Obama’s Long Battle to Cut Social Security Benefits

Eric Zuesse

If, as expected, U.S. President Barack Obama will, for the first time in his Presidency, be given by the nation’s voters two Republican-controlled houses of Congress, he’ll finally be able to sign into law bills that are as conservative as he wants; and one of these new laws will transform Social Security.

Back in 2009, he came into office wanting to address the long-term financial issue of Social Security not by removing the annual earnings-cap of around $100,000 that pertained (and above which income was/is untaxed for Social Security, so that this change alone could solve the problem), but instead by reducing retirement benefits to seniors: cutting the benefits they receive. This man, Obama, who went along with George W. Bush’s taxpayer-bailouts for Wall Street rather than institute bailouts of Main Street (the public) and who thereby produced continuation of the economic crash for everyone other than the nation’s wealthiest 1% or 5%, was also aiming to serve the wealthiest Americans at the expense of everyone else when it comes to long-term changes of Social Security. Now that voters will likely produce a solidly Republican Congress in this November’s elections, and so President Obama will thereafter be signing into law bills that will have passed two Republican-controlled houses, one of those bills he’ll sign will probably be his longstanding dream one, of slowly decimating the Social Security program, a program that Democrat FDR had proudly started. Obama’s plan to do this is the “boiling frog” approach: slowly enough so that the public won’t much notice the change until it’s too late and the “frog” is “cooked.”

On 12 November 2007, the great blogger “Mike the Mad Biologist” headlined “Obama Has Lost My Vote” and gave as his reason Obama’s having used the phrase “the Social Security crisis” when there was no ‘crisis’ except in the rhetoric of Republican politicians and their aristocratic stooges who want to reduce government benefits for everyone but aristocrats.

President Obama’s plan to cut Social Security, Medicare, and Medicaid, predated his becoming President, though he didn’t talk about it when he campaigned for the job. (If he had talked about it, he wouldn’t have won the Democratic nomination; and he might not even have beaten the Republican candidate, John McCain, in 2008, since no Republican Presidential candidate has ever publicly campaigned to weaken what his Party nonetheless routinely contemptuously refers to as “entitlements.”) Everyone had simply assumed that no Democrat would want to weaken or reduce the crowning achievements of Democratic Presidents Franklin Delano Roosevelt and Lyndon Baines Johnson, not to mention of the Democratic Party itself. But Barack Obama wanted to do it; and he remains committed to doing it.

On 16 January 2009, four days before Obama became President, Michael D. Shear headlined in the Washington Post, “Obama Pledges Entitlement Reform,” and he reported about “a wide-ranging 70 minute interview with Washington Post reporters and editors,” in which Obama endorsed efforts by congressional Republicans, and “the Blue Dog Coalition of fiscally conservative Democrats,” to cut Social Security and Medicare. Progressives were already disturbed at what their friends in Congress were leaking to them about Obama’s strong commitment to doing this, and so a few blog posts were issued to ring alarm bells publicly about it. Paul Rosenberg at openleft.com headlined on January 17th (three days before Obama’s Inauguration), regarding “Obama’s ‘Mandate’ To Slash Medicare, Medicaid & Social Security,” and he presented polls showing that the public not only didn’t want to cut any of these programs, but that 74% wanted Medicare and Medicare spending increased, and 62% wanted SS spending increased. Even 65% of self-declared “conservative” Americans wanted the medical programs increased, and 62% of them wanted SS spending increased. To Obama, his plan to cut Social Security, Medicare, and Medicaid, so as to fund the Wall Street bailout, was an act of political courage. (In his interview with the Washington Post, he “pledged to expend political capital on the issue.”) It was his long-term plan, even though the polls showed widespread opposition to it by the public. This was a matter not of expediency, but of conscience, for him: he needed to find some way to fund both the ongoing Wall Street bailouts, and the massive federal debt that would be caused by the 2008 Wall Street crash and its resulting plunge in federal tax-collections; and this “balanced approach,” of tax hikes and spending cuts, would be his solution to both problems.

