The Peter G. Peterson Fiscal Summit started today with the dulcet tones of its billionaire conservative patron, Peter G. Peterson, and Treasury Secretary Tim Geithner singing in harmony. It was a melody fraught with danger.
It was designed to be soothing, even with the jolt that Peterson inserted into his opening remarks that the nation was facing a federal government debt crisis that is “a transcendent threat to our economic future.” But that was the note that started the whole symphony in the wrong key.
The real transcendent threat to our economic future is the lethal combination of chronically high unemployment and stagnant middle-class and working-class wages, which together have kept demand weak and economic growth slow. If we don’t start there, conservatives in both political parties will, while proclaiming “balance,” replicate the austerity failures in Europe.
The opening of the Fiscal Summit gave us all the justification we need to launch our “Protest the Fiscal Summit” scheduled for 1 p.m. today. Peterson opened the summit with a speech that included magnanimous statements that whacked the ideological rigidity of congressional conservatives against revenue increases and challenged those who are as wealthy as he is to say what government breaks they are willing to do without. “We need to show that shared sacrifice is not the latest political oxymoron,” he said.
Likewise, Geithner used the word “balance” in describing a plan that he said had to phase in cuts to government programs “so they don’t undermine the economic recovery.” He spoke of the need for a better balance between growth and austerity than was seen in Europe in the past year, with a “softer path” to fiscal sustainability.
But the conference revolved around the Simpson-Bowles deficit reduction plan (or, as our Richard Eskow calls it, “the Simpson-Bowles medicine show”), the roadmap forged by former Republican Sen. Alan Simpson and former Clinton aide Erskine Bowles that was ultimately rejected by the bipartisan deficit commission they were appointed by President Obama to lead.
Dean Baker today reminds us of exactly what the Simpson-Bowles plan does:
This plan includes a wide range of budget cuts, including cuts to Social Security and Medicare. It would reduce the annual Social Security cost-of-living adjustment by 0.3 percent, which would lower lifetime benefits by an average of more than 3 percent. It would also raise the retirement age for Social Security. To balance these cuts to programs that benefit tens of millions of ordinary workers, Bowles and Simpson would cut the corporate tax rate from 35 to 28 percent and would lower the tax rate paid by the very wealthy from 40 percent to 28 percent. While these reductions in tax rates are supposed to be offset by the elimination of loopholes that benefit the wealthy, people have good cause for skepticism.
In spite of the fact that the Simpson-Bowles plan was not embraced by the deficit commission, it has become the sun around which everything in the Fiscal Summit is orbiting. President Bill Clinton is touting it as the core of a solution in his conversation this morning with former newsman Tom Brokaw. In fact, Clinton made the jaw-dropping statement that “Simpson-Bowles makes the Social Security system more progressive” — even though lower-income seniors would have to work longer to obtain lower benefits.
What we are fighting against is Simpson-Bowles becoming the core of a “grand bargain” that would cut Social Security, Medicare and the other pillars of economic security and well-being of millions of Americans, while not adequately addressing the need to put people back to work by rebuilding our infrastructure, properly funding our schools and universities, and financing the research that we need to regain our economic footing in the global economy.
Roger Hickey warned on Monday that while most Americans want immediate action on jobs, rater than spending cuts in the areas that ensure economic security for struggling people, “in search of an inside-the-Beltway consensus, [Peterson] 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. ”
We had hoped that what Geithner would offer is a robust case for the kind of deficit spending now that would actually help lower the long-term deficits that Peterson is concerned about. Given the extraordinary push on the right in favor of austerity, Geithner needed to be a champion for growth that will help the middle class and balance the extreme income inequality that has been the fruit of misguided conservative economics. With Geithner on the inside talking of “balance” between a centrist position and an extreme conservatism that is driving wealth to the top, we are going to have to Protest the Summit to really tip the scales back to favoring ordinary people.