-- Posted by Neil H. Buchanan
My FindLaw column this week continues a discussion, which I began in my Dorf on Law post last Tuesday, of the public's confusion regarding the financial crisis. My primary goal in that column is to confront the odd increase in the use of the term "Ponzi scheme," as a disapproving description of seemingly any government policy -- from Social Security to basic monetary policy. Today, however, I will deviate from my usual pattern of devoting my DoL post to the same topic as my FindLaw column. I invite readers to read and comment on that column here, if they wish; but I will devote the rest of this post to a different, albeit familiar, issue.
On Wednesday of this week, I returned to my occasional gig as an interviewee on KCBS radio in San Francisco. The subject of the interview (podcast here) was that day's scheduled release of the Deficit Commission's final report. My previous on-air interviews had shown that the anchors on KCBS are intelligent, no-nonsense interviewers who ask good questions -- and whose follow-up questions indicate that they are actually listening to the person at the other end of the line. Because they are serving the audience in the Bay Area, they have no reason to skew conservative in their questioning. (Notably, however, they do not appear to skew Pelosi-liberal, either.)
My experience in this interview confirms, sadly, just how distorted the public discussion of deficits has become. Here are the questions that they asked me (which they did not provide me in advance):
-- "If we can't get people to agree on this -- on the panel that's convening right now -- what would the next step be?"
-- "At this point, when you have both Erskine Bowles and Alan Simpson -- well-respected guys from each side of the aisle -- saying they just want to start the conversation, who takes the next step in that conversation?"
-- "One of the things that no one wants to sign onto -- least of all -- is a tax increase. Are we going to be able to get out of debt without doing that?"
-- "At this point, and given that we are -- at the same point as this commission is meeting -- looking at the expiration potentially of the Bush-era tax cuts, what do you expect is the outcome of that potential battle?"
-- "And what is the potential there for improving our economy or making our debt that much worse?"
I found myself a bit off balance during the interview, because I felt that the premises of the questions were so wrong. The anchors clearly had the idea that we need "to get out of debt," which is nonsense. They bought into the idea that that the commission's co-chairs were putting politics aside. They completely ignored medical care costs, focusing only on taxes and debt generically. (And by the way, is it really so hard to learn the difference between deficits and debt?) I did point out that Bowles and Simpson are ideological peas in a pod, not miles-apart statesmen who miraculously found common ground; but in four minutes, there was only so much one could do to correct the interviewers' premises.
This experience with high-quality local journalists, therefore, deepened my sense of distress about the national conversation over fiscal policy. If this is what people are thinking, it is less surprising -- but no less disgusting -- that President Obama began the week by unilaterally offering to freeze the salaries of civilian federal employees. Saving a princely sum of $5 billion over the next two years, the President would happily reinforce the Republicans' false narrative that federal employees are overpaid and are a significant part of the deficit problem. (Even a 50% cut in federal employees' salaries would have reduced this year's deficit by less than 6%.)
For its part, the deficit panel went even further off the rails. Its final report, which thankfully did not come close to receiving the super-majority support among the other commissioners that was required to send the proposals to Congress for a vote, differed from its preliminary PowerPoint presentation only in its self-important rhetoric. Titled "The Moment of Truth," the report actually has a "Preamble." Seriously. Its supposedly sober, bipartisan analysis of difficult issues includes mock-worthy (and semi-literate) gems like this one: "Ever since the economic downturn, families across the country have huddled around kitchen tables, making tough choices about what they hold most dear and what they can learn to live without. They expect and deserve their leaders to do the same."
Happily, some of the initial endorsements of the Bowles-Simpson proposal have now cooled. The editors of The New York Times, who originally lauded the preliminary proposal as an important contribution to the conversation, yesterday criticized the report's final version. They called out the commission for its arbitrary limit on spending, as well as its failure even to consider alternatives like a financial transactions tax. (They also mentioned a value-added tax, which I view as a Trojan Horse for regressive tax changes. But that is an argument for another day.) Most promisingly, the Times's editorial pointed out that any good long-term plan to reduce deficits begins with a plan to increase deficits -- more stimulus spending to bring down unemployment (and thus end the need for further spending on unemployment benefits, among other things) as soon as possible.
Even so, the Times's editors begin their analysis with a dangerously false equivalence: "Politicians from both parties favor deficit reduction until it comes to raising taxes on the rich or making actual cuts in the big-dollar programs, like Social Security and defense." How did Social Security end up in that sentence?
Yes, it is a big-dollar program; but it also has a big-dollar tax attached to it. As Obama's recently-departed budget director conceded in a recent editorial (in which he inexplicably endorsed the co-chairs' proposal to preemptively cut Social Security benefits and raise taxes): "Social Security is not the key fiscal problem facing the nation. Payments to its beneficiaries amount to 5 percent of the economy now; by 2050, they’re projected to rise to about 6 percent. ... Measured over the next 75 years, the deficit in Social Security is expected to amount to 0.7 percent of the economy — not a huge amount, but a deficit nonetheless." Projected health care shortfalls are six times higher through 2050.
As a few people have pointed out, the commission's mandate did not include bringing Social Security into actuarial balance (if that will even be needed). That has not stopped them (or other deficit hawks) from focusing on Social Security as the source of fiscal salvation. Apparently, we are to believe that Social Security should be on the chopping block -- because all of those people huddled around their kitchen tables want to see Social Security benefits cut over the remainder of their lifetimes.
This really is a moment of truth, in its own way. We need to decide whether the Great Recession will be the excuse that regressive forces have been looking for to take the next, fateful step in the process of destroying the underpinnings of the middle class in this country. The Republicans are united. A shockingly large number of Democrats seem ready to join them.