As we look to President Barack Obama’s second term we must look back to the first. And this morning as I wiped sleep from my eyes and turned on MSNBC I heard David Gregory squawk about how the President’s legacy will be based on whether or not he can cut Medicare, Medicaid and Social Security. In other words is he can become the anti-New Deal Democrat that will be his legacy. Well, needless to say that line of crap woke me up.
As Digby points out so well in this post, When there were no hostages, the biggest mistake Obama’s first term was – beyond a minor embrace of Keynesian economics – he abandoned Keynesian economics much too quickly.
I don’t disagree with this. I think it’s been a problem. But I think that on the greatest challenge of his administration — the economy — he’s been wrong on a political and a policy level from the beginning.
Obviously, I think deficit reduction is and was completely daft at a time like this. But I would suggest that by “pivoting” to talking about deficit reduction in the middle of the crisis, as he did, made it so that even the stimulus and all the other government actions to try to spur the economy sputtered as people didn’t spend in anticipation of more austerity.
And when you read those articles, it sure sounds as though they were using the bad economy an excuse to “fix” the “entitlements.” Michael Sherer talked about the motivation in the first article I excerpted above:
As sure as the sun rises, the sitting President of the United States will promise to save our fiscal future by reforming entitlement spending. And as sure as the sun sets, each attempt at delivering on that pledge will end in failure.
At bottom, entitlement reform means one of two things: less spending on things voters like, such as medical treatment or retirement checks, or unpopular higher taxes to pay for those things — and quite possibly it means both. Blocking each of those routes are powerful lobbies ready to whip supple members of Congress: antitax ideologues, liberal New Deal defenders, retiree groups, patient advocates, pharmaceutical companies and medical providers, to name a few. To make matters worse, while the financial crisis is both real and terrifying, it is not always apparent. Even as our fiscal position deteriorates, the world continues to buy U.S. government debt, allowing for magically low interest rates in spite of enormous deficit spending. (See 25 people to blame for the financial crisis.)
It is on this inhospitable terrain that President Barack Obama now plans to accomplish the impossible: reverse the trajectory of the political universe and make real progress on reforming Medicare, Medicaid and Social Security.
Why in the world were they thinking this way in the midst of what they themselves called the worst economic crisis since the Great Depression? This was the hubristic attitude of the Obama administration in the beginning — the belief that they alone would be able to solve all the problems that had eluded their predecessors, despite the fact that the world economy was melting down. (Or was it because the world economy was melting down?) They were just that special (aka Best and Brightest Syndrome, which does relate to Josh Marshall’s point.) And on health care, they even have made some progress. After all, if there is a long term debt problem it is almost entirely driven by health care costs. Unfortunately, by flogging the deficit boogeyman from the very beginning they perpetuated a whole bunch of economic myths that have hamstrung the recovery (and may wind up hurting the chances for the health care reforms to work by giving the deficit fetishists the weapon they need to cut it before it gets the chance.)
This was, in my opinion, the major error of the first term. And it’s why I have trouble trusting that the administration isn’t going to use whatever “cliff” or crisis to accomplish it in the second term. I hope they have seen the error of their ways, but these trial balloons about raising the Medicare age or the Chained CPI, don’t bode well. After all, the history shows that this does not come from being cornered or in “hostage” negotiations — it comes from a desire to do it. There were no hostages in February of 2009.
For anyone wondering what we do need in a second term on the economy should just watch these two videos:
Read more from from the National Nurses United here, ‘We Need a Real Economy’ to Eradicate Poverty in the U.S.
An no one has gone to jail for one of the biggest banking scams ever perpetrated on the American people. Hopefully President Obama will feel he can do more to help the American people in his second term. That’s my hope as President Obama is inaugurated for his second term, a change in his governing priorities.