Editore"s Note
Tilting at Windmills

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April 19, 2011

THE DEPTH OF THE PROBLEMS WITH THE GANG OF SIX AGENDA.... I argued yesterday that, as the Gang of Six "compromise" reportedly comes together, it looks pretty awful, at least from a center-left perspective. My case was built around the notion that the gang's Democrats are simply giving up too much, in exchange for too little.

The Washington Post's Stephen Stromberg ran a reasoned, polite criticism of my item on this, and at the risk of sounding defensive, I thought I'd respond to the response.

[N]either the Democratic nor the Republican vision recently articulated is likely to result in the sort of reform needed to fix America's finances in a way that achieves anything but basic solvency, if that. Nor is either party likely to get its way after 2012, anyway. Barring some truly massive electoral landslide or Matt Miller's third-party groundswell, Republicans will still hate tax hikes, Democrats will still hate entitlement cuts, and the filibuster-era Senate will still be the filibuster-era Senate.

The Gang of Six's plan might not be perfect. But openness to compromise is critical. For anything big to happen, both parties will probably have to betray some of their most powerful instincts, even after 2012.

I'd quibble with some of the particulars here. While Paul Ryan's House budget plan actually runs enormous deficits for many years -- even if deficit reduction is the principal goal, the GOP proposal is basically a fraud -- I think it's fair to say President Obama's debt-reduction agenda does more than just "achieve basic solvency." Elsewhere in the piece, Stromberg characterizes the Republican plan as "keeping taxes low," when in fact the House GOP's measure goes much further, slashing already-low taxes by trillions of dollars over the next decade, to the exclusive benefit of the wealthy.

But I'm probably being picky with this. The larger argument is straightforward: we have a terrible budget mess, and it needs to be addressed quickly. Any credible plan that intends to make a serious difference will involve Republicans compromising on taxes and Democrats compromising on entitlements. That, in effect, is Stromberg's pitch. It's not an uncommon one, and by all accounts, it provides the foundation for the Gang of Six talks.

I say "by all accounts" because the Gang of Six's members haven't actually disclosed their plan just yet. We're relying on comments panelists have made in the media, and piecing the puzzle together.

And from my vantage point, the puzzle looks pretty awful. I can appreciate why "openness to compromise is critical," and I think if one goes back over the last few months, you'll find that I've consistently offered restrained analysis of the Gang's efforts, willing to at least hear the senators out. I will, of course, still withhold judgment until I see their finished product.

But I continue to think my skepticism is well grounded.

First, I'm not even sold on the premise. I'm not at all convinced there's a debt crisis -- I am, however, convinced there's a jobs crisis. Borrowing more money right now is cheap and easy, and if we had the political will, we could make the necessary investments to bring unemployment down in a hurry. (And nothing brings down the deficit in a hurry like meaningful economic growth.) I draw a distinction between short-term issues and long-term issues, and while I believe the latter is relevant, I believe the former is being ignored.

Second, talking about cutting "entitlements" is an overly broad word, because not all entitlements are created equal. The status of the finances for Social Security, Medicare, and Medicaid are very different, and face wildly different long-term challenges. With that in mind, the Gang of Six is targeting Social Security without cause.

Third, the Gang of Six is treating the White House's debt-reduction plan as a liberal alternative to Paul Ryan's plan, which is very wrong, and speaks poorly of the panel's approach.

And fourth, the Gang of Six appears to be narrowing in on a deal that lacks balance. Democrats are reportedly prepared to accept cuts to Medicare and Medicaid, cuts to Social Security, and spending caps that will do meaningful and lasting damage. In turn, Republicans are reportedly prepared to accept some modest tax increases, which nearly all serious GOP observers recognize as necessary, and which will likely bring us back to where we were in the 1990s.

"Openness to compromise" may be "critical," but the compromise should be balanced, equitable, and consistent with sound public policy. If the reports are accurate, the Gang of Six agenda falls far short on all of these counts.

Steve Benen 2:15 PM Permalink | Trackbacks | Comments (22)

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Anytime Democrats go to negotiate something with the Republicans, I know what it must have felt like to be a Cubs fan when they got Earnie Broglio back for trading future Hall of Famer Lou Brock.

Doesn't ANYBODY on the Democratic side know how to play this politics game?

