‘Fix the Debt’ CEO Dream Team Wants You to Be as Scared as They Are of the Fiscal Cliff
Note: This entry was co-written by policymaven1 and JeffreeB
Many readers of our last post about Pete Peterson’s attack on Social Security commented on a very accurate point: Social Security contributes nothing to our national debt. It is a system into which we pay; and then, eventually, it pays us. And, as we previously pointed out, the Social Security Trust Fund is in surplus. And if the Social Security Trust Fund does begin to run dry, by law, it automatically reduces benefits payments to compensate. Which raises the question: Why do Peterson and pals so badly want us to believe that in order to reduce our national deficit, we have to reduce benefits and increase eligibility age for Social Security?
Well, let’s take a look at just who exactly wants to “help” us “fix the debt.” Erskine Bowles and Alan Simpson, the budget hawks who co-chaired the Simpson-Bowles Commission at President Obama’s behest, founded the Fix the Debt campaign with a nice chunk of change from the Peter G. Peterson Foundation (which is run by Pete’s son, Michael). Fix the Debt is co-chaired and co-“steered” by an array of politicians from both sides of the aisle. At last, bipartisanship!
But there are others on the steering committee. One of these is Dave Cote, CEO of Honeywell. Cote ranked 11th on a list compiled in a recent study conducted by the Institute for Policy Studies of executives who have saved the most from the Bush tax cuts. According to the IPS, Cote’s taxable compensation for 2011 was a bit over $55 million, and he got out of paying about $2.5 million thanks to the Bush tax cuts.
Another member of the steering committee is Robert Zoellick, former Vice Chairman of Goldman Sachs. Citizens for Tax Justice reported in 2011 that Goldman Sachs claimed a $352 million Excess stock compensation deduction in 2010 and received a $123 million tax subsidy. Goldman along with 170 other companies avoided paying $2 billion in taxes from this loophole alone. And one of Goldman’s former ringleaders is now going to help us fix the debt!
Pete Peterson’s aforementioned son Michael is also on the steering committee, along with James B. Lee, Jr., vice chairman of JPMorgan Chase. And there is a sizable, ever-growing list full of other nefarious CEOs who have signed on to Fix the Debt’s CEO Fiscal Leadership Council.
This is the dream team Peterson has assembled to pull us out of this whole mess. Oddly enough, you may have noticed, the lineup looks strikingly similar to that of the team that put us in this mess in the first place.
But let’s take a moment to look at how we got here in the first place. The reality is that the current system of taxation created by Ronald Reagan and put on steroids by George W. Bush is working quite well for Peterson and his fellow oligarchs. Economist Robert Kuttner outlines the beginnings of this historic wealth transfer in our film Heist: Who Stole the American Dream?:
You had massive lobbying beginning in seventy-six, seventy-seven, seventy-eight, for cutting taxes on rich people — trickle down economics. Cut capital gains taxes, cut dividend taxes, cut income taxes, and the economy will flourish. Some of the Democrats started drinking the Kool-Aid along with the Republicans.
So in 1981 Ronald Reagan convinced Congress to pass his Economic Recovery Tax Act, which cut the top tax brackets by nearly a third but raised taxes on the middle class. What was the practical effect of this new taxation? David Cay Johnston explains in Heist:
The Washington press corps went along with the White House, calling these “revenue enhancements.” By dramatically increasing the social security tax, as recommended by Alan Greenspan to Ronald Reagan, we shifted the burden of government, so that today, seventy some percent of Americans pay a heavier share of their income in Social Security and Medicare taxes than they do in income taxes, and we pushed the burden down. At the same time at the very, very top we radically cut taxes so that the 1,000 richest men, women, and children in America face an effective total federal tax rate — social security and income taxes — of about 17 cents on the dollar, and their average income is 263 million dollars.
Let’s be very clear, Peterson and his gang are fixated on the debt because they don’t want to pay their fair share of taxes! And now, we supposedly sit on the edge of the cliff, below which yet another financial mess awaits. And Peterson and pals claim to have the solution. Sound familiar? Maintaining the Reagan-Bush tax cuts is the number one goal of today’s ultra-conservative movement that has been in control of these United States since the late 1970s.
The way to peddle it to the American people? Beat the drum of debt reduction through the mainstream media megaphone. All of this is to obscure the real truth, which is that our debt is the direct result of the severe economic downturn, the continued failure of big corporations to pay their taxes on profits sitting offshore, the huge bank bailouts (paid for by you and me), and two wars fought on credit.
Up next on the Peter G. Peterson chopping block? Your Social Security and Medicare!
Note: JeffreeB will be available for comment after publication.
Photo: m.prinke on Flickr under a Creative Commons Share-Alike license