President Obama -- Dancing With Himself

04/15/2013 02:32 pm ET | Updated Jun 15, 2013

There has been lots of justified criticism of President Obama's budget proposal last week, which includes cuts to Social Security benefits by introducing chained CPI, a measure of inflation that results in slower increases in cost of living benefits for various government programs, including Social Security. The administration and its defenders have argued that it's not a cut -- just a more "realistic" measure of consumer behavior.

Many critics have noted, however, that chained CPI is not a more accurate measure of changes in prices, particularly as the elderly experience them. Of course, if it weren't a cut in benefits, proposing it in the context of reducing government deficits would be nonsensical. And the administration's avowal that it would protect the most vulnerable recipients from the effects of the new measure would also be pointless if the new measure weren't actually hurting people in the first place. Finally, Social Security (the main target of the new CPI measure) -- and its current multi-trillion dollar surplus -- has no effect on the deficit. This surplus (the money in the trust fund in excess of current outlays) will disappear in a couple of decades. But when it does, Congress will either act to amend the funding structure of the program (if it doesn't sooner), or it will allow people's benefits to rise more slowly than they are currently set to rise, and those benefits will, in all cases, continue to rise faster than the rate of inflation.

There are issues to address here, but they have nothing to do with deficits. The impact of these cuts will, unsurprisingly, fall on the least well off. Dean Baker calculates that seniors who rely primarily on Social Security for their retirement income will experience a cut in their benefits three times larger in relative terms than the hit that wealthy Americans will take from the New Year's Day deal that allowed the top income tax rates to rise for those making more than $400,00 per year (another perverse effect of the new CPI measure is that it would push many Americans into higher tax brackets, disproportionately hurting middle class earners).

In policy terms, then, President Obama's proposal simply doesn't add up. The White House has argued that this is a political move, however. It's designed to signal the President's seriousness in tackling the country's deficit problems. As a percentage of GDP, our deficits have been declining dramatically for three years from their immediate post-crash peak in 2009 and all of the supposedly horrible effects of deficit spending, including runaway inflation and soaring interest rates, have failed to materialize. But the president's team insists that it is important to offer responsible, prudent plans going forward to bring into closer balance our revenues and expenditures. The White House has wanted to do this by a mix of spending cuts and tax increases. The Republicans, of course, adamantly oppose the latter. But the political logic of the proposal is based on faulty premises. One faulty premise is that if President Obama makes concessions, Republicans will be compelled to make some of their own. This flies in the face of everything we know about the Republican Party -- a political faction now substantially in thrall to extremists whose own base has made repeatedly clear that compromise is for weaklings. Furthermore, as has happened with Medicare since 2010, proposals by the president to rein in "entitlement" spending have not been met with equanimity by the GOP, but instead by attack ads decrying the president's willingness to throw seniors under the proverbial bus. That many of the very same people who supported those reductions in Medicare spending were also willing to attack the President for making them tells you everything you need to know about the integrity and reliability of the folks to whom Obama still insists on making concessions. And one key Republican has already begun test-driving the same arguments about Obama's proposed Social Security reductions.

Perhaps, some of the President's defenders say, he's not trying to win over Republicans at all. He knows they won't compromise. He is, therefore, trying to make the point, once and for all (because it hasn't, presumably, already been painfully obvious for years) that Republicans are unreasonable and can't be trusted to govern the country. Then the question arises: to what audience is he trying to make this pitch? Is it to independent-minded voters? If so, it strikes me as highly unlikely that, in a showdown of ads in 2014, "he tried to cut social security" is going to be less effective than "see, Obama tried to compromise and the Republicans wouldn't play along," even among such voters. Yes, polls show that people now think the deficit is an important problem (not a surprise given the endless drumbeat about this issue from elite media and the political classes more broadly including, of course, the president). Polls, however, show much more clearly that cutting social security is wildly unpopular across the political spectrum. So, if you think your proposals are actually a non-starter, why not do what Congressman Jerold Nadler and others have argued for -- propose a budget that aggressively takes up the need for job creation, argue for its merits and explain why the GOP's agenda is nothing more than willful obstruction that is harmful to ordinary Americans?

The president issued a memorandum last week concerning the sequester. It appears to take back most of the proposed military spending cuts, leaving on the chopping block primarily domestic programs that help the less well off. It's arguably a significant betrayal of the already deeply flawed logic and structure of the 2011 deficit deal. The president already threw away much of his leverage on New Year's Day when he agreed to make permanent the Bush tax cuts on individuals making between $250,000 and $400,000 a year. He has now categorically reneged on longstanding promises he'd made concerning Social Security. The putative political benefits to Democrats in all of this are exceedingly hard to discern. Laurence Lewis of Daily Kos summed up well the political illogic at play here:

When the best that can be said about the president's proposal is that it has no chance of being enacted, the truth about it is that it is an astonishing failure. When the confidence that bad policy will not be enacted is grounded in the certainty that the Republicans are too stupid and unhinged to accept "yes" for an answer, we have reached the point of political surrealism.

But if there's no coherent policy or political rationale, what explains the proposal? Maybe President Obama's target audience is the coterie of wealthy and well-connected insiders -- the very serious people from the pundit classes and high finance -- whose concerns diverge dramatically from those of ordinary Americans. Is this because he's concerned about fundraising? That seems unlikely, since he's not running for reelection. Perhaps it's become an ideological belief, a function of becoming too far removed from Americans who don't make hundreds of thousands, or millions of dollars a year. Or of spending too much time listening to people who -- utterly lacking in self-reflection -- are convinced that only the middle class and the less well off need to rein in their spending and learn to live more modestly, prudently and wisely.

I have heard Obama defenders say for years that he's a really smart guy, so they trust him to do what's right -- that he's playing 12-dimensional chess and as the meme has it -- "he's got this." But can't one be a generally smart guy and still ultimately think some really dumb things? Maybe there is no clever end game. Or bigger picture. Maybe there's just a guy with a deluded notion that if so many Democrats dislike the idea, it must have some merit. Or that the government really is like a household. Or that this is what it means to stand above the partisan fray, to make good on the promise of his first moment in the national spotlight, in July of 2004. Not because this accomplishes anything. But because it's pleasing to his ear and, ultimately, he likes dancing with himself.