Show Peter Peterson We Reject His Elite Austerity Consensus

On Tuesday, May 15, one of America's wealthiest men, Peter G. Peterson, will use his foundation's money to lecture the rest of us about why the federal deficit is the most serious problem facing our country.

Since poll after poll [1] demonstrates that strong majorities of Americans care far more about high unemployment and slow growth, Peterson's major strategy is to put on a show aimed at demonstrating that all the "serious people" – the elite of both political parties – have already agreed that the deficit is such a threat to America that we must slash public spending and "reform" entitlements. (That's a fancy way of saying cut benefits, raise the retirement age for Gen Xers and Millenials, and dismantle Medicare for these future seniors, as Cong. Paul Ryan and just about all Republicans have proposed.)

I'll be outside Peterson's Fiscal Summit, with Senator Bernie Sanders, and lots of friends who don't agree with Peterson's elite consensus – including leaders of the Campaign for America's Future, Health Care for America Now, CREDO, Social Security Works, the National Gay and Lesbian Task Force, National Committee to Protect Social Security and Medicare, and NOW - and lots of other folks concerned about our country. If you don't believe Peterson speaks for the American majority, come on out. We start at 1 p.m. [2]

To repeat, Pete Peterson knows most Americans want action to create jobs, not spending cuts, so in search of an inside-the-Beltway consensus, he tries to find a few important Democrats who will come and pretend that the kind of budget austerity that has wreaked European economies – and is being rejected by voters around the world – should still be the priority for the U.S. economy.

Unfortunately, one of the key Democrats Peterson has lined up is Obama Treasury Secretary Tim Geithner – and there is no telling what Geithner is likely to say. What every Obama Administration spokesperson should be saying is, "We need to invest more in jobs creation – and aid to states to prevent layoffs of teachers and cops and firefighters. And if we can get more Americans back to work, the deficit will come down because we'll all be paying taxes."

But Geithner might just easily say something that undercuts that clear, winning Democratic message. He could do what many budget hawks have been urging and call a post-election "grand bargain" that would prioritize deficit reduction by embracing the proposals of former Sen. Alan Simpson and investment banker Erskine Bowles, whose ideas were rejected by the members of the commission that bore their names.

Simpson and Bowles proposed raising the retirement age for young people now in the workforce - and weakening the cost-of-living index for everyone. That means a big Social Security and Medicare benefit cut for people who will have few other retirement and health security plans for their senior years. If Tim Geithner embraces these kinds of big cuts to these crucial programs, the political impact will be to undermine Democratic chances to take back the House and keep the Senate in 2012.

Rep. Chris Van Hollen, who is also speaking at the Summit, should certainly care about Democrats like Geithner rejecting this kind of "bipartisan" consensus as a guide to what they should do in the lame duck session after the election. If he wants to be helping Nancy Pelosi to lead a strong Democratic majority after the election, he should be urging his fellow House candidates to reject this kind of deal – and to campaign like the successful Democratic special election candidate in New York, Kathy Hochul, who won by promising, "We will not cut Social Security and Medicare in order to pay for tax cuts for millionaires."

Speaking of tax cuts for millionaires and corporations, Simpson and Bowles are praised by Peterson and others for daring to increase taxes to reduce deficits, breaking with the quasi-religious conservative oppositions to raising any taxes at all. Actually, they propose the same counterintuitive approach as the Ryan budget plan: lowering tax rates, particularly those on the top. What my CAF partner, Robert Borosage, said at the time [3] applies equally to the Ryan plan: "They promise the lower rates will be accompanied by cleansing the tax code of various tax deductions and expenditures that mostly benefit the rich ... Only we've played this game before. In the 1980s, bipartisan reforms lowered tax rates across the board, particularly those on the top, and cleansed a tax code riddled with corporate and fat cat deductions. And then Lucy pulled the football. They eliminated the deductions but not the corporate lobbyists." The rates stayed low but the deductions came back.

Democrats should join the voters and call for raising taxes on the rich and the big corporations - not cutting them in the name of deficit reduction.

I've been to Peter Peterson's fiscal summits in the past – and I can imagine what the reaction of his public relations team will be to our gathering outside:

1) They will allege that we oppose all deficit reduction plans – especially those that tackle the "entitlements crisis." Our answer is clear: We do oppose cutting Social Security benefits because that system is not in crisis and can be solved by raising the cap on the Social Security taxes rich people pay. We do oppose cutting Medicare and Medicaid, because a civilized society should cover the costs of health care for seniors and the poor. However, our approach to deficit reduction involves a.) steps to spur growth and jobs; b.) real tax increases for the rich and the corporations; and c.) support for stronger health care reform aimed at getting the America's overall health care costs in line with other advanced countries. If we did that, our long term deficit problem would disappear. And I will bet that nobody speaking at Peterson's "Summit" will argue that crucial and clear approach to deficit reduction – because it means tax justice and taking on the drug and health care monopolies.

2) They will patronize us, pretending that Pete Peterson himself agrees there are times when job growth and economic stimulus must come before deficit reduction. But this is meaningless lip service. How many of Peterson's hand-picked Summit speakers will call for vigorous political action to pass a new round of stimulus and job creation measures? No, the real purpose of this Summit is to convince the media that – after a long period of slow growth, growing inequality, and polarized politics – leaders of both parties will come together after the election around a plan that kills the economic recovery through drastic spending cuts and undermines the Social Security, Medicare and Medicaid programs that actually help most Americans survive in bad times. This meeting will not issue a rallying cry for bold growth policies to put America to work. And we should try to make sure that Democrats do not buy into what the organizers are selling – because the voters certainly won't.

One more thing Peterson has been selling: House Budget Committee Chairman Paul Ryan. Even many deficit hawks have attacked Ryan's budget plan – supported by almost all Congressional Republicans – because its tax cuts and unspecified and unlikely loophole closings would make the deficit much worse. Democrats claim they will run against the Ryan budget as the epitome of everything wrong with the Republican party, as it is. Yet at the last Peterson Summit, a year ago, former president Bill Clinton came to the defense of Paul Ryan and his plans for Medicare [4].

At this Summit, Rep. Chris Van Hollen, a progressive Democratic leader (and ranking Member of the Budget Committee), is scheduled to engage in a "dialog" with Ryan. Van Hollen has so far done a good job at exposing the way the Republican budget slashes spending for the poor and middle class. Those of us outside the Summit will be hoping he stands up to Ryan by opposing job-killing austerity – and cuts to Social Security, Medicare and Medicaid. We'll see.

Note: It is wonderfully fitting that the Peterson Fiscal Summit will take place at the Andrew Mellon Auditorium, named after one of the wealthiest Americans of the 1920s and '30s, who, as Secretary of the Treasury, advised President Hoover [5] to "liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate... it will purge the rottenness out of the system." He advocated spending cuts to keep the federal budget balanced, and opposed fiscal stimulus measures. The result was the downward spiral known as the Great Depression.