Category Archives: economy

In the Social Security Debate, Today’s Democrats Are Worse Than Yesterday’s Republicans

Having “retooled’’ his Presidency for a more open accommodation of the center right, Obama will soon be overseeing the battle to launch a dismantling of the Social Security system.

His government has, from the start, been reminiscent of the Clinton years, so it’s safe to say that we can expect more triangulation. Clinton’s adoption of Republican tropes led him to fulfill some of the conservatives’ fondest dreams: His administration countenanced the demise of the banking regulations originally established by the Depression-era Glass Steagall Act, and the destruction of the welfare system established in the 1930s and expanded in the 1960s. Obama will provide much the same function on Social Security. Without entirely destroying the popular program, he will support cuts that go beyond anything that should rightly happen during a Democratic administration.

Of course, the Democrats will say that it isn’t their fault: It all happened because of that horrid Tea Party, dragging conservative Republicans even further to the right. This suggests that Democrats had no choice but to head them off at the rightward pass, as if standing and fighting simply wasn’t an option—and as if they didn’t still hold the Senate and the White House.  

What makes this especially disconcerting, for anyone who has lived long enough to remember earlier political eras, is how favorably the Republicans of the past compare to the Democrats of the present on many points.

Tracking back to the New Deal, one can find Senator Robert A. Taft of Ohio—the most prominent conservative Republican of his time, later identified by John F. Kennedy in Profiles in Courage as one of the five most important senators in history–registering his support for Social Security. A champion of private enterprise and enemy of labor unions, Taft bashed Roosevelt’s “socialistic” programs every which way, fighting to reduce runaway government and even opposing entry into World War II. But at the height of the Great Depression, he also supported the new Social Security program, as well as public housing and public education.

Taft embodied the tenets of Main Street middle western life before the Second World War. And he was not unreservedly laissez faire, nor was he anti-government. He believed in the intervention and utility of the federal government where he deemed it necessary, and that included providing an adequate, if not generous, public welfare system.

Taft ran for president three times and never made it. But Eisenhower, the war hero who became a popular Republican president, carried some of these same basic tenets into the postwar era. Eisenhower was not opposed to federal intervention in the economy and, for example, backed the creation of an interstate highway system, which became a vast public works program. And Eisenhower not only supported Social Security, but took steps to enlarge the program. According to the Eisenhower Memorial Commission:

Dwight Eisenhower was the principal force behind the greatest single expansion of Social Security beneficiaries in the history of the program. He led the legislative drive to add over ten million Americans to the system. Here’s how it developed.

When the Social Security Act became law in 1935 its purposes were primarily aimed at factory workers and other employees of business organizations. The legislative process leading to passage of the law was both lengthy and contentious. Large numbers of working American’s were left out of the original Old Age and Survivors Insurance coverage. No major changes in the Social Security law had been made since its initial passage.

During the presidential campaign of 1952, candidate Eisenhower made it clear that he believed the federal government played a rightful role in establishing the Social Security system, but he made no promises concerning its future. However, after the election it became clear that the Republicans would have control, by slim margins, of both the House of Representatives and the Senate. This changed the political and legislative landscape considerably.

Previously, expansion of the Social Security system or increasing the level of payments to retired Americans had been given no chance to succeed in the Congress because there were enough conservative Democrats (and the majority of Republicans) who would vote against such bills. With a Republican President it now appeared likely that the majority of congressional Republicans would honor their President and support his initiatives. Among the new legislative possibilities, action on Social Security now seemed possible.

Thirteen days after taking his oath of office, President Eisenhower delivered his first State of the Union message to Congress and, when discussing the need for greater effectiveness of government programs, he said, “The provisions of the old-age and survivors insurance law should promptly be extended to cover millions of citizens who have been left out of the social security system.”

