Obama’s Slam Dunk Off A Pick Set By Mitch Daniels

Originally Posted At Forbes.com
By Lawrence A. Hunter, Ph.D.
January 28, 2012

Last summer during the debt-ceiling negotiations, I warned that congressional Republicans and President Obama had cut a backroom deal to cover each other’s posteriors in order to raise taxes and cut Social Security:

“House Republicans are maneuvering behind the scenes to enact a ‘Grand Bargain’ with the Democrats and the White House to raise taxes at least a trillion dollars and cut Social Security benefits and Medicare for current retirees, right now, without reforming any of them.”

Republican Speaker of the House John Boehner at the time admitted as much on the Sunday talk-show circuit, saying that despite a breakdown in negotiations with the White House, his “offer to raise taxes almost a trillion dollars is still good, just sitting on the table waiting for the president to accept.”  In the Senate around the same time, a majority of Republican Senators actually voted for a Sense of the Senate Resolution declaring “that any agreement to reduce the budget deficit should require that those earning $1,000,000 or more per year make a more meaningful contribution to the deficit reduction effort.”

Although there was agreement that taxes would be raised in a discriminatory fashion under the guise of “fairness,” “reform” and “loophole closings”—another standard Washington swindle—what to do about the Bush tax cuts threw a spanner in the spokes.  Hence, the “Grand Bargain” was short-circuited temporarily during the debt negotiations when the White House and congressional Republicans couldn’t come to an agreement on exactly how to raise taxes on “the rich” without appearing to repeal the Bush tax cuts, political suicide for the GOP. 

A bipartisan contrivance to cut Social Security for current recipients was simpler—deny, deny, deny that there was any intention whatsoever to cut benefits for anyone currently on or soon to be on Social Security and then brazenly, with a sober and straight face enact a “technical correction” that alters the way inflation is measured so as to reduce annual cost of living allowances (COLAs) immediately.  The ruse had the double political benefit of slipping a real Social Security benefit cut past seniors while using the class-warfare resentment on taxes whipped up by the president and his congressional cronies to justify turning Social Security into a welfare program by means testing it and fraying the program’s link to the payroll tax.

When all was said and done, the can got kicked down the road into the lap of the Super Committee, after which the Grand-Scam deal to raise taxes and cut Social Security was put back into play again—until the Super Committee itself stumbled over defense cuts. 

Twice, the Grand Bargain to “welfarize” Social Security and cut Social Security benefits for current retirees in exchange for raising taxes on everyone earning more than $250,000 a year foundered on the details.  I predicted at the time that, no matter, this pernicious idea would bounce back like a bad penny, and so it has.

In his State of the Union Address last week, President Obama told the nation that he has cut a deal with the Republican leadership in Congress to cut Social Security in exchange for raising taxes by an amount approaching 20 percent on those earning more than $250,000 a year:

“As I told the Speaker this summer, I’m prepared to make more reforms that rein in the long term costs of Medicare and Medicaid, and strengthen Social Security, so long as those programs remain a guarantee of security for seniors."

[Translation:  “We have agreed to transform Social Security into a welfare program by means testing it, reducing future benefits, making people work longer and changing the way inflation is calculated to cut current COLAs immediately for current retirees.”]. 

The President went on: 

“But in return, we need to change our tax code so that. . .if you make more than $1 million a year, you should not pay less than 30 percent in taxes [and]. . .if you make under $250,000 a year, your taxes shouldn’t go up.” 

[No translation required now but next week we delve into the false premises on which this idea is based and examine its implications.]

Indiana Governor Mitch Daniels, giving the Republican response to the president’s address joined in the millionaire bashing and class-warfare rhetoric to throw GOP support behind the idea of turning Social security into a welfare program and cutting benefits, an idea embraced by all the remaining GOP candidates save Ron Paul:

"Decades ago, we could afford to send millionaires pension checks and pay medical bills for even the wealthiest among us. Now, we can't, so the dollars we have should be devoted to those who need them most.”

He also signed up the GOP for “taxing the rich:”

"It's absolutely so that everyone should contribute to our national recovery, including of course the most affluent among us.” 

[Translation:  “Cut entitlement benefits of old people and raise taxes on the rich.”] 

Daniels continued:

“There are smart ways and dumb ways to do this: the dumb way is to raise rates in a broken, grossly complex tax system, choking off growth without bringing in the revenues we need to meet our debts. The better course is to stop sending the wealthy benefits they do not need, and stop providing them so many tax preferences that distort our economy and do little or nothing to foster growth.”

[Translation:  “Any personal and business income and whatever equal-treatment/due-process rights the government decides individuals ‘don’t need’ should be taken away from them to serve the greater good, including raising taxes on interest, dividends and capital gains.”]

No wonder, MSNBC’s Chris Matthews once again experienced “tingle-up-his-leg” shudders listening to Daniels:

“There's not enough to go around. We're going to have to have means testing. We're going to have to close the loopholes.  [Daniels gave] a very responsible kind of look at fiscal conservatism that recognizes that the rich can't plunder the poor any more, that if you're going to have a true conservatism, in other words a society that will sustain itself, a society that will be at peace with itself, you need to help the people to get a break and that means it's not Libertarianism at all. There's nothing of Ron Paul in what that man said. . . He wasn't afraid to take on the rich and that's so rare today in the Republican side.  Now I understand why people like Mitch Daniels.”

So there you have it; the fix is in.  Two parties, one Establishment determined to raise taxes and cut Social Security and Medicare without reforming any of them.  It looks like just a matter of time and subterfuge (unless Paul stages an upset) before this president or his successor rolls up the lane and drives the bucket off a screen set by the congressional GOP for an easy redistribution slam-dunk, jammed right down America’s throat once again.

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