Mark Warner and Saxby Chambliss are the two Senators most hopeful of replacing Erskine Bowles and Alan Simpson should they ever die or meet a poor person and get a spark of empathy. Warner and Chambliss are charter members of the Gang of Six, now a Gang of Eight, who are hard at work on a grand bargain for the lame duck session. And they are appealing to their core constituency to help make that a reality: Wall Street.
“One of the reasons I’m more optimistic is I think the business community writ large is engaged” this time, Warner told the audience gathered for a New York conference hosted by the Securities Industry and Financial Markets Association (SIFMA).
Chambliss said he expects a “tough political slugfest” between Thanksgiving and Christmas as Congress and the administration race to beat the end-of-year deadline in an environment that will be politically charged no matter who wins the White House.
“I don’t want you to underestimate your influence or underestimate the fact that we need you involved in the process,” Chambliss told the crowd.
You have to admit, they know how to flatter. And given the rewards lavished on the financial industry after they crashed the economy, it’s hard to argue against their influence.
But as Felix Salmon points out, letting these CEOs and Wall Street tycoons drive a deal to cut the debt merely puts it in the hands of people who don’t understand demonstrated reality.
This is ridiculous. There are lots of serious threats out there to the economic well-being and security of the United States, and the national debt is simply not one of them. Nor is it growing. The chart on the right, from Rex Nutting, shows what’s actually going on: total US debt to GDP was rising alarmingly until the crisis, but it has been falling impressively since then. In fact, this is the first time in over half a century that US debt to GDP has been going down rather than up.
So when the CEOs talk about “our growing debt”, what they mean is just the debt owed by the Federal government. And when the Federal government borrows money, that doesn’t even come close to making up for the fact that the CEOs themselves are not borrowing money.
Money is cheaper now than it has been in living memory: the markets are telling corporate America that they are more than willing to fund investments at unbelievably low rates. And yet the CEOs are saying no. That’s a serious threat to the economic well-being of the United States: it’s companies are refusing to invest for the future, even when the markets are begging them to.
The economy would be a wreck if it weren’t for government picking up the slack with a larger deficit. But these self-serving CEOs want to use a vague and amorphous “debt crisis” as a means to lower tax rates. That’s really the bargain they want – take something that, were it a problem, would be solved in part with higher taxes, particularly on them and their CEO colleagues, and make a solution out of lowering them. For the sake of “competitiveness,” you see. And they want to pay for this tax cut by cutting Social Security and Medicare.
Meanwhile, all the ink spilled on the meaningless debt non-crisis makes it impossible to reach actual, realizable goals for the country: like fixing our crippling infrastructure, or solving the inequality gap. That’s part of the whole plan: make sure that any benefits from the economy go directly to the top level of society, rather than shared prosperity for all.