Steve Benen at the liberal washingtonmonthly.com headlined about the matter on the same day, January 16th, “Entitlements,” and he said “Obama’s comments on the subject weren’t troubling at all.” Benen ignored the messages that were then flying around Capitol Hill saying that Obama was evidently determined to cut back on these programs, and that he was working behind the scenes with conservative Democrats and with Republicans in order to achieve this before 2012. Obviously, he didn’t meet this goal.

Conspicuously missing from the list of names that the incoming President mentioned to the Washington Post as being among the individuals with whom he was discussing his planned changes to Social Security and Medicare were the Democratic leader in the Senate, Harry Reid, and the Democratic leader in the House, Nancy Pelosi, both of whom were already strongly on the public record as opposing any cuts to Social Security, Medicare, or Medicaid, as being appropriate ways to address the nation’s fiscal problems that had been caused by the Wall Street crash. Often during the subsequent years, Obama drove both Pelosi and Reid to fits with his back-door efforts to cut “entitlements,” such as when, on 18 February 2010, he appointed the conservative Democrat Erskine Bowles to serve opposite the extremely conservative Republican Alan Simpson as being the two co-chairs on the White House’s “bi-partisan” federal debt commission concerning entitlement “reform.” (The Commission heads produced recommendations that congressional Democrats roundly repudiated for slashing entitlements, and that Republicans condemned for increasing taxes.) Obama set this Commission up to deal with the soaring federal deficits that had been caused by Bush’s 2008 economic collapse, so as to use those federal deficits as an excuse to slash entitlements despite producing thereby even more suffering for the poor, at the very same time while Wall Street was being bailed out. Bowles was supported by the Wall Street mega-banks that were being bailed out by taxpayers. Simpson was a born conservative who followed in his father’s footsteps as Wyoming’s Republican U.S. Senator. His father had been quite extreme: “one of six Republican senators who voted against the Civil Rights Act of 1964.” So, this commission was set up in order to be a wolf-in-charge-of-chicken-coop type of operation, and congressional Democrats thus opposed it. Republicans opposed the commission’s mandate because it would mean increasing taxes – the commission wasn’t conservative enough for them. Thus, on the very same day, 28 March 2012, when the Bowles-Simpson recommendations were finally dashed in the House, the House passed instead the Paul Ryan budget, which Mitt Romney ran on, against Obama. The 2012 Presidential “election” was, consequently, between two conservatives, one of whom pretended not to be.

This “reform” of “entitlements,” along with tax-hikes on the rich, is what Obama has publicly referred to many times as his “balanced approach” and “shared sacrifice.” As this link shows, he announced at a press conference on 15 July 2011, that, “If you’re a senior citizen, and a modification potentially costs you a hundred or two hundred bucks a year or more,” then you should accept this cut, because “Congress has run up the credit card” paying the mega-banks in the Wall Street bail-out and to make up for the economic collapse from the 2008 Wall Street crash. So, “The least I can do is to say that people who are making a million dollars or more” (after their firms were rescued by the bail-out) will “have to do something as well. And that’s the kind of tradeoff, that’s the kind of balanced approach and shared sacrifice that I think most Americans agree need to happen.” However, in the nearly two years after Obama talked about cutting Social Security benefits by “a hundred or two hundred bucks a year or more,” the actual size of that proposed cut has become now, $100 a month: it has gone up by 600% to 1200%, in his 2013 proposal.

Obama has been trying hard: On 20 July 2011, Tyler Durden at zerohedge.com headlined “Bipartisan Plan Summary Charts Confirm Key Deficit ‘Cuts’ Come From Imminent Social Security Pillage,” and this conservative website expressed shock at how amazingly Republican this plan was, which Obama was trying to ram through. The “bipartisan” Obama had reached farther into Republican territory than Republican politicians had even dared. But Republicans stood firm in their demanding more tax-cuts for the super-rich. Congressional Democrats wouldn’t stand for that.

