The two biggest pieces of news today are that President Obama’s budget will reflect the tax and spending deal he offered House Speaker John Boehner last year — i.e. it will include the so-called Chained-CPI Social Security benefit cut — and that the March jobs numbers came in way lower than expected.
Some curdled cream in in your lukewarm coffee to start the day.
And just like coffee and cream, these stories are tightly linked, even though they appear to be unrelated.
The context that binds them is sequestration. Sequestration is the largest avoidable threat to the U.S. economy right now and the budget process is the closest escape vehicle. That Obama included chained-CPI in his official budget — as opposed to his less official private offers to Boehner — says little about his policy views, but a lot about where he stands, strategically, in his ongoing fiscal tussle with Republicans. Long story short, Obama’s budget now reflects a compromise, not an initial offer. It moves to the right of the budget Senate Democrats passed, toward — though not nearly all the way to — the House GOP position, because as far as the White House is concerned, that’s the only way to drag Republicans back into negotiations and convince the media that Republicans are the only thing standing in the way of making budget brinksmanship a thing of the past.
First, policy. Obama has been clear about his willingness to reduce cost of living increases to Social Security for years — but only if Republicans agree to higher taxes on rich people simultaneously The not-so-secret truth is that some people in the Obama administration simply think it’s a good idea, which is why you occasionally hear them slip and call it “correcting the CPI” or some other euphemism.
But for some reason this has never been good enough for Republicans and media elites many of whom continue to act as if Obama’s never given an inch to Republicans on entitlement spending. So now it’s officially official. And the good news is we’ll soon have some closure on this frustrating chapter in U.S. politics. If throwing a benefit cut into his budget was the Kabuki concession Republicans needed to cut a deal, we’ll know soon. If they remain adamant that rich people’s taxes aren’t going up anymore under their watch, then this charade can come to an end and everyone can move on. That would leave sequestration in place, and thus many more months of weak job growth in the months ahead. But, the Obama administration hopes, at least opinion makers would have to stop playing the false equivalence game and tell the country who’s really at fault.
If this does kickstart budget negotiations, though, it’s hard to imagine Republicans just swallowing Obama’s offer whole. I’ve been beating this drum for a while now, but these sorts of symbolic concessions are how harsher safety net cuts end up back on the table. If you’re no fan of Chained CPI to begin with, that’s a big problem. But the fact of the matter is that if Republicans were satisfied with claiming Chained CPI as a prize, this deal probably would’ve already been cut, and so the question is whether this is a sign that Obama’s willing to go negotiate further toward the right, or whether he’s just re-cementing his final offer.
We’ll know shortly. But remember today if budget negotiations fall apart once again. The risk Obama’s taking is that Republicans on the Hill can now characterize Chained CPI as a consensus policy that should be enacted alone, on the merits, without also increasing taxes, while Republican candidates can run against Obama’s plan to cut Social Security, and thus drive a wedge between Democratic incumbents and the President.
