Barack Obama’s carefully crafted economic populism carries the day…and then the next three months?
The media are a huge factor in most elections in the US, and outside of Fox News and the rightwing press, most of the major news outlets were more sympathetic to Obama than to Romney. They still helped Romney quite a bit, however, especially with swing voters, with poor reporting on key economic issues. Most Americans didn’t know that the federal stimulus had created an estimated 3m jobs; in fact, they didn’t even distinguish the stimulus from the unpopular federal bank bailout. They didn’t understand the benefits that people would derive from Obama’s healthcare legislation. They didn’t know that they’d had their taxes cut under Obama. And millions believed the hype that federal deficit spending and the US public debt were major problems. (For the record, the US currently pays less than 1% of GDP in net interest annually on the federal debt – less than it has paid during the past 60 years.)
The confusion on economic issues was probably the most important influence on swing voters, who supported Romney against their own economic interests, thinking that the economy might improve if he were elected. For this, and other misunderstandings, we can thank the major media, although we should also include the public relations blunders made by the Obama team. Perhaps the biggest strategic error wasPresident Obama’s refusal to go after Romney’s proposal to cut social security, thereby losing the majority of senior citizens’ votes (a big vote in swing states like Virginia and Florida), which he could potentially have won by defending America’s most popular anti-poverty program.
Obama’s silence on social security is a bad omen for the future of his second administration, when – facing almost immediately the “fiscal cliff” – political, media, and business leaders will be pressing for a “grand bargain” on budget issues that will screw the vast majority of Americans. It will take a lot of grassroots pressure to prevent the worst outcomes: likewise, to get us out of Afghanistan and to prevent another disastrous war, this time with Iran. Obama’s foreign policy has been mostly atrociousand the never-ending “war on terror” continues to expand, while most Americans’ living standards have been declining.
Bill BLACK: Yes. The president came into office talking about the possibility of this grand bargain—more than the possibility; this desire reach it. And then he tried to reach it in budget discussions with the Republicans. They refused.
He just a few days ago went and met with the editorial board of The Des Moines Register, the leading newspaper out in that portion of Iowa, and he had a discussion off the record, and emphasized that because it was off the record he could be more blunt, and said that his first course of business, and one that he believed he could get done very quickly should he be reelected, would be to strike a grand bargain. And he described the grand bargain, and there would be $2 in budget cuts for every dollar in increased taxes.
So this grand bargain is: we will weight this much more heavily towards killing social programs, or at least cutting them back significantly and raising taxes on the rich.
Now, that’s got most of the attention from progressives, but note two other things that he was saying. One, he’s talking about austerity. He’s talking about following exactly the kind of model that Europe has followed that put them gratuitously back into recession, and indeed into a Great Depression. And as we’re doing this interview, it has just come out that European unemployment reached a new high in September, which is the latest month that they had data for. So this has cost millions of Europeans their jobs, and it’s Great Depression levels of unemployment in Spain and Greece, and growing in many other nations. So this is insane to follow this strategy.
Glenn Greenwald at The Guardian writes:
So the delirium of liberals this morning is understandable: the night could scarcely have gone better for them. By all rights, they should expect to be a more powerful force in Washington. But what are they going to get from it? Will they wield more political power? Will their political values and agenda command more respect? Unless the disempowering pattern into which they have voluntarily locked themselves changes, the answer to those questions is almost certainly “no”.
Consider the very first controversial issue Obama is likely to manage, even before the glow of his victory dims, literally within the next couple of weeks. It is widely expected – including by liberals – that Obama intends (again) to pursue a so-called “Grand Bargain” with the GOP: a deficit- and debt-cutting agreement whereby the GOP agrees to some very modest tax increases on the rich in exchange for substantial cuts to entitlement programs such as social security and Medicare, the crown legislative jewels of American liberalism.
Indeed, Obama already sought in his first term to implement sizable cuts to those programs, but liberals were saved only by GOP recalcitrance to compromise on taxes. In light of their drubbing last night, they are likely to be marginally if not substantially more flexible, which means that such a deal is more possible than ever.
