THE BLOG
12/21/2012 02:53 pm ET Updated Feb 19, 2013

Chain of Fools

"We were always ready to sell out, but nobody was buying." -- Jerry Garcia

So now we have proof that if the president offered one of his daughters in human sacrifice, that would still not be enough for the House Republicans. Obama didn't go that far, but he did propose to cut, excuse me, tweak Social Security benefits. Before we dance on the grave of Speaker of the House John "It's cryin' time again" Boehner, we should consider what our champion in the White House was willing to endorse.

The Social Security benefit cut would be accomplished by reducing cost-of-living adjustments to Social Security benefits through the use of what's called a "chain-weighted index."

The particulars of the alternative index are irrelevant. The lame excuse is that it more accurately captures changes in the cost of living. Agreement on this technical issue is far from universal. But nobody should delude themselves that this is the reason for the change. If it was found that the current adjustments were too small, you can rest assured that the same reformers would not dream of suggesting a change that would raise benefits.

In short, anybody who says the reason to do this is a "more accurate" adjustment is lying through her teeth. In the same vein, House Democratic leader and ex-liberal Nancy Pelosi has adopted the Republican line that a benefit cut "strengthens the program." Gee, I hope they don't "strengthen" it too much. I'm not sure seniors subsisting on an average of $1,500 a month could stand too much strength. Do you think the Members of Congress will strengthen their own cake pensions by reducing the payouts? Nah, me neither.

All proposals to reduce Social Security benefits for "the wealthy" will end up hitting the not-so-wealthy. They have to, since there is not enough savings otherwise. Now ask yourself, should two persons getting the same Social Security benefits above some income threshold sustain the same benefit cut? Is that fair? Suppose one has income of $50,000 (in retirement) and the other $150,000. Should they each lose the same amount of benefits? Of course not. How to fix this? Increase the benefit cut for the one with the higher income. How to do this? Through the income tax. Any other approach is a backdoor way of obscuring the impact on taxpayers in terms of their ability to pay. Go ahead and call me a communist, but I say those with greater ability to pay taxes (income plus SS benefits) should pay more taxes (lose more benefits) than those with less. The refusal to do any such benefit 'means-testing' through the income tax is intrinsically dishonest and evasive.

Now that the House Republicans have blown up, we ought to expect the president to get a better deal. After all, a proposal the GOP rejects becomes inoperative. The question is whether any proposal gets done. If not, the fiscal cliff becomes a fiscal ski jump. It can end with an miraculous landing or an ignominious crack-up.

The crack-up ensues if the failure to reach an agreement causes automatic spending cuts and tax increases to take effect and to persist. What we actually need this year is more spending, not less. That's why former Governor and ex-liberal Howard Dean should give up the practice of economic prognostication. Thursday night he said going "over the cliff" would be good for the economy in the long run because The Deficit, and because look how well we recovered from the previous recession.

Message to the governor: our recovery from the previous recession sucks. Another shock at this tender moment is not likely to end well. In fact, deficit reduction in a recession can result in . . . higher deficits. How? Because austerity measures reduce employment and tax revenues and increase unemployment benefits and Medicaid spending. Governor, please consult a good elementary economics text.

I hope that any Democratic Member who votes for a Social Security benefit cut enjoys a primary challenge in 2014. And I hope a few are further punished by an independent liberal candidacy that either wins or throws the election to the GOP. Tough love! Personal responsibility! Replace ex-liberals with new liberals. Bullshit delenda est.

There is a precedent for such a political development. Once upon a time, the Democratic Party was committed to a futile, utterly destructive war in Southeast Asia. One of the reactions was the emergence of liberal peace candidates, not least for the presidency. They (ahem, we) succeeded in forcing an incumbent president to abstain from a reelection effort. I say this not to celebrate how the whole scenario unfolded, especially the Nixon unpleasantness, but to note the extent of pressure that can be brought to bear.

The president has the upper hand, since tax increases the GOP and everybody else hates automatically take effect on January 1. He can exploit this leverage to get a good deal, which means stimulus THIS YEAR (more spending, not less), reversion of tax rates on high-income taxpayers, including on dividends and capital gains, and further health care reform that reduces costs with minimal adverse impacts on benefits. We will see which side he is on.

Ultimately we would prefer to have people in office whose prospective behavior did not cause us to hold our breaths, or regret our support.

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