Episode 104: The Pete Peterson Austerity Empire and the “How Will You Pay For It?” Lie
Citations Needed | March 11, 2020 | Transcript
[Music]
Intro: This is Citations Needed with Nima Shirazi and Adam Johnson.
Nima Shirazi: Welcome to Citations Needed, a podcast on the media, power, PR and the history of bullshit. I am Nima Shirazi.
Adam Johnson: I’m Adam Johnson.
Nima: Thank you everyone for joining us this week. Of course, you can follow the show on Twitter @CitationsPod, Facebook Citations Needed and become a supporter of our work through Patreon.com/CitationsNeededPodcast with Nima Shirazi and Adam Johnson. All your help through Patreon is so appreciated. We are 100% listener-funded. There are no ads, there are no corporate sponsors. That is on purpose. That is so that we can do the show the way we want to do the show and the way that happens is through your amazing support.
Adam: And as always you can rate subscribe and leave feedback on Apple Podcasts. That’s always appreciated.
Nima: “According to the Bipartisan Policy Center…”, “a recent study by the Concord Coalition disagrees…”, “one review of your budget by the Committee for a Responsible Federal Budget says…” — we’ve seen these seemingly benign official sounding sources hundreds and hundreds of times — in presidential debates, on 60 Minutes, in countless articles in the Washington Post, NY Times, and from the mouths of people like Jake Tapper and Bob Scheiffer.
Adam: But what the average person can’t reasonably know is that these organizations, Bipartisan Policy Center, The Concord Coalition, the Committee for a Responsible Federal Budget and many other PR projects like The Can Kicks Back and America Speaks — are veiled front groups for a single far-right billionaire whose entire life mission was to privatize social security, Medicare and other entitlement programs under the auspices of fighting a so-called “deficit timebomb.”
Nima: His name is Pete Peterson, and for decades, a web of Peterson-backed front groups — often funded in concert with other like-minded billionaires — has used the faux neutrality of think tanks, institutes, centers and academia to launder “anti-deficit” messaging for American pundits, reporters and politicians entirely capturing the narrative around deficits and their alleged pending destruction of our society as a whole.
Adam: On this week’s episode we’re going to explore the origins of Pete Peterson’s austerity propaganda machine, his web of influence, how he helped co-opt both conservative and liberal knowledge production, and spent hundreds of millions of dollars to undermine what little liberal government the United States has.
Nima: Later on the episode, we will be joined by David Dayen, executive editor of The American Prospect. His latest book is Monopolized: Life in the Age of Corporate Power, which will be published this coming June.
[Begin Clip]
David Dayen: When a Democrat gets into office, Republicans completely turn on their policy of running up deficits for things they like and they weaponize the kind of Peterson rhetoric incessantly and they’re very on message about it and to a much greater degree than Democrats ever are and that amplifies the message. So what is being foregrounded here? It means effectively that Peterson-style deficit hawkery, it aligns with Republican policy preferences and those are, you know, cutting social programs and the like.
[End Clip]
Adam: So I’ve got to say, I’m very excited for this episode, Nima. We discussed the deficit racket in Episode 11.1 and 11.2, which is a two-parter we did. Sorry about the numbering. That was my fuck up. I think we’ve talked about it before.
Nima: Yeah, that’s part of Citations Needed lore.
Adam: It’s a long story, I thought I was, that’s how Star Trek did it, but apparently it’s not. Anyway, so go listen to the Deficit Episode 11, we think it’s a sort of good primer for this, but in all the research on that and subsequent other episodes where we’ve talked about healthcare, anything involving a liberal state, whether it be social security, et cetera, there is one name that keeps popping up, Pete Peterson, the Peter G. Peterson Foundation and Pete Peterson-funded front groups, and his influence on the media is tremendous and we think critically under examined and it’s definitely worth looking under the hood because if when it comes to any questions about the deficit or debt, there’s a greater than, I would say 80% chance the source or the genealogy of the source you’re using comes from a Pete Peterson-funded organization or person.
Nima: Yeah. He’s one of those kinds of people that the vast majority of people don’t know about, have never heard of, and yet the influence stretches so incredibly far and infects so much of the political language, political speech, what is asked in debates, who is referenced as experts in the media. It is so ubiquitous and so many of these roads lead back to Peterson.
