The NYT noted the split within the Democratic Party between those who want to see more stimulus and those who want the government to focus on deficit reduction. It then told readers:
"But in a more fundamental way, the argument over fiscal policy represents the churning of a cultural fault line that has defined and destabilized Democratic politics pretty much since the onset of the Great Society."
Umm, "cultural fault line?" I remember the 60s. There were student and anti-war types on one side and the Democratic Party establishment on the other side, a key bulwark of which were the unions. What does this split have to do with the current divide, which places anti-war types and unions on the same side against Wall Street and business oriented Democrats on the other side?
The focus on "culture" rather than economics leads to further confusion throughout the piece. The article argues the need to rein in entitlement spending. No one disputes the need to reduce the trend growth rate in spending on Medicare and Medicaid. The question is how this is accomplished.
The Wall Street Democrats want to cut spending by reducing benefits under these programs. The "traditional" Democrats want to reduce spending by making the U.S. health care system more efficient. If per person health care costs were the same as in the U.S. as any other wealthy country, then the United States would be looking at enormous surpluses in the long-term, not deficits. However, fixing the U.S. health care system would involve reducing the profits of the insurance industry, the pharmaceutical industry and other powerful interest groups in the health care sector. The Wall Street Democrats do not want to hurt these interest groups while the traditional Democrats do.
The Wall Street Democrats also gratuitously attack Social Security even though it has not contributed to the deficit and is projected to be fully solvent long into the future. They misleadingly lump it into "entitlement" spending so that they can imply that the problems with Medicare and Medicaid are also problems with Social Security.
Traditional Democrats are more likely to note that the "explosion in government debt" was due to an economic collapse that wiped out the savings and home equity of workers near retirement. This means that it would be especially cruel for the Wall Street Democrats (who designed the policies that led to the collapse) to take away the Social Security benefits that workers have already paid for.
The article also included the utterly bizarre observation that:
"What’s more, Mr. Obama has already succeeded in spending more of the government’s money than any other president in a generation, a record that includes the liberals’ long-sought goal of subsidizing health care for the poor. You might think that would give the president credibility when he argues that making government more responsible does not necessarily mean being less responsive to the poor."
It is not clear that anyone had spending government money as a goal. Furthermore, the reason for spending the money was the collapse of the economy. This is like noting that a city had used lots of water last week, without mentioning that the reason was there had been a huge fire. It would have been difficult to imagine any president, no matter how conservative, not increasing spending in response to the economic crisis caused by the collapse of the housing bubble.
Furthermore, liberals have been pressing for reform of the health care system, not "subsidizing health care for the poor." Most progressives understand that the system that President Obama put in place is not viable in the long-run, which is why they are not very happy with the outcome of the health care reform debate and you would not think that this would give President Obama the credibility that the NYT wants to give him.
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