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Dick Durbin: Sacrificing Social Security, Recovery?

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Now that the debt ceiling crisis is behind us -- and as its disastrous effects, possibly a new recession, unfold -- it's time to take a look at Senator Richard Durbin's role in shifting the debate away from the jobs crisis and legitimizing attacks on Social Security.

In the midst of the crisis, Durbin and the so-called Gang of Six senators unveiled their deficit reduction proposal, claiming a $4 trillion reduction over ten years. It would reduce Social Security benefits, cut Medicare and Medicaid heavily, and cap discretionary spending. The "gang" proposed immediate cuts of $500 billion.

The Durbin gang's plan claimed to raise revenues by $1 trillion by closing loopholes and ending deductions, while reducing the top tax rate on millionaires from 35 percent to as low as 23 percent. New revenues would be dedicated solely to reducing taxes or paying off debt.

Progressives roundly and rightfully condemned the proposal. The Congressional Progressive Caucus called it "a terrible plan" and vowed to oppose it. Senator Bernie Sanders, citing "major cuts in Social Security," called the plan "a disaster for working people and their families, for the elderly, for the sick, for children and for low-income people" -- while "the tax rates will be lowered for the wealthiest people and the largest, most profitable corporations."

When Sanders said Social Security (which has nothing to do with the federal deficit) should not be part of a deficit reduction deal, Durbin disagreed, saying, "I think Bernie is going too far."

The Raw Deal

The Center for America's Future called Durbin's plan a "raw deal" that will increase unemployment and income inequality and cripple the government's ability to get the economy moving. The plan shows "how divorced Washington is from the struggles that Americans face," said Robert Borosage of CAF.

The plan includes "immediate and significant cuts to Social Security benefits" and "virtually guarantees devastating cuts" further down the road, said Nancy Altman of the Strengthen Social Security coalition. The plan would reduce Social Security benefits by $112 billion over the next decade, she said. Remember all those promises by Durbin and others not to touch current beneficiaries?

And those vaunted revenue increases? Getting Republicans to sign on to higher revenues and defense cuts was supposed to be the Gang of Six miracle. Not so much, according to Citizens for Tax Justice. Minus a "deceptive accounting gimmick," the plan actually reduces revenues, CTJ said. In fact, the group said, it actually increases the deficit!

The plan also increases incentives for U.S. corporations to move jobs overseas and hide their profits in offshore tax havens, said CTJ, which previously gave Durbin a 100 percent favorable rating on his voting record.

Durbin's plan leaves untouched the most regressive loophole in the tax system -- the reduced capital gains rate, which taxes income on stock and bond earnings at a lower rate than wages and salaries, ensuring that "the richest Americans [will continue to] pay a lower rate of taxes than their chauffeurs," said CAF. (The "loopholes" it would target are those that help the middle class -- the home mortgage deduction, the exemption on employer health care.)

Dean Baker of the Center for Economic Policy and Research pointed to "huge tax breaks for some of the wealthiest people in the country." Under Durbin's plan, he said, a retiree in her 90s getting $15,000 a year would end up losing $1,000 annually, while JPMorgan/Chase CEO Jaime Dimon, earning $20 million a year, will save as much as $3 million a year on his tax bill.

In Denial

Durbin accused his "friends on the left" (watch your back when you hear that phrase) of being in "denial" about the severity of the deficit and the danger of Social Security insolvency.

But it's Durbin who is in denial. He certainly knows the facts of the matter: that Social Security currently has a $2.6 trillion surplus; that it has no connection to the federal deficit, being funded entirely by payroll taxes; and that its long-term problems could most easily and fairly be fixed by raising the cap on payroll taxes, so the wealthy pay their fare share.

He knows that the federal deficit was caused not by Social Security or Medicare: it was caused by the Bush tax cuts; by pointless wars in Iraq and Afghanistan costing trillions of dollars; by rising health care costs, fed by insider deals with insurers and Big Pharma; and by the recession, which cut revenues and raised costs dramatically.

And if he doesn't, he certainly should know that cutting federal spending now will increase unemployment and stall recovery, and that getting the economy going again -- which will require federal action, since no other sector is up to the task -- is the only realistic way to reduce the deficit.

What is Durbin doing? He says he wants to ensure that progressives have "a seat at the table." That's fine if it means progressive principles will be represented there. But Durbin seems to have compromised on even his own minimal stated principles; he told WBEZ his goal was protecting the safety net and progressive taxation. Much less did he stand for a progressive response to the immediate economic crisis: a serious jobs program.

Liberal cover

Durbin is providing liberal cover for attacks on Democratic programs. Indeed, shortly after the Gang of Six plan was unveiled, President Obama embraced it -- and went on to propose $650 billion in cuts to Social Security, Medicare, and Medicaid, including raising the age of Medicare eligibility to 67.

