Obama trades Social Security for “jobs”

Obama’s jobs speech, like many of his chameleon-like speeches, meant different things to different people. By hectoring Congress to pass his American Jobs Act, it seemed that he was calling for legislators to actually do something that would put people back to work. AFL-CIO president Richard Trumka said that Obama had showed he was “willing to go to the mat to create new jobs on a substantial scale.” E.J. Dionne commented: “After months of being a negotiator, Obama finally looked like a president.”

The legislature, however, was noticeably indifferent. Unemployment is a national crisis, and industry added no new jobs last month, but the reaction to Obama’s long-heralded speech was notable for its lack of enthusiasm. Dana Milbank described the scene: “House Speaker John Boehner and Vice President Biden set the tone at the start. Waiting for Obama to make his way down the center aisle, they stood before the House and had a talk – not about jobs, but about golf. … Obama spoke quickly, urgently, even angrily. Rep. Jesse Jackson (D-Ill.) stared at the ceiling. Rep. Peter Welch (D-Vt.) scanned the gallery. Rep. Jim Moran (D-Va.) was seen reading a newspaper. And Republicans, when they weren’t giggling, were mostly silent. Even a mention of Abraham Lincoln, ‘a Republican president who mobilized government to build the transcontinental railroad,’ brought no applause from the GOP side.”

Did Obama’s speech change anything for the unemployed? He certainly gave the impression of making a reasoned proposal to create a limited number of jobs. But this was more to provide political points for his reelection campaign than a serious attempt to make a difference. Eugene Robinson commented that “The measures Obama proposed are eminently reasonable. Who could argue with repairing the nation’s infrastructure, modernizing our children’s schools or providing jobs for brave returning veterans?  … But if – I mean, when – Republicans reject Obama’s jobs agenda, the president will be able to tell voters that he’ll never stop fighting for jobs and prosperity – and that Republicans will never stop defending tax breaks for ‘millionaires and billionaires.’ I think the campaign just began.”

But Obama’s “reasonable” measures were framed by the Republican mantra of tax cuts. This serves to mask the reality of the accumulation of political power by the super-rich and the massive transfer of wealth from the middle class and working poor to the Wall Street banks. Much of his proposal centered on cutting further the amount that workers must contribute toward Social Security benefits and to reduce, for the first time, the matching payments that employers are required to make. This would reduce government revenues by $240 billion next year and makes up the largest item funding his $447 billion plan. But this cut would be ineffective as an economic stimulus when the major problem is not how much cash companies have, but lack of demand for their products.

The New York Times points out: “The administration’s focus on payroll tax cuts, which became more ambitious in the days leading up to the speech, is an exercise in the art of the possible. While economists regard other kinds of measures as potentially more effective, the cuts would put money directly in the hands of consumers, and Republican leaders have indicated they are willing to consider the proposal. … In the present climate, however, there are significant reasons to doubt that consumers are honoring the predictions of economic models by taking that money and racing out to spend it.” In other words, people don’t have enough money to buy goods and services and are struggling to pay off household and mortgage debt instead.

Aside from being ineffective, the cuts seriously undermine the independence of Social Security, since the shortfall will be made up from general taxation. Welfare researcher Wendy Mink asks on her blog: “Is President Obama trying to kill Social Security without explicitly saying so?  He put Social Security ‘on the table’ for consideration by his Deficit Commission – even though Social Security has not contributed to creating or sustaining the deficit/debt in the first place.  He kept Social Security on the table when he made a deal to delegate deficit reduction authority over entitlements to an undemocratic Super Committee.  Now, in a speech reportedly about jobs, he proposed to extend and increase the ill-considered FICA tax cut he embraced last December – a tax cut that directly undermines the financial integrity of Social Security. … [E]ven if the Trust Fund receives full revenue compensation – for both employer and employee contributions – Social Security will be jeopardized.  That’s because the resources in the Trust Fund will be increasingly comingled with general revenue funds – and, hence, increasingly connected to the deficit.”

Since Obama knows the Republicans will reject anything he proposes, why did he confine himself to the art of the possible? He could have demanded Congress pass a half-cent tax on all stock trades, for example, in response to the lobbying of the national nurses union, which would raise much more revenue for unemployment relief and job-creation. That would certainly have galvanized his base, and created a fighting chance to win over independents by changing the terms of the debate. But Obama has consistently adopted the Republican narrative that workers have to sacrifice to solve the problems brought about by the banking collapse. Now he has given rhetorical strength to the right-wing argument that Social Security benefits must be reined in.

If Obama’s aim was to prove that Republicans were unreasonable, then he is underestimating the electorate. Obama is simply digging deeper the hole he is in. Voters have seen through the futility of bipartisanship and the independents he is courting sense they might as well vote for a real Republican as a half-hearted Democrat.


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Filed under austerity measures, debt limit impasse, financiers, marxism, Obama, political analysis, Tea Party movement, Uncategorized

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