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Grand Bargain or Great Betrayal? Reading the Tea Leaves of Fiscal Intentions for Entitlements

Wednesday, 14 November 2012 00:00 By Lambert Strether, Truthout | News Analysis

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Obama FiscalPresident Barack Obama speaks in the East Room of the White House, in Washington, November 9, 2012. (Photo: Stephen Crowley / The New York Times)An analysis of the president's statements concerning Social Security and Medicare during the campaign suggests a Great Betrayal may be in the offing. And then there was that curious incident in the East Room.

"The dog did nothing in the night-time. That was the curious incident."
                                -Sir Arthur Conan Doyle, Silver Blaze

Obama made his opening move in the lame duck's lightning round of 11-dimensional chess, negotiations on the "fiscal cliff" - and whichever Pete Peterson staffer invented that phrase surely deserves a bonus - in a statement from the East Room at 1:05 p.m., Friday, November 9. Curiously, Obama did not mention Social Security, or social insurance programs generally ("entitlements," so-called). And yet, of all fiscal issues, these issues concern ordinary Americans  the most. Why then is Obama silent in his post-election moment of triumph? To answer, let's contrast Obama's language on social insurance with FDR's; document the positions that Obama and his surrogates have taken on social insurance cuts; and conclude some frank speculation.

What Obama Did Not Say

Obama did not say this. FDR, June 8, 1934 (emphasis added):

Fear and worry based on unknown danger contribute to social unrest and economic demoralization. If, as our Constitution tells us, our federal government was established, among other things, "to promote the general welfare," it is our plain duty to provide for that security upon which welfare depends.... These three great objectives - the security of the home, the security of livelihood and the security of social insurance - are, it seems to me, a minimum of the promise that we can offer to the American people. They constitute a right which belongs to every individual and every family willing to work.

Contrast Obama, November 9, 2012:

[Middle class tax cuts] would give millions of families, 98 percent of Americans and 97 percent of small businesses, the certainty that they need going into the new year. It would immediately take a huge chunk of the economic uncertainty off the table. And that will lead to new jobs and faster growth.... And so a lot of the uncertainty that you're reading about - that will be removed.

FDR understands that social insurance programs are a "plain duty" of the government, and are a "right." Obama does not, or he would say that he does. And contrast FDR's concrete "fear and worry" with Obama's mushy and out-of-touch "uncertainty," today's version of Keynes's "animal spirits" and relevant only to "job creators." Most Americans aren't "uncertain" about their 1040 next April; they're "worried" about the bills right now!

And Obama did not say this. FDR, August 15, 1938:

We must face the fact that in this country we have a rich man's security and a poor man's security and that the Government owes equal obligations to both.

Contrast Obama, November 9, 2012:

Our work is made that much more urgent because at the end of this year we face a series of deadlines that require us to make major decisions about how to pay our deficit [sic] down, decisions that will have a huge impact on both the economy and the middle class, both now and in the future.

FDR understands that "security" is an "obligation" owed to citizens by their government. Obama does not. And contrast FDR's concrete "rich" and "poor" with Obama's mushy and obfuscatory "middle class." Apparently, the 1%, the working class and the poor are unmentionable parts of "the economy." This from a president where 93 cents out of every dollar of income growth went to the 1%. (Under Bush, the figure was 65 cents.) Moreover, we don't have a debt problem. We have an aggregate demand problem; the only problem with the deficit is that it's too small!

And Obama did not say this. Joe Biden, August 14, 2012:

I guarantee you, flat guarantee you, there will be no changes in Social Security. I flat guarantee you.

Contrast Obama, November 9, 2012:

I intend to work with both parties to do more, and that includes making reforms that will bring down the cost of health care, so we can strengthen programs like Medicaid and Medicare for the long haul, but, as I've said before, we can't just cut our way to prosperity. If we're serious about reducing the deficit, we have to combine spending cuts with revenue. And that means asking the wealthiest Americans to pay a little more in taxes.

