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Why We Rearrange the Deck Chairs



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The speaker has been taking some flak for walking back his suggestion last year that the retirement age for Social Security may eventually need to be raised to 70. Boehner now calls that suggestion a “mistake”, but pay attention to how he does so:

The Speaker indicated he was premature in suggesting raising the legal age at which retirees are eligible for full Social Security benefits, since he didn’t want to pre-judge a debate over how to fix the entitlement program. He said he wouldn’t rule out raising the retirement age, however.

“I made a mistake when I did that, because I think having the conversation about how big the problem is is the first step,” Boehner said Wednesday evening on CNN. “And once the American people understand how big the problem is, then you can begin to outline an array of possible solutions.”

Entitlement reform in Washington has always been a game of two-party chicken. Neither side wants to be the first ones to tell the American people that eventually, either their benefits will be gutted or their taxes will be spiked. This is a perfectly understandable strategy: force your opponents to deliver the unpleasant news and they suffer the wrath of the voters at the same time as they open up the rhetorical space necessary to publicly contemplate solutions that are more compatible with your own political prejudices (cf. Paul Ryan, the Democratic Baiting Of).

In it’s current configuration, the Republicans — as both the minority party and the party nominally in favor of balanced budgets and a leaner, meaner welfare state — think that if they can only educate the American people; if they can only, in Boehner’s words, make them “understand how big the problem is,” then we get serious about reform. But anyone even marginally plugged into the political discourse in this country realizes that a dearth of entitlement doom-saying is not the problem — pervasive NIMRODism (entitlement reform is great and necessary, as long as it does Not Impact My Retirement Options, Dude) — is. 

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By contrast, the Democrats — as both the party in power and the party eager to prove that we have the resources to deliver a robust welfare state in perpetuity — are content to do the demagoguing and deck-chair rearranging necessary to put off serious decisions until there is a crisis, preferably on somebody else’s watch. Megan McArdle captures this tactic perfectly in comparing President Obama’s State of the Union address to a conference call by the CEO of a company everybody knows is sinking:

The underlying economy is, I think, ultimately fine, but the structural problems with the government’s finances are driving it rapidly towards an unpleasant denouement.  Like a CEO with a stuck company, however, he can’t just say that.  Stating the obvious would make things worse, as customers and creditors decide that the end really is nigh, and it’s time to get out while they still can.

So what do those CEOs do?  They spend a lot of time talking about their company’s proud history, even if that history only stretches back a few years. They lavish extravagant praise on their awesome, dedicated workforce.  And they deftly avoid talking about the big problems, for which they have no solutions, by talking about strategic areas for potential growth (“green jobs”), and going over a laundry list of new initiatives that do nothing to solve any of the core problems.  When they are forced to talk about the core problems–and if the company is big enough to attract analyst coverage, they will rudely draw his attention to the problematic areas on the financial statements during the Q&A–he responds in vague generalities that restate the problem as if doing so constituted a solution:

“To put us on solid ground, we should also find a bipartisan solution to strengthen Social Security for future generations. And we must do it without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans’ guaranteed retirement income to the whims of the stock market.”

The absolute favorite tactic, however, is the management reorganization.  You may be in a saturated market where your second-rate franchisees are slowly destroying your brand, making it impossible to attract higher-quality franchisees . . . but that’s nothing that can’t be fixed by creating a new Chief Strategy Officer under the CEO, and giving that officer oversight of marketing, research, and HR.  Perhaps a much larger competitor whose cost structure allows them to undercut your prices by 32% has entered your niche, but can they really withstand the fearsome might of your ISO 9000 certification and your new cross-functional product teams?  The government regulators who just outlawed your three top-selling products and made two-thirds of your capital plant obsolete may be powerful–but not as powerful as your revolutionary sales force compensation scheme!

You can’t blame the dodges, but they are a warning sign.  Not that the CEO is a bad CEO, but that the CEO is in a bad situation he can’t fix.

It’s not that Obama doesn’t know how to fix the problems; I think that like most people in Washington, he understands the broad parameters within which the fixes will be carried out.  But he can’t make Congress do it before there’s an actual crisis.  And saying all of this is all too likely to trigger the crisis–a crisis he’d much rather would happen during someone else’s presidency.  So he tells us what we want to hear: that we need to find a way to fix Social Security without, y’know, changing it in any way.  And will you look at those green jobs!  I think we’re going to have a bumper crop!

And so it goes.



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