The following day, July 21st, Paul Kane bannered in the Washington Post“Debt Talks Bring Tensions Between Democrats, Obama to Surface,” and he reported that even top Democrats in the Senate – Reid, Kerry, Cantwell, Mikulsky, Lautenberg, and Feinstein – were shocked that the Democratic President was leaving them entirely out of the loop in his budget negotiations, and was negotiating only with leading Republicans. “Often kept in check out of loyalty for their president, congressional Democrats have grown increasingly suspicious of Obama’s motives over the past year. … They questioned whether Obama shared their core values. … The Democrats were winning, the senators said. The American people were with them on tax increases for the rich. … Why give up now? … Democrats lashed out, saying that deep cuts to federal agency budgets and entitlements were too steep a price to pay. … In the House, rank-and-file Democrats said the situation had grown dire. … [As one of them put it, he feared] ‘a deal that basically gives them [Republicans] everything they want but yet still takes away from those who are our most vulnerable.’”

Also on 21 July 2011, the Washington Post bannered “Debt-Limit Talks: As Obama, Boehner Rush to Strike Deal, Democrats Are Left Fuming,” and reported: “Democrats reacted with outrage as word filtered to Capitol Hill, saying the emerging agreement appeared to violate their pledge not to cut Social Security and Medicare benefits as well as Obama’s promise not to make deep cuts in programs for the poor without extracting some tax concessions from the rich. When ‘we heard these reports of these mega-trillion-dollar cuts with no revenues, it was like Mount Vesuvius. Many of us were volcanic,’ said Sen. Barbara A. Mikulski (D-MD).” The issue was no longer whether there would be drastic cuts to SS and Medicare, but whether there would also be tax-hikes on the rich. Furthermore, Grover “Norquist [whose statement reported earlier that day to the editors of this same newspaper, saying that termination of the Bush tax cuts wouldn’t count as a tax increase, had evidently alarmed his financial backers] backed away from the reported remarks Thursday. … Expiration of the cuts would amount to a tax increase” after all, Norquist announced. So, he was telling his Republican troops to stay in line in blocking Obama’s plan.

Businessinsider.com bannered the same day, “The Question Now: Can Obama Bully The Democrats Into a Debt Deal?” and Zeke Miller reported that Senate Republicans were euphoric, convinced that Obama would sign steep budget cuts with no significant tax increases, a deal which would decimate the Democratic vote-turnout in 2012. Huffingtonpost.com headlined “Tom Coburn [Obama’s conservative Republican friend]: President Obama Will Back Down On Budget Bill Veto Threat,” and reported that leading Republicans were confident that Obama would give them what they demanded. Washingtonsblog.com headlined “Debt Crisis Being Used as Shock Doctrine to Steal More Money from the American People to Give to the Richest 1%.” The world’s great newspaper, Britain’s Guardian, bannered “Barack Obama Is Gutting the Core Principles of the Democratic Party: The President’s Attacks on America’s Social Safety Net Are Destroying the Soul of the Democratic Party,” and the Guardian’s American reporter, Glenn Greenwald, said (and he documented) that “It is now beyond dispute that President Obama not only favours, but is the leading force in Washington pushing for, serious benefit cuts to both Social Security and Medicare.”

The next day, Patricia Murphy at The Daily Beast headlined “Democrats’ Debt-Deal Shutout: House Democrats are shocked and outraged that Obama is pursuing a debt deal with Boehner that sidelines them and won’t hike taxes – though some are resigned to it.” Also on the 22nd, “The Fix” blog at the Washington Post, headlined, “Democrats, Divided (on the Debt Ceiling),” and Chris Cilizza and Aaron Blake reported that Obama was out to hold onto the White House, regardless of the wishes, or political survival, of Democrats in Congress. Obama was, it appeared, willing to destroy the Democratic Party, if need be, in order to stay in the White house, even if this would mean his ruling as the titular “President” when both houses of Congress would be Republican in a second Obama term. Obama wouldn’t be able to achieve anything that way, but he still would retain the title of “President,” and he still would have the power to place the aristocracy even deeper into his debt, perhaps so that they’d finance yet-bigger memorials to him (etc.) during his retirement. And needless to say, a President retiring like that would have money poured at his feet, by lots of aristocrats who have money to pour.