Never mind that deficit owls understand that taxes do not fund spending, even if deficit hawks and doves do not. And never mind the lethal folly of imposing austerity in the midst of a recession. And never mind that Obama's "little more" won't even come close to the 90 percent top rate under the moderate Republican Eisenhower administration. What's interesting is not what Obama says, but what he does not say. The closest he comes to mentioning social insurance programs at all - and Social Security in particular - is "programs like Medicare and Medicaid." "Like" in what way? Why the silence? Why did the dog not bark?

What Obama and His Surrogates Have Said

Here's what we should be hearing from Obama: "I guarantee that there won't be one penny of cuts to social insurance programs, and any efficiency gains will be passed through as increased benefits." This is a moderate and centrist position; a more radical position would be to demand that Social Security benefits be made age-neutral, and that the retirement age be reduced to 60. Maybe then elders wouldn't have to work 'til they dropped, and there'd be more jobs for young people. But we will never hear that from Obama. Here's what we have been hearing instead:

Obama on ABC's "This Week with George Stephanopoulos on May 13, 2007:

Stephanopoulos: You've also said that with Social Security, everything should be on the table.
Obama: Yes.
Stephanopoulos: Raising the retirement age?
Obama: Everything should be on the table.
Stephanopoulos: Raising payroll taxes?
Obama: Everything should be on the table.


If "everything is on the table," then cuts are on the table.


Obama 2012 campaign site:

Both President Obama and Mitt Romney know that the program is solvent for more than two decades and that there's a need for gradual reforms to the benefits that millions of seniors have worked for, paid for and earned.... The President knows that guaranteed Social Security benefits are not handouts, but a bedrock of the commitment to retirement security America makes to our seniors. He believes that no current beneficiaries should see their basic benefits reduced, and he will not accept any approach that slashes benefits for future generations.

Stirring words 'til you read them as if a lawyer wrote them. "Gradual reforms" is a euphemism for cuts. "Current beneficiaries" is a euphemism for elders betraying their children into a tiered program of lesser benefits for them. "Slash" doesn't rule out cuts. A "commitment" is not a right. And the right to social insurance is for everyone of all ages, not just today's "seniors." And what on earth is meant by "basic?"

Obama advisor David Axelrod, Morning Joe, September 23, 2012:

[D]o you adjust the growth of the program? That's a discussion worth having. But again, we have to approach it in a balanced way.

"Adjust the growth" is certainly a contender for Best Euphemism, "Cuts" Division! "Balanced" means that your benefits get cut, and in exchange the rich will have their accountants figure out a way to avoid or evade "a little more" in taxes. (This process is also called "shared sacrifice.")

Obama in debate with Romney, October 13, 2012:

You know, I suspect that on Social Security, we've got a somewhat similar position.

Curious, given that the Republican platform would privatize social insurance, the crown jewels of the New Deal.

Obama's Silence

Here are some reasons why Obama might be silent on social insurance, Social Security and even "entitlements."

1. Obama silently took Social Security "off the table" because he believes that the "obligation" of government to provide social insurance to its citizens as a "right" is so obvious that it need not be defended.

2. Obama silently took Social Security "off the table" because he got muscled by Bernie Sanders, socialist. That seems highly unlikely. Reid may have been muscled; but that doesn't mean Obama has been.

3. Obama silently took Social Security "off the table" because he's moving left with the new Senate. Could be, but contrast FDR's language with Obama's. Obama's language, again, is not the language of a president who is persuaded, with FDR, that social insurance is a right. And if social insurance is not a right, it's a privilege, and it can be taken away.

4. Obama is silent on Social Security because the existing deal with Boehner is still "on the table." WaPo:

When they reached Daley's office, the Republicans were handed a four-page document that made changes, typed in red, to an offer Boehner had made two days earlier, during a secret meeting at the Capitol. A lot of red ink, the Republicans thought. But the major elements of a bargain seemed to be falling into place: $1.2 trillion in agency cuts, smaller cost-of-living increases [cuts] for Social Security recipients, nearly $250 billion in Medicare savings achieved in part by raising the eligibility age [from 65 to 67, a cut]. And $800 billion in new taxes.

5. Obama is silent on Social Security because he's already betrayed his supporters with a back room deal, exactly as he betrayed supporters of "the public option" by silently taking it off the table even as he encouraged "progressives" to believe his health care plan would include it.

6. Obama is silent on Social Security because all he has to do is wait for "progressives" and liberals to implode, yet again.

