You may have heard of this group back in late October, when a group of 80+ CEOs signed a letter to Washington that asks Congress work out a deficit-reduction deal that calls for both increases revenues and cuts spending. This letter (and the launch of this group) had enough of the optics of bipartisanship that Senator Chris Coons rushed out with a statement that endorsed this “balanced approach” to deficit reduction. You can see something of these optics in the Statement of Principles that these CEOs published:
In order to develop a fiscal plan that can succeed both financially and politically, it must be bipartisan and reforms to all areas of the budget should be included. The plan should:
o Reform Medicare and Medicaid, improve efficiency in the overall health care system, and limit future cost growth;
o Strengthen Social Security, so that it is solvent and will be there for future beneficiaries; and
o Include comprehensive and pro-growth tax reform, which broadens the base, lowers rates, raises revenues, and reduces the deficit.
There’s more, and you should click over to read the whole thing.
Right out of the gate, commentators started pointing out the problems with this group of CEOs and their high-profle search for some fiscal sanity — namely, that these CEOs and their companies had alot to gain from a deal that insisted on “balanced cuts”, when in fact, one of the reasons why the debt is so big is that these CEOS and their companies are not paying their fair share in taxes. But yet, they are perfectly willing to push for a deal that will reduce their taxes at the expense of folks living off of Social Security and Medicare. Let’s start with Felix Salmon(who probably ought to have the last word on this business):
So when the CEOs talk about “our growing debt”, what they mean is just the debt owed by the Federal government. And when the Federal government borrows money, that doesn’t even come close to making up for the fact that the CEOs themselves are not borrowing money.
Money is cheaper now than it has been in living memory: the markets are telling corporate America that they are more than willing to fund investments at unbelievably low rates. And yet the CEOs are saying no. That’s a serious threat to the economic well-being of the United States: it’s companies are refusing to invest for the future, even when the markets are begging them to.
Instead, the CEOs come out and start criticizing the Federal government for stepping in and filling the gap. If it wasn’t for the Federal deficit, the debt-to-GDP chart would be declining even more precipitously, and the economy would be a disaster. Deleveraging is a painful process, and the Federal government is — rightly — easing that pain right now. And this is the gratitude it gets in return! […]
But when they try to get to the specifics of tax reform, they start falling into blather, asking that it be “pro-growth” (an utterly meaningless phrase), and asking too that it include lower rates and higher revenues.
Maybe they should have just asked for a pony for everybody instead: that would be easier. You can’t have lower rates and higher revenues — not without eviscerating pretty much all of the tax deductions which much of the middle class has learned to rely upon. Mortgage-interest tax relief, the charitable deduction, even the deduction for state and local taxes: pretty much all of them would have to go. That wouldn’t just get blocked by Democrats: it would get blocked by Republicans, too. And because most of these tax expenditures go to the middle class, broadly defined, the one group which would see most of the benefits while bearing very little of the costs would be the top 1%: the very CEOs who signed this letter.
Seriously, go read the whole thing — the comments are good here too.
The Institute for Policy Studies did an analysis of the fiscal impacts of implementing the principles of the Fix the Debt group and found that they would stand to gain quite a bit if they were implemented:
- The 63 Fix the Debt companies that are publicly held stand to gain as much as $134 billion in windfalls if Congress approves one of their main proposals — a “territorial tax system.” Under this system, companies would not have to pay U.S. federal income taxes on foreign earnings when they bring the profits back to the United States.
- The CEOs backing Fix the Debt personally received a combined total of $41 million in savings last year thanks to the Bush-era tax cuts. The top CEO beneficiary of the Bush tax cuts in 2011, Leon Black of Apollo Global Management, saved $9.9 million on the Bush tax cuts. The private equity fund leader reaped $215 million in taxable income last year just from vested stock.
- Of the 63 Fix the Debt CEOs at publicly held firms, 24 received more in compensation last year than their corporations paid in federal corporate income taxes. All but six of these firms reported U.S. profits last year.
(The entire IPS document is here.)
But the Huffington Post notes as these CEOs get out and about with their powerpoint slides and media appearances:
Yet the CEOs are not offering to forgo federal money or pay a higher tax rate, on their personal income or corporate profits. Instead, council recommendations include cutting “entitlement” programs, as well as what they call “low-priority spending.”
Many of the companies recommending austerity would be out of business without the heavy federal support they get, including Goldman Sachs and JPMorgan Chase, which both received billions in direct bailout cash, plus billions more indirectly through AIG and other companies taxpayers rescued.
Just three of the companies — GE, Boeing and Honeywell — were handed nearly $28 billion last year in federal contracts alone. A spokesman for Campaign To Fix The Debt did not respond to an email from The Huffington Post over the weekend.
Right. We let these companies repatriate money from overseas — money that will go directly to the pockets of shareholders and executives — they won’t be “creating jobs” with this money in return for cutting back on Medicare and Social Security benefits. such a deal, right?
Peter Overby did a piece on Pete Peterson — the man who is bankrolling this juggernaut to cut corporate taxes AND Social Security and Medicare — the other day.
So what’s missing from this charm offensive by these CEO’s trying to look sober and balanced on America’s debt?
How about American Jobs? You never see these people talk about that — the fact that we still have an employment crisis here in the US. And shame on the legislators who continue to be influenced by the money of all of these people so that they have prioritized making sure that rich people get the better of a debt deal over making sure that Americans are working.
What tax subsidies or deductions would they support eliminating? Most of these firms use as many of these as they can get away with to reduce their tax burdens — some reportedly to zero. It is interesting that they can call for cuts to Medicare and Social Security without naming what of their own tax privileges they would eliminate.
And where’s the stick? Groups like the NRA get what they want because they will with hold checks or support primary challenges. These CEOs aren’t putting their muscle into this — I suspect because they think they can sell this shared sacrifice to a bunch of legislators who are desperate to be seen as being Bipartisan. Except in this thing, being Bipartisan means that middle class people get the short end and are supposed to think that they are doing their bit.
You are going to see alot of these CEOs over the next weeks and you will likely hear alot from local legislators on “bipartisanship” and “working together” — which is just fine. They *should* be working together to craft some policy that is meant to work for most Americans. Just be sure to let them know that this Fix the Debt approach is meant to make these companies whole at the expense of working class and middle class people. Again.