More About the Fix the Debt Crowd

Like the older brother in the back seat who soothingly says he won’t punch you anymore while reaching around to steal your sandwich, the Fix the Debt Crowd is hawking its urgent, communally minded, wares to all who are happy to have a partner from the overseer class. [Previous post.]

Windfall for the grown-ups 

by digby

Regular readers know that I’ve been dogging this bogus “Fix the Debt” group for many months. It’s long been clear that they are working on behalf of those who created the series of arbitrary deadlines called the “fiscal cliff” in order to press for cuts to entitlements.

It turns out they have another, more personal, agenda as well:

When a group of 86 large U.S. companies came out in late October in favor of fixing the debt it was seen as a rare example of corporate unity, and a wake up call on just how urgent an issue the growing federal deficit has become for business.

In a new report, the Institute for Policy Studies (IPS), a liberal Washington think tank, argues that the group, called “Fix the Debt” is basically a larger version of an earlier Washington corporate lobbying group called “Win America”, and shares its focus on getting corporate money now being held overseas back into the United States with little or no taxes taken out.

And from David Atkins, also at Hullabaloo

The Grand Lie

by David Atkins

Part of what is so frustrating about any conversation about the “deficit” is the obviousness of the lies being told. Conservatives have a decades-long strategy that they have telegraphed since the Goldwater years. It’s not complicated, and everyone in politics knows about it:

1) Claim that jobs and economic growth depend on tax cuts, especially on the wealthy. Claim that any cuts will pay for themselves. Both of these are lies, and everyone serious in public policy knows it.

2) When revenues dwindle and deficits explode as they have under every Republican President since Nixon, blame “welfare” (a lie) and “spending” (another lie.)

3) Let Democrats be the ones to take responsible measures to bring deficits back under control by sacrificing their own programs. Don’t take responsibility for “starving the beast”: let Democrats do it instead, and then blame them for it.

4 When good economic times and minor tax boosts bring both the economy back to health and the deficit back in line, tell people that the government has too much money, and that they should “get more of their money back.” This is an intentional strategy to drive up the deficit, forcing more cuts later.

That strategy isn’t just politics. It amounts to direct economic sabotage–sabotage that everyone in politics and media knows is happening.

AND, it turns out that the horrific rise projected for “entitlements” may not be as solid as the DHs would have you believe.  Another from Hullabaloo:

Quick, let’s make a deal (before the deficit goes away on its own)

by digby

You know that deficit that’s killing us? The one we’re going to fix by “asking the rich to pay a little bit more” and cutting benefits for everyone else? What if the scam is even worse than we thought?

Dean Baker spills some very inconvenient beans:

[T]he big stick for the deficit hawks was their story of huge deficits in the longer term. They attributed these to the rising cost of “entitlements,” which are known to the rest of us as Social Security, Medicare, and Medicaid.

While they like to push the notion that the aging of the population threatened to impose an unbearable burden on future generations, the reality is that most of the horror story of huge deficits was driven by projections of exploding private sector health care costs. Since Medicare and Medicaid mostly pay for private sector health care, an explosion in private sector health care costs would eventually make these programs unaffordable.

As some of us have long pointed out, there are serious grounds for questioning the plausibility of projections that the health care sector would rise to 30 or 40 percent of GDP over the rest of the century. Recently a paper from the Federal Reserve Board documented this argument in considerable detail.

The Fiscal What? How About The Deficit Deception?

Chris Hayes of the Nation and MSNBC takes us on a little tour of the facts regarding the so-called Fiscal Cliff.  For the deficit hawks, going over the fiscal cliff is just what they should want:  Bang!  Deficit reduced in a matter of months.  Of course, as it has been pointed out the deficit hawks are really more like pigeons.  They want to get as much grain for themselves and their biggest backers and will coo anything to get there.

The real problem is that not fixing the problem throws us into an Austerity Trap which Paul Krugman and others have been inveighing against for several years — with Ireland and Greece and Spain as prime examples.  Demanding austerity in the middle of a hard down-swing will only increase the velocity of fall; it will not — as the hawks claim– reverse the fall into a climb.

Visit for breaking news, world news, and news about the economy



The Fiscal Cliff and Its Perpetrators

Pardon me for asking a stupid question but, if the Fiscal Cliff is looming, not because of hurricane force winds in the Gulf, or an asteroid from the far reaches of the Milky Way, but because a craven congress voted to create it — why can’t they unvote it?  Everybody knows, if the automatic spending cuts are made with a broad-ax instead of a scalpel, misery will bleed from the cuts– in gushers.  So, vote to rescind the original vote and set about doing what should have been done in the first place.

Nevermind, it won’t happen, I know.

What is likely to happen of course is that those who have the biggest stake, and know it, will weigh in with dollar-amplified voices to improve their own positions and ignore the larger issues of redress of equality and equal opportunity which are the real sources of America’s long economic growth.

It is not good news that Erskin Bowles and Alan Simpson and Pete Peterson, along with the Business Roundtable are ginning up a slew of television advertising in an attempt to frame the debate.

