“Fix the Debt” or “Screw the Poor”?

Matt YglesiasJonathan Chait wrote an excellent article today, Deficit Scolds Are Holding the Unemployed Hostage. It is broadly about something I talk about a lot around here. The deficit scold industry may have it’s stated purpose—to reduce the long-term deficit—but what it actually accomplishes is to push all economic policy rightward by the use of endless false equivalence. But it isn’t an accident.

This works very simply because of the fact that the Democratic Party isn’t liberal on economic issues. So it turns out that what these rich-people groups want in terms of economic policy is the same thing that, for example, Obama wants. But they can’t admit that. They’ve got to pretend that they are right in between the parties. If only the two sides would compromise! Of course, the Democrats have done little else but compromise for the last 35 years.

Think of a very unfair parent. He has two kids. One of them stabbed the cat to death and the other left the refrigerator door ajar. Fifteen minute timeouts for them both! Except that the deficit scolds are worse than this. Imagine that one of the kids stabbed the cat to death and the other did exactly as he was told. Fifteen minute timeouts for them both! This is a huge benefit the deficit scolds are providing for the Republicans, because regardless of how badly they misbehave, they are never punished for it—at least not by the deficit scolds.

But here is the thing that you have to understand, and that Chait is not willing (publicly anyway) to talk about. The deficit scolds don’t care about the deficit. They really don’t. It is just an excuse for cutting entitlement programs and lowering taxes on the rich. I don’t normally go in for long quotes, but shortly after the last presidential election, Matt Yglesias wrote what I think of one of the best pieces of opinion journalism I’ve ever read. We were headed toward the “fiscal cliff.” If nothing was done by Congress, federal income taxes would go up on everyone who pays them. This is something that should have thrilled the deficit scolds. But it did not. Here he is discussing the top deficit scold group, The Fix The Debt Two-Step:

I had some frustrating dialogue with whoever runs the Fix The Debt twitter account last night, centered around my observation that it’s strange for a group allegedly all about the need for deficit reduction to have advocacy for lower tax rates as one of its core principles.
The first response I got was that Fix The Debt thinks a comprehensive solution needs to be bipartisan, and that revenue-positive rate-cutting tax reform is much more viable as a locus of bipartisan compromise than rate hikes. That’s absolutely true, but it’s simply false that a solution needs to be bipartisan. Unless congress passes a tax cut bill this month and the president signs it into law, tax rates will automatically rise precipitating a large cut in the budget deficit

So having zigged, the conversation then zags and we hear that this kind of rapid deficit-reduction would be economically harmful. What we really need is “smart” fiscal consolidation.

Thumbs up. Right on. But here’s where we shift out of breathtaking dishonesty terrain and into staggering hypocrisy terrain. This outfit, after all, is called Fix The Debt. Its messaging is all about the evils of the national debt. Its core thesis is that high levels of government borrowing are setting us up for a catastrophic economic collapse. Indeed, it was precisely on those grounds that these people spent all of 2009, 2010, and 2011 arguing that we shouldn’t let short-term labor market problems distract us from the urgent need for long-term deficit reduction. If you really believed any of that, there’s just no way you’d be out there with all this fiscal cliff scaremongering. What you’d say instead is that, yes, the fiscal cliff is bad. Yes, ideally congress would avoid it. But the fact remains that the fiscal cliff is a mechanism for the vital task of long-term debt reduction and the overwhelmingly most important thing is that congress not fear the cliff so much that they merely further delay action.

But Fix The Debt isn’t saying that because they’re not actually so dumb as to believe their own nonsense about the overwhelming importance of debt reduction.

What they believe in, instead, is the overwhelmingly importance of rate-cutting tax reform and reduced spending on retirement programs…

And then he goes into his brilliant analogy about Quakers who want to balance the budget by cutting defense.

You may wonder what “rate-cutting tax reform” is. Normally, this is where tax rates are decreased, but so are deductions so that the total amount brought in is the same. Much of the debt scold industry claims to want to do this so that the total brought in goes up. It doesn’t much matter. Let’s just go with the equalized case. What is the point of doing it? Well, you could do it because it is fairer. (I discuss this concept in depth in, Hidden Welfare for the Rich.) But that’s pretty minor. It is not the reason that billionaire Pete Peterson has spent oh so many millions trying to change the tax code. Tax deductions are far easier to get enacted than tax rate reductions. What’s more, it is especially easy for the rich to get those special loopholes. So it’s a great deal: swap the deductions for the rate decreases. In ten years, the deductions will all be back but the new low rates will still be there.

So everything that Fix the Debt and related groups are doing is designed to take money away from the poorer classes and give it to the rich. “Fix the Debt” would be more appropriately called, “Screw the Poor.” And by “poor,” I many almost everyone in this more and more unequal society.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

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