The following week, during a White House meeting of the House and Senate Republican leadership, Eisenhower brought up the Social Security expansion proposal and asked America’s most famous living conservative, Senator Robert A. Taft, if he would support the initiative. When he received a positive reply he knew that the possible had just become the probable. Before the end of the month, Eisenhower appointed a presidential commission to study the Social Security system’s deficiencies and submit a detailed report on specific reform measures. In his public statement creating the commission, the President said, “It is a proper function of government to help build a sturdy floor over the pit of personal disaster, and to this objective we are all committed.”

Those opposed to the initiative stressed their belief that retirement income was the responsibility of every individual and the federal government should not be involved. One citizen should not have to pay for the old age necessities of another. President Eisenhower responded to this notion during his press conference on June 17, 1953 with these remarks: “A strict application, let us say, of economic theory, at least as taught by Adam Smith, would be, ‘Let these people take care of themselves; during their active life they are supposed to save enough to take care of themselves.’ In this modern industry, dependent as we are on mass production, and so on, we create conditions where that is no longer possible for everybody. So the active part of the population has to take care of all the population, and if they haven’t been able during the course of their active life to save up enough money, we have these systems.”

You know it’s a measure of how far this country has moved to the right that someone like myself could wax nostalgic for the likes of Dwight Eisenhower and Robert Taft. (Next stop: Remembrances of the Nixon years, when the richest Americans were taxed at a rate of 70 percent.) Yet now we see the historic approach of these two major Republicans figures—the icon of the Senate and the storied war hero—submerged beneath the threat of the Tea Party adherents. And it is all happening under the listless hand of Obama, while the Democratic mainstream sits passively back and watches the demise of the programs that made their party great.

In the end, history most likely will judge that the final blows against the New Deal came not from the Republicans, but from weak or opportunistic Democratic politicians–first Clinton, then Obama.

Obama’s Tax Deal and the Future of Social Security

It’s worth pointing out once again that  last week’s  tax deal is hardly the victory for the American people it is made out to be. One of the biggest chunks —thirteen percent of the total monies — come from Social Security and Medicare in the form of a one-year cut in payroll taxes. The government promises to pay back what it is taking from the Social Security trust fund by borrowing the money, then floating bonds to guarantee  repayment.

This one year abeyance might not seem like much. But with the coming of a right-wing  Republican House, under pressure from the further fringes in the Tea Party, it does not augur well for the future of the program. From its inception under FDR, the Republicans have dreamed of getting rid of Social Security, along with such other things as the Federal Reserve, the income tax, the Department of Education and the UN.

“Social Security’s dedicated funding base is jeopardized by this deal in an unprecedented way and there is a grave risk now that the retirement benefits of America’s workers will have to compete with our other priorities for a share of the general budget,” said Texas Congressman Loyd Doggett at a press conference cheld by the National Committee to preserve Social Security and Medicare. “It would result in Social Security being as dependent on annual Congressional action as public television or our National parks.”

“If the recent debate on the Bush tax cuts has taught us anything, it is that taxes are easy to cut but hard to restore, said Florida Congressman Ted Deutch at the same press conference. “If this provision is made permanent, it will double Social Security’s long term funding gap and open a door that Democrats have long fought to keep closed – budgetary attacks on Social Security.’’ 

Cutting social welfare programs will be very much in vogue with the new Congress, especially as it ramps up for a showdown on raising debt limits this coming spring. Because the right wingers are out to get social programs and because all spending measures must start in the House, it is highly likely that Social Security and Medicare will occupy center stage in this debate, and that the proposals of various fiscal commissions will come into play. First, the suspension of a cost of living increase for Social Security recipients could well be extended. Second, the age at which one can begin to collect Social Security will most likely be raised from 67 to 69. And finally, the Bush tax cut deal digging into the Social Security trust fund certainly will be an opening for the right to further a  borrowing spree–ironically, all in the name of reducing the deficit.

However, there is a potential remedy. In 2012, the economy should be stronger than it is today, argues Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities. 

 In addition, Congress likely will have enacted some significant budget cuts, and the nation likely will be debating the sort of further cuts that various commissions have recently proposed, including cuts in Social Security and Medicare benefits for elderly widows and seriously disabled people with incomes as low as $20,000. At that point, the President will need to make clear that he will veto any legislation extending the high-end tax cuts or the weakening of the estate tax beyond its 2009 parameters, and he should use the bully pulpit to take this case to the country.

