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It Ain't Over Till It's Over: Wall Street Gears Up for Austerity Battles of 2013
For better or worse, a bill passed Congress in the wee hours of 2013 averting the much-hyped "fiscal cliff" for now and raising taxes on couples making over $450,000 and extending a lifeline of unemployment benefits to 2 million Americans.
But the vote is not so much an ending as a beginning to the austerity battles of 2013.
As the economy continues to stagger, the search for a "grand bargain" on taxes and critical social programs is likely to roll from fiscal cliff to debt ceiling negotiations into the annual budget battles. While some feel that a "grand bargain" is less likely than "death by 1,000 cuts," the ongoing debate will continue to pose serious risks for average Americans who will need to stay engaged.
Those who benefit the most from the status quo are gearing up for a battle royale and are hoping for a helping hand from President Obama's pick for U.S. Treasury Secretary.
Wall Street Backs "Fix the Debt" Coalition
Although the mainstream press has reported that Wall Street was lying low on the fiscal cliff negotiations, nothing could be further from the truth. Wall Street bankers and financiers knew that the fiscal cliff was but a prelude and they have been prepping for the battle ahead.
They recently unveiled a new front group with a clunky name but a glitzy new webpage called "Fix the Debt." The goal of the 95 firms in the coalition? To make sure that as the economy continues to stagger that Congress does not raise taxes on corporations or the rich, but first looks to slash the social supports that millions of average Americans rely upon. Always ambitious, the firms also want to permanently exempt from U.S. taxation all income earned by U.S. firms operating offshore -- a proposal sure to exacerbate the debt problem the firms are all so concerned about.
Pete Peterson Wants to "Fix" Grannie
"Fix the Debt" is the latest incarnation of the many decade long effort of Blackstone billionaire Pete Peterson to destroy social support programs such as Social Security, Medicare and Medicaid. The effort is being organized by Peterson funded New America Foundation and Peterson's son is on the coalition's board.
Peterson and his Wall Street cronies are following their tried and true formula. Gather a bipartisan group of "serious" men, hire a PR firm to place them on TV shows, blanket the media with talk of a looming crisis and pretend to have grassroots support ("chapters" they are called), across the country.
Peterson knew that the fiscal cliff was only the opening foray of the battle of the century. This time around he has created an astroturf "super group" who are looking to raise some $60 million for the first phase of operations.
Obama's Pick for Treasury Will Signal His Approach on Austerity
As the Fix the Debt shills, including Democrat Ed Rendell (who now works for a venture capital firm), Judd Gregg (an advisor to Goldman Sachs), Erskine Bowles (board of Morgan Stanley) and Sam Nunn (board of General Electric), take to the airwaves to try to convince the American people that the time has come to kick grannie out of the nursing home, a critical voice is missing from the debate.
The new U.S. Treasury Secretary will have more to say about the route the United States will take in the austerity debates ahead than any member of Congress. Yet, while Geithner is increasingly anxious to leave, Obama has not yet named his replacement. Obama's choice will speak volumes about his approach to austerity.
If Obama picks a pro-growth Treasury Secretary, one less interested in speed dialing Wall Street and more interested in the type of robust investment needed to put people to work and dig us out of this hole, it would be very reassuring to the unions, community groups and other grassroots activists who worked their tails off for the progressive "we take care of our own" message espoused by the Obama campaign.
But if he continues in the model of Geithner and picks an Erskine Bowles type, who raked in money on the Morgan Stanley board as the firm engaged in all the behaviors that lead to the financial crisis then sucked up billions in secret loans from the Federal Reserve every night to avoid complete collapse, then progressives know we are in for the fight of our lives. Any banker or financier tied to the crisis would be seen as a betrayal.
Fix the Debt's "Magic Moment"
So far, Fix the Debt has got fawning media coverage from outlets like the Wall Street Journal and CNBC. Watch as Bowles and Alan Simpson ("fiscal hawk icons" according to Politico) take to the airwaves today to "tisk tisk" the President for not slashing enough from social programs relied on by millions of Americans.
“Washington missed this magic moment to do something big to reduce the deficit, reform our Tax Code and fix our entitlement programs,” said Bowles and Simpson in a Fix the Debt statement after last nights vote.
The Fix the Debt "magic" means painful austerity for the rest of us. They are ready for the battle ahead, are we?