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Just to remind everyone, the Campaign to Fix the Debt (CFD) is yet another Peter Peterson-inspired initiative that has as its main goal cutting and/or privatizing Social Security and Medicare. Peterson has used the billions of dollars he earned as a Wall Street investment banker and private equity fund manager to finance a whole slew of Washington-based outfits for this purpose over the last two decades.
The CFD was the biggest and boldest effort yet, incorporating funding and support from the heads of many of the largest corporations in America. It hoped to take advantage of the deficits that resulted from the collapse of the housing bubble.
The idea was to whip up hysteria over a deficit crisis. They wanted to paint a picture of out-of-control government spending that could only be addressed by major cuts to the country's two most important and popular social programs. While they got the cooperation of much of the national media, who consistently put the CFD's views and spokespeople at the center of the budget debate, the facts refused to cooperate.
First, the real scary projections of exploding deficits in the next two decades largely disappeared as the rate of health care cost growth slowed sharply. When the Congressional Budget Office and other official forecasters incorporated slower health care cost growth into their numbers, the deficits projections no longer provoked the same sort of hyper-ventilation. Slower projected health care cost growth eliminated almost 70 percent of the projected shortfall in Medicare.
Second, there were actually substantial cuts in the budget, both in 2011 and more recently as a result of the sequester. These cuts are not good news, they are hurting important programs. They also are slowing the economy and costing jobs, but they have lowered projected deficits to levels that fall within almost anyone's acceptable range.
Finally, the intellectual case for a looming debt crisis got blown out of the water because of the famous Reinhart-Rogoff Excel spreadsheet error. The uncovering of this error led to a debate that showed conclusively that there is no debt cliff at 90 percent of GDP. Furthermore, the evidence that there is causation from high debt to slower growth (as opposed to the opposite) is weak to non-existent. The idea that we were about to raise our debt to levels that would lead to a sharp fall-off in growth had no basis in reality.
As a result of this turn of events, the FTD crew seem prepared to abandon ship. Maya MacGuineas, the leading spokesperson for FTD, apparently having given up on Congress, was last seen calling on Silicon Valley to use its technological prowess to disrupt the political process. And the Washington Post, which has been an open CFD cheerleader, mournfully noted the improbability of a deal involving major cuts to Social Security and Medicare.
In this case the strong support of the public for these programs -- which cuts across party and demographic lines -- overcame the power of corporate money and the political elite. When push came to shove, not enough politicians were prepared to go against the strongly held views of their constituents. And it helped that the facts were on their side.
It would be great if we could switch from defense to offense. The Wall Street financial types who brought on this economic catastrophe are richer and more politically powerful than ever. They are laughing at the Dodd-Frank financial reforms, and looking to several more decades of free "too-big-to-fail" insurance from the government. In the same vein, other major industries such as the pharmaceutical companies, the health insurance industry, and the telecommunications industry, continue to rake in record profits due to their monopoly power and government protections.
It would be great if the same people who recognized cuts to Social Security and Medicare as attacks on low- and middle-income people could also see the need to move the ball forward onto the other team's turf. This means applying the same sort of sales taxes to financial speculation that the rest of us pay when we buy clothes or shoes. It means breaking up the big banks. It means ending the abuse of patent monopolies by drug companies who push bad drugs at high prices. And it means ending abuses of market power in a number of industries.
The result will be a somewhat smaller share of the pie for those on top and a larger share for everyone else. And it will almost certainly also mean a more rapidly growing economy. The latter would especially be true if we could reverse the sequester and other pointless austerity measures.
But the move to offense is not about to happen right now. And with all the money it has available, we can't even assume the CFD effort will stay dead.
But we should take a moment to celebrate the victory we have achieved. So pick up a glass of the beverage of your choosing and drink a toast to Social Security and Medicare, to the people whose lives they have made more secure, and to the people who have worked to ensure that these programs are there for current generations and those yet to come in the decades ahead.