federal investment outpaced spending on entitlements 3 to 1; in 2012, that ratio was reversed, and in 2020, the nonpartisan Congressional Budget Office says spending on entitlements will dwarf government investments 6 to 1.
    But the reality is that Democrats and President Obama have shown little if any inclination to seriously address the growth of entitlements.  Republicans, with the addition of the Medicare Prescription Drug benefit during George W. Bush's presidency, have often been no better.  But if there is to be any benefit derived from the 2012 election, it should be that a serious plan to reform entitlements was set forth by the Republican party via its vice presidential candidate Paul Ryan, and that the result was not electrocution by that proverbial third-rail topic.  Perhaps it's difficult to claim a mandate by saying, "We proposed entitlement reform and didn't lose in a landslide," but it may be the GOP's best argument.  Now we just need some more Republicans with the guts to say it.

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