WASHINGTON ― Debate moderator Chris Wallace dangled before Donald Trump and Hillary Clinton the once-popular (at least in Washington) idea of a “grand bargain” to save Social Security and Medicare. On Wednesday night, neither of them bit.
If you’re a progressive, that’s cause for a little celebration. It shows that America’s political leaders have finally rejected the obsessive alarmism about the national debt that infected elite circles in the wake of the Great Recession, even if some journalists have not. It demonstrates the progress that liberal activists have made in changing the debate around Social Security and Medicare ― and the challenges they face in dislodging the last stubborn vestiges of the pro-austerity consensus.
“The Committee for [a] Responsible Federal Budget has looked at both of your plans and they say neither of you has a serious plan that is going to solve the fact that Medicare’s going to run out of money in the 2020s, Social Security is going to run out of money in the 2030s, and at that time, recipients are going to take huge cuts in their benefits,” Wallace began his last question of the presidential debate.
“So, in effect, the final question I want to ask you in this regard is ― and let me start with you, Mr. Trump ― would President Trump make a deal to save Medicare and Social Security that included both tax increases and benefit cuts, in effect, a ‘grand bargain’ on entitlements?” Wallace said.
He went on to ask Clinton roughly the same question.
Wallace’s framing was straight out of the pro-austerity playbook from which both parties read during President Barack Obama’s first term. It was rooted in a narrative popular at Washington think tanks that goes something like this: The country is broke, and it’s broke because we have made promises to seniors that we cannot afford. If we do not cut Social Security and Medicare, those programs will drown the economy in debt and will not survive to support younger generations. The only solution is for the two parties to agree to a “grand bargain” that cuts benefits and increases taxes to improve the programs’ solvency. Anyone who stands in the way of this solution is an irresponsible ideologue with no regard for our children’s future.
Or so the pro-austerity crowd argued.
This narrative gained a lot of traction among lawmakers in the immediate aftermath of the Great Recession. The country was indeed running up big budget deficits. The depressed job market meant less tax revenue, even as demand for emergency benefits like Medicaid and unemployment insurance drove up spending. Obama’s stimulus package, which consisted of nearly $800 billion in deficit spending and tax cuts, also stoked fears of out-of-control debt.
At the time, the Committee for a Responsible Federal Budget, a think tank backed by private equity billionaire Pete Peterson, and other budget hawk groups leveraged public confusion about the causes of the economic slowdown to generate political momentum in favor of scaling back the major social insurance programs. As HuffPost reported in 2012, Peterson spent almost $500 million on organizations and initiatives that promoted panic about the debt and the costs of social insurance programs.
Never mind that the deficits in 2009 and 2010 were the natural result of a temporary economic collapse or that the stimulus prevented an all-out depression, as the government spent money to revive consumer demand.
The proposed solutions to the false debt crisis were equally off-base. Social Security’s funding gap can easily be fixed without cutting its modest benefits. and Medicare could use its vast bargaining power to drive down its health care costs.
For a number of years, however, the drums beat for a “grand bargain.” Even with a Democratic-controlled Congress, Obama pivoted to deficit reduction in 2010, creating the Bowles-Simpson commission, which recommended major Social Security benefit cuts. And the president tried repeatedly to trade a Social Security benefit cut for additional tax revenue in negotiations with congressional Republicans.
But the austerity craze eventually ran its course. The high water mark of the movement to cut social insurance programs may have been the spring of 2013 when Obama included a cut to the Social Security cost-of-living adjustment in his budget. The idea was met with widespread liberal uproar and little interest from Republicans, leading the White House to shelve the provision the following year.
Meanwhile, progressive activists managed to shift the focus of the debate from Social Security’s solvency to its increasing importance in an era of diminishing retirement income. They pushed for Democrats to back expanding Social Security benefits, which Obama, Clinton and the vast majority of Democrats in Congress eventually did.
Yet it speaks to the staying power of the “grand bargain” vision that Wallace’s question might as well have been written by Peterson the austerity king himself. Wallace’s reference to the Committee for a Responsible Federal Budget is not the first time the think tank’s work has come up in this year’s debates. CBS’s Elaine Quijano also used its statistics in a question about Social Security during the vice presidential debate ― a query that HuffPost and other outlets panned for embracing hysteria about the program’s financial challenges.
The committee’s research and opinions are credible, but like that of any other highly ideological group, its work is not uncontroversial. Mark Schmitt of the New America Foundation put it well in The New York Times early Thursday morning:
Imagine a question such as this: “According to the nonpartisan Sierra Club, unless we reduce carbon dioxide in the atmosphere to 350 parts per million, climate change will be catastrophic. What kind of carbon tax or cap-and-trade plan would you propose to avoid this result?” This is a trick question of sorts, because ... not one question about climate change was asked.
But if it had been, this perfectly reasonable inquiry would have been denounced as leading, accepting the argument of an advocacy group, and presuming the appropriate policy solution, just as Mr. Wallace’s question did with the “grand bargain.”
The good news for progressives who thought they had vanquished the pro-austerity consensus is that on Wednesday, at least, neither Clinton nor Trump took the bait.
Trump dodged the question entirely, suggesting that cutting taxes and repealing Obamacare are all that is needed to shore up Social Security and Medicare. But his evasion signaled an awareness that embracing the “grand bargain” constituted a political risk. No other recent Republican standard-bearer would have hesitated to back, at the very least, the benefit-cuts half of the equation.
And Clinton firmly ruled out reducing Social Security benefits, a position she’s first staked out in February under pressure from activists and her primary opponent Sen. Bernie Sanders (I-Vt.).
“I will not cut benefits,” Clinton said Wednesday night. “I want to enhance benefits for low-income workers and for women, who have been disadvantaged by the Social Security system.”