Another deal is being floated. Let’s think this through (with the caveat that the details could change):
- The chained-CPI Social Security cuts are terrible, terrible public policy.
- Now, yes, to avert the bad aspects of the gradual fiscal incline Republicans will have to be given something, so the tradeoffs have to be evaluated; that chained-CPI is terrible in itself does not inherently make the deal bad. But…
- I still don’t see what Republicans are giving up that could possibly justify Social Security cuts. The increased revenues can’t really be considered a concession, since they happen automatically on January 1st if Obama does nothing, increasing his leverage. The rest of the concessions seem piddlyshit, and the fact that the deal apparently doesn’t even involve extending the payroll tax cut is remarkable. (The latter also undermines the most compelling reason to give up something to make a deal: a time of weak economic growth and mass unemployment is the wrong time for austerity.)
- In addition, it’s worth noting that trading cuts to the already threadbare American welfare state for tax hikes is always a dubious proposition. Again, the key dynamic here is that today’s Congress cannot bind future Congresses. And while social programs that benefit the middle class have a certain level of political protection even during partisan shifts in government, under the current partisan configuration upper-class tax cuts are inevitable anytime the Republicans control the White House, the House, and 45 or so Senate seats. As long as the Republican Party is strongly committed to upper-class tax cuts and completely indifferent about deficits, “responsible” Grand Bargains are a sucker’s game.
- So, I’m with DeLong: “This deal would still be on the table in January. And odds are Obama could get a much better deal than this come January.” Yup. Unless it’s a lot better than what Ezra is describing, pass. This would be a terrible deal, squandering very rare leverage.