Politics

How One Woman Made Budget Scolding Chic

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IN SEPTEMBER of 2011, a fortyish budget connoisseur named Maya MacGuineas was feeling demoralized. She couldn’t believe that Congress and the president had nearly let the country default on its debt rather than reach a major deficit-cutting deal the previous summer. So she did what she had become unofficially famous for in the wonk circles of Washington: She threw a glamorous dinner party.

MacGuineas’s friend, Virginia Senator Mark Warner, agreed to open his Alexandria estate to a coterie of bold-faced names. There would be CEOs like Indra Nooyi of Pepsi and Larry Fink of BlackRock; politicians like Saxby Chambliss, the Republican senator from Georgia, and Steny Hoyer, the House’s second-ranking Democrat; and A-listerswithout-portfolio like Alan Greenspan and labor leader Andy Stern. MacGuineas had planned for a crowd of 20, but some 60 showed up in the end. It turned out they were feeling the same existential dread she was, a throbbing sense that the country was becoming ungovernable.

The evening didn’t start well. “The members of Congress were saying to the CEOs, ‘You guys need to get involved,’” MacGuineas recalls. “And the CEOs pushed back: ‘We’re desperately trying to run companies... Why don’t you guys do your job.’” But, after the initial finger-pointing, the dinner took on a confessional air. Stern, who had served on the Simpson-Bowles deficit commission in 2010, announced that he regretted his vote against the now iconic deficit-cutting plan. Aetna CEO Mark Bertolini gave an impassioned, extemporaneous speech about how it was up to everyone to work together. “This is never going to happen again. We’re getting in the game,” he said.

Less than one year later, with the dinner still fresh in her mind, MacGuineas launched the Campaign to Fix the Debt, a lobbying organization bent on persuading Washington to prune the deficit. Under MacGuineas’s stewardship, the group has raised over $40 million and run ads instructing the capital’s powerbrokers to “Just Fix It!” It has dispatched CEOs across the cable dial and to all corners of Beltway officialdom to deliver stern talking-tos about fiscal responsibility. It has even spawned 17 state chapters to spread the word through the hinterlands.

With the fiscal cliff looming this fall, “it seemed like everyone wanted to do Maya’s group,” said an aide to a leading CEO. As it happens, this it-ness is the product of MacGuineas’s remarkable hustle. She has signed up Alan Simpson and Erskine Bowles, currently the two biggest celebrities in corporate America, as her “co-founders,” and stacked her steering committee with well-connected bigwigs, like Steve Rattner, the private-equity magnate and former Obama auto czar, and JP Morgan Vice Chairman Jimmy Lee. 

For decades, deficit kibitzing was perhaps the least sexy occupation in a town famously lacking in sex appeal, conjuring images of pasty-faced men behind lecterns in poorly lit conference rooms. But MacGuineas has managed to make the topic fashionablea cause célèbre not just for the city’s budget nerds, but for its entire ruling class. These are people animated by the conviction that, if both parties just give a bit on their most dogmatic beliefslow taxes for Republicans, entitlement spending for Democratsthey will converge in the sensible center and revive the U.S. economy. The problem is that the midpoint between the two parties has shifted vastly rightward in recent years, as the Republicans have come unhinged. By building an elite consensus around the idea of bipartisan difference-splitting, MacGuineas isn’t helping to heal what ails us; she’s simply putting a genial face on increasingly radical policies. 

 

IT CAN SOMETIMES seem as though MacGuineas wasn’t so much born as scientifically engineered in the basement of a Georgetown salon. As a twentysomething grad student at Harvard’s Kennedy School, she once wrote a paper about her plans to start a bipartisan budget watchdog group, replete with a collection of policy eminences as her board of directors. After Harvard, she spent a year researching Social Security at the Brookings Institution, then did a stint as an adviser to John McCain’s first presidential campaign (the one D.C. insiders rooted for), before landing at the just-launched New America Foundation in 2000.

In 2003, she got a call from Carol Cox Wait, who had spent the previous two decades running an advocacy group called the Committee for a Responsible Federal Budget (CRFB) and was searching for a successor. The key criterion? Bipartisan bona fides. “The committee is uniqueit’s not a nonpartisan organization. It’s a bipartisan organization,” Wait says. “It’s terribly important for the person who heads that to understand that you can only operate by consensus.” After meeting with MacGuineas on and off for six months, Wait deemed her exceptionally worthy.