If only we could count on our president to do something like this at all, much less in an election year.

Obama’s Fiscal Commission Prepares to Carve Its Turkey

The dread report of the White House’s National Commission on Fiscal Responsibility and Reform is due out this week.  One of the Commission’s co-chairs, the putative Democrat and consummate wheeler-dealer Erskine Bowles, has been up on the Hill flogging their plan to reduce the debt by cutting the country’s already skimpy programs for the old, the sick, and the poor. His partner, motor-mouth Republican Alan Simpson, continues his ranting and ravings against the greedy geezers who want to sink the entitlement-cutting ship before it’s launched. Both of them have taken to boo-hooing because no one appreciates all the work they are doing to save the nation from certain fiscal doom, and nobody is willing to pitch in to meet this noble goal.

Fiscal Commission's Plan: Starve the Old to Stuff the Rich

Personally, I’m still waiting to hear how Wall Street is going to pitch in and do its part–or the people with high six-figure incomes who claim they still aren’t rich enough to give up their tax cuts. Or, for that matter, Bowles and Simpson themselves, who retired on fat  pensions and don’t have a financial care in the world.  Since none of this is likely to happen any time soon, we’d better take a good hard look at what these sanctimonious old coots have come up with.

We already know a lot about what to expect from the Fiscal Commission Plan, since the co-chairs released their own preliminary proposals (as yet unapproved by the 18-member Commission) earlier this month. According to people with access to the Commission’s thinking, they seem to think their best bet is to achieve consensus on a proposal to change the way Social Security’s annual cost of living increases (COLAs) are calculated. What seems like a mere accounting adjustment would, in reality, severely affect benefits over time. The National Committee to Preserve Social Security and Medicare explains the impact of this scheme:

This proposal will affect current and future beneficiaries uniformly.  The impact would occur after benefits are initiated, with each COLA, as the yearly increase in benefits would be slightly lower than would have been the case without the change.  The impact would be greater with each successive COLA.  For example, the Social Security benefits paid to someone collecting benefits for 10 years would be about 3 percent lower, on average, if the chained-CPI was used for the COLA instead of the current CPI-W.  After 20 years this reduction would reach 6 percent and 9 percent after 30 years.

This is is bad enough–especially since old people’s cost of living increases faster than the national average because of exploding health care costs. But of course, there’s more, in the form of a plan that would raise the retirement age to 67 and eventually 69. Working until you drop dead or  literally are forced out of the labor market is utilitarian nineteenth-century thinking. But at that time, at least there was an expanding need for workers in a burgeoning industrial capitalist economy. The one big profitable industry surviving in America today is so-called financial services, which consists of a small number of overpaid people passing money back and forth amongst themselves. They certainly don’t need any more workers, and if they do, they’ll get them in India. Vermont Senator Bernie Sanders said of the idea that it was not only “reprehensible,” but “also totally impractical. As they compete for jobs with 25-year-olds, many older workers will go unemployed and have virtually no income.”

There was no such ringing takedown of the plan, of course, from Senate Majority Leader Harry Reid, whose mealy-mouthed statement tells us what we can expect from our Democratic Senate. “I thank the leaders of the bipartisan debt commission for their work,” Reid said. “While I don’t agree with every one of their recommendations, what they have provided is a starting point for this important discussion. I look forward to the full commission’s recommendations and to working with my colleagues on both sides of the aisle to address this important issue.”

Nancy Pelosi had somewhat stronger words, calling the preliminary proposals “simply unacceptable”–but then, she’s nothing but the soon-to-be-ex-Speaker of the House. In fact, co-chair Simpson has been predicting, with something close to glee, the “bloodbath” that’s likely to ensue next spring, when the new Republican House refuses to extend the debt limit and threatens to send the nation into default “unless we give ’em a piece of meat, real meat, off of this package.”