No one can have followed Social Security policy on AB and not be familiar with the name Dean Baker, co-founder and co-director of CEPR and co-author of 1999’s ” Social Security: the Phony Crisis”. But maybe some are not aware that the other half of that “co-” in all three cases is Mark Weisbrot.
Kind of the unsung co-hero of Social Security Defense.
Just watched Alan Grayson with Elliot Spitzer. We can count on Alan giving the president a difficult time over this. Good to have him back.
Not worried about it. It’s just a carrot to get them moving in my opinion. He seems to give them deals that don’t really turn out that good for them.
Politically, it’s not a bad strategy since it appears to have worked. Policy wise, it’s not the right prescription. However, we are not at liberty to enact the right prescription, since republicans won’t go for it.
They have to be tricked.
Bear–Trust me, you should worry that the President will get all austere on us. In addition, he’s been willing to cut Social Security across the board for all beneficiaries through the “chained CPI” starting now and then for future beneficiaries so that they will also get in the neck. Why cut SS? Because, Pete Peterson wants him to, is why. For an explanation of all this, see Bruce’s work on SS together with Dale Coberly.
So, us oldies around here are worried about this Grand Bargain. He can make all the bargains he wants, but the House will never keep them. Anyhow,even if the Bargain gets out of the House the Senate will kill or greatly modify it, especially the SS piece. But the ensuing comprimises will hurt us more than they will hurt them.
Don’t forget the future 20% plus benefit cuts. Not a great bargain for us but great for the rich guys. They don’t want to pay more income tax so we get to pay it for them by forgoing our currently scheduled benefits. Sounds fair, doesn’t it? NancyO
The President carefully said he would not slash Social Security.
So expect the death of a thousand cuts.
They also admitted that Social Security has nothing to do with the deficit, but they need to cut it to restore confidence to the bond markets.
With that kind of “reasoning” … well, it’s like arguing with the inmates of the asylum. Question is, who put them in charge?
Let me take this opportunity (close your ears regular readers) to say one more time
Social Security has nothing to do with the deficits, the workers pay for it themselves.
Social Security is not going broke, the workers can pay for the increased costs of living longer by raising their tax an equivalent of eighty cents per week each year while their incomes are going up eight dollars per week each year.
It’s not a cost to the government. SS isn’t even a “cost” to the workers… it’s a way of saving their own money, protected from inflation and other losses, until they need it most.
But that fundamental fact is ignored by everyone.
It’s like they heard the cost of bread was going up, so they met in learned panels to discuss ways of feeding the people less.Or keeping them fromfeeding themselves. Because what counts at the end of the day is that the item “food” remains a constant percent of the budget. Even if people have more money to spend.
You see, we can “save” Social Security, and Medicare too, if we just stop using them for what they were designed for.
You scared? I am not scared in the least.
It’s political gamemanship. Check out republicans today saying they won’t accept tax hikes on the rich.
It’s going to be brutal for them. To continue on this path. But they can’t help themselves. So no, I am not scared about the deals being branded about.
Coberly I totally agree. SS is not broke.
I will add that neither is Medicare, Medicaid, nor is our government insolvent. However our health system needs better efficiency, and total coverage for all.
Bond vigilantes have zero power against a fiat currency issuer like the US. None, nada, zilch. Japan is bankrupting all the vigilantes anyways, there may be few left in a few years.
See this Dean Baker post with comments from Warren Mosler:
Obama’s grand bargain is a rip off. The republicans are the blind leading the blind.
None of this is any surprise and is the eason I did not vote for Obama–I did not vote for Romney either. For a smart guy Obama really does not understand economics very well and in his rush to be post partisan has compromised with deals the equivelant of “heads I win, tails you lose”. I noted before the election that the best chance of preserving social security was to elect Romney and hold onto the Senate. While I am heartened by the election of Senators like Warren and Baldwin whether they stand up to Obama remains to be seen. The real key is Harry Reid who has said some good things in the past. I have absolutely zero confidence in Obama doing what is best for the country when it comes to economic policy.
Senator Diane Feinstein on TV pledged her support for Social Security and Medicare. What did she leave out? Medicaid.
She is not the only one who talks that way. And poor people have no lobby. Expect Medicaid to get the shaft.