Posted by: c u n d gulag on April 19, 2011 at 2:20 PM | PERMALINK

Where, oh where, is any meaningful inclusion of cuts in DOD spending?!? Nothing - and I mean NOTHING - will "cut the size of government" the way cutting the size of the defense budget will. And I'm not anti-military; I just covered the defense industry for a decade and saw lots and lots of programs that were badly run, overly complex, suffered huge cost overruns, and no one ever questioned whether they were needed at all.

Posted by: blondie on April 19, 2011 at 2:28 PM | PERMALINK

The real danger in all of this is that fact that there are many, many different solutions to the financial situation that will never, ever be spoken of let alone be 'presented' by the corporate media who is writing the script on what the solutions are and are not. This is how propaganda and brainwashing occur. Take for example the possible solutions of the Democratic budget presented by that congressman from Arizona .. forgot his name now .. a totally reasonable solution that simply has been washed away by the corporate media ... anyway to me this is the biggest danger: solutions, many of them, that will never see the light of day because of the control mechanisms in the corporate media which of course owned by corporations themselves.

Posted by: stormskies on April 19, 2011 at 2:34 PM | PERMALINK

"Openness to compromise" may be "critical," but the compromise should be balanced, equitable, and consistent with sound public policy. If the reports are accurate, the Gang of Six agenda falls far short on all of these counts.

Two which friend Stromberg would say:

"But, Steve, they're being 'bipartisan' about it! That is all We-Who-Live-Inside-The-Beltway want and care about. Its not like any of Us-Who-Are-So-Wise-And-Bipartisan actually need Medicare or Medicaid or Social Security.

Really, Steve, its like you aren't even one of Us-Who-Matter-Because-We-Live-Inside-The-Beltway!!"

Posted by: Josef K. on April 19, 2011 at 2:36 PM | PERMALINK

Ernie Broglio, remembered fondly, by me, for his 1958 season with the Toronto Maple Leafs.
As to negotiating, surely Obama's $38 billion becomes less than $400 million in 2011 must be cause for some optimism.

Posted by: Johnny Canuck on April 19, 2011 at 2:40 PM | PERMALINK

This is really scary. So that they can say everybody's sacrificing a bit, dontcha know, they'll cut benefits to the elderly, many of whom have little or no income besides Social Security, and raise some tax or other a tad, making tax attorneys even richer as they shift their clients' money around a bit more to avoid paying it. But Washington will give itself a party, and S&P will promise to keep our rating AAA. Once SS is means tested, that is the beginning of the end.

I've always been pretty cynical, but I never thought I'd see this. And one has to think Durbin is doing Obama's bidding on this. God, how depressing.

Posted by: Jwei on April 19, 2011 at 2:43 PM | PERMALINK

I agree with Steve. There's no problem with SS, and suggestions to the contrary are a con. If, however, we want to make SS even stronger, then we could simply raise or eliminate the cap on payroll taxes--no benefit cuts necessary. Non-crisis solved.

The fact that some Democrats (including Dick Durbin) are willing to be complicit in this con is, to say the least, disappointing.

Posted by: Chris on April 19, 2011 at 2:46 PM | PERMALINK

By the way, stormskies nailed it @2:34.

Posted by: Chris on April 19, 2011 at 2:47 PM | PERMALINK

This is how we can play it...say NO to everything the GOP proposes, let the tax cuts for everyone expire (we will still have those that the Obama administration has passed in the last two years), SHOW the revenue collected and how it goes to pay down the debt and TOTALLY refute the 'it's not a revenue problem it's a spending problem' LIE.

Posted by: SYSPROG on April 19, 2011 at 2:53 PM | PERMALINK

The current "Gang of Sicks" is just "The Catfood Commission, Part Deux". Same agenda, same gibberish. Only difference: this time all the participants are Senators. They intend to convert the catfood into legislation and make us eat it, in exchange for which they all get paid handsomely by their corporate sponsors. No need to wait for their dubious output; they will simply paraphrase the Bowles-Simpson plan.

Posted by: MGLoraine on April 19, 2011 at 2:59 PM | PERMALINK

"The larger argument is straightforward: we have a terrible budget mess, and it needs to be addressed quickly. Any credible plan that intends to make a serious difference will involve Republicans compromising on taxes and Democrats compromising on entitlements."

Any credible plan needs to involve raising taxes and cutting spending, which is different from saying that Democrats need to compromise on entitlements. Republicans want to eliminate Social Security and Medicare. There's no compromising with that.

Social Security is fine. We don't need to cut benefits; we don't need to means test; we don't need to increase the retirement age. Maybe raise the cap on contributions.

