Least Surprising Anti-Democratic Deal of the Year

Everyone who's surprised that Obama is offering to gut the social safety net in hopes the repugs will come to his birthday party, stand on your head.

Obama administration officials are offering to cut tens of billions of dollars from Medicare and Medicaid in negotiations to reduce the federal budget deficit, but the depth of the cuts depends on whether Republicans are willing to accept any increases in tax revenues.

Way back in December, economist Dean Baker wrote this about Obama's plan to kill Social Security:

The prospect of the U.S. government defaulting on its debt creates the sort of end of the world scenario in which Congress rushed to pass the TARP in 2008. Back then, President Bush, Fed Chairman Ben Bernanke and all sorts of other luminaries told members of Congress and the public that we would have a second Great Depression if the Wall Street banks were not immediately bailed out, no questions asked. And the money flowed.

The prospect of defaulting on the debt will create a similar outbreak of shrill warnings of disaster. This would likely to lead to scenario in which President Obama signs whatever debt ceiling package House Republicans hand him, even if it includes the privatization of Social Security and Medicare and major cuts and/or elimination of other important programs. The argument from the administration will be that they have no choice.

In order to avoid this train wreck, supporters of Social Security and Medicare have to restructure the options. They have to push President Obama to announce in advance that he will never sign a debt ceiling bill that includes cuts to Social Security and Medicare, the country’s two most important social programs.

These programs are crucial to the financial security and health of tens of millions of people. If there are to be changes in these programs then they should occur after a full public debate in the light of day, not as the result of Republican trickery and parliamentary game playing.

This would be a hugely popular position since not only Democrats, but also independents and even Tea Party Republicans overwhelming support Social Security and Medicare. Furthermore, the gun, in the form of a potential debt default, is actually pointed at the Wall Street banks, not the public.

A debt default would be a very bad situation and one that we absolutely should try to avoid. But the day after the default, the country would still have the same capital stock and infrastructure, the same skilled labor force and the same technical knowledge as it did the day before the default. In other words, the ability of our economy to produce more than $15 trillion in goods and services each year will not have been affected.

One thing that would not be around the day after a default is Wall Street. The default would wipe out the value the assets of the Wall Street banks, sending Goldman Sachs, Citigroup and the rest into bankruptcy. The recovery for the economy from such a situation will be difficult, but the shareholders of the Wall Street banks would be wiped out and their top executives unemployed.

For this reason, the threat of a default is a gun pointed most directly at Wall Street. Given the power of Wall Street over Congress, is inconceivable that they would ever let the Republicans pull the trigger.

This means that if President Obama is prepared to take the right and popular position of supporting Social Security and Medicare, he will win. This is both good policy and great politics. The public just has to force President Obama to stand up and show some leadership.

Let's see, what would I demand in exchange for gutting Social Security and Medicare? 99 percent tax rates on all income over $250,000? The Koch Brothers giving their entire fortune to a revitalized ACORN? The permanent dismantling of the entire Reichwing communications machine - Fox, talk radio, redstate.com and all? $10 trillion in stimulus to create new government jobs?

No, not even all of that would make up for what Obama is planning to give away for nothing. (He says he wants revenue increases in exchange, but for the last seven months he's given away the store time after time after time and gotten nothing in return - why should this time be different?)

I'm not the first to suggest the following negotiating technique to President Obama, but it's well worth showing again.



Maybe he thinks he's supposed to be Geary?