Readers will note some skepticism with regard to the president's good intentions. True, past performance is no guarantee of future results. But when simple and obvious words are not said - like FDR's - that government "owes equal obligation" to rich and poor, or Biden's "flat out guarantee" - one can only wonder what else is not being said.

A Note on Vocabulary

A key piece of Orwellian language in the "fiscal cliff" discourse is the word entitlements: Government services that people are "entitled" to if they pass some test; income, or age, or illness. (Oddly, or not, the Pentagon is not considered an "entitlement" for Lockheed, zero percent interest is not considered an "entitlement" for banks, and lavish bonuses and stock options are not considered "entitlements" for banktsters.) When discussing programs like Medicare, Medicaid, unemployment insurance and Social Security, we would do better to use, rather than entitlements (or its close cousin, safety net), FDR"s original term: "social insurance." Social insurance contains in itself the reasons why government needs to provide such services and not individuals or the private sector: First, only the government can confer rights; second, only the government can deliver services regardless of the state of the economy, because of its fiscal powers. Safety net preserves the "security" denotation while erasing the connotation of rights; entitlement erases both security and rights. Words matter.

A second example of Orwellian language, Grand Bargain, has denoted a political outcome whereby social insurance programs - and especially Social Security - would be gutted (or, in the jargon, "tweaked") by Democrats in exchange for meaningless concessions from Republicans. And for years, the countervailing meme to the Grand Bargain - "Social Security is the third rail of American politics" - prevailed. No doubt because of decades of propaganda of Goebbels-ian scale, the 1%'s takeaway from the New Deal - "Never again!" - has become the conventional wisdom of official Washington (very much including Obama, as we have seen). William R. Black, correctly, sees a Grand Bargain as a repudiation of the Democratic Party's New Deal legacy, and suggests replacing the phrase with "Great Betrayal."

Copyright, Truthout. May not be reprinted without permission.

Lambert Strether

Lambert Strether is a contributing author at Naked Capitalism and blogs at Corrente.


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Grand Bargain or Great Betrayal? Reading the Tea Leaves of Fiscal Intentions for Entitlements

Wednesday, 14 November 2012 00:00 By Lambert Strether, Truthout | News Analysis

Click here to support news free of corporate influence by donating to Truthout. Help us reach our fundraising goal so we can continue doing this work!

Obama FiscalPresident Barack Obama speaks in the East Room of the White House, in Washington, November 9, 2012. (Photo: Stephen Crowley / The New York Times)An analysis of the president's statements concerning Social Security and Medicare during the campaign suggests a Great Betrayal may be in the offing. And then there was that curious incident in the East Room.

"The dog did nothing in the night-time. That was the curious incident."
                                -Sir Arthur Conan Doyle, Silver Blaze

Obama made his opening move in the lame duck's lightning round of 11-dimensional chess, negotiations on the "fiscal cliff" - and whichever Pete Peterson staffer invented that phrase surely deserves a bonus - in a statement from the East Room at 1:05 p.m., Friday, November 9. Curiously, Obama did not mention Social Security, or social insurance programs generally ("entitlements," so-called). And yet, of all fiscal issues, these issues concern ordinary Americans  the most. Why then is Obama silent in his post-election moment of triumph? To answer, let's contrast Obama's language on social insurance with FDR's; document the positions that Obama and his surrogates have taken on social insurance cuts; and conclude some frank speculation.

What Obama Did Not Say

Obama did not say this. FDR, June 8, 1934 (emphasis added):

Fear and worry based on unknown danger contribute to social unrest and economic demoralization. If, as our Constitution tells us, our federal government was established, among other things, "to promote the general welfare," it is our plain duty to provide for that security upon which welfare depends.... These three great objectives - the security of the home, the security of livelihood and the security of social insurance - are, it seems to me, a minimum of the promise that we can offer to the American people. They constitute a right which belongs to every individual and every family willing to work.

Contrast Obama, November 9, 2012:

[Middle class tax cuts] would give millions of families, 98 percent of Americans and 97 percent of small businesses, the certainty that they need going into the new year. It would immediately take a huge chunk of the economic uncertainty off the table. And that will lead to new jobs and faster growth.... And so a lot of the uncertainty that you're reading about - that will be removed.