Adam: I would say this is pure conjecture, but I would speculate that in terms of just pure body count, like how much human suffering one person has created, other than maybe the Koch brothers, maybe even Bill Gates, but even less so him, I would say Pete Peterson has a very high body count, very high suffering index.
Nima: Yeah, he’s a killer.
Adam: He’s a killer because his whole project is to gut and to completely narrow the vision of the liberal state in the United States.
Nima: Yeah, anything that may actually help people needs to be opposed because God forbid it may raise taxes on hedge fund managers. So before we kind of get into the vast network of Peterson aligned groups and how he really influenced so much of what we hear about economics, namely with regard to social security, the debt and the deficit, we wanted to do — as we do on Citations Needed — a little background. Pete Peterson was born in Kearny, Nebraska in 1926 and, after graduating from Northwestern University, cut his teeth in various high-ranking corporate capacities, he was an executive at the McCann Erickson advertising agency in Chicago — you may remember that name is you watch Mad Men — that was in the early 1950s, and later as chief executive of the Bell and Howell electronics company. Peterson earned an MBA at the University of Chicago in 1951. One of his mentors at the time was Milton Friedman, one of the chief architects of 20th-century free-market propaganda and policy machine, from his 1962 book Capitalism and Freedom to being an economic adviser to Barry Goldwater, Ronald Reagan, Margaret Thatcher and Augusto Pinochet, among many others. As we previously discussed on Episode 95 of Citations Needed, Friedman was one of the first people to employ the rhetorical device of “choice” in a way to better destroy beneficial universal government programs. But back to Peterson. In the 1970s, Peterson served in the Nixon administration, first as assistant for international economic affairs and then in the cabinet as Secretary of Commerce. In 1973, Peterson joined the investment banking firm Lehman Brothers, which we now know as one of the foremost actors in the 2008 financial collapse. Peterson became the CEO of Lehman Brothers in the seventies. Peterson then formed a new private-equity firm, Blackstone Group, in 1985. The same year he became the board chairman of the Council on Foreign Relations, a role he held until 2007. CFR of course is known for its affinity for American imperialism. Pete Peterson died in March of 2018. At the time, Forbes estimated his net worth at $2 billion. That’s billion, with a “B.”
Adam: So upon his death, and this is going to lay the groundwork for the remainder of the episode, this billionaire, lifelong Republican, austerity scold who funded organizations, programs, centers to push austerity, was eulogized on the House floor by his longtime friend Nancy Pelosi.
[Begin Clip]
Nancy Pelosi: Pete was a clarion voice for fiscal responsibility and a strong moral conscience in Washington working tirelessly and always reaching across party lines. For Pete, building a bright economic future for the next generation was his patriotic duty. He understood that he was so fortunate to have lived the American dream and he wanted that same opportunity available for every man, woman, and child in our nation.
[End Clip]
Adam: Yeah. So later on in another fiscal summit, after he passed, she went on to praise him saying this:
[Begin Clip]
Nancy Pelosi: But the fact is that I come here each year very complimented to have the invitation of the Peterson family. Pete Peterson to me was a national hero. I loved him very much. He was the personification of the American dream, Greek American family, rising to the heights, the Mount Olympus of the financial community in our country, always sensitive to the needs of working people, always teaching us that the increase in the national debt was a tax on our children and that we had to hold it in check and be creative in how we did it. And he always said to me, ‘Nancy, keep your eye on the tax expenditures in the budget.’ So I feel very honored always to be invited to this.
[End Clip]
Nima: Yeah. (Laughing.)
Adam: So here you have the most powerful Democrat in the fucking universe who has a long standing personal, and I think it’s fair to say friendly, relationship with someone whose sole ideological project is austerity.
Nima: She loved him very much, Adam.
Adam: Yeah, obviously Nancy Pelosi’s one of the wealthiest members of Congress, which I’m sure is correlated by this, but so per usual on the show, we don’t know where ideology and venality begin and end. But suffice to say that during Pelosi’s reign with PAYGO rules and all the austerity scolding by Democrats has basically been centered around her and the extent to which we have not expanded any liberal programs or done piecemeal Heritage Foundation inspired healthcare plans it is largely because of Pete Peterson, his ideological capture of the Democratic Party either through funding or through just because they believe it, because they also happen to be rich and shares class interest.
