The White House isn't trying to tax the rich to pay for an extension of a classic welfare system. It's trying to tax the rich in exchange for preserving the entitlement system. Here's why the distinction matters.
The president's budget plan gave Republicans fresh ammo to claim "class warfare" against the White House, which wants to raise taxes on the wealthiest Americans to pay for about half of its deficit reduction.
"Class warfare" is too strong. It's also too simple. The deal at the heart of the president's proposal is higher taxes for the rich with no serious changes to Social Security and health care services. The rich aren't being asked to pay for an expansion of the welfare state. They're being asked to pay for the preservation of the entitlement state.
This isn't class warfare. It's not about class. And it's hardly a war. It's an all-out commitment to keeping our promises to the seniors and the sick.
I hesitate to call this any form of war. It's senior-oriented policy meeting senior-oriented politics. For the last six decades, federal spending has gradually shifted from a defense-dependent and investment-heavy model -- in the 1950s, more than one of every two dollars went to defense -- to a income-redistribution and preservation-heavy model. We used our wealth in the 20th century to build and expand on a preservationist society, where $4 out of every $10 goes to Social Security, Medicare and Medicaid. Social Security faces a moderate, fixable challenge, and health care faces a more serious long-term challenge. Having guaranteed to seniors and the sick some services that are getting expensive much faster than the economy is growing, we've bought a pony that grew into a Clydesdale.
That seniors show up so prominently in our public policy might have something to do with the fact that they show up so prominently at our polling stations. Between 70 and 80 percent of citizens over 65 voted in the last two elections. This is chicken and egg. Policies to support seniors encourage them to vote to protect their interests; senior votes encourage more policies to support seniors. It's not for nothing that Rep. Paul Ryan, a Deficit Hawk with a capital D and H, voted to expand Medicare Part D without offsetting the cost.
Almost every $4 trillion deficit deal devised in some think tank or working group in Washington found serious savings in entitlements. They are 40 percent of the budget, after all. The White House did not. Its plan cuts spending by about $3 trillion (including $1 trillion in gimmicky ware reductions) and it raises taxes by about $1.5 trillion, mostly on the top 2 percent. It doesn't touch Social Security and it makes only modest cuts on the provider side of Medicare and Medicaid.
Republicans want to make this a debate about class warfare because it plays into their charge that Democrats are secret socialists*. Democrats wouldn't mind making this a debate about class warfare because it plays into their charge that Republicans are secretly heartless. But behind the clash, there is a larger agreement between the leaders of both parties: seniors are untouchable. Even ultra-conservative Republicans that want to take apart Social Security and Medicare promise not to change the programs for those near retirement.
Whether the rich can afford another $1.5 trillion in taxes is an academic question, because Republicans will never vote for the president's plan. At best, the White House has pulled the debate to the left and created space for the supercommittee to raise taxes moderately while still being seen as far to the right of the administration. At worst (from a deficit reduction perspective) they've poisoned the water and killed any chance of a bipartisan deal to make structural reforms to the budget.
Either way, they've revealed that there are three truths in the budget wars: domestic cuts are bipartisan, taxes hikes are partisan, and the term "shared sacrifice" was never meant to apply over the age of 55.
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