This Week: Obama's Deficit Commission or Pete Peterson's?

Pete Peterson's summit is designed to stampede President Obama's new deficit commission (which meets the day before, for the first time) into adopting their version of fiscal austerity.
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On Wednesday Wall Street multi-billionaire Peter G. Peterson, who has pledged to spend a billion dollars to panic Americans about deficits in order to get them to slash Social Security and Medicare, is conducting a "Fiscal Summit" in Washington featuring many of the very people who created the deficits Peterson decries.

This summit is designed to stampede President Obama's new deficit commission (which meets the day before - on Tuesday - for the first time) into adopting their version of fiscal austerity.

At 3:30 on Tuesday, I will moderate a press conference, featuring Robert Kuttner, Heidi Hartmann and Dean Baker, designed to present a counter to Peterson's simplistic explanations and dangerous proposals - and to warn the White House that having the two co-chairs of the Obama deficit commission participate in Peterson's extravaganza will discredit the already dubious White House claim to be examining all the paths to fiscal sustainability.

But Americans looking for jobs and economic recovery are not likely to be persuaded by the bizarre collection of speakers Peterson has assembled.

The Bush tax cuts for the very wealthy were the first cause of soaring US deficits after Democrats cleaned up the red ink of the Reagan years. So who are Peterson's headliners? Alan Greenspan, former Fed Chairman, who famously assured Congress that those deficit-creating tax cuts were OK - and who was recently forced to admit that his conservative blinders prevented him from seeing and acting to avoid the housing bubble and the deficit-creating economic crash that resulted. Other speakers, like Congressmen Judd Gregg and Paul Ryan, supported the Bush tax cuts. And Peterson himself, who benefitted hugely from the Bush tax changes, never seriously protested those irresponsible deficit-creating policies.

Also speaking: Robert Rubin, who as Clinton's Treasury Secretary, presided over the deregulation of Wall Street financial giants, and then as CitiBank chairman, presided over the orgy of speculation and outright fraud (all enabled by his Treasury policies) that brought the financial system crashing down.

The chutzpa of this Peterson "fiscal summit" is just breathtaking.

Wall Street billionaires who helped Bush blow a whole in the federal budget - and who also actively enabled the financial deregulation and speculation that created today's economic crisis and deficits - are gathering (at the Ronald Reagan building!) to lecture senior citizens and the rest of us about the need to tighten our belts and allow them to slash Social Security and Medicare.

This billionaires' bash might seem comical - Saturday Night Live couldn't do justice to it - except for the fact that the organizers have massive resources at their disposal and they are deadly serious.

For one thing, they are trying to sabotage all further efforts to stimulate a stronger economic recovery. And it is pretty clear that they have had an impact on the Obama administration, which seems to be giving up pushing for significant new aid to the states or job creation, like Rep. George Miller's Local Jobs For America Act.

Under pressure from these conservatives, President Obama is on the verge of pivoting to the deficit, not jobs creation, as we go into the election season. That would be disastrous, both economically and politically - as Americans who watched the bank bailouts, continue to look for a jobs recovery.

Even more disastrous would be for Democrats to embrace Peterson's deficit "solutions." He wants the country (and Obama's commission) to cut Social Security benefits, even though Social Security contributes nothing to the deficit. And he wants us to cut Medicare benefits (or turn Medicare into a voucher program, as White House commission member Representative Paul Ryan would do). This after President Obama has just successfully made the case that the target for deficit reduction should be overall health care costs, not Medicare.

President Obama, who has rightly blamed Bush economic policies and the current financial crisis for the growing deficit, should not follow Peterson advice on health care, on "entitlements," or on jobs and economic stimulus. And he should make sure that his deficit commission co-chairs, Erskine Bowles and Alan Simpson (and three other members of the White House commission) who are speaking at the Peterson conservative extravaganza, are exposed to a more progressive point of view.

It really does look bad - just as the White House is warning more progressive members of the Obama Commission to hold off on publicly talking about the commission's work - to allow the two co-chairs to attack senior organizations (as Simpson has, since being named) and to declare that Social Security and Medicare have to be cut (as Bowles recently did) and then to participate in this Peterson "summit" so obviously meant to push the White House in a conservative direction.

But wait, there's more: the White House appears to be using a self-described "independent, non-partisan" group, called America Speaks to carry out what appears to be an "astro-turf" campaign to simulate public discussion of these issues. Heads up, folks. They announce on their website:

On June 26, 2010, thousands of Americans, in hundreds of locations across the United States and online, will weigh-in on strategies to ensure a strong economic recovery and a sustainable fiscal future.

Sounds like a cool, grassroots, online democracy kind of project - until you read further and find one of their big funders: the Peter G. Peterson Foundation. He is everywhere, manipulating the debate about our future!

Get ready for a fight, friends. The whole dynamic reminds me of the early 1998 period during which President Clinton issued his call for a nationwide series of town-hall forums to discuss the long-range future of the Social Security program. Those official White House forums gave half their program to people who wanted to privatize Social Security - and Vice President Al Gore's bold declaration at one of these events that the White House was ready to "seize the third rail of American politics" greatly confused people, especially seniors, who wondered whether he and the President, and Democrats in general, might be willing to compromise with the enemies of Social Security.

Our efforts to turn around Clinton eventually grew into a powerful coalition that defeated George Bush's privatization plan, but first we had to spend way too much time convincing Democrats that standing up for Social Security and Medicare was both good policy and good politics.

Get ready for another great debate - this time about the future of good jobs, secure retirement, and conservative austerity versus the raising of public revenues to finance investment in the next generation of sustainable economic growth. We know we will be up against the well-funded Peterson conservatives. Let's work to make sure the Obama White House is on our side.

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