Fix the Debt, Destroy the Recovery

David Walker announced his endorsement of Mitt Romney this week. The name might not ring a bell, but Walker was head of the Peter G. Peterson Foundation, the number one funder of deficit-hawkery in the United States. Walker, a former Comptroller General, has described himself and his crusade as bipartisan, and it is actually helpful that he has come out of the closet as a Republican.

Lately, Walker has been deeply involved with the efforts to levitate the late Bowles-Simpson Commission as a template for deficit-reduction, and has been working closely with the corporate-funded “Fix the Debt” campaign of more than 100 CEOs lobbying for an austerity grand bargain. 

It’s worth unpacking the economics and the politics of the austerity lobby.

The Fix the Debt campaign, much like the Bowles-Simpson Commission and the propaganda of the Peterson Foundation generally, contends that the projected national debt is depressing business willingness to invest now. Presumably, businesses are worried about inflation and uncertainty. But the government can fund ten-year bonds at less than 2 percent interest and thirty-year bonds at less than 3 percent. So investors don’t seem worried about inflation. It’s not lack of confidence in deficit reduction that’s depressing business investment but lack of confidence in consumer purchasing power.

If anything, the economy needs more public spending to get us out of a deep slump brought to you by the very people behind this campaign. Cutting the deficit prematurely will only depress purchasing power and deepen the slump. That’s the real lesson of Greece, Spain, Portugal, et al.

The only difference between the “Fix the Debt” campaign and a dozen kindred efforts such as the Committee for a Responsible Federal Budget, the Pew-Peterson Commission, the Concord Coalition, and Bowles-Simpson Redux is that this one is funded and led by corporate CEOs. The campaign is on track to raise $100 billion in corporate money.

Last week, the campaign even did a major event at the New York Stock Exchange, a sign of the tin ear that operates in the corporate boardroom echo-chamber. It was Wall Street excesses that crashed the economy. And now, corporate CEOs are hectoring the 99 percent to tighten their belts.

Another splendid case of chutzpah, defined in the classic joke as the man who murders his parents and then asks the judge for mercy on grounds that he’s an orphan: Several of the CEOs that lead the Fix the Debt campaign are heads of highly profitable corporations that pay no federal taxes.

According to a very helpful analysis by Americans for Tax Fairness, 13 of the corporations whose CEOs are behind this lobby paid zero taxes in recent years. Here is their chart drawn from an analysis of IRS data by Citizens for Tax Justice:


Federal Income Taxes 2008-2011

$ Billions

Tax Subsidies 2008-2011
$ Billions









General Electric




Honeywell International




Verizon Communications






$62 billion

$27 billion

David Cote, the CEO of Honeywell, and a member of the steering committee of the Fix the Debt lobby, is paid $55.2 million a year, and personally saved an estimated $2.5 million last year thanks to the Bush tax cuts. Americans for Tax Fairness calculates that 57 of the sponsoring CEOs save at least $1 million a year courtesy of the Bush tax breaks.

Another member of the steering committee is James B. Lee, Jr., co-chairman of JP Morgan. With Wall Street’s other investment bankers, Morgan is relentlessly lobbying the government to water down the regulations carrying out the Dodd-Frank Act. It was the recklessness of Wall Street that pushed the economy into a deep hole, and these people want the license to do it again.

Others in this financial rogues gallery lending their names to Fix the Debt are Larry Fink, CEO of Black Rock, and Lloyd Blankfein, chairman of Goldman Sachs.

So if these guys were not utter hypocrites, they’d be lobbying to repeal cuts on their personal incomes and the loopholes that allow highly profitable companies to avoid taxation entirely, as well as for adequate financial regulation.

Even worse is the fact that prominent Democratic elected officials, now cozy with the business elite, have lent their names to this effort. In that hall of shame: former Pennsylvania Governor Ed Rendell and former Califorina Congressman Vic Fazio, as well as former Senator Sam Nunn, a longtime deficit hawk associated with the Peterson-funded Concord Coalition.

The other cute deception practiced by the Fix the Debt campaign is to portray their own efforts as a way to spare the economy from the harmful effects of the impending “fiscal cliff.” That is the set of automatic “triggers” set to go off January 1, cutting spending by $1.2 trillion dollars, unless Congress acts to cut the deficit on its own. The Congressional Budget Office projects that deficit cuts of that magnitude will push the economy back into negative GDP growth in 2013.

However, automatic triggers have been a favorite device of the austerity lobby going back decades. So Fix the Debt is promoting deep cuts to spare the country deep cuts resulting from the earlier handiwork of the same crowd. The only difference between the fiscal cliff that the Fix the Debt campaign is invoking in its hysteria campaign and the one that the campaign itself wants to lead the economy off a cliff is a matter of degree. The CEOs would push us off a slightly lower cliff.

This stuff would be comical if it weren’t so influential. And if President Obama is re-elected, the corporate CEOs add up to one more pressure group pushing him to agree to a budget-cutting deal that will be suicidal for the economy and for his legacy in a second term.

Deficit reduction in a deep slump is not a path to recovery but to a deeper slump.

The fact that corporate CEOs are behind this latest push should not give the campaign greater credibility, but rather should signal “buyer beware.”

Despite the bipartisan camouflage, this campaign was always deeply conservative—hostile to social outlay, activist government, and a decent income distribution. Shame on any Democrat who doesn’t see through it.

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