For Medicare, rather than structuring it as a deep well with no cost constraints, we need to figure out how other nations can deliver better health care to more people for half of what the we pay. This probably means that we need the public option; but it would also require Americans to be more serious about healthy diets and lifestyle (an ounce of prevention is worth a peck of treatment) and accept outcome-based treatment.

Why this is so hard for blue-dog Democrats to figure out, I don't know. I don't expect Republicans to change their stripes, but Democrats should know better.

Posted by: PTate in MN on April 19, 2011 at 3:02 PM | PERMALINK

How can anyone actually believe that the Republican members of the "Gang" actually will vote for any "compromise" proposal opposed by the remainder of the Republican caucus ? Again, the Democrats will unilaterally water down their proposals as a "compromise" that the Republicans won't honor. This nonsense has been going on since at least 1994 (when Bob Dole voted against the healthcare reform bill that he introduced), so why do Democrats alwaysget suckered ?


Posted by: H-Bob on April 19, 2011 at 3:12 PM | PERMALINK

@ Blondie
Go here and look at Defense Technology International..
http://www.zinio.com/reader.jsp?issue=416163209
It is put out by Aviation Week and is essentially a catalog of the latest and greatest war things to spend government dollars on.
Mr. Eisenhower's Industrial Military complex won't let any cuts happen.

Posted by: John R AKA Mr. Serf Man on April 19, 2011 at 3:18 PM | PERMALINK

Are we being shrill without knowing all the facts, AGAIN??? I say we wait and see what the Gang of Six actually proposes, and if it's bad for the middle class, take to the streets -- or the National Mall.

Posted by: pol on April 19, 2011 at 3:25 PM | PERMALINK

People have been suspicious of Obama since he was elected, that he would concede giving up SS or Medicare or both. Let us hope he might surprise us, the way his recent speech on never killng Medicare and raising taxes on the wealthy ended up surprising so many.

What seems interesting to me is this: there is nothing that will come of the Republicans' adventures in tea party land as long as the Senate is Democratic controlled, so in effect nothing at all will get done over these two years, at least.

Now, is there any point at all to talking with these rabid maniacs, and trying to make something worthwhile come out of it? I wonder if the Republicans in this gang are as rigid as their counterparts in the House? I hear tell that Chambliss says we must raise taxes, which would be a total non-starter in the House.

What can we really make of of this "gang of six"? Would anything these Senators came up with make it past the teapartiers in the House anyway?

Obama's speech made a good case for doing things right for the long haul. Nobody will EVER listen to HIM, of course, that's a given. No matter how often he yelled at the Democrats in Congress to rescind the tax cuts for the wealthy before the election they were afraid to do it; afterwards they couldn't and put him in the very awkward position of having to concede an extension in order to get anything else passed.

The Senators are supposedly the 'elite' managers of our government. They are not uniformly bright or in some cases even vaguely intelligent.

Too much power is in their hands and they are wielding it very imperfectly at best.

Posted by: jjm on April 19, 2011 at 3:27 PM | PERMALINK

Grand Compromise? Reagan's deal with Tip was basically raise payroll taxes to build up reserves for Social Security and Medicare/Medicaid to cope with the retiring baby boomers, while lowering income taxes. The reserves on those accounts basically covered part of the deficit and help to fund the tax cuts. Now it's time to start paying out those reserves, and the FICA taxes can't be used to help hide the deficit, and the Republicans want to go back on their word. It's now time for the artificially low income tax rates to go back up, but....

Remember when companies had pension plans, and some even had them fully funded? Then those plans were raided, money paid out to CEO's and shareholders, and pensioners were basically screwed. That's akin to the Republicans plans. Very business like.

Posted by: golack on April 19, 2011 at 3:29 PM | PERMALINK

Do not worry. Why? Because what ever the "compromise" this will NEVER pass this current House. Too many teabaggers in there who wouldn't accept any modest tax increases.

Posted by: Maritza on April 19, 2011 at 3:31 PM | PERMALINK

While I agree that the President's plan is most certainly not liberal, it is the offer put forward by the leader of the Democratic party, so it *is*, unfortunately, the liberal alternative. SB may bemoan this, but in the next post will let Obama off the hook by claiming it's useless to forth an actual liberal budget because the Republicans won't like it. But, gee, it sure would be nice if the leader of the Democratic party would, you know, occasionally stand up for working people. Oh, and a more liberal budget, based on polling data that I've seen, would have the virtue of actually being popular.