Also on 22 July 2011, President Obama held a press conference, opening with “Remarks by the President.” He said: “Essentially, what we had offered Speaker Boehner was over a trillion dollars in cuts to discretionary spending [while unemployment already was high], both domestic and defense. We then offered an additional $650 billion in cuts to entitlement programs – Medicare, Medicaid, Social Security. … We were offering a deal that called for as much discretionary savings as the Gang of Six. We were calling for taxes that were less than what the Gang of Six had proposed. And we were calling for modifications to entitlement programs, [which] would have saved just as much over the 10-year window. … I spoke to Democratic leaders yesterday, and although they didn’t sign off on a plan, they were willing to engage in serious negotiations, despite a lot of heat from interest groups around the country. [NOTE: Like Ronald Reagan, he referred to traditional Democratic Party constituencies as ‘interest groups,’ but did not refer to traditional Republican Party constituencies that way. This phrase was psychological code for treating Democratic constituencies as being leaches or parasites upon the public, rather than being the public. He actually said this; and this type of language was frequent from him. It constituted a clear sign that he was a closet Republican.] … It is hard to understand why Speaker Boehner would walk away from this kind of deal. And frankly, if you look at commentary out there, there are a lot of Republicans that are puzzled as to why it couldn’t get done. In fact, there are a lot of Republican voters out there who are puzzled as to why it couldn’t get done.”

During the Q&A session after the speech, Scott Horsley asked, “Q: Mr. President, can you explain why you were offering a deal that was more generous [to the Republicans] than the Gang of Six [composed of three conservative Republicans, two conservative Democrats, and one liberal Democrat]?” Obama answered: “Because … there are a group of his caucus that actually think default would be okay. … And so I understand how they get themselves stirred up and the sharp ideological lines that they’ve drawn.” Norah O’Donnell asked, “But they were willing to move on some revenues, apparently?” And he answered: “Absolutely.” He went on to explain: “If I’m saying to future recipients of Social Security or Medicare that you’re going to have to make some adjustments, it’s important that we’re also willing to make some adjustments when it comes to corporate jet owners, or oil and gas producers, or people who are making millions or billions of dollars.”

On July 23rd, Mike Allen of Politico bannered “The Obama-Boehner Breakup,” about the collapse of the deal. However, already, Ezra Klein in the Washington Post, had explained in advance “Why Liberals Should Thank Eric Cantor [Boehner’s #2, and the Tea Party’s leader in the House].” Klein explained that whereas Obama wanted to make a deal that would satisfy Republican voters, few other Democrats were willing to go that far, and that therefore Cantor forced Obama to go into the coming 2012 electoral battle fighting to retain his base, instead of appealing to what was commonly referred to as the center-right: Republicans and independents. Obama didn’t have the stomach to fight for, and run on, a Democratic position; but now, because of the Tea Party’s intransigence, he would have to run on Democratic positions; this would now be the only way for him to compete in 2012.

Also on July 23rd of 2011, Jane Hamsher headlined at her firedoglake.com, “Obama: We Offered Cuts to ‘Medicare, Medicaid and Social Security,” and she quoted Obama’s admission that, “We [i.e., honestly: he, singular – this was his concession, not his and Boehner’s, but he used here the plural in order to fool Democrats] then offered an additional $650 billion in cuts to entitlement programs – Medicare, Medicaid, Social Security.” Hamsher’s comment was: “It’s been two and a half years since we first said Obama was trying to cut Social Security. Denial is no longer possible.” She was right. She had been right all along.

Two days later, on July 25th, Obama delivered an “Address by the President to the Nation,” in which he said: “While many in my own party aren’t happy with the painful cuts it makes, enough will be willing to accept them if the burden is fairly shared. … And to his credit, this is the kind of approach the Republican Speaker of the House, John Boehner, was working on with me. … This balanced approach isn’t on its way to becoming law … because a significant number of Republicans are insisting on a different approach – a cuts-only approach. … Many Republicans in the House refuse to consider this kind of balanced approach.” What he didn’t say but knew was that almost all Democrats in Congress would also vote against the deal, if it were to have been placed to a vote. While Obama’s vague reference there to “enough will be willing” suggested that plenty of congressional Democrats accepted his plan, and that only Republicans had killed it, all indications were that the only Democrats who would actually have supported it were some of the “Blue Dog” or conservative Democrats. In the House, there were 26 “Blue Dogs” in 2010, and 14 of them remained after the 2012 elections. In the Senate, there was only one in 2010: she was the anti-public-option, even anti-Obamacare, “Democrat” Blanche Lincoln from Arkansas, but Lincoln lost her seat to the Republican. Though she had won re-nomination in 2010 because Obama fund-raised for her against her broadly popular (and pro-public-option) Democratic primary opponent, Bill Halter, Senator Lincoln was defeated by the Republican candidate, John Boozman, in the general election. Perhaps Obama was especially sad to lose there a “Democrat” who voted in the way that he actually felt but could not say. But Boozman would be quite similar to her.