The Campaign to Fix the Debt, a new group with a $40 million budget whose backers include Jeffrey R. Immelt of General Electric and David M. Cote of Honeywell, will run more than a million dollars’ worth of advertisements. The spots take their cue from well-known ads by the likes of Nike and Dunkin’ Donuts and feature slogans like “Just Fix It” and “Time to Fix the Debt.”

Mr. Immelt and Mr. Cote also feature prominently in a more traditional campaign by the Business Roundtable, which represents Fortune 500 companies and is one of Washington’s most powerful lobbying groups.

The Business Roundtable’s effort, set to begin on Tuesday, has a budget of close to half a million dollars, and is focused on news media in the Washington area, including outlets like Politico as well as conservative talk radio shows.

[The Fix the Debt campaign was created by Erskine B. Bowles and Alan K. Simpson, who were chairmen of a presidential commission charged with developing a blueprint for fiscal change and deficit reduction in 2010, and the group backs many of their recommendations.]

… Both the Business Roundtable and the Fix the Debt campaign suggest they could pay for the corporate rate reduction by “broadening the base,” closing loopholes and eliminating many deductions. Some critics say they doubt that would bring in enough revenue to pay for reducing taxes on corporations, eventually shifting some of the burden to smaller businesses and individuals.

Advocates for low-income and older Americans have also been harsh critics of the Simpson-Bowles plan, saying it would keep tax rates on businesses and wealthy Americans at levels below the historical average, and underwrite that by sharply cutting Social Security andMedicare.

Fix the Debt is also backed by Peter G. Peterson, a longtime deficit hawk who has advocated cutting Social Security and other elements of the safety net to pay for debt reduction. Other corporate backers include Mark T. Bertolini, the chief executive of Aetna, and Gregory Q. Brown, the chief executive of Motorola.

NY Times: Nelson D. Schwartz and David Kocieniewski


Krugman warns us about some of these players:

Consider the early-2011 award for “fiscal responsibility” that three of the leading deficit-scold organizations gave to none other than Paul Ryan. Then as now, Mr. Ryan’s alleged plans to reduce the deficit were obvious flimflam, since he was proposing huge tax cuts for the wealthy and corporations while refusing to specify how these cuts would be offset. But in the eyes of the deficit scolds, his plan to dismantle Medicare and his savage cuts to Medicaid apparently qualified him as a fiscal icon.

And how did the deficit scolds react when Mitt Romney served up similar flimflam, with Mr. Ryan as his running mate? Well, the Peter G. Peterson Foundation is deficit-scold central; Peterson funding lies behind much of the movement. Sure enough, David Walker, the foundation’s former C.E.O. and arguably the most visible deficit scold in America, endorsed the Romney/Ryan ticket.

… I don’t know how seriously to take the buzz about appointing Erskine Bowles to replace Timothy Geithner. But in case there’s any reality to it, let’s recall his record. Mr. Bowles, like others in the deficit-scold community, has indulged in scare tactics, warning of an imminent fiscal crisis that keeps not coming. Meanwhile, the report he co-wrote was supposed to be focused on deficit reduction — yet, true to form, it called for lower rather than higher tax rates, and as a “guiding principle” no less. Appointing him, or anyone like him, would be both a bad idea and a slap in the face to the people who returned President Obama to office.

Cut Government Spending! (Unless it Comes to Us)

Nelson Schwartz, on Sunday in the NY Times, had a most interesting article on big business cutting back on investment and hiring because of fears of the so-called “fiscal cliff,” the automatic enormous budget cuts and reversion to pre Bush tax rates if Congress cannot come to an agreement about trimming the deficit.  Of course this fiscal cliff was engineered by most of the same worthies now in Congress because they couldn’t agree a while back, apparently with the idea that time and dire threat would make them more reasonable down the road.

Not so.  Unreason has gripped the minds of a significant minority in Congress, and the minds of those who sent them there.

But on with the article.  At first glance it would seem that business reluctance to invest and spend is fear of ‘chaos.’  Mebe.  There’s also the issue of budget cuts.  That is, the Federal government will spend less.  On what? Blankets for the homeless?  No.  More to the point are the major purchases from these very, now skittish, companies — who have been funding the United States Chamber of Commerce and contributing to campaign funds all calling for smaller — that is, less spending– government.

The very scrawny chickens are coming home to roost.

The NY Times lead editorial on Monday, picked up on the problem:

 Republican lawmakers demanded the cuts last year as part of their brinkmanship over the debt ceiling, and business lobbies have generally supported slashing the deficit. But now that the cuts are imminent, corporate executives seem to have realized that the last thing the economy needs is a large budget cut across the board.


as did Duncan Black in his Atrios costume. 

Their waking up to worries about federal government spending cuts is not simply due to Keynesian concerns about aggregate demand and the potential for recession, but because they’re seeing their federal contract gravy train disappear.

[and if you want an explanation for “Glatian Overlords” in his piece, here is one. ]