Obama Wants to Be the President Who Rolled Back the New Deal

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Naked Capitalism / By Yves Smith

Obama Wants to Be the President Who Rolled Back the New Deal

The president wants to cut Social Security and Medicare to protect the investor class.

April 7, 2013  |  

 

 

 

There is no more pretense possible. As we’ve warned for some time, Obama is eager to put a notch on his belt by being the President that rolled back the New Deal programs that helped create broad-based middle-class prosperity and dignity. He’s cast himself as an adult inflicting discipline on profligate Americans. But in reality, the profligacy was most concentrated among elite financiers who used leverage on leverage vehicles to stoke liquidity that led to worldwide underpricing of risk. They paid themselves record bonuses in the years immediately preceding the crisis, and then in a grotesque display of ingratitude, did so again in 2009, able to do so only thanks to massive taxpayer support, alphabet-soup special borrowing programs, and the tax on savers known as ZIRP. And the direct result of their looting exercise that produced the crisis was the explosion in government deficits, due to a collapse in tax revenues and a rise in payments under countercyclical programs such as unemployment insurance and food stamps.

But are the real perps the object of Obama’s disciplinary impulses? No. He seems spectacularly unwilling to take on anyone even remotely approaching his size (as if a President should be cowed by senior banker bullies like Jamie Dimon). The President’s failure to reprimand the financial CEOs who dissed him by refusing to attend his address on the first year anniversary of Lehman was a tacit acknowledgement that they were really in the driver’s seat.

Keep in mind what is happening here. We are not in the realm of Obama kayfabe, where he pretends that those big bad Republicans forced him to do what he wanted to do all along. This is Obama’s budget offer, not the result of pretend hard fought battles over positions that are at most 10 degrees apart. As the Grey Lady describes it:

President Obama next week will take the political risk of formally proposing cuts to Social Security and Medicare in his annual budget in an effort to demonstrate his willingness to compromise with Republicans and revive prospects for a long-term deficit-reduction deal, administration officials say…

Besides the tax increases that most Republicans continue to oppose, Mr. Obama’s budget will propose a new inflation formula that would have the effect of reducing cost-of-living payments for Social Security benefits, though with financial protections for low-income and very old beneficiaries, administration officials said. The idea, known as chained C.P.I., has infuriated some Democrats and advocacy groups to Mr. Obama’s left, and they have already mobilized in opposition…..

Mr. Obama will propose other spending and tax credit initiatives, including aid for states to make free prekindergarten education available nationwide — a priority outlined in his State of the Union address in February. He will propose to pay for it by raising federal taxes on cigarettes and other tobacco products.

I assume Obama’s flacks understand full well what an extreme porcine maquillage exercise “in an effort to demonstrate his willingness to compromise” is. We now have the absurd spectacle of Paul Ryan’s budget being to the left of Obama’s on the issue of Social Security and Medicare. If the Republicans have an iota of sense, they’ll take full advantage of the weapon Obama has handed them. Every poll ever done over the last 50 years shows substantial majorities favoring continuing and increasing Social Security and Medicare provisions, and either increasing taxes or cutting other spending to do so.

And Obama will pay for kiddie photo ops by increasing regressive taxes. Charming.

If it is any consolation, the chattering classes are ripshit. The article went up at the Times after 12:30 AM. By the time I saw it, about an hour later, it had 48 comments. Of them, 46 were disapproving, ranging from resigned to ripshit. A few examples:

J Wolfe: Keep the stupid stuff but get rid of things people really need. Free pre-k schooling (ie., free daycare) but toss retirees (ie, boomers) under the bus. Nice. Does this president have any clue at all how to lead and manage anything more than a street rally? He is one of the most clueless, inept and unqualified presidents ever. I don’t see any cutbacks in his lavish 1% lifestyle even though people can barely afford to buy food and gas these days. Pathetic.

kamilyon: I am outraged: We don’t need a deficit reduction deal at all!!!

We need a strong economy through jobs, jobs, jobs! And reducing wealth inequality! And providing strong financial foundations for our people through safety-net programs so that we can be healthy, provide for our children, and take business risks, all while knowing we can survive with dignity into our old age!!!

Why did you even run as a democrat?

Thom: All democrats should be livid that President Obama is the one to propose the beginning of the end of important social programs such as Social Security and Medicare.

This is yet another example of Obama saying one thing and doing the opposite – Gitmo, transparency, saving the middle class; now Social Security and Medicare.

Shame on you President Obama, once again you betray the ideals and hard work of the democratic party and the needs of the vast majority of Americans.

There was a lonely true believer:

HB: I don’t like these cuts, but I trust President Obama.