When all is said and done, there’s pretty much no way this so-called debate will end up without most of us, old and young alike, getting screwed. An already stingy program that ought to be expanded to cover elders as their numbers grow instead  is going  to be reduced, and the only question is how and by how much. It makes no sense, but it may well have political traction because the pols can sell it as an attack on rich grannies–“the greediest generation” as Simpson calls the old–while the young are hoodwinked into thinking it’s good for them. And since its full effect will take  years to be felt, the current crop of opportunistic politicians will be long gone into splendid retirement by the time these young people realize how wrong they are. Alan Simpson was frank about this fact in the Washington Post on Friday, using another one of his nauseatingly folksy metaphors:

 It takes six to eight years to pass a major piece of legislation. . . . On a piece of legislation that you know is going to go somewhere someday, you want to get a horse on the track. That might be not much. Then the next session you want to put a blanket on the horse. Nobody’s paying attention then. Then you put some silks on the horse. Then you clean the outfield and the infield. And then you put a jockey on the horse in the sixth year, and you can win it. Because the toughest part is to do the initial thing, and so it’s usually so watered down, it’s just gum, you could gum it. Then you begin to build it the next year, the next year and then you get it done. That’s what I see.

And just in case you thought it couldn’t get any worse, consider this warning from Allan Sloan, Fortune’s senior editor, who wrote an op-ed in the the Washington Post on Thanksgiving day:

[P]rivatizing Social Security, slaughtered when George W. Bush proposed it five years ago, seems about to rear its foul head again. You’d think that the stock market’s stomach-churning gyrations – two 50 percent-plus drops in just over a decade – would have shown conclusively the folly of retirees’ having to bet their eating money on the market. But you’d be wrong. Stocks have been rising the past 18 months, and you can bet that we’ll see a privatization push from newly elected congressmen and senators who made it a campaign issue.

Why is privatizing Social Security such a turkey? Because retirees shouldn’t have to depend on the market’s vagaries for survival money. More than half of married couples older than 65 and 72 percent of singles get more than half of their income from Social Security, according to the Social Security Administration. For 20 percent of 65-and-older couples and 41 percent of singles, Social Security is 90 percent or more of their income. That isn’t projected to change.

Arrayed against these grim prospects are a small group in Congress, led in the Senate by Bernie Sanders and Sheldon Whitehouse of Rhode Island, and in the House by Jan Schakowsky of Illinois. Says Shakowsky

Social Security has nothing to do with the deficit. Addressing the Social Security issue as part of the deficit question is like attacking Iraq to retaliate for the 9/11 attacks – there is simply no relationship between the two and attempting to conflate them does a grave disservice to America’s seniors. Taking money from Social Security retirees whose average total income is $18,000 per year and average benefit is $14,000 ($12,000 for women) is simply wrong. It places them at fiscal risk and hurts the economy because they will be unable to purchase the goods they need.  Americans in poll after poll have indicated their opposition to benefit cuts – particularly at a time when Wall Street bankers are making record bonuses.’

Schakwosky has her own plan, which will be an antidote to whatever the Fiscal Commission comes up with. But her ideas are unlikely to make any headway in the lame duck Congress or with the Democratic leadership, as they wait, already on bended knee, for the coming of the Republicans.

Roosevelt’s Thanksgiving Proclamation 1933

With unemployment insurance  about to run out for millions of people and the Congress and the President set to reduce our parsimonious social welfare system in the name of free enterprise, it is well to recall those dark days of the Great Depression when, on Thanksgiving Day 1933, Franklin Delano Roosevelt proclaimed the following:

May we recall the courage of those who settled a wilderness, the vision of those who founded the Nation, the steadfastness of those who in every succeeding generation have fought to keep pure the ideal of equality of opportunity and hold clear the goal of mutual help in time of prosperity as in time of adversity.

May we ask guidance in more surely learning the ancient truth that greed and selfishness and striving for undue riches can never bring lasting happiness or good to the individual or to his neighbors.

