Over the last three months, the Fix the Debt campaign, led by more than 100 big company CEOs, has unleashed a firestorm of ads, blanketing political news web sites and entirely plastering the Capitol South Metro station used by most Congressional staffers.
In late October, the Institute for Policy Studies began exposing the Trojan Horse represented by Fix the Debt. While they presented themselves as a patriotic bipartisan group, merely seeking a "balanced" deal, their own lobby materials revealed they were out to use the fiscal cliff as an opportunity to win massive new corporate tax breaks paid for with cuts to earned benefit programs like Social Security and Medicare.
The hypocrisy was stunning. We documented, for example, how many of the campaign's leaders had contributed massively to the national debt through tax-dodging tricks. Twenty-four of them had even paid their CEOs more in 2011 than their firms paid in corporate income taxes. We also calculated that the average Fix the Debt CEO calling for cuts to Social Security themselves had pension assets of $12 million, enough to garner a $65,000 monthly retirement check starting at age 65.
Did all their high-priced subterfuge pay off? The New Year's deal was a huge disappointment for those hoping that President Obama would use his bargaining position to strike a strong blow against the extreme inequality that is undermining our economy and democracy. But the Fix the Debt campaign also suffered a loss. After one of the most ambitious corporate lobby campaigns in history, they failed to win any of their three major objectives:
- Cutting earned benefit programs such as Social Security and Medicare
- Cutting corporate tax rates ("pro-growth tax reform" in Fix the Debt speak)
- Shifting to a territorial corporate tax system, which would grant a permanent corporate tax holiday on offshore income, including the hundreds of billions stashed in the world's tax havens. Fix the Debt companies alone stood to gain an immediate 134 billion windfall from this reform, according to an Institute for Policy Studies report.
In a press release, Fix the Debt leaders lamented that "Washington missed this magic moment to do something big to reduce the deficit, reform our tax code, and fix our entitlement programs."
As in the tale of the Trojan Horse, however, we cannot assume that the Fix the Debt army is going to just sail away. Corporate tax reform is expected to be a major focus of Congress in 2013, starting as early as the debt ceiling fight, which is likely to come to a head in March. (By then, we expect to be able to report on how many profitable U.S. corporations avoided paying taxes in 2012.)
Congress's New Year's Eve capitulation to their wealthiest benefactors heightens the stakes for the corporate tax fight. Because Congress and the White House lavished so much on high-income individual taxpayers, they may well find themselves with fewer goodies to pass out to corporations. These will have to be paid for with either higher deficits or even more draconian cuts to Social Security, Medicare, and other programs ordinary Americans depend upon.
As Iowa Senator Tom Harkin stated in opposition to the fiscal cliff deal: "Every dollar that wealthy taxpayers do not pay under this deal, we will eventually ask Americans of modest means to forgo in Social Security, Medicare and Medicaid benefits."
The Fix the Debt gang is reportedly beefing up their ranks and will likely be a major force for the duration. Last fall they boasted of having $60 million for the "initial phase" of their campaign. Even if they've completely blown through that pile of dough, they will likely have no trouble securing additional mega-millions for the battles to come.
This commentary was co-authored with Scott Klinger, an Institute for Policy Studies Associate Fellow.