Nima: Yeah. The idea that Pete Peterson was looking out for the little guy, for the working people of this country is completely ludicrous considering the entire ideological project that he ran for decades to great success was predicated on destroying social programs, in privatizing social security, in deficit scolding and completely changing the way that we talk about the economy and how the government is supposed to spend its money. So Pete Peterson wasn’t just influential in terms of what he himself did and wrote and where he worked. One of the most sustained and insidious ways that Peterson used his wealth is to create a network of reactionary think tanks that still pervade media outlets to make the case for gutting these federal programs. For instance, he founded the Institute for International Economics in 1981 and was its founding chairman. This was later renamed the Peterson Institute for International Economics in 2006.
Adam: He founded the Concord Coalition, which was — you guessed it — about preventing the deficit bomb. He funded the Bipartisan Policy Center, which is a very powerful deficit scolding think tank. He is a major funder of the Bipartisan Policy Center, which was founded in 2007 which is an influential deficit scolding think tank. He founded the Pete Peterson Foundation, named after himself, which funds debt and deficit-related causes and most perniciously, which we’ll get into, he is the sole, more or less the sole funder, pretty much or was I should say, he’s now passed, of the Committee for a Responsible Federal Budget. $1.25 million in 2011 and $3.2 million in 2015, $1 million in 2016, $2.1 million in 2017 — you get the picture. The Committee for a Responsible Federal Budget doesn’t disclose its funders on its 990 tax forms, but one can use a little deductive reasoning to find out what percentage of its funding comes from Pete Peterson. For example, in 2016 the Committee for a Responsible Federal Budget reported a total of $1,104,244 in contribution and the Pete Peterson Foundation that same year contributed $1 million. So, with some various carryover funding each year, but more or less they are the primary, if not virtual, sole funder of the Committee for a Responsible Federal Budget.
Nima: Which just sounds so official and responsible and potentially a government agency.
Adam: Yeah. Just to cap this off, he has funded deficit and debt scolding, quote-unquote “think tank activities” at the American Enterprise Institute, the Heritage Foundation, which are both right-wing institutions. We don’t have time to actually list it all. He has funded a program at the Teacher’s College to get teachers to care about the national debt. Something I suppose that they’re supposed to indoctrinate children with. This is a 2010 article in the Columbia Teachers College website that said, quote, “Teaching Kids About the National Debt Teachers College has received a three-year $2.45 million grant from the Peter G. Peterson Foundation to develop a comprehensive social studies and mathematics curriculum about the fiscal challenges that face the nation, which will be distributed free of charge to every high school in the country.” So we saw this of course with John Stossel.
Nima: Yeah, it’s like the richer, more legit Stossel effect.
Adam: Yeah. So he spends a lot of money to basically indoctrinate teachers and students into thinking about the debt and deficit. So around the same time the Kaiser Family Foundation, which is the go-to source for anything involving healthcare policy, you’ll notice that anything that’s criticizing Medicare for All or single-payer with some rare exceptions, but for the most part it comes from the Kaiser Family Foundation.
Nima: It’ll cite a study by the Kaiser Family Foundation.
Adam: Yeah, the Kaiser Family Foundation has also received millions of dollars from the Pete Peterson Foundation. They created a partnership to have the health system tracker. Just in the last two years alone, they’ve given $4.2 million and this health system tracker about reducing costs. You’ll notice in most of the Pete Peterson Foundation website and a lot of their literature, they talk about cost reductions, which is sort of busy work when you don’t want to create a single-payer healthcare system you talk about reducing cost efficiency.
Nima: ‘We’ll make it cheaper, we’ll make it cheaper, we’ll make it cheaper’ as opposed to ‘No, this will be part of your life without having to pay out of pocket for it.’
