10/21/2012 10:36 pm ET Updated Dec 21, 2012

Pander Bears

Conservative commentators use the term "pander" to describe politicians, usually liberals, who are sensitive to women, blacks, Latinos, gays, and workers who lose their jobs to outsourcing. You might say a lot of right-wing pandering goes on when it comes to the religious right, the NRA, and the anti-abortion lobby. As we heard in the second debate, nearly everyone seems to be pandering to the coal industry.

But the mother of all special interest groups is Wall Street. And the most economically dangerous pandering this year and next is the pandering to the deficit hawks led by America's corporate elite. If you need an emetic, have a look at the website of the Peter G. Peterson Foundation. Or the Fix the Debt Campaign. Or any of a dozen other corporate-led front groups who are urging that America deflate its way to recovery.

Yet we barely even have a debate between the presidential candidates on the question of whether the deficit needs to be cut at all. Both agree that it does. The reality is that the deficit will come down as revenues go up when the economy goes into recovery. If it goes into recovery. But if we cut the deficit prematurely, that recovery will keep receding.

We have plenty of debate on whose budget numbers are fishy (Romney's) and on whether to bring about deficit reduction by slashing social spending to pay for even more tax cuts (Romney) or whether to have a mix of budget cuts and tax increases on the wealthy (Obama.)

The Romney budget would cut spending by about $5 trillion over a decade. The Obama budget would cut it by just under $4 trillion, about 46 percent from tax increase, and 54 from spending cuts.

Of the two positions, Obama's is both the more sensible and intellectually honest. But the Democrats are mistaken when they argue that the deficit needs to be cut any time soon. With the economy weak, we certainly don't need $2 trillion in spending cuts as Obama proposes; if anything, we need more stimulus spending.

As soon as the election is over, if Obama does win there will be a titanic struggle within the Democratic Party. Under the pressure of the so-called fiscal cliff, some Democrats around the president and in Congress will be insisting that Social Security and Medicare will need to be cut, both to appease the deficit hawks in the corporate and financial elite, and as part of a grand bargain with Republicans in Congress.

In case you missed it, the so-called fiscal cliff is a massive and automatic budget contraction set to go off January 1. It is made up of the expiration of the Bush tax cuts and the temporary cut in payroll taxes, plus the chickens coming home to roost from the budget non-deal that Republicans imposed on Democrats back in 2011 -- automatic budget "sequesters" in the form of $1.2 trillion in cuts divided evenly between military and domestic spending.

According to the Congressional Budget Office, all these cuts will kick the economy back into a full-blown recession. But a budget deal that cut a little less would only throw the economy off a slightly smaller cliff.

The idea that social spending cuts will somehow help the recovery is voodoo economics. Social Security is fine until 2033, according to its own actuaries, and would be fine indefinitely if the wages of ordinary workers kept pace with the economy's productivity growth.

And the premise that President Obama and the Democrats should sacrifice social outlays in order to get a grand bargain with the Republicans is also delusional. The Republicans have shown over and over again that they don't do grand bargains. They do "My way or the highway."

The current titanic political struggle ends on Election Day, Tuesday, November 6. If Obama performs in the third debate as well as he did in the second one, it will probably end with Obama winning re-election by a few percentage points and a few key states.

But then, on Wednesday, November 7, the next titanic struggle begins. It has two parts. The first part is for Democrats to keep Republicans from using the fiscal cliff to win what they didn't win in the election -- further deep cuts in Social Security, Medicare and what's left of other social investment.

Alas, the second struggle will be within the Democratic family -- to keep the Obama Administration from giving away much of what Democrats stand for, in a hapless quest for a budget bargain on Republican terms that will cheer the Wall Street elite.

After the cheering dies down, a re-elected Obama will be thinking about his legacy. If he listens to the Democratic austerity hawks, his legacy will be that of a two-term Democratic president who presided over eight years of an economic slump. He, and we, can do better than that.

Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His latest book is A Presidency in Peril.