May we be grateful for the passing of dark days; for the new spirit of dependence one on another; for the closer unity of all parts of our wide land; for the greater friendship between employers and those who toil; for a clearer knowledge by all nations that we seek no conquests and ask only honorable engagements by all peoples to respect the lands and rights of their neighbors; for the brighter day to which we can win through by seeking the help of God in a more unselfish striving for the common bettering of mankind.

In witness whereof, I have hereunto set my hand and caused the seal of the United States to be affixed.

This from the President who got us through the Depression and charted a course to ensure safe passage for future generations.  Yet today, Wall Street bankers are richer than ever,the poverty class is growing, the elderly are about to see a reduction in their paltry dole, children starve and are sick, the health system is broken down. In answer to these dark times, the Congress and the President think not of bringing people together, but talk about money as they prepare to further dismantle Roosevelt’s New Deal. All this as  the United States slides into decline and prepares to enter the dark age.

Live Poor or Die: The New American Retirement

The very idea of retiring in America had become a mirage–tantalizing, but always sliding into the distance. Those visions of golden years spent playing golf in Tucson or bridge in Boca Raton, promoted by AARP magazine and purveyors of retirement investments, are now nothing more than a chimera for most Americans. The exception, of course, is a wealthy minority, who for the past decade has been squirreling away money they should have been paying in taxes. For everyone else, old age been reduced to three alternatives: Those of us lucky enough to have jobs can keep working indefinitely; the rest can live poor or die.

Anyone who doubts this blunt truth should take a look at a few few recent trends. Start with something called the Retirement Income Deficit. Retirement USA, a consortium of non-profits and unions, which came up with the term,  describes the deficit as follows:

Retirement USA asked the respected non-partisan Center for Retirement Research at Boston College to calculate the figure that represents our current retirement income deficit – that is, the gap between the pensions and retirement savings that American households have today and what they should have today to maintain their standard of living.   Using the data from the Federal Reserve Board’s Survey of Consumer Finances, the Retirement Research Center has calculated that figure at $6.6 trillion.The deficit figure covers households in their peak earning and saving years—those in the 32-64 age range—excluding younger workers who are just beginning to save for retirement as well as most retirees.  It takes into account all major sources of retirement income and assets:  Social Security, traditional pension plans, 401(k)-style plans, and other forms of saving, and housing. 

The measure assumes people will continue to work, save, and accumulate additional pension and Social Security benefits until they retire at age 65, later than most people currently retire.  It also assumes that retirees will spend down all their wealth in retirement, including home equity.  The deficit is thus in many respects a conservative number.

This gap is due, in large part, to the demise of the old-fashoned, fixed-income pension system. According to the Pension Rights Center, total employment in the nation today stands at 130 million, of which 108 million people are employed by private business and 22 million public. The traditional fixed-benefit  plans now cover only about 20 percent of the private workforce, and 79 percent of public workers. Half the entire private workforce today has no retirement system at all. And those with 401ks are at the mercy of the mutual fund companies, with their futures staked on the stock market. In the recession, those plans took a dive, losing one quarter to one third their assets.

Even public employees lack the retirement security they once had. There are recent reports that states, because of their own budget deficits, can’t pay retirement monies to their pubic services workers. The news is hyped by politicians and way overstated, said Keith Brainard of the Public Fund Survey, an outfit sponsored by the National Association of State Retirement Administrators and the National Council on Teacher Retirement. Still, pension plans that cover public service workers and teachers in New Jersey, Illinois, and the city of Philadelphia may be at risk, according to Brainard. About 70 percent of state employees are covered by Social Security, but a good 30 percent would be left out in the cold if the plans went down.

But that’s not the end of it. The big financial institutions that run the 401k plans have been busy applauding the comeback of the stock market, suggesting that it redeems the whole 401k concept. Unfortunately, as the recession wears on, a whole lot of people are withdrawing money from their 401ks, instead of (or in addition to) contributing to them. Fidelity Investments included the following in a recent report on developments in the second quarter of 2010:

While the majority of 401(k) participants continued to save during the quarter, the percentage of participants either initiating a loan or a hardship withdrawal increased.  Loans initiated over the past 12 months grew to 11% of total active participants from about 9% one year prior.  The portion of participants with loans outstanding also increased two full percentage points in the second quarter to 22%.  The average initial loan amount as of the end of the second quarter was $8,650 with an average loan duration of three and half years….