Adam: The Kaiser Family Foundation is also funded by insurance companies, Blue Shield of California Foundation, which used to be a nonprofit, but it’s now technically for-profits since their nonprofit lapsed, California Healthcare Foundation. California Healthcare Foundation gave about $3 million to Kaiser Family Foundation. So, Kaiser Family Foundation is a think tank/foundation that is the primary go-to source on healthcare. And Pete Peterson has leveraged much of his deficit and debt scolding with regard to single-payer by working through them. And this is a pattern you’ll see time and time again.
Nima: So the Kaiser Family Foundation has recently been doing a push poll about public interest, public perception of single-payer healthcare. They’d been doing it at least since last summer since the Democratic campaign really has been taking off and they keep kind of updating it with more and more recent numbers. But really the whole thing winds up being ideologically transparent. It is, as I said, it’s definitely a push poll, yet it keeps getting cited in basically every article that comes out about the popularity or not of a single-payer system. So for instance, just recently, here’s a Valentine’s Day article, February 14 from this year, 2020, in Fox, quote:
Polling data indicates why single-payer might be a liability. At first glance, Medicare-for-all does poll pretty well: 56 percent approval and 41 percent disapproval, according to the most recent Kaiser Family Foundation survey. It could be aided by some misconceptions, though: More than half of people, for example, think they’d be able to keep their health insurance plan under the single-payer system. (Under Sanders’s bill, they would not; most private insurance would be prohibited after the four-year transition period.) But public opinion hinges on how you talk about the issue. Support dropped from 56 percent to 37 percent when voters were told the proposal would eliminate private insurance companies or raise taxes for most Americans. (Support correspondingly surged when voters heard the strongest talking points in favor of the proposal: universal coverage and lower health care costs.)
End quote.
Adam: Yeah, so the single-payer was basically conventional wisdom about two years ago, right? Kamala Harris, Elizabeth Warren, Cory Booker, every major 2020 candidate signed off on it. And so then you had to have a sort of cute, okay, because it was popular, you know, it was pulling at 60 some odd percent with Democrats, even the one poll from 2018 showed most Republicans, 53% of Republicans supported it. So then we got to go into the whole scaremongering over losing your insurance. So the Kaiser Family Foundation poll, which is the single most cited poll in the debates and etcetera, when people say, ‘But when they find out the details, they don’t like it.’ And here’s what the question says, it says, “Do you favor or oppose having a national healthcare plan sometimes called Medicare for All?” Would you favor or oppose a Medicare for All plan if you heard that it did the following, quote, “eliminate private health insurance companies.” Without saying what replaces it that does sound very scary, right? If you don’t say eliminate private health insurance, but replace it with a public Medicare for All option, where everyone’s covered, then of course they’re going to freak out over that question ‘cause it’s a fucking bullshit question. It’s a push poll.
Nima: It’s the only thing you’ve known.
Adam: Right. Because you’re not saying what’s replacing it. It’s not, the idea that I’m going to eliminate your private insurance without explaining what comes in instead is obviously meant to sort of do this. And you saw this with Jonathan Jay and a bunch of other commentators, they cited this poll as evidence that once people really find out the details about Medicare for All, they’re actually not gonna like it. And, you know, that’s sort of the point, right? The point of these organizations are to frame things in a way that makes it look like, I don’t think it’s necessarily sinister on a micro level, but generally Kaiser Family Foundation has to come out by saying, ‘Look, the Americans are scared and they’re frightened by having a single-payer healthcare system.’ Now a single-payer healthcare system is fucking Pete Peterson’s nightmare scenario because of the trillions and trillions of dollars that costa and how it eliminates obviously profit centers, ‘cause again this is someone who’s been wanting to privatized Social Security and Medicare. They’re sort of vestiges of 1930s and 1960s liberalism and so to invent a new form of liberalism, which is what single-payer healthcare is, is just completely fucking shocking.
Nima: Among Peterson’s web of propaganda campaigns is the Campaign to Fix the Debt and the Fix the Debt Campaign along with the youth-oriented version of the Fix the Debt Campaign called The Can Kicks Back — yeah. So the Fix the Debt Campaign and its Can Kicks Back pet project were in 2013 caught out for basically ghostwriting articles that were placed in local papers, allegedly written by young people at college talking about how much they are worried about — what else? The thing most college kids care about — the exploding national debt. For example, in 2013 Florida’s Gainesville Sun published this article, quote, “Lay off the astroturf and outright plagiarism” and it’s written about Fix the Debt, it starts like this, quote:
If you liked University of Florida student Brandon Scott’s column last Sunday about the national debt, you also should enjoy columns by Dartmouth College student Thomas Wang and University of Wisconsin student Jennifer Pavelec on the issue.
