StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



Erskine Bowles Was Wrong: The Era Of "Deficit Denial" Definitely Is Not Over

10 Dec 2010
Posted by Stan Collender

Remember the "era of deficit denial" that Erskine Bowles, one of the co-chairs of the Bowles-Simpson deficit reduction commission, declared a week ago was over as he introduced the plan he wanted considered?

Well...It may have been a good line that got lots of media attention, but it can now be listed as one of the top overstatements of 2010.  As this poll from Bloomberg News (which was taken after the Bowles-Simpson commission's activities were completed last week) shows, Bowles was completely wrong.  Here are the three (excuse the obvious pun) money quotes:

The public wants Congress to keep its hands off entitlements such as Medicare, Medicaid and Social Security, a Bloomberg National Poll shows. They oppose cuts in most other major domestic programs and defense. They want to maintain subsidies for farmers and tax breaks like the mortgage-interest deduction. And they’re against an increase in the gasoline tax.

***

While they say they strongly support balancing the budget over the next 20 years, when offered a list of more than a dozen possible spending cuts or tax increases, majorities opposed every one of them except imposing a bigger burden on the rich.

***

A freeze on nondefense discretionary spending, which some Republican congressional leaders have proposed, is opposed by 53 percent against 43 percent in favor. Cuts in defense spending are opposed by 51 percent versus 45 percent in favor.

Most of us at CG&G have written about this before and in almost all respects there's nothing new here.  Except for one thing: given all the media attention Bowles' statement received (Just search on "deficit denial" and see what comes up), we now have statistical evidence that the commission changed nothing in terms of public attitude towards the deficit.  Budget politics are just a difficult now as they were before the commission was created and the debate on the budget is going to be just as intractable now as it was before.

Well, actually, the public

Well, actually, the public does seem to support reigning in the deficit . . . by taxing the rich. That's the solution the public wants but the absolute last thing the politicians want to do--that would hurt their wanker banker masters too much.

And the commission has been a grand success. It's narrowing the allowable solutions to the supposed deficit problem and targeting social security for attack. At a time when the Democrats received a mandate for change and controlled the legislative process and vast numbers of the public rely on and want to keep social security and Medicare it is no mistake that Obama enabled this attack on social programs.

Both parties want to steal social security from the American people that have put about 13% of their earnings into this fund and been promised benefits. The politicians, led by the right-wingers, have been borrowing against this fund for their dirty wars and their supply side, voodoo economics, tax cuts. The commission has been wildly successful at using the propagandist media to stiffen the spine of politicians who are going to be asked to stick a knife into the back of average Americans.


Adult Supervision

The electorate's views have to a large extent gotten us into this fiscal mess. Getting the creditworthiness of the country back on track will require either leadership in changing those views, or ignoring them. Both the Executive and Legislative branches have abdicated their responsibility and truly seem to care about nothing more than the next election. Blanche Lincoln's bizarre voting behavior is but one example. Until our political leaders decide that their personal electoral success is less important than our collective national finances, and until the relatively well-off connect the dots that their T-Bills, Notes and Bonds (and their muni's and CD's) are only worth par if there is enough tax revenue to cover expenses, there will be no deficit reduction. Politicians need to tell the electorate "I will vote for a lot of things that will cost you some money, but the alternative is Somalia or Nicaragua. Care to visit your future?" Who are the politicians ready to step up and be Cincinnatus?


The public cares about jobs

The public cares about jobs and the economy. They recognize that cutting the deficit now won't help or would be counterproductive. They also recognize that we can't tie the hands of future politicians. Note how Bush spent the entire Clinton surplus and more.

They probably also note the distributional effect of the Bowles-Simpson deficit reduction commission, which was to transfer from the less well off to the incredibly well off. As you note, the only proposal with majority support is raising taxes on the rich, which would somewhat ameliorate the distributional issue.

All in all, their reactions make more sense then those who would start cutting today. When the economy is strong, unemployment is low, capacity utilization is higher, etc. we can raise more revenue and won't need to spend as much on the social safety net.


the public cares about jobs

The public does care about jobs or at least those without one or soon to be without one do. But polls regarding solutions to the deficit have been consistent, even when the economy was strong. There are no programs that a broad majority is willing to cut and that someone else should pay the added taxes needed to ensure that the deficit is cut and the programs continued.

The Bloomberg poll is simply another example of this.


You guys have no credibility

when the only complaints you make about the deficit are exclusively aimed at Republicans.


Inasmuch as it can be shown

Inasmuch as it can be shown that 100% of the deficit was caused by Bush and the Republicons; and current Republicons are pushing only legislation which will increase the deficit; why not?


The country tried it 'their

The country tried it 'their way' for 30 years. The government-hating evangelists of 'all taxes are theft' have a $13,000,000,000,000.00 national debt to show for their supply-side idolatry.

We need to return to taxing financial transactions. When the SEC was founded, it was financed by a stock trade tax. Eventually it was producing more revenue than was needed, and was repealed. But now the financial sector is a much larger share of the economy, and bad actors within the sector have contributed to the national deficit and debt by holding us hostage to their failures, aka we bailed their butts out, and they continue to gorge at our trough. The tax would do two things: it would raise much needed revenue AND it would suppress unproductive stock churning, which is sort of like throwing up a lot of dust. These high stakes gamblers might do less of that if it cost them. Although who knows, seems like they've got so much money they wouldn't notice. I just think it would be nice if they paid back a little of what the taxpayers have given them.




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