————

Before going any further here, it might be worth noting that one of the reasons why congressional Democrats were shocked at Obama’s commitment to cutting Social Security, Medicare, and Medicaid, is that prior to his being elected as President in 2008, he had (even if only intermittently) championed the progressive proposal on Social Security, which was to eliminate the approximately $100,000 earnings-cap on income that’s taxed by the “FICA” or Social Security tax, so that all income, no matter how large, would get taxed into Social Security.

For example, the even-more conservative Democrat Hillary Clinton attacked Obama during the 2007 and 2008 Presidential primary debates, precisely for this progressive proposal of his.

During the debate on 16 April 2008, just before the crucial Pennsylvania primary, occurred this exchange:

CLINTON: I’m certainly against one of Senator Obama’s ideas, which is to lift the cap on the payroll tax, because that would impose additional taxes on people who are educators, police officers, firefighters and the like. [Here, she was using the same basic argument that Republicans do against taxes that are targeted at the rich: saying that ‘Small businessmen’ – here ‘firefighters’ etc. –  will get hit hard by this new tax.’ This is a standard conservative debating tactic that she was using, to deceive the audience against a progressive proposal.] …

OBAMA: That’s why I would look at potentially exempting [them].

Obama here didn’t point out to the audience that Clinton was using a standard conservative debating ploy, but he instead simply accepted her conservative and false framing of this issue, and then proceeded to weaken his own progressive proposal into confusing mush, so as to make it harder for her to attack, yet without actually defending it.

Even earlier, the two of them had debated this, such as on 15 November 2007 in Las Vegas; and, on that particular occasion, Obama had instead stuck by his progressive guns on this matter:

CLINTON: I do not want to fix the problems of Social Security on the backs of middle class families. … If you lift the cap completely, that is a $1 trillion tax increase. …

OBAMA: Understand that only 6% of Americans make more than $97,000 – so 6% is not on the middle class; it’s the upper class.

That time, he flat-out rejected her false (and conservative) framing of the issue. But, until he was elected as President, he didn’t actually have any fixed position on this important matter.

For example: In a 7 July 2004 press release (while he was still only a member of the Illinois state senate), Obama headlined “Increase Retirement Security,” and he said: “The best way for our government to help ensure that every American can retire with dignity is to provide incentives for middle class families to save for the future. My Working Families Savings Accounts plan gives working men and women earning up to $50,000 per year the opportunity to put money in a retirement plan, whether it’s an IRA or an employee based 401(k), and have that money matched with a 50 percent tax credit for contributions up to $2,000.” Basically, this proposal was in line with George W. Bush’s proposed privatization of Social Security – it was treating the government’s retirement insurance scheme, known as “Social Security,” as being instead a private investment scheme (which it is not and never was). At that time, he was signaling to Wall Street that he would be the type of “Democrat” they could do business with.

So: Until only shortly before Obama became President, he was actually just “winging it” on policy issues, and he didn’t really have any ideological commitment that was coherent or carefully thought-out. Until he became President, he wanted simply to become President; he didn’t have an ideology – or at least none that was thought-out, consistent, or aimed at any goal other than his gaining more power.

Once he was elected, however, he did think this issue through, and he decided that he would need to cut Social Security, Medicare, and Medicaid, in order to enable the Wall Street bailouts to continue, such as to fund the purchase of $40 billion each month of the Wall-Street-generated mortgage backed securities (MBS) – $480 billion per year – by the N.Y. Federal Reserve Bank that Timothy Geithner used to run.