Obama may well do more to set back the progressive causes that people like SB seem to believe in more than any Republican ever did. In a kind of only Nixon could go to China sort of way, it takes a Democrat to truly enshrine the too many to name disastrous policies of the contemporary Republican party. He gives the batshit insane Republican policies a nice bi-partisan sheen.

Posted by: Vince on April 19, 2011 at 3:31 PM | PERMALINK

What too many overlook is that except for a few, if one lives long enough, one will eventually be poor. Of course if the GOP manages at some point to get its Medicare reforms through, lotsa folks won't live that long. Hmmm, there's a synergy there. Cut Medicare, people die sooner, collect less SS and voila! Social Security surpluses once again. But if people have shitty jobs their whole lives, SS won't be much anyway. Life won't be worth living with no medical care and a SS pittance. Gotta love the GOP...and current Dems, too, for giving up too easily.

Posted by: Wes on April 19, 2011 at 3:33 PM | PERMALINK

What continues to puzzle me -- and what I think is a big problem in all this -- is Obama's choice of who to lead the deficit commission, Alan Simpson and Erskine Bowles. I understand the need for choosing both a Republican and a Democrat. But Obama for all intents and purposes chose two people who are both to the far right on fiscal matters, at least as their parties have traditionally defined them. What was wrong with Bruce Bartlett? Or David Stockman? Or Bob Keane? or William Weld? And for the Democrats how about choosing a liberal? I'm not talking anything crazy; but what about Krugman or Stiglizt? Or Robert Reich? Or Laura Tyson? Or Walter Mondale?

It's as if Obama himself did everything in his power to frame the fiscal debate as far to the right as is possible.

And so here were are in 2011, and a deficit reduction package composed primarily of drastic cuts to programs working Americans depend on now constitutes what is "reasonable" and "centrist."

Posted by: Jasper on April 19, 2011 at 4:21 PM | PERMALINK

I don't buy the premise. Why would entitlements need to be cut? As I understand it, the greatest threat to our fiscal solvency moving forward is the faster rate of growth of health care costs compared to the rest of the economy's rate of growth. So why is the best way to deal with that to simply deny benefits to some people? Isn't the best way to deal with it to actually get at the root of the health care cost increase? And isn't that the HCR? Haven't we already taken the best step we can towards actually reducing the costs of health care, short of even more "progressive" steps we'll surely end up taking at some point anyway (meaning extending the government's umbrella to more and more people, not less and less).

If we're solvent in 5 years it won't be because we've found sufficient numbers of people to let die or students to allow to remain uneducated. It will be because HCR worked, and because we finally had the sense to knock off the anti-tax hysteria.

I think the 'debate' is a fraud because entire "entitlement cuts" are a canard, included essentially as a form of hippie-punching: if there's to be bi-partisanship, then the Dems have to give something, and all they care about is the sick, the poor, children and old people.

Posted by: Jim Pharo on April 19, 2011 at 4:58 PM | PERMALINK

One important aspect of all of this that's all too rarely discussed: The key reason to raise taxes on the rich isn't to "balance the budget." It's to redirect excess capital before it does too much damage to the economy.

Capital seeks investment opportunities as inexorably as an organism seeks oxygen. If worthwhile opportunities for investment don't exist, it flows into investments that are less worthwhile, or marginal, or flat-out bad. Once this starts, the prices of marginal assets are bid up, thereby attracting more capital. It's a vicious cycle that continues until a few players need to cash out, at which point the whole house of cards collapses, causing widespread economic devastation.

Even in the halcyon later Clinton years, even after the big hike in tax rates for the rich and the resultant partial paydown of the national debt, there was still too much capital, enough of an excess to create and fuel the dotcom boom/bust.

To me, it's bizarre that the center-left frames the deficit debate in terms of "compassion" and "inequality" when in fact the real issue is whether or not we, as a society, are prepared to do what it takes to prevent capital from acting against its own medium term interests. Under extreme conditions, the market doesn't right itself, and monetary policy has been pushing on a rope since before the crash even started. Only government, through taxation, can do what needs to be done.

I dunno. Maybe at some point the people who do capital's bidding will beg the government to save them from themselves. They should, you know-- the bust cost them trillions. But I wouldn't hold my breath.

Ayn Rand was a Soviet agent sent to destroy capitalism. And her evil plan is finally working. :/

Posted by: Tom Marney on April 19, 2011 at 5:33 PM | PERMALINK
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