There's little doubt Durbin was tasked by the Obama administration with pushing deficit reduction, and chosen precisely because of his liberal credentials. (He's played this role previously, on Obama's ill-fated deficit reduction commission, the subject of a previous post.) Obama has disastrously chosen to focus on the debt crisis, to the exclusion of the real crisis, the jobs crisis, which is at the root of the soaring deficit.

As Elizabeth Drew explains, this is part of a campaign strategy to attract independents. (It's a bad strategy, too, since independents care more about jobs than the deficit.) Bill Daley is serving as Obama's Andrew Mellon.

In doing this, Obama has -- disastrously -- empowered the Tea Party. He's taken up Tea Party rhetoric in an attempt to co-opt their issue, but ended up playing entirely on their turf. Obama began focusing on the deficit early in his term, and he's been emphasizing it for over a year. And it was Obama who insisted the debt ceiling deal include a "grand bargain" on deficit reduction.

James K. Galbraith argues that the debt deal got the president exactly what he really wanted -- locked-in domestic spending cuts, a path to severe cuts in Social Security, Medicare and Medicaid, and no tax increases.

Now Obama wants to "pivot" to jobs -- but he's just negotiated a deal that makes serious action on jobs virtually impossible. Instead he'll turn to Wall Street-favored free trade deals. (Much more real was his pivot between a realistic approach to Social Security as a candidate, and a sudden focus on "entitlement reform" as president-elect.)

Smart Politics

The smart politics would be progressive politics -- to maintain consistently that the immediate issue is not a debt crisis but a jobs crisis; that the economic collapse makes Social Security more important and less expendable than ever; and that containing health costs means expanding Medicare, not contracting it.

In fact, as Robert Reich and CAF's Dave Johnson point out, polls consistently show the American people support taxing the rich, creating jobs, and maintaining Social Security and Medicare. And even Larry Summers -- even Ben Bernanke! -- say an austerity program at this time is going to damage economic recovery.

Durbin has enabled Obama in this politically and economically disastrous approach.

Durbin described the Gang of Six plan as a middle ground between the supposed extremes of the Ryan budget plan and President Obama's proposals. But both those approaches accept the Wall Street/Beltway analysis that government spending is the problem. When Obama said "everything is on the table," he meant Social Security and Medicare, because he'd already taken jobs programs off the table.

The real alternative, which actually reflects the American mainstream, was the People's Budget of the Congressional Progressive Caucus; somehow no one at the table brought it up.

In the debt ceiling negotiations, Durbin was an early proponent of the congressional "Super Committee," now tasked with cutting an additional $1.2 trillion from the deficit by December, with automatic cuts built in if Congress doesn't approve the committee plan. Social Security, Medicaid and Medicare are squarely in the sites of the Super Committee. Strengthen Social Security calls the deal "a recipe to raid Social Security."

Russ Feingold explains how the committee's setup -- the plan gets an up-or-down vote in Congress, no extended debate, no amendments, no filibuster -- makes cuts to Social Security a virtual certainty.

No Worries

If Durbin were a Republican betraying his party's principles, the Tea Party would be all over him. As it is, he has little to worry about. Progressives have established little leverage over Democratic politicians.

Robert Borosage argues this is due to "money politics and the passivity of the Democratic base." Progressive groups, including weakened labor unions, must compete for influence within the party with well-funded corporate Democrats. And they seem to value their access a lot -- a place in the "veal pen" where they can enjoy being cursed out by the likes of Rahm Emanuel. It's the old "seat at the table" syndrome.

"Progressives need to learn not so much from the Tea Party as from their own history and build an independent movement to stand with working Americans," argues Borosage, whose CAF is part of the American Dream Movement:

Unlike the Tea Party fringe, a progressive movement has the advantage of mobilizing Americans around values and the policy priorities that are supported by a broad majority. It can organize to hold legislators in both parties accountable, demanding that they stand up for the many, not the privileged few.

Today, a range of groups are doing just that, calling on members to inundate Congress with demands that Medicare and Social Security be protected, and that the rich pay their fair share of any deal. The challenge for the movement is whether it can gear up to run its own challengers in Democratic primaries against incumbents who are more responsive to their contributors than their constituents.

"People who adhere to the core Democratic values Obama has abandoned need a strategy for stronger resistance," writes William Greider. "To be blunt, progressives have a pick a fight with their own party."

Though Durbin has clearly been in Washington too long, he is not likely to get a serious primary challenge. (It's a shame that a senator who's considered unbeatable doesn't use his strength to push things in a progressive direction; and instead lends his good name to legitimize the Beltway consensus.)

But he should certainly hear from his constituents, the people who need the jobs, Social Security and Medicare, early education programs and college grants and nutrition assistance -- all of the programs that real people need and that Durbin has traded away, while boasting of his "pragmatism."

And perhaps Senator Durbin should rethink his relationship to an administration that seems to be out of step with the values of his strongest supporters on some basic issues.