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Thursday, Nov 8, 2012 10:00 PM UTC

America didn’t vote for a “grand bargain”

Listen up, Democrats: Obama didn't win by promising a compromise on entitlement reform. He won despite it

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Topics: Entitlement reform, national debt, Medicare, Medicaid, John Boehner, Federal Deficit, Social Security, Barack Obama, "grand bargain",

America didn't vote for a (Credit: AP/Carolyn Kaster)

By 10 p.m. on Tuesday, it was all over but the shouting — the shouting of Karl Rove, incredulous that Fox News’ “decision desk” would dare deploy the best statistical evidence at its disposal to call Ohio for the president; the shouting of wingnuts everywhere that — no fair! — Obama only won because of superstorm Sandy (because demonstrated competence in running the government is no reason to choose someone to … run your government); the shouting of the joyous throngs at McCormick Place waiting to receive their new second-term president. In my Hyde Park apartment just five blocks from the president’s home, soon all around me was jubilation. A second Barack Obama term! I alone seemed to feel the disquiet. This reelection troubles me. It troubles me because of the signal it may send to some of the people running the Democratic Party, and to Barack Obama, a signal that may threaten the long-term health of the Democratic Party itself.

I heard Dick Durbin, the Illinois senator who is close to Obama, on the radio the next morning boasting that he was one of the Democrats on the Simpson-Bowles Commission to vote for its recommendations — recommendations that included, in addition to changes in the tax code meant to increase revenue (while also cutting tax rates), diminishing eligibility and benefits for Medicare and Social Security. Though the commission failed to reach consensus, making its proposals moot, it was aiming at just the sort of “grand bargain” that Obama has consistently and quietly spoken about as his sort of beau ideal for what a successful presidency would look like. Durbin went on to say he hoped a grand bargain might be wrapped up in the next calendar year, before congressmen and senators became preoccupied with reelection. And maybe it will. As the blogger Lambert Strether impishly put it on Election Day: “I’m betting the Ds, who wouldn’t abolish the filibuster for health care or the stimulus, will abolish it if that’s what it takes to kick the hippies and gut Social Security.”

Fellow Democrats, let’s hope not. Please, please, please, let’s hope not.

The goal, with or without a filibuster reform, would be to “correct” a supposed structural budget crisis that liberal economists like Paul Krugman and Dean Baker convincingly point out doesn’t actually exist. In fact, the increase in the deficit was caused directly by the financial crisis and the housing bubble, and had nothing to do with the middle-class entitlement programs a grand bargain would cut. What’s more, the deficit is perfectly sustainable in any event. As for the record national debt, in fact the rest of the world’s eagerness to lend to America at next to no cost is in fact a glorious opportunity to increase American well-being, something not to be feared but welcomed. (America’s debt to GDP ratio is about 70 percent. Japan’s is over 225 percent — and that island, with the world’s third-largest economy, has not sunk into the sea. In fact, from 2001 to 2010 its economic growth has generally surpassed ours.)

America’s government is not too big. It is not “out of control.” Measured by the number of public sector employees compared to the overall population, in fact, it is at its smallest size since 1968. The Democratic compulsion to take the lead in making it smaller, to “control” it, is in itself a serious historic problem —and a perverse one at that. For it doesn’t work. Bill Clinton tried it in the 1990s, working with Republicans in Congress both to obliterate the deficit caused by Republican budgetary mismanagement, and “end welfare as we know it.”

What happened to the resulting budgetary surplus they created? Republican mismanagement and ideological extremism obliterated it, and the public acted like no miracle save for drastic cuts in middle-class entitlements could ever bring it back; media gatekeepers immediately forgot that Democrats had been “responsible” fiscal stewards, just like much of the populace simply forgot what Clinton did with welfare. After Hurricane Katrina, the story was that black residents of New Orleans had become so enervated by their reliance on welfare checks they were too dumb to get out of the rain. It was as if America’s newly stripped-bare welfare system’s time limits, work requirements and block grants had been thrown down a memory hole — even as, seven years later in our current unemployment crisis, according to the nonpartisan Center for Budget and Policy Priorities, welfare reform now greatly contributes to increased rates of poverty.

A simple historical fact: There is no political payoff for Democrats in presiding over governmental austerity. The evidence goes far back to long before Bill Clinton. In the mid-1970s, the first superstar of the Democratic austerity movement, William Proxmire, a budgetary obsessive whose campaign bumper stickers read “Waste Will Bury Us,” began awarding a monthly “Golden Fleece Award” to the government expenditure he judged the most wasteful — a clown show that frequently had no more effect than making things difficult for scientists doing basic research that frequently led to revolutionary breakthroughs. Austerity was the ideology of Gov. Jerry Brown in California, too — and also the man who beat Brown for the Democratic presidential nominee in 1976, Jimmy Carter, who announced, in his 1978 State of the Union address that “Government cannot eliminate poverty or provide a bountiful economy or reduce inflation or save our cities or provide energy.”

What Carter said wasn’t even true; for instance, he did deploy the power of government to reduce inflation, by appointing a Federal Reserve chairman, Paul Volcker, with a mandate to squeeze the money supply, an act of deliberate austerity that induced the recession that defeated him. Like I said, there was no political payoff: Ronald Reagan, depicting Carter on the campaign trail as just another Democratic spendthrift, defeated him, reappointed Volcker, then harvested the political credit when Volcker’s governmental policies did slay inflation. And then came the amnesia: When, 18 years later, Bill Clinton gave much the same State of the Union address — “The era of big government is over” — people acted like no Democrat had ever said anything like that before.

Now Barack Obama, oblivious, may be barreling into a yet more dangerous austerity dare, perhaps squeezing the two most effective and popular government programs in existence — Social Security and Medicare. Credibly pledging not just to preserve them but to extend them has been how generations of Democratic politicians have turned millions into habitual Democratic voters.

Barack Obama didn’t win by promising a grand bargain to rein them in. He won despite it. Democrats won’t win in the future by “reforming” entitlements. If they do it, they will lose, precisely because of it, and possibly for generations. If he believes things to be otherwise, God help the party of Jefferson and Jackson.

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Rick Perlstein is the author of "Nixonland: The Rise of a President and the Fracturing of America" and "Before the Storm: Barry Goldwater and the Unmaking of the American Consensus" More Rick Perlstein.

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