06 June 2016

Ryan Grim: Obama's SEA CHANGE on Social Security

Farflung correspondents,

Normally I do my own diatribes, but this one's worth passing on unchanged. /Ryan Grim.

♦ David Studhalter

---------- Forwarded message ----------
From: Ryan Grim <ryan@huffingtonpost.com>
Date: Mon, Jun 6, 2016 at 1:53 PM
Subject: Obama went from cutting Social Security to boosting it. Here's how that happened...
To: studhalter@gyromantic.com

​ •

Barack Obama Once Proposed Cutting Social Security. Here's What Changed His Mind.

By Daniel Marans, Arthur Delaney and Ryan Grim

WASHINGTON — When President Barack Obama announced his support this week for expanding Social Security benefits, it was nothing less than a sea change. Progressive activists claimed credit for the move as both a clear nod to their power in the age of Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.), and the fruits of ambitious activism that slowly but surely moved the bounds of the mainstream political discussion.

Whether Obama's remarks mark a shift in his policy views, a politically expedient concession to an ascendant progressive wing or something in between, it is an unmistakable indicator of the Democratic Party's return to its New Deal roots.

But getting there required a slog through the political aftermath of the worst economic calamity since the Great Depression.

Fighting Popular Wisdom

Obama entered the White House at a time of economic crisis and rapidly increasing national debt. Virtually from the start of his presidency, Washington was seized with hysteria over the latter phenomenon.

Although a diverse array of economists believe Obama's $800-billion stimulus package played a key role in helping the economy recover, it elicited howls from the right for contributing to the already rising debt. Much of the growth in annual budget deficits for which Obama was blamed, however, was due to the Great Recession and the Bush tax cuts — things he had no control over.

Stopping "out-of-control spending," in the form of the president's stimulus package and other policies, became one of the nascent tea party's rallying cries.

Even as the country struggled to beat back double-digit unemployment, addressing the debt became among the most pressing issues in Washington. Think tanks and pundits on all sides of the spectrum lined up to warn of the dire consequences of avoiding an "adult" conversation about the unsustainable costs of Social Security and Medicare.

And the Obama administration — rather than fight the narrative of out-of-control debt tooth and nail — chose to accommodate it.

Just a year into Obama's presidency, the White House began to pivot away from fiscal stimulus and toward austerity. The president convened a bipartisan debt reduction commission in February 2010, co-chaired by Morgan Stanley director Erskine Bowles, a Democrat, and former Sen. Alan Simpson (R-Wy.), and charged it with forging a fiscal "grand bargain." That became the catchphrase of choice on the Bowles-Simpson commission — and in budget talks in subsequent years — for a compromise agreement to reduce the long-term debt, through a combination of Social Security and Medicare cuts historically anathema to Democrats and revenue increases and defense cuts hard for Republicans to swallow.

It was very lonely to be on the side that said: 'Absolutely no cuts, under any circumstances.'Alex Lawson, Social Security Works

A small group of organizations on the progressive end of the Democratic Party arose to mobilize against the commission's efforts with a focus on protecting Social Security.

Activists say they were emboldened by the knowledge that the Beltway elite was out of touch with how Americans felt about Social Security.

Perhaps thanks to its universal nature, even Republicans support it by wide margins. Opposition to Social Security cuts was the only policy position that supporters of all the presidential candidates agreed with in a March 31 Pew poll.

Social Security experts Nancy Altman and Eric Kingson, both veterans of the 1982 commission that orchestrated the last round of major reforms to the program, secured foundation funding for the creation of the advocacy organization Social Security Works.

Social Security Works led the Strengthen Social Security coalition, an alliance of progressive organizations, labor unions and think tanks in what was then a fight to stop cuts expected to be recommended by Obama's fiscal commission.

The coalition members, which ranged from the National Organization for Women to MoveOn.org, rejected the policy arguments for the cuts on several grounds.

Social Security is a self-funded program that faces a modest financial shortfall andshould not be cut to reduce a deficit it did not cause, they argued. And besides, the activists maintained, Social Security has only become more important as other traditional sources of retirement income declined and newer ones have failed to close the gap.

But in a political environment where austerity was all the rage, advocates like Alex Lawson, Social Security Works' executive director, were initially at pains to find members of Congress willing to pledge not to cut the program, let alone expand its benefits.

"It was very lonely to be on the side that said: 'Absolutely no cuts, under any circumstances,'" Lawson recalled. "There weren't many allies."

The tea party was more useful than Democratic leadership when it came to killing a grand bargain that would have cut Social Security benefits.Adam Green, Progressive Change Campaign Committee

Deprived of access to the closed-door commission, Lawson began live-streaming the closed door on days when the commission met.

The gimmick resulted in a bombshell conversation with commission co-chair Alan Simpson in June 2010. Simpson went on a profanity-laden rant, tearing into progressives who questioned the commission's concern for "the lesser people" and repeating alarmist myths about Social Security's finances.