FDR understands that social insurance programs are a "plain duty" of the government, and are a "right." Obama does not, or he would say that he does. And contrast FDR's concrete "fear and worry" with Obama's mushy and out-of-touch "uncertainty," today's version of Keynes's "animal spirits" and relevant only to "job creators." Most Americans aren't "uncertain" about their 1040 next April; they're "worried" about the bills right now!

And Obama did not say this. FDR, August 15, 1938:

We must face the fact that in this country we have a rich man's security and a poor man's security and that the Government owes equal obligations to both.

Contrast Obama, November 9, 2012:

Our work is made that much more urgent because at the end of this year we face a series of deadlines that require us to make major decisions about how to pay our deficit [sic] down, decisions that will have a huge impact on both the economy and the middle class, both now and in the future.

FDR understands that "security" is an "obligation" owed to citizens by their government. Obama does not. And contrast FDR's concrete "rich" and "poor" with Obama's mushy and obfuscatory "middle class." Apparently, the 1%, the working class and the poor are unmentionable parts of "the economy." This from a president where 93 cents out of every dollar of income growth went to the 1%. (Under Bush, the figure was 65 cents.) Moreover, we don't have a debt problem. We have an aggregate demand problem; the only problem with the deficit is that it's too small!

And Obama did not say this. Joe Biden, August 14, 2012:

I guarantee you, flat guarantee you, there will be no changes in Social Security. I flat guarantee you.

Contrast Obama, November 9, 2012:

I intend to work with both parties to do more, and that includes making reforms that will bring down the cost of health care, so we can strengthen programs like Medicaid and Medicare for the long haul, but, as I've said before, we can't just cut our way to prosperity. If we're serious about reducing the deficit, we have to combine spending cuts with revenue. And that means asking the wealthiest Americans to pay a little more in taxes.

Never mind that deficit owls understand that taxes do not fund spending, even if deficit hawks and doves do not. And never mind the lethal folly of imposing austerity in the midst of a recession. And never mind that Obama's "little more" won't even come close to the 90 percent top rate under the moderate Republican Eisenhower administration. What's interesting is not what Obama says, but what he does not say. The closest he comes to mentioning social insurance programs at all - and Social Security in particular - is "programs like Medicare and Medicaid." "Like" in what way? Why the silence? Why did the dog not bark?

What Obama and His Surrogates Have Said

Here's what we should be hearing from Obama: "I guarantee that there won't be one penny of cuts to social insurance programs, and any efficiency gains will be passed through as increased benefits." This is a moderate and centrist position; a more radical position would be to demand that Social Security benefits be made age-neutral, and that the retirement age be reduced to 60. Maybe then elders wouldn't have to work 'til they dropped, and there'd be more jobs for young people. But we will never hear that from Obama. Here's what we have been hearing instead:

Obama on ABC's "This Week with George Stephanopoulos on May 13, 2007:

Stephanopoulos: You've also said that with Social Security, everything should be on the table.
Obama: Yes.
Stephanopoulos: Raising the retirement age?
Obama: Everything should be on the table.
Stephanopoulos: Raising payroll taxes?
Obama: Everything should be on the table.


If "everything is on the table," then cuts are on the table.


Obama 2012 campaign site:

Both President Obama and Mitt Romney know that the program is solvent for more than two decades and that there's a need for gradual reforms to the benefits that millions of seniors have worked for, paid for and earned.... The President knows that guaranteed Social Security benefits are not handouts, but a bedrock of the commitment to retirement security America makes to our seniors. He believes that no current beneficiaries should see their basic benefits reduced, and he will not accept any approach that slashes benefits for future generations.

Stirring words 'til you read them as if a lawyer wrote them. "Gradual reforms" is a euphemism for cuts. "Current beneficiaries" is a euphemism for elders betraying their children into a tiered program of lesser benefits for them. "Slash" doesn't rule out cuts. A "commitment" is not a right. And the right to social insurance is for everyone of all ages, not just today's "seniors." And what on earth is meant by "basic?"

Obama advisor David Axelrod, Morning Joe, September 23, 2012:

[D]o you adjust the growth of the program? That's a discussion worth having. But again, we have to approach it in a balanced way.