This was when he decided he that his chief goal as President would be to shovel public money at Wall Street, and to get the resulting yawning fiscal gash salved by tax contributions from everybody else. That’s why he chose Timothy Geithner as Treasury Secretary, and Eric Holder as Attorney General – to shovel government money at Wall Street chieftains, and to block them from being prosecuted for any frauds that they might have committed. As soon as he was elected in 2008, he proceeded to assemble a solidly pro-Wall-Street cabinet and Administration. Perhaps he had been a closeted conservative all along, but, if so, he didn’t show it clearly until he was elected to be the President.

————

We’ll now skip forward to 2013, after President Obama had refused, at the end of 2012, to employ the only effective weapon that was available to him to force congressional Republicans to drop their debt-ceiling threat, of driving the Federal Government into default as their means of getting their way at the “fiscal cliff”: this weapon against using the debt-ceiling that way was the 14th-Amendment option (which Bill Clinton, Nancy Pelosi, Harry Reid, and other Democrats, were urging him to use in his budget negotiations with the Republicans). Obama instead wanted John Boehner and other Republicans to retain their power of using this threat, so that they could then “force” him to agree to slash Democratic programs, as the “necessary” way to prevent a federal default. This refusal of Obama to use the 14th Amendment, in that way, brings us to the present stage of the budget negotiations:

On the morning of 1 March 2013, President Obama met with House Republican leaders to achieve, as the AP reported, “a big fiscal deal that would raise taxes and trim billions from expensive and ever growing entitlement programs” (the same list: Social Security, Medicare, and Medicaid).

Also that morning, Les Leopold headlined at huffingtonpost, “Sequester This! How Did We Get Here?” and he perspicaciously noted that, “When Wall Street imploded under the immense weight of its own greed, it tore a hole in the economy. … The combination of the economic collapse and the deficit spending needed to counter it increased the national debt. Before the crash in 2007, the yearly deficit was 1.17 percent of GDP. By 2009 it shot up to 10.13 percent. Even with a weak recovery, the deficit fell to 8.51 [percent] by 2012.”

However, what does that soaring deficit-spending really have to do with Obama’s aim to “trim billions from expensive and ever growing entitlement programs”? It provides him an excuse to cut, even at a time of greater need, and for him to say that Republicans have “forced” him to “concede” to doing it. Thus, for example, the liberal Mr. Leopold asserted that, “President Obama caved to the debt hysteria.”

Obama didn’t “cave.” Cutting “entitlements” had unquestionably been one of Obama’s top goals ever since at least four days prior to his becoming President. Liberals (outside Congress) simply refused to believe it.

Obama kept trying, and Republicans kept giving him more rope with which to hang his Presidency. On March 6th of this year, Rosalind S. Helderman of the Washington Post headlined major news, “House Votes to Fund Government Through End of Fiscal Year,” and she reported that, “President Obama is focusing on wooing rank-and-file Republicans in the Senate who might be interested in a deal that would pair tax reform that produces new revenues with cuts to entitlement programs.” Those “entitlement programs” are Social Security, Medicare, and Medicaid. There had just been a House vote, “passing a measure that funds the government through the end of the current fiscal year,” so as to give congressional Republicans added time for using their threat of blocking a debt-ceiling increase, and of their thus driving the U.S. Government into default. Dragging out these negotiations this way will give Republicans the added time they need to force the ultimate tax-and-spend “deal” to end up their way: with little or no tax-hike on the rich. “The measure was approved by a vote of 267 to 151, with most Republicans supporting it and [by nearly 3 to 1] most Democrats voting against it.” House Republicans wanted this measure to pass, and Obama wanted it to pass; but congressional Democrats overwhelmingly did not want it to pass. Then, “After a series of phone calls from Obama to Republican senators who have expressed their interest in that kind of ‘grand bargain,’ he will take a group of senators to dinner Wednesday evening at the Jefferson Hotel.” Obama was working with Republican leaders in both houses, in order to achieve goals that both they and he had been working toward for years.