Maybe he’s making this compromise because he thinks it’s better for ordinary Americans on net, or maybe he’s bluffing as part of a political strategy to box in the other side. Either way, I won’t pretend to know better.

He understands the issues, he understands the politics, and he cares about ordinary families. I trust my president.

And the other approving comment was from someone taking the realist line. The thumbs ups on the comments so far were consistent: lots of approval from the readership for the critics, no affirmation for the lonely Obama stalwarts.

But Obama wants his legacy and the public be damned. And Bill Clinton proves that being a front person for neoliberalism is a very lucrative post-Presidential line of work.

So the question is who is going to join Obama in this wildly elite-serving budget? Will Congresscritters fall in line with what big donors want, or will they be chastened enough to remember the 2010 midterms, where the Obama-aligned Blue Dog Democrats were routed, but the more liberal Dems for the most part survived? Obama has never been very good about taking care of anyone but Obama, and Jeff Connaughton’s book The Payoff made clear that goes double for Biden.

In other words, the battle to get Obama’s fondly-desired Social Security cuts passed means persuading legislators to take a memorable vote that their constituents are likely to hold against them. Obama, as a lame duck, has fewer levers to pull than he once did. So this will be a test of the 11 dimensional chess view of Obama. Does he have the authority and bargaining skills to pull this one off, or will he beat a retreat and need to pretend it was a victory?

To be honest, I’ve never bought the 11 dimensional chess palaver. My wee theory is that Obama has a picture in his closet. In Oscar Wilde’s story, Dorian Gray sells his soul so that his portrait will age while he remains the beauty of the original image. Gray becomes increasingly debauched and his picture becomes more grotesque. Even an effort to reform makes the picture more frightful since Gray took up the idea only to see if it might reverse the uglification of his painting. Grey stabs the painting. His corpse is so withered and aged that it barely identifiable, but his picture has reverted to its former beauty.

My pet construct is that Obama has a picture too, but it’s a lucky paining, not a beauty painting. It makes Obama look like a winner, so Obama wins. His bad luck goes into that portrait in his closet. But I’m not sure he sold his soul (maybe it was just in indentured servitude) since it does not seem to be working so well of late. Obama had a reversal of his characteristic good fortune when the Supreme Court declared recess appointments to be invalid, which is a serious complication for him.

This “have old people die faster” plan will be contested. The normally complacent public is unlikely to sit by quietly and have its ox gored. Even the Times is not trying to soft pedal what is going on; it’s not using the anodyne language of “chained CPI” but “cutback” and in the headline, no less. Obama may still pull this off, but this will be his most uphill battle to date, and the second-term timing does not favor him. And we can only hope that any magic on his side is ebbing as well.

Read more at http://www.nakedcapitalism.com/2013/04/now-its-official-obama-sells-catfood-futures-um-social-security-and-medicare-cuts.html#kkazAiqASe40w3m5.99

Yves Smith is the founder of Naked Capitalism and the author of 'ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism.'

Saturday, April 6, 2013

The New Social Darwinism: Companies Require Workers to Divulge Health Info so They Can Charge Overweight and Others Deemed Less Healthy

Matt Stoller warned last June that citizens will increasingly have to submit to personal surveillance to get many types of insurance and financial products. He wrote:

Profit-driven surveillance does not starts and stop with young adults. It is, in fact, becoming pervasive. The main theme of a recent IBM consulting document on the future of the insurance industry is how much more money an insurance company can make if it tracks and tags its customers…

It’s not just sensors in your car – insurance companies are modeling tighter and tighter risk chunks. IBM goes on, saying that new products “will facilitate “just-in-time insurance” as a person moves through a set of “spaces.” Each step of the journey represents a different risk such as car-to-train-station, train-to-city-station, station-to- office, and so on. Each leg of the trip truly represents a varying amount of risk.” Tracking these movements could require nothing more than downloading an app on a smart phone, or some other device. But it is literally the application of financial engineering to your very liberty, or the toll-boothing of your life.

We are moving towards that future from two separate directions. One from the employer side, where companies are increasingly requiring workers to divulge information about their physical condition, and imposing extra charges, in the form of higher health insurance charges, on ones with conditions deemed to be treatable, like overweight and hypertension. From the Wall Street Journal:

Are you a man with a waist measuring 40 inches or more? If you want to work at Michelin North America Inc., that spare tire could cost you.

Employees at the tire maker who have high blood pressure or certain size waistlines may have to pay as much as $1,000 more for health-care coverage starting next year.

