These are not happy days for the fiscal fear-mongers. The deficit has been falling rapidly even in the absence of a grand bargain to slash entitlements and raise taxes. Both sides have given up for now on the elaborate charade of super-committees and debt commissions, which, for several years now, have accomplished nothing but nudging the country toward a premature austerity that, many economists now agree, undermined our economic recovery. Instead, today’s New York Times reports that “in a shift from deficit concerns,” the Senate is on the verge of passing the extension of a whole swath of business tax breaks without finding any way to pay for them.
It is, in other words, not an auspicious moment for the annual “Fiscal Summit” hosted in Washington today by the Peterson Foundation, the organization funded by private-equity titan and Social Security antagonist Pete Peterson. But when a billionaire’s footing the bill and a former president is on the guest list, it’s not like you just call the whole thing off. So the event proceeded, with all the awkwardness of a wedding anniversary party where everyone in attendance knows that the husband and wife are both in the midst of torrid affairs.
Then again, carrying the event off was perhaps not so difficult to do, given that these summits have from the start been built around a different sort of truth-avoidance. Peterson and his ideological allies promote a specific, non-unanimous agenda—prioritizing deficit and debt reduction above all else via deep reductions in Social Security and Medicare and increases in taxes (in that order of preference). That is their prerogative as advocates. But the summits they host to this end are framed as if they’re being held on behalf of some universal, noncontroversial cause—a framing that, among other things, enables the participation of straight-news journalists who would shy away from engaging in similarly slanted events on different issues. Those involved act as if the summits are but a wonkier cousin of a Take Back the Night rally or a breast cancer awareness promo. They are not.
With such disingenuousness at their base, it is no surprise that the events are riddled with moments of elision, hypocrisy or outright dishonesty that are allowed to pass unchallenged by complaisant moderators. There was nothing at today’s event to compare with the spectacle of the tax-slashing Paul Ryan being awarded a “Fiscy Award,” as he was in 2011 shortly after he helped torpedo the Simpson-Bowles debt-commission report hailed by many fiscal hawks.
But there were still some choice moments. There was Columbia economics professor Glenn Hubbard fretting that “we risk becoming a nation of entitlements.” Yes, that is the same Glenn Hubbard who was chairman of George W. Bush’s Council of Economic Advisers while the unpaid-for Medicare drug benefit was being crafted in 2003 and who helped design the deficit-expanding tax cuts of 2003.
There was Jeffrey Immelt, the CEO of General Electric, warning in a video clip interspersed between the summit’s live events that “some day it will be too late” to reduce deficits and the debt, that “some day we really will have lost our ability to fix these things on our own terms.” Hmm, does that mean that “some day” Immelt’s company will stop investing enormous effort in tax avoidance schemes that, just a few years ago, had GE not only paying zero taxes in the U.S. on its $14 billion in worldwide profits but in fact claiming a U.S. tax benefit of $3.2 billion?
There was Senator Rob Portman, Republican of Ohio, lamenting that President Obama had stopped pursuing one of his prior “grand bargain” concessions, a tweak in the Social Security inflation index that would reduce benefits over time. “If we had been able to get the president to simply support his own budget in that regard, we’d make an enormous step in the right direction,” Portman said. “The fact is we’re looking at trillion-dollar deficits again in the next 12 years. We’re going to see these numbers escalate.” Wait, is this the same Rob Portman who was budget director under George W. Bush at a time when, by his own past admission, “a lot of people” in the Bush administration didn’t see the need to reduce the deficit?
And there was the star of the day, Bill Clinton, a loyal attendee at Peterson’s events, who somehow managed to get through his discussion with Gwen Ifill about the debt and income inequality without being asked about his own contribution to both problems: the 1997 cut in the capital gains tax rate from 28 percent to 20 percent. Clinton has of late been trying to cast his tenure in populist terms and he did so again today, saying that in the 1990s, “each quintile of the American [income ladder] increased in tandem more than anytime since the mid-70s.” That may be, but income inequality as defined by one traditional standard—the share going to the very top—increased sharply in the Clinton years. Clinton dismissed this today, saying, “I don’t think there’s much you can do about that unless you want to start jailing people.” Huh? There’s one thing one could do: not lower the capital gains rate, which disproportionately benefits the very wealthy.
As Ifill’s session went on with Clinton, they started wandering away from fiscal matters to Ukraine, Sudan, and Karl Rove’s speculation about Hillary Clinton having suffered brain damage in the fall that kept her from testifying on the Benghazi attack. Clinton’s pushback at Rove got titters on Twitter, but it was Jackie Calmes, the New York Times’ veteran budget correspondent, whose tweet captured the real import of the far-straying Clinton conversation: “@billclinton remarks at #fiscalsummit deal w/just about everything but fiscal policy—reflecting end, for now, of that debate.”
Yes, this is how billionaire-funded fiscal fear-mongering ends: not with a whimper, but a bang on the head.