The Hijacked Commission
By PAUL KRUGMAN
Published: November 11, 2010
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We’ve known for a long time, then, that nothing good would come from the commission. But on Wednesday, when the co-chairmen released a PowerPoint outlining their proposal, it was even worse than the cynics expected.
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Matters become clearer once you reach the section on tax reform. The goals of reform, as Mr. Bowles and Mr. Simpson see them, are presented in the form of seven bullet points. “Lower Rates” is the first point; “Reduce the Deficit” is the seventh.So how, exactly, did a deficit-cutting commission become a commission whose first priority is cutting tax rates, with deficit reduction literally at the bottom of the list?
Actually, though, what the co-chairmen are proposing is a mixture of tax cuts and tax increases — tax cuts for the wealthy, tax increases for the middle class. They suggest eliminating tax breaks that, whatever you think of them, matter a lot to middle-class Americans — the deductibility of health benefits and mortgage interest — and using much of the revenue gained thereby, not to reduce the deficit, but to allow sharp reductions in both the top marginal tax rate and in the corporate tax rate.-edit-
Let’s turn next to Social Security. There were rumors beforehand that the commission would recommend a rise in the retirement age, and sure enough, that’s what Mr. Bowles and Mr. Simpson do. They want the age at which Social Security becomes available to rise along with average life expectancy. Is that reasonable?
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But beyond that, the proposal seemingly ignores a crucial point: while average life expectancy is indeed rising, it’s doing so mainly for high earners, precisely the people who need Social Security least. Life expectancy in the bottom half of the income distribution has barely inched up over the past three decades. So the Bowles-Simpson proposal is basically saying that janitors should be forced to work longer because these days corporate lawyers live to a ripe old age.Still, can’t we say that for all its flaws, the Bowles-Simpson proposal is a serious effort to tackle the nation’s long-run fiscal problem? No, we can’t.
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It’s no mystery what has happened on the deficit commission: as so often happens in modern Washington, a process meant to deal with real problems has been hijacked on behalf of an ideological agenda. Under the guise of facing our fiscal problems, Mr. Bowles and Mr. Simpson are trying to smuggle in the same old, same old — tax cuts for the rich and erosion of the social safety net.Can anything be salvaged from this wreck? I doubt it. The deficit commission should be told to fold its tents and go away.
http://www.nytimes.com/2010/11/12/opinion/12krugman.html************
And readers' comments:
1.
Shane
New York, NY
November 12th, 2010
2:04 am
Professor Krugman,
You write that you "always believed that President Obama made a big mistake when he created the National Commission on Fiscal Responsibility and Reform". I'm not sure I can agree. To carry out their proposals, indeed, not to dissolve the "Catfood Commission" post haste, would be a mistake. But Obama knew precisely what he was doing when he created the commission, hand selected its center-right and hard-right leaders, and stacked it with members who are known supporters of benefit cuts and privatization.
Now we learn that many members of the commission staff are drawing salaries paid for by Pete Peterson, or moonlighting from think tanks funded by Peterson, who has long been seeking a way to slash Social Security and was active in President Clinton's ill-fated "Bipartisan Commission on Entitlement and Tax Reform". Surely Peterson's involvement, however indirect or behind the scenes, is also with the President Obama's knowledge and approval, so Obama is by no means making a mistake. He's working with a plan, and he must own the Commission – at least, the parts that don't belong to Pete Peterson.As one who is on the cusp of those who will be affected by any rise in retirement age, I sincerely hope that the President and his lame-duck congress will not betray me and millions of other struggling Americans by further playing into the hands of the super rich and the war industries who have been raiding our retirement savings with outlandish tax cuts for the wealthy and siphoning profits from our unnecessary, unfunded, off-budget decade-long wars. If Obama thinks that giving them more middle class money will keep himself and his party in power, he should look at how the health care industry turned the tables on him in this last election.
8.
Dave K
Cleveland, OH
November 12th, 2010
2:04 am
Tax cuts have been the conservative answer for any and all political conditions. Economy is good? cut taxes to stimulate further growth. Economy is bad? cut taxes to reduce the drag on growth. Tax revenue is up? cut taxes to reward the people who paid in. Tax revenue is down? cut taxes because the Laffer Curve ensures that revenue will go up if you do so. Nation at war? Cut taxes for no obvious reason. Nation at peace? Cut taxes to enjoy a peace dividend. And of course those tax cuts are aimed at the wealthiest Americans more than anybody else.
I still had some hope that the Obama administration had set up the deficit commission as a way of keeping all the folks who want to gut Social Security busy for a couple of years while he took care of business. If we're lucky, they'll end up going away and nothing will be done. If we're unlucky, these proposals which the people of the United States clearly don't want will become conventional Beltway wisdom, and will pass over the howls of the public.
And if Obama caves on this one, I'm going to be looking to recruit a primary challenger or left-wing third party challenger that will actually take care of the vast majority of Americans who make less than $200,000 a year. I will volunteer for that challenger, and do what it takes to get that challenger elected. 6.
