Thursday, March 03, 2005

Alan Baby, Why So Jaded?

I recall being somewhat amused when President Bush, basking in the afterglow of his electoral victory, defiantly proclaimed about Social Security privatization:

I will also assure members of Congress that this is an issue on which I campaigned, and I'm still standing.
Bush was claiming to have a mandate to reform Social Security because he had "campaigned" on the issue. The only problem is, he didn't exactly, um, campaign on the issue. Bush never put forward a plan. The non-existent plan wasn't discussed at the convention, and it wasn't a part of the stump on the campaign trail. Making veiled and ambiguous references to ownership societies and private accounts does not count as a plan, or "campaigning" on an issue, and it certainly doesn't provide you with a mandate to radically alter the Social Security system as we know it after coming into office.

Which is really part of the bigger picture when appreciating the significance of November 3, 2004. Bush's victory wasn't really garnered on the strength of
values issues - I don't think it was a question of same sex marriage or abortion. And it definitely wasn't a victory based on his domestic agenda, such as the intention to privatize Social Security. Bush won because, for better or for worse, the American people trusted him to wage the war on terror, and people were scared. In that state of fear, Bush seemed like the safe choice, and his display of strength, though you might disagree with its validity, was soothing to many. There were malicious "wolves" nipping at the borders, and electing John Kerry would result in another al-Qaeda led attack, or so the campaign commercials and the double talking Vice President would have had voters believe. If you watched the Republican Convention, there seemed to be a strict quota on the number of times any given speaker had to utter: terrorism, terrorists, 9/11, threat, war, terrorism, etc, repeat, etc.

Thus, it perked my interest to see the President try to convince voters, retroactively, that they had given him a mandate to drastically undo the Social Security system as we know it. I wondered whether Bush believed his own hype, or whether he would be able to convince voters by the sheer force of his will Maybe I was missing the real dynamic when such dubious matters of fact are introduced to the public. The events of the last couple of months have confirmed what was already knowable to the attentive observer: the American people welcomed the site of Iraqis voting, but have largely rejected the President's highly marketed, extensively spun, and aggressively sold plan to torpedo the most popular entitlement program in the nation's history. Bush has a mandate in the realm of foreign policy, but his victory was limited on the domestic front - even with control of both Houses of Congress.

Josh Marshall (the one man privatization watching gang) has an excellent summary of some recent poll data which reveals the strength of Bush's "mandate." The Pew poll depicts Bush's nadir (at least for the moment):

The new poll indicates that the Social Security debate is packing a powerful political punch. It finds that just 29% of Americans approve of the way that Bush is handling the issue. This is the president's lowest approval rating for any policy area, and is considerably lower than his overall job approval rating of 46%.[emphasis added]
Poll results such as these, and the rumblings from the burgeoning chorus of doubters found among the ranks of Republican lawmakers has raised the hopes of blog watching pundits from Atrios, to the notoriously pessimistic Scot, Mick Arran (No, really, this is the first time I think I've ever seen one of Mick's posts smile). There is a good chance that the Democrats have been able to stave off the ravaging of Social Security for now, but before we raise the Mission Accomplished banner, let's remember that Bush is known for his stubbornness, and this is something that Republicans have been patiently working towards for more than sixty years. Since I recently cautioned against some premature Right-wing triumphalism, I would be remiss to let the Left get overly indulgent in the same manner without a word of caution. This will probably be a long hard slog, but you can't help but notice the wind at our backs for a change.

Despite the gathering momentum, I was still a bit surprised to see a crack in the partisan veneer of Alan Greenspan himself. In
recent statements, Greenspan finally admitted that Bush's reckless tax cut scheme might not be untouchable. It wasn't a 180 degree reversal, but the slight shift in rhetoric wasn't nothing either.

"Addressing the government's own imbalances will require scrutiny of both spending and taxes," Mr. Greenspan told members of the House Budget Committee.
But before your jaw hits the floor, Greenspan was quick to shore up his tax cutting bona fides, and send a signal that he doesn't want to interfere too much with Bush's "starve the beast" agenda.

"However, tax increases of sufficient dimension to deal with our looming fiscal problems arguably pose significant risks to economic growth and the revenue base."