Jim Vandehei and Mike Allen headlined at Politico on March 12th, “Missed Chance: Obama’s Tax Problem,” and reported that when the President had spoken with Republican House Majority Whip Kevin McCarthy on March 9th, Obama had, according to McCarthy, told him, “I listen to Paul [Ryan, who wants to slash Social Security and Medicare],” and, that, “Obama then said that if Republicans are going to get entitlement reform, ‘You need me.’” This was his charm-offensive. Obama’s message to the Republican Whip was that he actually did want to slash those programs, but that he wouldn’t be able to do it unless Republicans would provide him the cover of raising taxes on the rich, as a supposed trade-off. He still couldn’t figure out their priorities. He could never take no for an answer. He still dreamt of getting to yes with them. But they turned him down.

To Obama, fighting for this is a matter of moral principle. It’s an essential part of his program not just to enable the routine, non-‘emergency’, $83 billion+ annual taxpayer subsidy, that the ten megabanks routinely receive, but also to fund the purchase of $40 billion each month of mega-bank-generated mortgage backed securities (MBS), $480 billion per year, in this ongoing N.Y. Federal Reserve Bank program to purchase these MBS that the megabanks had needed to get rid of when the music stopped playing in 2008. Ultimately (and very indirectly), the U.S. Treasury will be the dumping ground for all of these Wall-Street-owned “toxic assets” that had remained on the books (at their full nominal value, not their steeply discounted market value) of the Wall Street institutions, when global investors stopped buying their garbage. “Entitlements” must thus be slashed, so as to enable this transfer of aristocrats’ (insiders’) investment losses onto the American public to continue. As for non-aristocrats’ investment losses from buying MBS, the Obama Administration has been doing everything it can to block those Wall Street frauds from reaching our criminal courts. Those matters are being dealt with only by fines that are paid by the current stockholders in Wall Street banks. The Wall Street executives who had made billions from generating and selling the frauds were allowed to keep “their” money. And, of course, they don’t need any “entitlements.” (Only the public does.)

Numerous accounts of Obama’s first Presidential term have documented that on economic matters, this President saw the most eye-to-eye of all, with his chosen Treasury Secretary, Timothy Geithner – even more than he did with any of his strictly economic advisors. Geithner resigned in early 2013, to join the Council on Foreign Relations, which is headed by his long-time career-sponsor, Citibank’s Robert Rubin (who had formerly headed Goldman Sachs). On that occasion, Liaquat Ahmed at a blog of The New Republic, headlined on 24 January 2013, “Timothy Geithner on Populism, Paul Ryan, and His Legacy.” In this lengthy “exit interview,” Geithner described himself as a courageous person who overcame the urge to “go populist” (shades there of Obama’s having privately told the Wall Street elite inside the White House, “My administration … is the only thing between you and the pitchforks”), and who instead explicitly rejected “the understandable need people had for justice.” To Obama and company, any “justice” against the elite was merely “pitchforks” – it was like the KKK had used before lynching Blacks. Geithner implicitly said there that anyone who wanted any of the banksters to be prosecuted for MBS-fraud, etc., was an ignoramus who was endangering the USA by pushing for such “populism.” He praised Obama and other “political leaders who are willing to take the brutal political cost of doing what’s necessary” (such as cutting Social Security), and he contrasted him with political leaders who “let the populist fires burn, or decided they were going to try to teach people a lesson” (such as by prosecuting those banksters). To Geithner, prosecuting banksters would be mere revenge-seeking, just envy against the economic winners. He proudly proclaimed himself as one who “pushed earliest for a pivot [away from unemployment] to a focus on the debt situation.” He was proud of his anti-Keynesian stance. He even expressed agreement with Republican House Budget Committee Chairman, and ex-Republican VP nominee, Paul Ryan, rejecting “growth-killing revenue increases” (rejecting increased taxation upon the rich that would fund additional short-term stimulus-spending to restore a growth-economy so as to pay down the debt long-term, from this growth long-term in people’s incomes). When asked “If you said that to Paul Ryan, would he agree with you?” Geithner answered: “I think he would. We’ve had the chance to talk about this in public and in private. I think what he would say is that you also have to worry about the 50-year problem, not just the 10-year problem … because of the demographics of the nation,” with more people living longer. He wanted to target Social Security and Medicare for cuts, and so he redirected the interview to those, as being “the 50-year problem.”

In other words, Geithner was advising: Take the losses – from the Wall Street bailout, and from the Wall-Street-caused economic collapse that had produced it – out of the hides of future recipients of Social Security, Medicare, and Medicaid, not out of the hides of the banksters who had made billions from those Wall Street frauds.

