'Divide and Lose': A Lousy Democratic Strategy for Social Security'

WASHINGTON, DC - APRIL 10:  Copies of the Obama Administration's proposed FY 2014 federal budget are on display before going
WASHINGTON, DC - APRIL 10: Copies of the Obama Administration's proposed FY 2014 federal budget are on display before going on sale at the Government Printing Office Book Store April 10, 2013 in Washington, DC. The White House says the Obama plan would cut deficits by a total of $1.8 trillion over a decade. (Photo by Chip Somodevilla/Getty Images)

If some pundits have their way, the new blueprint for the Democratic Party will pit generation against generation and ethnicity against ethnicity, fragmenting us into ever-smaller social groups competing for slices of an ever-shrinking economic pie.

Call it "Divide and Lose."  To observers like Ronald Brownstein and Charlie Cook, it's shrewd strategy, especially when it comes to the "chained CPI" set of tax hikes and Social Security benefit cuts.

They couldn't be more wrong. If Democrats try to "divide and conquer," everyone will lose.

Not Keen

It began with Ronald Brownstein in the National Journal. Brownstein dismissed "the keening on the left about President Obama's budget proposal," saying that it "suggests that large portions of the Democratic base still don't understand the political and economic dynamics of the party's changing electoral coalition."

Brownstein goes on to describe a "coalition of the ascendant" which includes minorities, millennials, and college-educated whites (especially women). Brownstein defends Obama's proposal to cut Social Security benefits through the chained CPI. He argues that this move, together with the anti-poverty proposals in the White House budget, helps build that coalition for the Democrats.

Brownstein's piece was quickly picked up by Ezra Klein in the Washington Post, who noted that Obama political advisor David Axelrod had tweeted it. "Really interesting analysis," wrote Axelrod.  Klein also used Brownstein's data to write this lede: "Perhaps you've heard that the federal government spends $7 on the elderly for every $1 it spends on kids."

"It's true!" Klein added cheerily.

 Follow the Money

What was left unsaid is this: These are social insurance programs. Insurance money is based on need, not equity. And most of that spending is on health care, which the elderly need more. So in one sense, complaining about this ratio is like complaining that all my car insurance premiums go to people who have had accidents. I haven't had one. No fair!

What's more, that money doesn't "go" to elderly people. Healthcare dollars increasingly wind up in the pockets of the for-profit interests who dominate our medical economy.

When it comes to Social Security, those "investment/outlay" are even more misleading. 100 percent of Social Security's outlays come from payroll taxes paid by working Americans and their employers. The generational imbalance in that fund doesn't approach the level of disparity these global figures imply.

Straw Men, Beware

While Klein didn't wholeheartedly embrace Brownstein's thesis, he gave it a lot of traction.  That's unfortunate, because it's wrong on so many levels.  And today Brownstein's National Journal colleague Charlie Cook jumped in, mocking Democratic "Flat Earth Society members" who "ignore the numbers and think we can just go on."

He doesn't name any of them, and for a good reason: They don't exist.  Chained-CPI critics include the top economists and benefits experts in the country. They oppose it because they know "the numbers." And they don't "think we can just go on." They support real-world solutions which include lifting the payroll tax cap, other increased contributions, and a systemic plan to address runaway greed in the health sector.

But it's easier to mock your opponents than it is to address their arguments. Hence Cook's "Flat Earth-ers" and Brownstein's dismissive "keening."

A Coalition of the Opposing

As for the politics, the "keening" crosses political and generational lines.  Fifty-six percent of Republicans in all age groups opposed it in a recent poll, as did 67 percent of Democrats. Eighty-seven percent of voters over the age of 50 opposed it.

You may say that these voters don't matter. What about the "coalition of the ascendant"? Overwhelming majorities of Generation X and Generation Y voters oppose it too, according to a poll conducted last September.

The Young Lose Out

They should oppose it. The chained CPI will hurt them more than it would hurt their elders. It will raise taxes throughout much of their working lives, a fate older Americans have escaped. And its benefit cuts will affect them as deeply as they affect seniors who are on Social Security today -- even more, in fact, since most of today's seniors have had one or more COLA increases at today's higher (but still insufficient) rates.

The "Divide" strategy only makes sense if you assume that millenials don't care about other people, including their parents and grandparents -- and aren't very intelligent.

Brownstein and Cook apparently haven't realized that, when it comes to Social Security, there is no division between"old" and "young." There's only "old" and "not yet old."

One Economy, Not Many

Brownstein and Cook also misread the economic implications of the chained CPI. A national economy is an integrated whole. Seniors with less money spend less on goods and services. The national economy would lose more than $100 billion in government spending under the chained-CPI over the next 10 years. And seniors, who overwhelmingly rely on Social Security as all or most of their income, spend that money much more readily than higher-income groups do.

That gives Social Security expenditures a higher "multiplier effect" than high-income tax breaks, and this lost growth will hurt job and wage growth -- two areas that have hit young voters, minorities, and other members of the Democratic base especially hard.

Medicare and Medicaid are our government's most critical cost problem. But fixing it requires more than a band-aid approach. It means restraining the for-profit corporations who increasingly dominate our health economy, driving our costs far in excess of other developed countries while providing a lower level of service.

Lifeboat America

We are a prosperous nation, but we haven't been managing our wealth very well. We've allowed a powerful few to hijack our dollars -- our health dollars, our banking dollars, our productivity dollars -- to a level that's unprecedented in modern history. That's the fundamental problem we must face.

The "Divide and Lose" strategy advances another vision of our country. It's the vision of a nation as a leaky lifeboat on an open sea, with food and water running out and no land in sight. The "Divide and Lose" vision tells us that it's time to start deciding who gets thrown overboard.

Brownstein and Cook have volunteered to heave Grandma and Grandpa into the briny deep. Stop keening, old-timers!

Divide and Lose

But that's the wrong analogy for our economy, and it's the wrong ethical framework for this debate. The deepest flaw in the Brownstein/Cook argument isn't in the polling data or the economic models.

The deepest flaw is a moral one. To back this strategy is to propose that we become a nation of brutally competing interests which must fight each other to the death without ever addressing our fundamental problems of inequality.

We have never been a nation that abandons its elderly or its disabled in a time of need. Let's not become one now. If the Democrats adopt this strategy, we will become increasingly divided. And everyone will lose -- including the politicians who lead the Democratic Party.