The Fed chairman emphasized that his own preference was to reduce deficits by cutting spending rather than raising taxes. But he said the "overriding principle" was to reduce the deficit, making compromise essential.
Not Earth-shattering, but when you consider that his prior two rounds of public statements on fiscal health emphasized an aversion to alter any portion of the tax cuts in any manner, his acknowledgement that some tax cuts might need to be jettisoned, and that compromise is needed, is significant. He also pointedly contradicts Vice President Cheney's bizarre moment of fiscal hackery, the "deficits don't matter" moment, in a more urgent manner than in the recent past.

"When you begin to do the arithmetic of what the rising debt level implied by the deficits tells you, and you add interest costs to that ever-rising debt, at ever-higher interest rates, the system becomes fiscally destabilizing," he told lawmakers. "Unless we do something to ameliorate it in a very significant manner," he added, "we will be in a state of stagnation."
Here is a look inside the numbers of the tax cuts in question:

Extending all of the expiring tax cuts add about $1.8 trillion to the federal debt over 10 years, according to the Congressional Budget Office. That would come on top of a rapid escalation in the federal debt from $3.4 trillion to $4.3 trillion as a result of soaring annual deficits since 2001.
The Bush administration was caught uncharacteristically flat-footed by Greenspan's brief flash of honesty.

White House officials played down Mr. Greenspan's remarks, noting that he had placed top priority on reduced government spending and that Mr. Bush had vowed to reduce the budget deficit by half by 2009.

"The president does have a substantial deficit-reduction package," said Trent Duffy, a White House spokesman. "His budget is a continuation of that policy, and he looks forward to working with Congress in cutting that spending down. Likewise, the president agrees that the long-term budget is the issue, which is why he's trying to lead a national discussion and reform movement to save and strengthen Social Security."
What the Bush team didn't say, was that the President's own plan to cut the deficits in half by 2009 was built on economic projections that assume that the President's tax cuts all expire. In other words, for the President's deficit reducing plan to work, he must be prevented from making any of his tax cuts permanent. Bush must defeat...Bush. Without the $1.8 trillion in savings represented by that occurrence, Bush's plan won't put a dent in the deficit. And the facile evocation of Bush's privatization scheme is more than spurious. Bush's plan would necessitate approximately $4.5 trillion in borrowing to handle the transition costs. How, exactly, is borrowing $4-5 trillion going to reduce the deficit? That math is so far beyond fuzzy, it's white noise.

Perhaps Greenspan's taking one small step off the reservation is indicative of a tension mounting between true fiscal conservatives, and the new fangled "cut and spend" hybrid currently occupying the White House and most Congressional leadership positions.

Mr. Greenspan, a Republican, has long argued that Congress should reinstate rules that would require lawmakers to offset the cost of tax cuts and new spending programs with savings in other areas.

Mr. Bush and his Republican allies in Congress have insisted that any such "pay as you go" restrictions, which existed in the 1990's, apply only to new spending and not to new tax cuts.

Reinstating the previous budget rules would make it far more difficult, if not almost impossible, for Congress to extend permanently Mr. Bush's tax cuts of 2001 and 2003.
The next salvo launched by Greenspan appears to be directly aimed at the Bush administration's notorious propensity to manipulate budget figures to hide the true state of affairs - whether it be lying about, and covering up, the costs of a Medicare bill, or leaving expensive military expenditures out of the initial budget.

In addition to calling for a return to the tough budget rules of the 1990's, the last of which expired in 2002, Mr. Greenspan urged Congress to adopt a mechanism that would allow for a "midcourse correction" in the event that budget deficits turn out to be sharply higher than expected.
The reaction from the big spending Bush and his allies is predictable.

That is another idea that the White House and Republican legislators have previously rejected, and it is one that is unlikely to be embraced this year.
My biggest fear now is that Democrats like Joe Lieberman and the faint-hearted brigade will find a way to snatch defeat from the jaws of victory. A perplexing and disturbing pattern Democrats have been repeating for the entire course of my political life. But what a folly it would be to rush to compromise with Bush on any plan that would weaken Social Security, especially when stalwarts like Alan Greenspan are showing signs of hesitation. Now is the time to push for victory on this one, and exploit it for all its worth. To my Democratic compatriots, all I have to say is: stay on target.

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