After all, they’re the same columns.
The identical columns ran last weekend in newspapers in New Hampshire and Wisconsin. They each included the same first-person passage describing the student’s work with the Campaign to Fix the Debt and its ‘millennial arm,’ The Can Kicks Back.
Adam: The way that Can Kicks Back is like the debt or deficit is we’re kicking the can down the road for future generations. This was the talking point, right? But again, the problem is nobody fucking cares because no one actually cares about the deficit or debt. So they did all these various things trying to astroturf interest in this, The Can Kicks Back organization hired Alan Simpson. So Alan Simpson is a former Senator from Wyoming who is the titular Simpson in Simpson-Bowles, which is the deficit reduction panel that was commissioned by Obama at the beginning of his administration, so long story short, they wanted to make people care about this so they had Alan Simpson do the Gangnam Style in this YouTube viral video that actually didn’t get that many views and of course the media takes the bait on this kind of low-hanging fruit. It’s not very effective, but they always run with it. So NPR ran a story like laughing at it saying, Alan Simpson’s trying to take on the, quote, “deficit crisis” so we’re sort of accepting the premise that there’s a deficit crisis because that’s the whole point of these things where you have to accept the premise. Politico wrote, quote, “The Can Kicks Back project is a nonpartisan campaign targeting millennials to fix the national debt according to the campaign’s website.” So they kept trying to do these, these like goofy high concept viral videos, which they would get zero organic interest in but the media would always write them up because they thought it was interesting ‘cause a bunch of millionaires funded this millennial deficit and debt campaign. And so needless to say that didn’t really sort of go anywhere but Pete Peterson spent upwards of $60 to $100 million dollars depending on what source you look at.
Nima: Another one of these campaigns was the America Speaks town hall campaign and I say town hall, actually that’s a generous way of putting it. There was a set of 19 fake town hall meetings that were put together called America Speaks and it was, you know, funded by the Peterson Foundation and all about when we actually hear from the mouths of Americans, you’re going to hear how devastating Medicare and social security are — somehow — and therefore you will know that there is a popular movement to get rid of these programs. So they held these fake town hall meetings under a total false premises and like they collected distorted survey data, which they were definitely going to use for however long, years to come in whatever PR propaganda they were going to push out — deficit scolding, debt mongering, social security scares, all this stuff — but it totally backfired because the data actually found when America then spoke the participants in so many of these town halls actually said how much they wanted these programs to expand and continue to the great consternation of the America Speaks crew. And so they kiboshed the whole thing.
Adam: Yeah. ‘Cause they were trying to, if this happened sort of in parallel with the Tea Party, which had a similar artificial astroturf with Koch brothers, but they didn’t quite have the kind of racist energy or an anti-Obama vitriol. So he tried to do like a PC version of the Tea Party, but nobody fucking cares ‘cause that was astroturf but it also was partly organic, right? Because it tapped into racist anxieties with regard to Obama and of course the kind of language around taxing and entitlements and Obama phones and Glenn back. So it was this cheesy liberal version of that basically, it was like a liberal Tea Party they tried to do, but needless to say, nobody cared. And this was of course done at the same time that big-time deficits scold Jake Tapper, which was one we talked about in the episode on him, is a huge factor in his success was that he was a really aggressive deficit hawk who would ask Obama Press Secretary Robert Gibbs, ‘Is it responsible to leave the debt to the next generations?’ And he did, of course, a lot of the, um, a lot of the sources he cites are of course Pete Peterson and the Committee for a Responsible Federal Budget. And the B roll in all of Jake Tapper’s reports and the B roll of every single deficit and debt report you’ve ever seen is what, Nima?
