With GOP Roadmap in Hand, Where Will Obama and Dems Wind Up?
Some pundits imagine that President Obama has thoroughly out-foxed the Republicans on the debt-ceiling debate, arguing that he could safely push for “the biggest deal possible”—including concessions on Social Security and Medicare—because Republicanas are too divided to grasp the deal they'd be getting.
But Obama and many key Democrats have adopted crucial elements of the Republican/corporate frame on the economy. Whether or not Republicans are able to make these framing concessions pay off now in the debt-ceiling talks, the Democrats’ constituents will suffer in the long haul.
Democrats have accepted one Republican/corporate premise after another, with potentially devastating implications for the people who worked so hard to elect them:
1) Government debt—not the moral debt that the nation owes to working people out of work or under-employed for year after year—is the nation’s leading priority. The notion that reducing unemployment would significantly lower the deficit has been ruled out of bounds, because it would involve spending more government money.
2) Taxes on millionaires and billionaires cannot be raised immediately, because it would discourage these “job creators” from investing in the U.S. economy and speeding up the recovery. As the New York Times reported,
Mr. Obama used his news conference to counter Republicans’ attacks suggesting that he wanted immediate tax increases. With the economy still weak and unemployment high, he said, tax increases should not take effect before 2013…”
3) Social Security must be “trimmed” –in Obama’s term—because it will start encountering problems in 2037.
4 ) Medicare must be seriously cut back because of fast-rising costs.
5) High U.S. corporate taxes make American uncompetitive, and loopholes must be eliminated while overall rates are lowered.
If they accept all these ideas, how does the Democratic Party look any different to voters than the GOP? How can the voters count on Democrats to stand up for them when the chips are down?
This unwillingness to take clear moral stands has led to a dangerous blurring of the Democrats’ identity in the public mind. In 2006, pollsters and political analysts John Halpin and Ruy Teixeira analyzed Democracy Corps polling data and concluded: "A majority of Americans do not believe progressives or Democrats stand for anything."
The Obama administration—with its close identification with Wall Street leaders—has only exacerbated the problem rather than offering the much hoped-for alternative of government dedicated to serving the people most in need.
THE NEW PRIORITIES
The set of priorities now embraced by the Obama team is unrecognizable by anyone who witnessed his 2008 campaign, as reflected in the president's praise for the “Gang of Six,” a bipartisan group of conservatives who managed to persuade the usually liberal Sen. Dick Durbin to sign on. While many members of the Democrats’ Progressive Cacusus have been unsually quiet, Sen. Bernie Sanders (I-Vt.) has been outspoken on the direction promoted by the Gang and Obama:
While all of the details from the so-called Gang of Six proposals are not yet clear, what is apparent is that the plan would result in devastating cuts to Social Security, Medicare, Medicaid and many other programs that are of vital importance to working families in this country.
Meanwhile, tax rates would be lowered for the wealthiest people and the largest, most profitable corporations. This is an approach that should be rejected by the American people.
At a time when the rich are becoming richer and corporate profits are soaring, at least half of any deficit-reduction package must come from upper-income people and profitable corporations. We must also take a hard look at military spending, which has tripled since 1997.
Specifically, these are the Republican/corporate priorities now being pursued to varying degrees by Obama, the Gang of Six and some other Democrats:
1) BOOST BUSINESS CONFIDENCE: With a new stress on reassuring corporate CEOs that their investments are welcomed in the United States, we witness the Obama economic team making frantic efforts to build “business confidence” by reducing the deficit—even if it means slashing public-sector jobs and deepening the recession.
Further, the Obama administration is now promoting free trade agreements with South Korea , Colombia and Panama. These agreements blatantly contradict the campaign-trail rhetoric of Obama in 2008 that allowed him to carry the nation’s industrial belt from upstate New York to Wisconsin.
2) CUT SOCIAL SECURITY: There is an urgent need to strengthen Social Security, as few Americans have been able to save for their retirements given real-wage declkines since 1973 and nore recent, pervasive wage-cutting.
Instead, America is headed on a path of cutting Social Security although it is now fiscally sound and not due to enounter any problems until 2037, argues economist Dean Baker of the Center for Economic and Political Reserceh. When it comes to Socail Security, Obama has rapidly jettisoned his egalitarian words and latched on to reactionary solutions:
When President Obama preaches equality of sacrifice, it is the elderly and the poor who are supposed to do most of the sacrificing. His plan to change the annual cost-of-living adjustment formula for Social Security would reduce benefits for someone in their seventies by 3 percent, in their eighties by 6 percent and in their nineties by 9 percent.
These are huge cuts. The Republicans are screaming bloody murder because President Obama wants to raise the top tax rate by 4.6 percentage points. Imagine that he proposed raising taxes on the wealthy by twice as much. That is effectively what he is proposing for people in their nineties who are entirely dependent on Social Security.
And he is proposing to impose this tax on seniors who had nothing to do with the crisis, while leaving Wall Street untouched. A modest tax on financial speculation could raise more than $150 billion a year or $1.5 trillion over the course of a decade.
3) CUT MEDICARE: America' s roll of the uninsured is growing rapidly as premiums soar, employers dump coverage and insurers rack up record profits. At a moment like this, when many millions of workers in their 50s and 60s are being displaced with little chance of bying insurance in the private marketplace, it makes enormous sense to cover these folks by lowering the Medicare age and allowing them to pay for coverage through Medicare.
Instead, we are seeing a push by the Gang of Six—with Obama apparently concurring—to raise the Medicaid eligibility age to 67. This will mean millions of people floating around without insurance, unable to see a doctor and finally being forced to use emergency rooms when their conditions become sufficiently grave.
While I’m not surprised to see the current crew of Republican zealots thinking this is just the most excellent idea, it is hard to envison even Blue Dog Democrats wagging their tails about this approach.
5) CUT CORPORATE TAXES: Barack Obam’s Jobs and Competitivnesss Council is headed up by GE CEO Jefrrey Immelt, so we should perhaps not be surprised by Obama and Democrats like Kent Conrad incessantly repeating the myth that U.S. corporate taxes are too high. We should seek to eliminate loopholes and lower rates overall, runs the dominant line in Washington, D.C., even among Democrats.
However, as Edmund L. Andrews documents,
By most measures, the corporate tax burden is lower in the United States than it is in the European Union or in Japan or most other industrialized countries…
Those who see the American corporate tax as oppressive point to a striking fact: the standard corporate tax rate of 35 percent is now higher than that of most other industrialized countries. The average top rate is 25.8 percent in the European Union, where most nations have cut rates to attract investment.
But official tax rates are not the same as actual tax burdens. What American companies lose in high tax rates they more than make up in higher tax breaks.
What is the final outcome when top Democrats accept these myths and fail to see the vast suffering among the jobless, the uninsured, the impoverished elederly?
Instead of coming up with progressive solutions that expand ordinary people's economic rights and extend democracy, Democrats go along with a slightly less onerous version of the Republican program. That is what we are seeing right now.
That is no formula for maintaining an enthusiastic, fired-up base. And it isn't a formula for winning the presidential election in 2012, no matter how vile the Republican candidate is.