Saturday, July 09, 2011

The Smartest In The Room

Doubt at your own peril that Barack Obama is the smartest person in the room. At his press conference on July 2, President Obama stated "Government has to start living within its means, just like families do. We have to cut the spending we can’t afford so we can put the economy on sounder footing, and give our businesses the confidence they need to grow and create jobs." Paul Krugman noted

That’s three of the right’s favorite economic fallacies in just two sentences. No, the government shouldn’t budget the way families do; on the contrary, trying to balance the budget in times of economic distress is a recipe for deepening the slump. Spending cuts right now wouldn’t “put the economy on sounder footing.” They would reduce growth and raise unemployment. And last but not least, businesses aren’t holding back because they lack confidence in government policies; they’re holding back because they don’t have enough customers — a problem that would be made worse, not better, by short-term spending cuts.

Spinning conservative myths while obsessing about the national debt at the expense of fighting job loss, however, does have its political advantages. Unfortunately, those dividends are paid only to the President and not to his party and I have argued, on July 5 and on July 9

While distinctions between the two parties ( as perceived by liberals and moderates) are narrowed, Obama gets to declare victory, the Democratic Party loses its identity. Disillusioned, many Democrats decline to vote for others of their own party but, appalled by the extremism of the opposition to the President, vote for the re-election of Barack Obama. Now that is one smart pol.

President Obama clearly believes that drastically cutting spending- even during an economic downturn, with unemployment now up to 9.2%- will enhance his re-election prospects. The impact upon other Democrats- congressional candidates- would be far worse.

The final chapter- or even the second chapter- hasn't been written on this yet. But The Hill on July 10 sets it up:

President Obama’s apparent willingness to discuss Social Security cuts in the debt-ceiling negotiations with Congress has angered labor unions and could cause them to withhold support for Democrats in the next election.

Press reports say President Obama is considering a proposal to change how Social Security payments are calculated by chaining payments from the program to the Consumer Price Index. That change would help bring down the national debt but would likely reduce benefits for retirees.

Unions are making it known that Social Security cuts are unacceptable to them and say they will lobby against any cuts to the popular entitlement program.

Now here is the kicker:

Signing off on cuts to Social Security could lead to less political support for the president and the Democratic Party as they move into the 2012 election season. Some unions say the issue is a litmus test for whether a candidate will earn their support.

“We will not endorse anyone if they believe we should cut Social Security,” said Karen Higgins, co-president of National Nurses United.

Higgins would not go as far to say if that promise included President Obama, but that lawmakers in Congress and at the state level would lose the backing of the nurses’ union if they slashed Social Security.

“It is definitely our local leaders. It is definitely our congressmen,” Higgins said. “We have concerns about where the president is going and we are asking him to make better decisions for our seniors and working people in this country.”

Higgins is an official of only one union but her comments are revelatory. She says, diplomatically and generously, "we have concerns about where the president is going." And her solution? "We will not endorse anyone if they believe we should cut Social Security," Higgins says- except possibly President Obama. "It is definitely our local leaders, it is definitely our congressmen," Higgins says of people who have had nothing to do with putting Social Security on the table. These unnamed local leaders and members of Congress will be held responsible; it's only Barack Obama who may escape accountability.

David Frum (who as of July 5 was unsure whether Obama is being rolled voluntarily or involuntarily) explains that a President uncomfortable with the drastic cuts advocated by Republicans could have appealed over their head to the American people. Nevertheless,

Obama never publicly branded the debt ceiling as "if the Republicans force this country into bankruptcy." He issued no public call to constituencies like the financial industry to bring pressure to bear on the issue. He did not warn that he would manage any crisis in ways that Republicans would not like. ("If the Republicans in Congress deny me the authority to pay everybody, then I'm going to have to choose some priorities. I don't think it's likely that Texas-based defense contractors will find themselves at the top of my list.")

Nobody could be such a bad negotiator as to want a progressive outcome to the debt negotiations and yet have them endanger Medicaid, Medicare, Social Security, and the economic recovery. As the President embarked- in April- on the debt negotiations, Glenn Greenwald was prescient:

I experience such cognitive dissonance when I read all of these laments from liberal pundits that Obama isn't pursuing the right negotiating tactics, that he's not being as shrewd as he should be. He's pursuing exactly the right negotiating tactics and is being extremely shrewd -- he just doesn't want the same results that these liberal pundits want and which they like to imagine the President wants, too. He's not trying to prevent budget cuts or entitlement reforms; he wants exactly those things because of how politically beneficial they are to him -- to say nothing of whether he agrees with them on the merits.

Things in Washington are getting awfully uncomfortable for Democratic office-holders. Except one.


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