Charles
MA
November 12th, 2010
2:04 am
The commssion was not really hijacked. Judging by the members the president chose, it was destined from the start to issue a camouflaged version of the old "starve the government beast" propaganda blast. Mr. Krugman, your criticisms are all well made, but
the most ominous sign of all is that president Obama refuses any personal comment on the preliminary report at all, while authorizing his advisor David Axelrod to shamelessly claim that there just isn't enough time to stop the extension of the Bush tax cuts for the very wealthy. Refusing comment because a full committee report isn't in yet and claiming that lack of time is a valid reason for extending a grotesquely unfair tax cut on the super-rich, who are investing mostly in high-yield stocks and bonds in emerging economies, not in the US, is simply outrageous -- and may I say it, not very patriotic.The president can refuse this commission's one-sided report if he wants to, yet his silence suggests he won't. The probable reason he maintains silence is because he hopes the majority of the commission members will still manage to agree on some of the points in the chairmen's first report. That is, Obama seems to be positioning himself to cave in on all major economic issues for the next two years, using this commission's report as cover and then pretending to be a "bipartisan" president.Instead, however, his weakness will be seized on by the Republicans and the result will be massive gridlock. If he does not clearly and strongly criticize the commission report, support Social Security, and push Congress hard not to extend the Bush tax cuts for the rich, he will be a Democrat In Name Only, and the Dems should start looking for other candidates to challenge the president in 2012 -- candidates who understand what it means to be a Democrat.
5.
Titus
Slovenia
November 12th, 2010
2:04 am
I'm stunned at the gall of this Commission. Note that they implicitly wish to castrate policy and, by extension politics. Capping federal revenue at 21% of GDP? That puts a limit on the scale of federal programmes, something which really should be left to the voters. If they desire that the government help people with, say, healthcare, or if they desire a renovation of the rail system it would be absurd to block policy because of a rule which caps federal revenue for, well, purely ideologoical reasions.
And there is no good economic reason for caping federal revenue as a percentage of GDP. The Commission might have cause were the US in danger of finding itself on the upper part of the Laffer curve, when the tax base starts to deteriorate, and tax revenues fall. That isn't the case. The US' share of taxes in GDP is something like 30%. Japan's is 33%. The European average is 42.7%. The Nordic countries, praised for their dynamic, competitive economies? Over 55%.
It seems obvious that the only thing this proposal would do is burden the already-stressed middle class voters, lower the rate of reducing the deficit when the time comes, and sour the people's relationship with the Democrats. In short, the proposal should be given as much credence as, say, the Da Vinci Code. Horrendous writing, shallow characters, logical absurdities, but still oddly gripping. The highest form of pulp.
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17.
Karen Garcia
New Paltz, NY
November 12th, 2010
2:04 am
It's not official, but it's de facto: The United States Government no longer operates in the public interest. We may have cast the votes for whoever is floating around in that giant D.C. bubble, but they don't work for us. The Corporate Welfare for the Rich Party (GOP) has the majority only in the lower half of Congress. But the Droopy Dog Dems of the Senate and White House are falling all over themselves in their rush to kowtow.
Nobody's surprised that the Bowles/Simpson team is aiming to shoot the final volley in the Class War against 98 percent of the population. Nobody's surprised that Bernanke is flooding Wall Street with more billions for the rich to mythically trickle down on "Main Street." And hardly anybody is surprised that Appeaser in Chief Obama is caving on extending tax cuts for the rich until 2012 or infinity (same thing). What is surprising is the breathtaking speed of all these leaks, previews and announcements. Nothing like catching the hoi polloi off-guard from multiple fronts to get what you want. Hit them from so many different directions they'll get confused and maybe just go away.
That's not going to happen, not this time. People are furious. Mad enough to strike like the French and riot like the Brits? I sincerely hope so. President Obama may be in for a shock: the American people don't care about process and civility when their very lives are at stake. Watch out for some major bubble bursting coming very soon.4.
Bill Pieper
Taiwan
November 12th, 2010
2:04 am
K Street lobbyists are salivating over the commission's report since they will likely be the first to benefit big time from it, regardless of whether the findings will be acted upon or not. There will naturally be a full court DC press to pass yet more terrible legislation that Americans clearly do not want. We've seen this movie before, all too often. This will of course be funded by the wealthiest and most powerful who stand to benefit enormously, because you see they simply do not have quite enough wealth and power. If there is anything Americans should have learned this past decade, it is that Washington does not care what Americans want, and this is true no matter what party controls Congress or sits in the White House.
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This should be a line in the sand issue if there ever was one for progressives. Unfortunately, now that voters no longer matter, I suspect at least some of these recommendations will become law, with plenty of help from sellout Democrats. There will be token cuts to defense, that will quietly be gotten around or magically disappear due to an unnoticed provision slipped into the bill shortly before it passes. Taxes will probably be raised for some, but not by enough and the wealthiest will simply pay armies of clever people in various parasitic professions to relieve them of the bulk of their justifiable obligations and civic duty. All the deal making will be done without anything like transparency. The whole process is nauseating and sadly, very familiar.
Progressives worthy of that label should commit now to vote against anyone - regardless of party - who defies the public will and supports this absurd and utterly unnecessary withering of Social Security. This absolutely includes that President who I hope will have the good sense to dismiss this nonsense out of hand.-edit-
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