During the second quarter of this year, 62,000 participants initiated a hardship withdrawal, as compared to 45,000 participants who initiated one during the prior quarter.  As of the second quarter, 2.2% of Fidelity’s active participants took a hardship withdrawal, up from 2.0% one year prior.  Additionally, 45% of participants who took hardship withdrawals one year prior also took a hardship withdrawal in the 12 month period ending in the second quarter of this year.  Plan sponsors report that the top reasons why participants are taking hardship withdrawals are to prevent foreclosure or eviction, pay for college, and the purchase of a primary residence.

Fidelity has found that the average age of those taking a loan or hardship withdrawal is between 35 and 55 years old – a worker’s peak earning years – when individuals often have to deal with multiple, competing, financial challenges.  Distributions from a 401(k) or 403(b) are taxed as ordinary income, plus if you are under age 59½ you may be subject to a 10% early withdrawal penalty.

I don’t know much about the pitfalls of 401k loans, so I called up Rebecca Davis, Legislative Counsel at the Pension Rights Center. She explained that if you have a 401K worth $100,000, you can borrow up to half that amount. Before getting the money you need to work out a repayment plan that includes an interest payment to yourself. And that’s where the hitches begin.

To start with, the 401k plan may well charge you a fee for all this; that fee varies from plan to plan. Moreover, when you take the loan from your own plan you must immediately pay the government a flat 10 percent tax—because the money you have withdrawn becomes taxable income. Finally, if you quit your job or get laid off, the loan to yourself from your own plan becomes due immediately–just at the moment when you probably won’t be able to pay it back. And if you don’t pay it back, you’re subject to early withdrawal penalties.

Then comes this important bit of information: The money in your 401k is normally protected from creditors. If you go bankrupt, for example, the creditors can’t get at the money. But once the money is removed from the protective cover of a 401k, pension, or IRA, then it can be seized. So now you’re broke and jobless, and you have to use your retirement funds to pay your debts.  In other words, you are screwed from every possible direction. And if you think things are bad now, just wait until you get old.

Did I mention that Republicans and Democrats alike now want to cut Social Security? Probably not for today’s geezers, but for the old folks of the future–in other words, for precisely the same people who stand to have disappearing pensions and depleted 401ks.  

Behind the Battle Over Social Security

As the midterm elections near, the future of the Social Security system has become a hot-button issue–and a confusing one. A number of Republican politicians have hit on it as yet another way to undermine Obama and the Democratic leadership, by criticizing their supposed fiscal irresponsibility. Some must also see victory at hand in the conservatives’ longstanding battle to destroy one of the most hated remnants of the New Deal. These include the GOP’s chief architect of change Paul Ryan,who wants to turn Medicare into a voucher program and privatize Social Security. He is backed up by House minority leader John Boehner, who, if the Republicans take the House, could become the next speaker. 

Some Democrats have risen to defend the best–and most solvent–anti-poverty program the nation has ever known. But for other Democrats–including those in the White House–the response is more triangulation. It was Obama who set in motion the Fiscal Commission, supposedly to study the deficit but in fact, as just about everyone in Washington knows, to pare entitlements, cutting Medicare and Social Security. Originally, this commission was thought ready to propose lifting the limit at which one could draw Social Security from 62 to 67. Now scuttlebutt  is that the entry age should be 70. Our supposedly “socialist” president has placed the country’s premier social program in the hands of Alan Simpson, a Republican crank who views old people as the new welfare queens. 