"Adjust the growth" is certainly a contender for Best Euphemism, "Cuts" Division! "Balanced" means that your benefits get cut, and in exchange the rich will have their accountants figure out a way to avoid or evade "a little more" in taxes. (This process is also called "shared sacrifice.")

Obama in debate with Romney, October 13, 2012:

You know, I suspect that on Social Security, we've got a somewhat similar position.

Curious, given that the Republican platform would privatize social insurance, the crown jewels of the New Deal.

Obama's Silence

Here are some reasons why Obama might be silent on social insurance, Social Security and even "entitlements."

1. Obama silently took Social Security "off the table" because he believes that the "obligation" of government to provide social insurance to its citizens as a "right" is so obvious that it need not be defended.

2. Obama silently took Social Security "off the table" because he got muscled by Bernie Sanders, socialist. That seems highly unlikely. Reid may have been muscled; but that doesn't mean Obama has been.

3. Obama silently took Social Security "off the table" because he's moving left with the new Senate. Could be, but contrast FDR's language with Obama's. Obama's language, again, is not the language of a president who is persuaded, with FDR, that social insurance is a right. And if social insurance is not a right, it's a privilege, and it can be taken away.

4. Obama is silent on Social Security because the existing deal with Boehner is still "on the table." WaPo:

When they reached Daley's office, the Republicans were handed a four-page document that made changes, typed in red, to an offer Boehner had made two days earlier, during a secret meeting at the Capitol. A lot of red ink, the Republicans thought. But the major elements of a bargain seemed to be falling into place: $1.2 trillion in agency cuts, smaller cost-of-living increases [cuts] for Social Security recipients, nearly $250 billion in Medicare savings achieved in part by raising the eligibility age [from 65 to 67, a cut]. And $800 billion in new taxes.

5. Obama is silent on Social Security because he's already betrayed his supporters with a back room deal, exactly as he betrayed supporters of "the public option" by silently taking it off the table even as he encouraged "progressives" to believe his health care plan would include it.

6. Obama is silent on Social Security because all he has to do is wait for "progressives" and liberals to implode, yet again.

Readers will note some skepticism with regard to the president's good intentions. True, past performance is no guarantee of future results. But when simple and obvious words are not said - like FDR's - that government "owes equal obligation" to rich and poor, or Biden's "flat out guarantee" - one can only wonder what else is not being said.

A Note on Vocabulary

A key piece of Orwellian language in the "fiscal cliff" discourse is the word entitlements: Government services that people are "entitled" to if they pass some test; income, or age, or illness. (Oddly, or not, the Pentagon is not considered an "entitlement" for Lockheed, zero percent interest is not considered an "entitlement" for banks, and lavish bonuses and stock options are not considered "entitlements" for banktsters.) When discussing programs like Medicare, Medicaid, unemployment insurance and Social Security, we would do better to use, rather than entitlements (or its close cousin, safety net), FDR"s original term: "social insurance." Social insurance contains in itself the reasons why government needs to provide such services and not individuals or the private sector: First, only the government can confer rights; second, only the government can deliver services regardless of the state of the economy, because of its fiscal powers. Safety net preserves the "security" denotation while erasing the connotation of rights; entitlement erases both security and rights. Words matter.

A second example of Orwellian language, Grand Bargain, has denoted a political outcome whereby social insurance programs - and especially Social Security - would be gutted (or, in the jargon, "tweaked") by Democrats in exchange for meaningless concessions from Republicans. And for years, the countervailing meme to the Grand Bargain - "Social Security is the third rail of American politics" - prevailed. No doubt because of decades of propaganda of Goebbels-ian scale, the 1%'s takeaway from the New Deal - "Never again!" - has become the conventional wisdom of official Washington (very much including Obama, as we have seen). William R. Black, correctly, sees a Grand Bargain as a repudiation of the Democratic Party's New Deal legacy, and suggests replacing the phrase with "Great Betrayal."

Copyright, Truthout. May not be reprinted without permission.

Lambert Strether

Lambert Strether is a contributing author at Naked Capitalism and blogs at Corrente.


Hide Comments

blog comments powered by Disqus