Despite all the handwringing over the impending collective right wing meltdown over president Obama's immigration orders there is one bright spot: if the Republicans decide to shut down the government it does not appear that the Democratic grassroots will have to go to general quarters again to try to save Social Security. For the first time since 2010 (and truthfully since 2009) the so-called entitlements do not seem to be on the chopping block.
It's worth revisiting how cuts to America's most important safety net came to be on a Democratic president's agenda in a time of economic crisis and financial chaos. Talking about cutting such programs at a time like that has been the last thing on any liberal's mind since Franklin Roosevelt took John Maynard Keynes' advice and used federal money to try to put people to work and stimulate the economy. Most observers assumed that Hoover's advisor Andrew Mellon's, prescription to "liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate... People will work harder, live a more moral life..." was an old saw that had turned into a punchline. But as we saw, Jazz-age austerity was suddenly back in vogue and everyone believed the crisis was a good opportunity to "do big things" which were all sold as being big government money savers. This was the Grand Bargain which President Obama first sprang on the nation a couple of weeks before he was inaugurated.
You'll recall that the Grand Bargain consisted of three big reforms. The first was health care reform (to "bend the cost curve.") The second was "entitlement" reform (to "make the program financially sound") and finally there was tax reform which would be revenue neutral lest anyone open that tax hike can of worms. The beltway was giddy with excitement about all this in the early days of the administration signaling as it did that the president was ready to embrace both their beloved bipartisanship and obsessive deficit fetish. The media called it "audacious" not because they thought .it would be difficult to achieve but because it was so very Grand. The common thinking was that if the new president could get these pesky problems off the country's plate once and for all, then he would be free to ... well, do other things, presumably having to do with miracles and world peace.
Everyone knows what happened next. Health reform was a painful and difficult process that ended up passing on a party line vote through an unusual procedural route due to the fact that the Democrats lost their 60th vote when Senator Kennedy passed away. But the first leg of the Grand Bargain passed. And by the time it did the right wing of the Republican Party had completely lost its collective mind.
Nonetheless, the White House believed it might be able to rekindle some of that old bipartisan feeling if it put deficit reduction on the top of the agenda and feature some serious cuts to Social Security to get those Republicans to agree to raise taxes on the wealthy. They tried more than once to get that done but despite over half a century of demagogueing Social Security, when the Democrats offered to cut it, they couldn't take yes for an answer.That would have meant giving President Obama a 'win" and they just couldn't stomach it. And anyway, by that time the obstruction strategy was in full effect and they were joyfully rampaging through the capitol attempting to destroy the country's credit ratings, shutting down the government, cutting off Unemployment Insurance and all manner of other random destruction across the domestic political landscape. In a mad scramble to keep the United States government from completely imploding they cobbled together the travesty of sequestration that cut deeply into necessary programs for real people. But the second piece of the Grand Bargain --- "entitlement reform" --- was left on the cutting room floor.
Today everyone says the Grand Bargain is dead. It certainly does not appear at this point that President Obama is going to put Social Security back on the chopping block, although it's always possible. But what about that last piece of the bargain, "tax reform"? Well, this is one zombie that hasn't died even in this age of total obstruction. And guess who's talking it up?
Rep. Paul Ryan, the incoming chairman of the powerful House Ways and Means Committee, laid out an expansive agenda Wednesday for 2015, including a GOP alternative to the Affordable Care Act and a fix for the looming shortfall in the federal disability insurance program.
An overhaul of the nation’s tax laws will also rank high on the agenda when Ryan (R-Wis.) takes the helm of the tax-writing panel in January.
Paul Ryan used to be considered a potential White House partner in the Grand Bargain. He had a reputation as a Very Serious policy guy who wasn't an ideologue and could be persuaded to work with Democrats. This was despite his extremist Ayn Rand philosophy and his penchant for fudging numbers and misleading statistics. Over time it became clear that he was a flim-flam artist and his image took a hit. And then he signed on as Mitt Romney's side-kick and that was the end of that. But Ryan's new position has put him back in play and it's unknown if the White House has any interest in playing with him on tax reform. It is to be fervently hoped at this point that they are not. Jonathan Chait explains why:
[Ryan] has been talking far and wide about how he plans to use “dynamic scoring.” That means the official scoring agencies in Congress would assume, as Ryan does, that lower tax rates dramatically increase economic growth, thus creating more revenue, a belief Ryan has advocated fervently his entire career, even in the face of massive evidence to the contrary. Dynamic scoring would enable him to reduce tax rates without matching all the lost revenue by cutting preferences in the tax code. In other words, it would be the sort of tax-cuts-for-the-rich agenda he has pursued unwaveringly ever since he was an Ayn Rand–reading, supply-side-economics-
Surprise. But the good news is that Ryan is pessimistic that even if he and the president were to throw back some shots and come to an agreement that the GOP congress would be able to forgive him for his immigration order. Ryan laments that the president poisoning the well for any more bargaining, Grand or otherwise. If "dynamic scoring" is what they've got on the agenda it's lucky for all of us that he is.
So, here we have the status of the Grand Bargain 2014. Health care reform made "entitlement" reform impossible and now immigration may be making tax reform impossible.That's not a bad outcome. And while it's true that the budget has been ruthlessly slashed due to the sequester debacle, we did manage to retire the Bush tax cuts so it hasn't be a total disaster on that front. All in all, the best you can say for it is that it's been a messy process with the extreme right wing foolishly doing the left's heavy lifting by refusing to negotiate when they had the upper hand. Their hatred of Obama made them blind to what he was offering them. And thank goodness for that.
Meanwhile, we have some new health care programs and a few million hard working immigrants will be able to come out of the shadows. That may not be a Grand Bargain but it's not the worst deal we've ever had either.