It’s not surprising, then, that a lot of older voters don’t know what to make of it. A piece in Sunday’s New York Times reported on “tales of political burnout and withdrawal among older voters” in one swing county in Colorado. Many in this consituency, which can usually be counted upon to vote in large numbers, seemed to be withdrawing altogether from the fray. Others were preparing to shoot themselves in the foot:

Bill Benton, 79, a lifelong Colorado resident who described himself as an Eisenhower Republican, supports Mr. Buck and believes that his comments suggesting that the private sector could perhaps do a better job with Social Security were “just talk.” Mr. Buck has said that despite his comments, he would not support privatizing the retirement program. “I like him, but he says some dumb things,” Mr. Benton said.

With all the rhetoric flying out of Washington, it’s likely that some older people have come to view the whole topic of Social Security as the centerpiece in a Washington charade of boasts and lies, another turn in the game of smoke and mirrors, much in the manner of the shouting match over health care. It turns the stomach, feeds the hate against Washington, and sends people fleeing to escape a nightmare they can’t understand–sometimes, it appears, right into the arms of the Tea Party.

And in fact, people who suspect a smoke-and-mirrors game are pretty much on the money. Social Security’s elevation to a central political debate is tied to another hot-button issue: The future of the Bush tax cuts. Those tax cuts, which benefit the very rich—the people who pump cash into a candidate’s campaign—are set to expire next year. “In 2010, when all the Bush tax cuts are finally phased in, a staggering 52.5 percent of the benefits will go to the richest 5 percent of taxpayers,” according to Citizens for Tax Justice, the Washington-based  public interest group that follows and analyzes tax policy.

The impact of these cuts on the national treasury–and the deficit–cannot be overestimated: “The tax legislation enacted under President George W. Bush from 2001 through 2006 will cost $2.48 trillion over the 2001-2010 period,” Citizens for Tax Justice reports. “This includes the revenue loss of $2.11 trillion that resultsdirectly from the Bush tax cuts as well as the $379 billion in additional interest.’’

Obama has declared his opposition to extending the tax cuts for the highest income brackets. But some conservative Democrats will have other ideas. And if the White House’s resolve fails, as it often does, there’s another deficit-cutting alternative at hand in Medicare and Social Security. It’s a lot easier for politicians to talk about paring down entitlements than it is to attack the rich on whose largesse they depend.

Republican Right Offers Reagan Redux

The Republican right’s Pledge to America is widely being compared with Newt Gingrich’s Contract with America. But for those of us with long enough memories, it more clearly harkens back a decade further, to the early days of the Reagan Administration. Now, as then, the Republican agenda has two major political thrusts.

First, the Republicans are advancing a Reaganesque program based around defense Keynesianism, an economic pump-prime through military spending. It signals a victory for the Pentagon generals who have been fighting Obama to further expand what certainly appears to be a futile war in Afghanistan and parts of Pakistan–one that can go on and on indefinitely. Moreover, the Republicans want to fund an expensive missile defense system. Just as with Reagan, once this kind of spending gets going, they will be congratulating themselves on new jobs making armaments. At the same time, they can talk of shrinking the deficit by reducing or eliminating domestic programs.

That’s the nub of the pledge, with one adroit addition. This document makes no mention of reducing or eliminating Social Security. This is good politics before the election, and it’s bound to undercut the Obama administration, which has created the fiscal commission to reduce deficits, and is widely assumed to have Medicare and Social Security in its sights. Reagan did his best to cut domestic programs of the New Deal sort. But in the end, he could never have entirely eliminated them because he always swore to maintain a basic safety net for the old and the poor–and such public pronouncements helped to undermine Democratic challenges.

The pledge provides a focus for Republican ambitions, but most importantly it removes any thought that the Tea Party people have or could ever have any real sway in Republican policy matters. During Reagan’s early forays into the countryside, there were plenty of what now would pass for Tea Party types, but they were largely excluded from the party’s overall direction. Gingrich and his New Right colleagues in Congress occupied the back benches of the House at the time, and they moved within the overall Republican party apparatus. There was–and is–no chance of a popular takeover from the fringes of the party. Instead, Reagan claimed the center, and then pushed that center further and further to the right, where it remains to this day.