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epeal of Glass-Steagall. Not only has Obama been gunning for retirement
programs since 2008 (I’ll explain), he’s so hell bent on reducing deficits
that he’s willing to damage the economy. The Congressional Budget
Office estimates [3] if the economy plunges over the cliff, recession will
hit in 2013. Interestingly, the CBO calculates that if all the tax cuts are left
in place and no spending cuts are enacted the economy will grow by 4.4
percent next year and add 2.3 million full-time equivalent jobs. This
would be the highest rate of growth since the late 1990s [4].
Now, it’s a stone-cold fact that the Democrats are willing to gut social
welfare. Listen to New York Times chief political correspondent Matt Bai
[5]: “Mr. Obama, during his ‘grand bargain’ negotiations with the House
speaker, John A. Boehner, in the summer of 2011, had already signed off
on painful cuts to Medicare, Medicaid and Social Security.” Bai says there
was “near unanimity” among Obama’s advisers and Harry Reid and Nancy
Pelosi said “they would get behind it.” Paul Krugman’s assessment [6] is
harsher, saying Obama was “willing to sign on to … draconian cuts in key
social programs.”
During the summer of 2011 the Obama White House and the
Republican House played chicken over raising the federal debt ceiling. Bai
says the two sides were haggling over the amount of cuts, not the question
of bleeding retirement programs. Obama was willing to sacrifice $1
trillion in Medicare cuts over two decades, $110 billion in short-term
Medicaid cuts, and acquiesced to “changing the Social Security formula so
that benefits would grow at a slower rate.”
Mind you, the Budget Control Act Obama and Boehner eventually
inked not only put the fiscal cliff in place, it cut spending for a second
time in 2011. Over the next decade this will chop $900 billion in “nondefense
discretionary spending.” [7] This is wonk-speak for social
programs, which will shrink to pre-1962 levels by 2021. Simply put,
Washington already plans to roll back the Great Society – even before the
fiscal cliff is reached.
But wasn’t Obama at the mercy of a Tea Party Congress threatening
default unless he forked over $2 trillion in spending cuts? That’s what Bai
argued [8] last April: “Not only was [Obama] bent on avoiding a