Wait’s CRFB had been respected but tinyjust her and an assistant (“vice president” in the vocabulary of Washington). MacGuineas had grander ambitions. She raised more money, hired a policy staff, put out volumes of reports, and dramatically increased its media visibility. Then, in 2009, the deficit mushroomed to its largest size since World War II. MacGuineas’s main preoccupationchipping away at the federal debtalso became elite Washington’s.

The guest lists at her dinners (some of which were canceled if the lineup skewed too far in one party’s direction) began to throw off more wattage. For her part, MacGuineas was highly attuned to the success of these events, to whether the attendees had schmoozed amiably or simply recited talking points. “In staff meetings, she would frequently lament or be optimistic about what had happened at the most recent dinner,” recalls a former staffer. Intentionally or not, MacGuineas had perfectly captured the mood of the establishment. The more relentlessly polarized the country became, the more the city’s mandarins hungered for a bygone era of bipartisan goodwill.

Unfortunately, this militant evenhandedness, whatever its historical virtues, borders on surreal at a time when one side has drifted so far from the mainstream. During the House Republicans’ experiment with refusing to raise the debt ceiling last year, MacGuineas issued a press release stating that “[t]hreatening to blow up the nation’s credit rating and potentially the economy should not be seen as a legitimate negotiating strategy.” She then added: “At the same time, failing to use this debt ceiling ‘hammer’ to force serious fiscal reforms would be a dangerous lost opportunity.” It was a bit like condemning hostage-taking in the strongest terms, then warning that failing to use hostages to, say, secure a Palestinian state would be downright irresponsible.

MacGuineas’s interest in calling fouls on the GOP has, if anything, only waned since last year. By any objective measure, the biggest obstacle to major deficit reduction during Barack Obama’s first term has been the Republican Party’s refusal to raise tax revenue. It’s what torpedoed the $4 trillion deal John Boehner and Obama had all but agreed to in 2011. After Obama won reelection on a promise to increase taxes on the wealthy, Republicans agreed to more revenue in principle, but spent weeks insisting that it arise from tax reform (i.e., lowering tax rates while closing loopholes) rather than higher rates. What they didn’t mention is that it’s almost impossible to raise enough revenue that way given the political difficulty of eliminating the most popular loopholes and deductions. And yet, when the White House and congressional Democrats have made this point, CRFB has rebutted them with blog items and a more formal paper insisting the GOP approach can work. 

Coming from someone with such cachet among the “Morning Joe” set, these musings have given the party cover for its pathological foot-dragging on tax increases. Worse, the more the GOP is able to hold down the amount of tax revenue the government takes in, the more deficit reduction will have to come from cuts to programs like Social Security and Medicare.

And then there’s Fix the Debt’s attitude toward the fiscal cliff itself, which can only be described as hyperventilationist. One typical press release described the cliff as “over $600 billion of spending cuts and tax hikes next year alone that analysts unanimously agree would push the country back into a recession.” This is highly misleading. While leaving the spending cuts and tax increases in place for much of next year would in fact trigger a recession, the economic damage would be virtually nil if the GOP caved within a few weeks, which polls overwhelmingly suggest it would have to. As a practical matter, then, the possibility of going over the cliff enhances the president’s leverage, while persistent fear-mongering undermines it.

With Obama and Boehner exploring a compromise built around roughly equal parts revenue and spending cuts (worse than Obama could have secured by waiting, but a reasonable distance from Boehner’s initial offer), MacGuineas is moving on to another pet concern: condemning those who might sabotage the effort in Congress. “I’m worried that the extremes on both sides are lining up to oppose a deal,” she recently told The Wall Street Journal. It was classic MacGuineas: making a fetish of evenhandedness in the face of a deeply imbalanced reality. As in 2011, congressional Democrats are largely falling in line behind the president even though the likely deal would include deep cuts to programs they regard as sacred. Should the talks collapse, it will almost certainly be because the extremists in the Republican caucus defected yet again. And they will be comforted by the knowledge that, once all the dust has settled, Maya MacGuineas will award them no more than half the blame.

Noam Scheiber is a senior editor at The New Republic. This article appeared in the December 31, 2012 issue of the magazine under the headline “The Doyenne of Debt.

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