This was the most extensive statement expressing the real Obama that has ever been published, and it came in the “exit interview” of Obama’s mouthpiece and top policy-maker: Timothy Geithner.  Of course, as a politician himself, Obama is too slick ever to speak publicly in the direct way that Geithner did there. But that was actually Obama speaking, in a sense, and not merely his chosen economic guru expressing his personal view.

The actual name of the Social Security System has always been “Old Age, Survivors’ and Disability Insurance,” and this government-run insurance policy is what Obama, Geithner, and congressional Republicans, want to reduce. (As was noted before, Social Security is not an investment plan, though Republicans always portray it as such in order to enable it to become privatized and thus managed by Wall Street firms. It’s only an insurance policy. Monies going into it are insurance premiums, not investments – and certainly not personal investments, no investments of any sort.) Obama and Geithner want to cut into this insurance policy so as to fund both the continuing Wall Street bailouts, and the regular ($83 billion+) annual taxpayer subsidy to the ten largest banks. Congressional Republicans want to reduce it not only to fund those, but also in order to reduce public pressure to increase taxes upon the rich (not just banksters, but all of the rich) – so as to reduce the debt wholly upon the backs of the non-rich. Obama is seeking to get congressional Republicans to increase taxes on the rich in order to win their support so that he can cut “entitlements” in order to fund the “Too Big To Fail” banks, whose heads he has shown that he greatly admires. The problem for Obama, however, is that the chief reason that Republicans want to cut “entitlements” is precisely in order to balance the federal budget without even needing to raise taxes on the rich. Obama, it seems, still hasn’t quite figured that out: Republicans want all of the top 1%, not merely the Wall Street insiders, to be protected, in all ways. They just want Wall Street to be protected the most. But if Republicans finally do change their priorities in this regard, perhaps congressional Democrats won’t be able to stop Obama and Republicans from passing their “Grand Bargain” into law, after all.

And what will happen if, as expected, Republicans win control of the Senate in this November’s elections, and retain control of the House? Neither Harry Reid nor Nancy Pelosi will be able then to stop Obama’s plan. John Boehner and Mitch McConnell will send him a bill he’ll be happy to sign. It will be consistent with what he’s been fighting for in back rooms since at least 16 January 2009.

President Obama has never had two Republican-controlled houses of Congress. Until now, he has never been able to ram anything down the throats of congressional Democrats. But he will be able to do that if all of the political prognosticators are correct that this November’s elections will for the first time give Obama two Republican-controlled houses of Congress instead of the present single Republican-controlled house, the House of Representatives. If those political projections are correct, then there won’t any longer be Harry Reid able in the U.S. Senate to block Obama’s TPP and TTIP international trade deals: Mitch McConnell or another Republican Senate leader will happily ram them through, and Obama will happily sign the ‘compromise’ bill, which then won’t really be any significant compromise at all. There also won’t be Harry Reid able to block Obama’s plan (discussed here) to gut Social Security. There also won’t be congressional Democrats able to stop Obama’s increasingly aggressive military policies (such as the present Republican bill, stalled now in the Senate, to arm the Ukrainian military). And global warming? Obama is already opening the floodgates to leases on federal lands, and pushing to increase oil, gas, and coal exports, and promoting the Koch brothers’ filthy tar-sands oil for sale in Europe. Democrats will no longer be able to restrain him there, either.

This Republican ‘Democrat’, Barack Obama, will finally have a free hand; he will finally be free to do what he has always hoped he’d be enabled to do. He might veto a few Republican bills, on issues such as school prayer, but his Wall Street and Big Oil and armaments-making beneficiaries will benefit even more then than they now do, from that new, full-fledged Republican, ‘Democrat’, Barack Obama, being in the White House. It’ll be basically a solid Republican Federal Government.

And within a generation or two, Social Security will be stripped so bare, people will hardly even know it’s there.

———-

Investigative historian Eric Zuesse is the author, most recently, of They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

This entry was posted in Business / Economics, General, Politics / World News and tagged , , , , , , , , , , , , , , , , , , . Bookmark the permalink.