As they fight rising health-care costs and poor results from voluntary wellness programs, companies across America are penalizing workers for a range of conditions, including high blood pressure and thick waistlines. They are also demanding that employees share personal-health information, such as body-mass index, weight and blood-sugar level, or face higher premiums or deductibles…

Six in 10 employers say they plan to impose penalties in the next few years on employees who don’t take action to improve their health, according to a recent study of 800 mid- to large-size firms by human-resources consultancy Aon Hewitt….

Pharmacy chain CVS Caremark sparked outrage among employees and workers-rights advocates last month by asking staff members to report personal health metrics, including their body fat, blood sugar, blood pressure and cholesterol levels, to the company’s insurer by May or pay a $600 penalty.

This is basically another tax on the poor and lower income. Weight levels in particular have become a class marker. Why? Because more affluent people can eat healthier food, in particular, more fresh vegetables and fruits (which fill you up with a lot fewer calories) and less of the highly refined and prepared foods that are cheap and not very good for you (fast food in particular, but also refined carbs like sugars and starches). In addition, affluent people are more able to have enough control over their schedule to get in exercise if they are so inclined. By contrast, lower income people who are cobbling together several jobs or reliant on public transportation have to struggle to hold their place on the economic ladder and be good parents. Eating well and taking care of themselves is a luxury they often can’t afford.

And you have the tacit assumption that if people fall outside certain norms, they are presumed to be guilty of poor lifestyle choices. And the focus on simple indicators is often misleading. For instance, new research suggests that being physically active is more important than being svelte. Heavy people who exercise regularly are often in better health than normal weight couch potatoes. And what about people who put on weight, say as the result of a forced period of restricted activity (as a result of an operation or accident) or due to aging (women who go through menopause typically put on 5 to 15 pounds even if they fight to keep it off).

But even more troubling is the intrusiveness. Once the details of an employee’s health are considered fair grounds for disclosure, it’s hard to see this development not going further and further down the path of more intrusions, and more covert and overt discrimination. And that ties into the surveillance issues that Matt Stoller raised earlier. Some behaviors are bad for your health, and I don’t mean just smoking. Having a high appetite for risk is also correlated with higher health care costs. Fortunately, we are hopefully a very long way from the health police trying to monitor condom use.

But on the other end, the public is being increasingly desensitized about putting information on view. Gillian Tett writes about how Nike and Jawbone have created a vogue for biorythm monitors where people upload and share the information. For the life of me, I can’t understand why anyone would want to know the pattern of their friends’ sleep. Perhaps this is just the Pet Rock of 2013 and will quickly tire. Tett is also perplexed, and tries putting on her anthropologist hat:

Most notably, when I was growing up as a child in England, I assumed that people would always prefer to sleep in private, unless they were with a romantic partner. To be sure, children would sometimes share bedrooms; but when somebody “grew up”, they would usually choose to sleep in their own bedroom and bed – if they had the economic means.

However, people in Tibet and Tajikistan had different assumptions. Each night, piles of people would all sleep in the same room, or tent. If somebody was not sleeping or eating well, it became a matter of wider knowledge and debate. Personally, I found that extremely intrusive. And until recently, I vaguely assumed that societies tended to shed this group pattern when they got richer and more technologically advanced. After all, the broad sweep of history suggests that most cultures have become more individualistic over time, as wealth gives people more freedom to break away from the group.

But the digital revolution could be shaking these assumptions. Never mind the fact that the younger generation today has an obsessive need to keep communicating via Twitter and Facebook, or post information online with scant concern for privacy. If young professionals in places such as San Francisco and New York now think it is “cool” to post their sleeping patterns to each other, then it would appear that the concept of cultural progress has come full circle. Suddenly we are all back in a giant electronic tent together – or at least Andy and some of his elite, wealthy friends are.

Now of course, I may simply be too deeply invested in my out, now dated, notion of culture. But the tell in Tett’s write up is the word “cool”. This is not an organic development. Fashion is created, and it’s created through marketing. Anyone who has seen any of Adam Curtis’ films, or has read up on propaganda knows the degree to which changes in social values in the 20th and 21st centuries aren’t the result of environment and need (for instance, the contention that Japan’s group-oriented society results from the demands of rice cultivation) but of marketing and public relations. For instance, surveys have repeatedly found that more engagement with the Internet is directly correlated with unhappiness. Similarly, people with more Facebook friends are typically more aggressive and narcissistic. All of this sounds terribly mal-adaptive, unless you are a big company that thrives on creating anxieties and then offers products or services that give you a short-term psychological lift.

If collective impulses were really on the rise, one would think you’d see people banding together to push back against oppressive and intrusive authority. And maybe we will see some employee groups pushing for limits on employer nosiness. But they need to move quickly before this new practice becomes firmly entrenched.

Topics: Social policy, Social values, Technology and innovation