The Wrongologist

“It would be irresponsible not to speculate.” – Peggy Noonan

You gotta love that quote. Now that
the election is behind us, let’s speculate on where we are headed with
the Grand Bargain.

Mr. Obama
was reelected.  It was an Electoral College landslide. That lopsided electoral
count was somewhat deceptive, since Republicans didn’t lose by that much in key
electoral states and they still control the House, so it is uncertain that the Democrats get to control the political
agenda or even the Presidency beyond the next 4 years. 

Despite talk about a new coalition, ideologically
the Democrats have become more like Republicans of the 1970’s. To a great
degree, Republicans have become
reactionaries, similar to the John Birch Society of the 1950’s. 

There is
no viable third party in the US, because
today’s Republicans and Democrats agree on a surprising number of issues.

And they may get to “yes” on the Grand
Bargain.

Mr. Obama wants the Grand Bargain to encompass
tax reform, spending cuts and revenue increases. It is unclear what
John Boehner wants included in a Grand Bargain.

What does the trade that is shaping up
between the parties look like?

Let’s hope it isn’t based on the memo Mr. Obama sent to Mr. Boehner in
July, 2011.  

Check this
out: Bob Woodward was on Meet The Press last Sunday. He spoke about a memo from Mr.
Obama to House Speaker John Boehner which contains the White House’s 2011 Grand Bargain proposal to the Republicans.

Woodward’s
on-air comment:

“This is a confidential document, last offer the president — the
White House made last year to Speaker Boehner to try to reach this $4 trillion
grand bargain.  And it’s long and it’s tedious and it’s got budget jargon
in it.  But what it shows is a willingness to cut all kinds of
things, like TRICARE, which is the sacred health insurance program for the
military, for military retirees; to cut Social Security; to cut Medicare. And there are some lines in
there about, “We want to get tax rates down, not only for individuals but for businesses.”  So Obama and the White House
were willing to go quite far.”

You can view
the entire WH memo here. Despite what Mr. Woodward says, it really isn’t long
(3pages) or tedious. Remember, this
was Obama’s best and final offer to Boehner. It is called the “Nabors
draft”. Rob Nabors is Mr.
Obama’s Director of Legislative Affairs. The penciled markup may be by Woodward
or his staff.

Ignore Woodward’s fax number on the top of the
memo. He probably doesn’t know about PDFs and email.

Below, the
specific cuts Obama offered to Boehner include:

Note in the
first paragraph: “Firewall for FY 2012 and 2013 defense appropriations”. That
means no cuts in defense spending until FY 2014.

“Civilian
Retirement” probably means extending the eligibility age for Social Security age
and increasing/removing the income caps for SS taxes. It saves $33 Billion.  $27 Billion of cuts come from “Military
Retirement” and TRICARE military benefits; and significant cuts to many other
non-defense related agencies.

Notably, the
extension of Unemployment Insurance benefits (UI above) adds $43 Billion in
costs to the Grand Bargain proposal.

Let’s look
at page 2:

The headline on page 2 of this memo should
be the $425 Billion cut to Medicare and Medicaid and a reaffirmation of the tax
rates for those earning below $250k.  

Go read all 3 pages. It looks more like what Boehner’s plan would have been if the
Republicans had WON the Senate. What was Mr. Obama thinking in July, 2011?

That isn’t knowable. What is knowable is that
if last year’s ”best and final” is Mr. Obama’s starting point for this month’s
negotiation on the “Grand Bargain”, it would be a travesty, considering Mr. Obama’s current political capital.

The
“Fiscal Cliff” is not a dire
emergency. The Sequester and lapse of Bush tax cuts may be a more productive way of starting
the deficit conversation than spending the next 6 weeks with both
parties working together in a sham spirit of compromise.

It isn’t
compromise to cut benefits of the powerless, it is cowardly. We need to ask Mr. Obama:

• How
  much money would workers lose (or not save) if these Medicare/Medicaid cuts and
  the rise in Social Security age go into effect?

• What
  percentage of their median savings would this impact?

• How
  would it compare to the percentage of loss of those whose Bush tax cuts could
  sunset?

• How
  much would it reduce the deficit and are some economists correct that it could cause
  a serious recession?

Mr. Obama
will succeed in “reforming” Social Security and Medicare because it is
something only a Democrat can do, but this shouldn’t be his starting point
for the Grand Bargain.

Let’s see
if Mr. Obama changes course from this ill-advised memo.