The Blog of the Frances Perkins Center

Buying deficit reduction

In Political world on July 1, 2010 at 8:10 am

In a Bloomburg article this morning, Peterson’s $1 Billion Investment Shows Returns as Deficit Concerns Mount, reporters Max Berley and Brian Faler take a look at Wall Street billionaire Peter G. Peterson’s largely successful attempt to influence the discussion around the deficit, Social Security, and other social programs.

Peterson has committed $1 billion of the fortune he made as co-founder of the New York-based private-equity firm Blackstone Group LP to his personal crusade: raising the alarm about the $13 trillion national debt, Bloomberg Businessweek reports in its July 5 issue.

He is paying the bills at a foundation that bears his name, supports a network of like-minded advocacy groups, backs The Fiscal Times, an online newspaper, formed a commission of experts, and organizes conferences with marquee guests such as former President Bill Clinton. The crusade appears to be in sync with the concerns of most voters, with a June 4 Gallup poll showing that the federal debt and terrorism were tied for first place (at 40 percent each) as the biggest threats to Americans’ future well-being.

It may be that fears about the future damage of the federal debt do worry Americans. However, Peterson’s prescription–cut Social Security benefits, Medicare, and Medicaid–may not receive the same level agreement.

His fortune also was the major funder of the America Speaks national town meeting, Our Budget, Our Economy, last Saturday, which I attended.

Interestingly enough, while Beltway officials and pundits may be falling for the Peterson rhetoric around cutting priorities, the general public seems less gullible. Yesterday, Tom Frank, in his Op-Ed, Avoiding the Austerity Trap: Deficit reduction is an unhealthy obsession in the Wall Street Journal reported the results of the town meetings:

The event took place as scheduled last Saturday, with thousands of citizens meeting in different cities. They duly absorbed a booklet alerting them to the danger of deficits. They deliberated. And then something funny happened on the way to the consensus.

According to a preliminary compilation of results, participants supported “an extra 5% tax” on incomes of greater than $1 million per year (by 68%) and an increase in the corporate income tax rate (59%). They thought a “carbon tax” was a good idea (64%) as well as a “securities transactions tax” (61%). On Social Security, austerity was nowhere in sight as 85% backed raising the limit on taxable income, and only a miserable 27% thought that we should “create personal savings accounts.” Majorities favored cutting defense spending and expressed support for further recovery measures even if they increase the deficit.

These liberal results have been brought to you in part by a distinctly conservative foundation—bipartisanship at its best. Will Washington listen? Probably not. One reason we are rushing to austerity these days is because that’s what the comfortable people who chat so amiably in the green room are utterly certain we ought to be doing. The deficit numbers, they think, are just too big, too frightening. And deep in their hearts, they also know that the costs of austerity will always be borne by others.

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