Opinion

Reihan Salam

The ‘grand compromise’ that wasn’t

Reihan Salam
Feb 24, 2014 21:36 UTC

One of President Obama’s defining convictions is that he is the most reasonable man in our nation’s capitol. He seems to view opposition to his agenda as a reflection of intellectual or moral failures (my opponents don’t understand the underlying issues well enough, or their hearts aren’t big enough), or as a product of naked cynicism (my opponents are dishonest, and they will do anything to defeat me). To prove his point, the president will occasionally tout an idea from the other side of the aisle, or rather an idea he imagines to be from the other side of the aisle. And when his political opponents don’t embrace the idea, well, that means that they are acting in bad faith.

So I was delighted by the news that the Obama administration is changing its tune on Social Security in its forthcoming budget proposal. Last year, the president included a Social Security reform compromise in the budget proposal he presented to Congress. This year he has decided not to do so. But the truth is that the president’s Social Security compromise wasn’t a compromise at all. His decision to jettison it is a refreshing change of pace. And while the reforms aren’t officially part of the 2015 budget proposal, they remain relevant because Obama is treating them as a concession he’ll make if Republicans agree to raise taxes.

According to the president and his allies, the White House was only willing to compromise on Social Security, by cutting benefits, if Republicans were willing to give a little too, by agreeing to higher taxes. The problem is that his idea for cutting Social Security benefits is actually pretty bad, and it would also raise taxes. In other words, the president’s offer to the GOP is, “Hey, why don’t you share the blame for this thing that will make Social Security worse for seniors and raise taxes, and in return for my generosity you’ll let me raise taxes even more?” You will be shocked to learn that Republican lawmakers were not thrilled by this idea.

Specifically, the White House called for changing the index used to both calculate cost-of-living adjustments for Social Security payments and set tax brackets in its budget for the 2014 fiscal year. This new method for gauging consumer price inflation (“chained CPI”) is considered more accurate than the federal government’s standard Consumer Price Index (“CPI”). But the appeal of chained CPI is not just that it’s more accurate. It just so happens that chained CPI is expected to yield inflation rates around 0.3 percentage points lower than old-school CPI.

This is where the magic happens. By using chained CPI instead of CPI, Social Security benefits would grow at a somewhat slower rate over time, thus containing the Social Security system’s cost as baby boomers exit the workforce. If the only thing Republicans cared about was cutting Social Security spending, this would make the new index pretty appealing.

A prophetic President Bush

Reihan Salam
Apr 26, 2013 20:59 UTC

This week, various political luminaries gathered in Dallas, Texas, to celebrate the presidency of George W. Bush, who presided over one of the most tumultuous periods in modern American history. Among liberals, Bush is considered a uniquely awful president, having led the United States into the ill-fated invasion and occupation of Iraq and having passed into law deep tax cuts that contributed to America’s present-day fiscal crunch.

Conservatives are more conflicted. Some dismiss him as a big-government conservative who failed to heed the wisdom of Goldwater and Reagan. Others, including many who served in the Bush administration, believe that as time passes, he will be lauded for his achievements. The complicated truth is that for all his flaws, George W. Bush had a better understanding of the challenges facing Republicans than most Obama-era conservatives. His rocky tenure is best understood as a testament to how difficult it will be to modernize the GOP.

Many hero-worshipped Bush during the early days of the war on terror, seeing him as a humble Christian leader who was always willing to take the hard road rather than the easy one. But as the public turned against the Iraq War, and as his efforts on behalf of Social Security reform and immigration reform engendered a fierce political backlash, a growing number of conservatives came to see Bush as an apostate who expanded Medicare and the federal role in education while failing to roll back the growth of government. The Bush administration’s response to the 2008 financial crisis alienated conservatives even further, as the ominously named Troubled Asset Relief Program (TARP), engineered by Treasury Secretary Hank Paulson, struck many as a hardly-any-strings-attached Wall Street bailout. The Tea Party movement arose in no small part as a repudiation of Bush and his fitful efforts to transform the GOP.

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