Grand Bargain R.I.P.

Thank goodness too.

There was some angst amongst left leaning analysts earlier this week because the smoke signals rising from the White House suggested that Obama had not given up the idea of changing the indexation for Social Security. This indexation is the way in which payments are calculated each year to offset inflation. A change proposed a few years back in the height of the budget crisis would have had the effect of reducing future increments and thus reducing the amount retirees would receive versus what they would have received under the older indexation method. It all sounds very technical, which it is, but the effect would have been substantial.

The switch in indexation methods was just one element of the so-called ‘grand bargain’ Obama was desperately trying to get agreement on with the Republicans in Congress. Many of us on the left were aghast that a Democrat would propose such a large cut in social payments, and we voiced our opinions loudly at the time. Recall that at the time there was great pressure to slash spending, and silliness like the Simpson-Bowles plan was viewed as mainstream thinking.

But the Tea Party rescued us.

Vehement opposition within the Republican caucus in Congress to any form of tax increase killed off the notion of a grand bargain. As the split in the Republican ranks deepened it became obvious that a sweeping deal on the budget was not a feasible option. Subsequently we all were forced to go through a series of artificially created near disasters as the Tea Party gradually took control of Republican budget strategy.

Amidst this infighting on the right the various elements that Obama had offered up to induce compromise were largely forgotten or ignored as we lurched from one political drama to the next.

So imagine our horror when rumors began to circulate that the switch in indexation might re-appear in Obama’s latest budget.

It was a false alarm. The White House has confirmed it has no intention of including the switch. We can all calm down.

That is victory enough, but the larger message is even more dramatic: clearly the White House has given up any thought of a grand bargain. This is good news indeed because it marks the end of the foolishness of so-called centrist opinion on the Federal deficit and national debt. A grand bargain to reduce the deficit would have done untold damage to our social programs in the name of austerity or budgetary probity, neither of which would have been sensible economic policies. The deficit and the debt were never problems, at least on the scale suggested by those pressing for a grand bargain back in darkest days of the crisis. If there is a problem, which is highly questionable, it only exists way off in the future and can be dealt with in a more considered way after the current malaise has been sorted out and the economy restored to full health. The bargain being pursued a few years back was a panic move on the left and a strategic move on the right. Neither had much to do with the actual size of the deficit. Both had a great deal to do with the political landscape.

It appears, finally, that Obama has learned that there can be no compromise as long as the Tea Party rules the Republican agenda.

Thus we move on liberated from the nonsense of a grand bargain.

May it rest in peace. Better yet: in pieces.

 

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