A couple months later, Simpson wrote to the head of the Older Women's League mocking Social Security as a "cow with 310 million tits." The comments prompted a high-profile — albeit unsuccessful — campaign for his ouster.

"Alan Simpson was the gift that kept on giving," Lawson said.

Thanks in no small part to Simpson, a letter started by Reps. John Conyers (D-Mich.) and Raul Grijalva (D-Ariz.) asking the commission to hold Social Security harmless gathered signatures rapidly, with 137 House Democrats eventually putting their names on it.  

Their efforts did not shape the substance of the commission's proposals, but they laid the political groundwork for a broader movement that would ultimately succeed.

Gene Sperling, who served as a White House economist during negotiations over the grand bargain that would have led to Social Security cuts, said that organized labor and Altman deserve significant credit for reshaping the conversation.

"You can argue over details and payfors, but the change in conversation from how to reduce Social Security for solvency to how to strengthen Social Security and overall retirement security for tens of millions of seniors is a very positive one," Sperling told HuffPost. (He is now an adviser to the Hillary Clinton campaign.) "And beyond the politicians, you have to give some credit to the AFL-CIO, Nancy Altman and the Strengthen Social Security coalition for helping to change the terms of the debate."


Obama Makes An Offer

The Bowles-Simpson commission's final report in December of that year proposedmajor cuts to Social Security, including an increase in the retirement age, a lower benefit formula for above-median earners and a stingier cost-of-living adjustment. Although it maintained the pretense of bipartisan balance, 69 percent of the commission's proposed budget savings came from spending cuts.

The proposal itself went nowhere. It became the blueprint, however, of subsequent plans to cut Social Security — especially after Republicans took control of the House of Representatives in 2011.

With Republicans hell-bent on holding hostage every debt ceiling increase and extension of government funding to extract major policy concessions, Obama decided to put one of the commission's proposals — the chained Consumer Price Index — on the table.

The chained CPI would change the formula used to adjust Social Security and other benefits for inflation. Although scholars debate whether it represents a more accurate price index than the one currently used, one way or another, it lowers the value of benefits over time relative to what they would be otherwise.

Obama appears to have come closest to striking a deal with the benefit cut during last-minute budget negotiations with Republicans at the end of 2012, in the lame-duck session of Congress after he won re-election. The country faced what was dubbed a "fiscal cliff" at the start of the new year as a slew of Bush-era income tax cuts were due to expire and automatic spending cuts were set to take effect.

Obama offered Republicans chained CPI in exchange for providing more tax increases. But under pressure from hardline anti-tax legislators, Republican leaders in Congress refused to compromise more.

Thank you, tea party!Adam Green, Progressive Change Campaign Committee

At one point, the White House reportedly suggested putting chained CPI back on the table after Republicans had not presented a counteroffer on taxes with the budget deadline less than 36 hours away.

Then-Senate Majority Leader Harry Reid (D-Nev.) was apparently so peeved at the idea that he threw a note with the proposal into a blazing fire in his office fireplace.

Reid ruled out reconsidering chained CPI because it seemed to him that Republicans weren't serious about giving ground on the Bush tax cuts, according to Jim Manley, a longtime spokesman for Reid who by then had stopped working for the senator. And that was the last time Reid ever entertained the idea of messing with Social Security.

"Since then it's been, 'Hell no,'" Manley said.

Progressives recognize that they benefitted from hard-line conservatives' delusion that by holding out, they could win even larger cuts.

"One of the ironies is that the tea party was more useful than Democratic leadership when it came to killing a grand bargain that would have cut Social Security benefits," said Adam Green, co-chair of the Progressive Change Campaign Committee, an online activism group at the forefront of the fight against cuts. "They were so crazy and unwilling to take 'yes' for an answer. That allowed us to live to fight another day."

"Thank you, tea party!" Green added.

According to a former Obama administration official who was involved in the grand bargain negotiations, Obama and his team at the White House concluded that, in order to get tax hikes out of Republicans, they'd have to give ground on a major Democratic priority. One camp was pushing for a bump up in the Medicare eligibility age, reasoning that as long as the Affordable Care Act was in place, people between 65 and 67 would be in fine shape. In fact, they thought, low-income elderly, would do better under Obamacare than under Medicare.

But the faction pushing to put chained CPI on the table won out. Once that decision had been made, the official said, Obama rationalized his way toward believing that it was merely a modest statistical adjustment.

In his second term, Obama even appeared to embrace chained CPI as his own, including it in his annual budget proposal in April 2013, which came after a fierce internal debate, according to one participant.

The budget encountered stiff resistance from congressional Democrats and progressive activists, spurring a petition delivery and protest outside the White House where Bernie Sanders spoke.

The following year, the provision disappeared from the president's budget.


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