President Obama's decision to join Bernie Sanders, Hillary Clinton, and Elizabeth Warren in calling for expansion of Social Security is a big win for the left wing of the Democratic Party. Liberal Democrats and their allies in the labor union movement put this idea on the table several years ago to try to kill off enthusiasm from centrist Democrats for reducing Social Security benefits. Their strategy worked.
But in addition to a tactical win for the left, Obama's turnabout on Social Security is the result of a cycle of tactical ineptitude on the part of the American conservative movement.
Five years ago, conservatives had the opportunity to get a Democratic president to sign legislation that would have substantially cut entitlement spending. In exchange, they were asked to agree that high-income Americans should pay higher taxes. They refused, thinking in part that preventing Obama from scoring a bipartisan achievement would make him easier to beat in 2012.
Obama was reelected anyway. Taxes on high-income households went up anyway. And now the politics of entitlement spending have shifted drastically to the left. The Republican Party's 2016 nominee says he opposes cuts in Social Security benefits, and mainstream Democrats have flipped away from Obama's openness to cuts to the position that benefits should be enhanced.
The grand bargain drama of 2011
This epic miscalculation started with a miscalculation by Democrats. In November 2010, they took a beating in the midterm elections.
But Congress came back into session that December and engaged in a surprisingly productive round of legislating. The Bush tax cuts were extended for two years, and a "payroll tax holiday" was implemented as a fiscal stimulus measure. Congress ratified an important nuclear arms control treaty and repealed the discriminatory "don't ask, don't tell" rule.
One thing the lame-duck Congress didn't do, however, was pass the increase in the statutory debt ceiling that was needed in 2011. This was a deliberate move on the part of Democratic leaders who thought the need to raise the ceiling would be a constructive way to engage the incoming GOP House majority in responsible governance.
What happened instead is that Republicans united around the view that the debt ceiling could only be raised in exchange for big cuts in entitlement spending. Rather than reject this idea out of hand, Obama embraced it — but said entitlement cuts should be matched dollar for dollar with tax increases.
But there was an important nuance to this. When George W. Bush passed his big tax cut package in 2001, he structured the cuts as legally temporary, even though Republicans immediately turned around and said they should be made permanent. This created a divergence in budget jargon between the "current law" baseline, which assumed the tax cuts would expire as scheduled, and the "current policy" baseline, which assumed the tax cuts would be extended as Republicans wanted.
The tax increases Obama asked for were relative to the current policy baseline — i.e., Obama was simply asking Republicans to agree to let tax cuts expire that were already scheduled to expire.
Republicans rejected even this weak offer, opting instead for sequestration — an evenly balanced series of cuts to defense and non-defense discretionary spending that did nothing to address the long-term budget deficit and have since been partially rolled back.
The GOP says no
Obama's grand bargain offer and the GOP's rejection both involved a mix of substantive and political calculations. Obama thought it would be nice to run for reelection with a major bipartisan achievement under his belt to complement the big party line achievements of 2009-'10. He also felt that getting Republicans to cast an affirmative vote for higher taxes would break the spell of anti-tax dogma with useful long-term consequences.
Republicans, conversely, were roiled by intra-caucus dynamics.
The party's House and Senate leaders, John Boehner and Mitch McConnell, were deeply reluctant to divide their own parties with any kind of big partisan deal. They weren't well-liked by their own backbenchers or trusted by conservative media sources.
At the same time, they found the White House's bargaining position to be slippery. If there were entitlement cuts that Obama favored on the merits, why not simply spell them out and see if the parties could reach agreement? Making the whole thing contingent on tax hikes seemed to Republican leaders like a cynical effort to divide their party — exactly what they didn't want to do.
Last but by no means least, just as Obama was hoping for a bipartisan achievement to bolster his legacy, Republicans wanted to paint him as a liberal extremist and deny him that kind of win.
According to Matt Bai's reporting, Boehner in particular got very close to agreeing to a deal at one point but ultimately scotched it in large part because he thought his nominal deputy, Eric Cantor, would use the issue as a wedge to poach Boehner's job.
The unfolding of a disaster
Everyone in the GOP had their reasons for doing what they did. But the result has been a complete tactical and strategic debacle.
- Cantor ended up losing a primary challenge to a more aggressive right-winger.
- Boehner never secured the confidence of his caucus, and wound up resigning under fire without ever having achieved the aura of statesmanship that a grand bargain would have given him.
- Obama was reelected anyway.
- As a result of Obama's reelection, taxes went up anyway.
In other words, the bad stuff conservatives wanted to avoid (tax hikes, Obama's reelection) happened anyway. The bad stuff Republican congressional leaders wanted to avoid (divided party, lost leadership jobs) happened anyway.
So nothing was gained by rejecting the grand bargain. But it turns out that a great deal — a massive opportunity for conservatives to reduce the federal spending footprint — was lost.
The progressive wing of the Democratic Party breathed a sigh of relief that right-wing intransigence had essentially bailed them out in 2011 and began a mobilization campaign that has now succeeded in pushing grand bargaineering out of the party mainstream. And Trump has taken over the GOP on a platform that disavows the party's longstanding support for entitlement reform.
Of course, in life mistakes happen. But what's particularly striking about this fiasco is there's been absolutely no self-criticism about it. In the conservative imagination, failures to achieve policy gains are always the fault of perfidy and insufficiently rigorous adherence to the dogma. The idea that, at times, conservative true believers have erred by failing to correctly assess opportunities is never even considered, much less embraced.