Nima: The National Debt Clock. So, you know, the big billboard that was put up by Seymour Durst, a New York real estate developer — we all know how great those people are — who installed the first National Debt Clock at Sixth Avenue by 42nd Street in Manhattan on February 20th, 1989, the debt at that point was still under $3 trillion, but soon thereafter, three years later, Pete Peterson used the debt clock as the background for his announcement of the creation of his Concord Coalition and since adopted this National Debt Clock as a ticker for his own foundation, for the Peter G. Peterson Foundation, you can now go to the Peterson Foundation’s website and see a constantly upward ticking National Debt Clock and with the correlating amount, it is currently $71,122 for every single person in America. That’s what we have to pay toward our National Debt.
Adam: It’s great B roll, right? Because how do you visualize the debt, nobody fucking cares, right? But if it’s this constant ticking time bomb, it’s like ‘Holy shit, it’s gonna explode and we’re all gonna die.’ One thing that Pete Peterson did, a lot of the funded he did nominally liberal or progressive journalism and reporting and television and so we’re going to detail how his funding influenced the liberal space, because again, if he’s just funding a bunch of right-wing organizations like the Koch brothers does, it’s effective, but it’s almost more effective if you just co-opt liberal discourse in general. So Pete Peterson’s Foundation funded a government waste award with ProPublica in 2010. On the website it said, quote, “We want to recognize the most important and thorough investigative work by government agencies that, much like our own mission, seek to serve the public interest by exposing exploitation of the weak by the strong and the failures of those with power to vindicate the trust placed on them.” So they had an award through ProPublica for government to uncover waste in the government, which as you can probably imagine, would maybe involve a lot of the liberal state, waste in welfare, waste in food stamps, waste in social security. In 2010 they funded a fellowship for a year for the Columbia Journalism Review to, quote, “To support a one-year fellowship at the Columbia Journalism Review to comment on the content and quality of media coverage of fiscal issues.” The result was insipid deficit trawling by a journalist named Holly Yeager who downplayed Citizens United and also did a lot of hand wringing about whether or not the media was properly covering the deficit and debt. It’s mostly kind of middlebrow, it’s sort of very Ezra Klein at the time was at the Washington Post, who was very hawkish on deficit discourse. 2009 they funded PBS World Focus when they announced their donation of $1 million they said, quote, “in exchange for the grant, [Pete Peterson President] David Walker said, the foundation expected ‘Worldfocus’ to produce reports examining how other countries have dealt with the challenges facing the United States, like health care and Social Security reform. ‘Worldfocus,’ he said, will have ‘total control over the content.’” Which is definitely something you say when someone has total control over the content. World Focus did not attract other major funders and actually eventually collapsed before they could produce any of their content.
Nima: Peterson also funded the Fiscal Times, which has previously partnered with The Washington Post to report on deficit fear mongering. This was in 2009 and 2010, the peak of this deficit panic in the early years of the Obama administration. The reposting of Fiscal Times articles under the Post banner really brought about not only seeming legitimacy for Fiscal Times, but with it its fair share of criticism. This from Politico in January 2010, quote:
Critics are calling on The Washington Post to stop printing news articles from The Fiscal Times, a new ‘independent digital news publication’ funded by Peter G. Peterson, a former Wall Street financier and longtime advocate of changes to Social Security. The Post and the new publication announced an agreement last month to jointly produce content ‘focusing on budget and fiscal issues,’ and the first article from The Fiscal Times appeared in The Post on Thursday. Headlined ‘Support grows for tackling nation’s debt,’ it described growing momentum for ‘a special commission to make the tough decisions that will be required to dig the nation out of debt.’ In a letter to The Post’s ombudsman, 14 academic and public-policy experts on Social Security said the newspaper should ‘rescind the partnership, reserve opinion pieces for the op-ed page, and not allow itself to be a propaganda arm for ideologues who use fiscal distress as a stalking horse to destroy social insurance.’
Adam: I will say after the Fiscal Times controversy with the Washington Post blew up, the Pete Peterson fellow at the Columbia Journalism Review, Holly Yeager, acknowledged the conflict of interest. She wrote an article in August of 2010 titled “The Peterson Dilemma — A funded fellow wrestles with a funder’s influence.” Now the piece subsequently spent 2,500 words, hand wringing about the conflict of interest but how like deficit conversations were important, but she’s funded by them, but also claims that she didn’t push it too much and anyway, I’ve read it, I’ve no idea what the thesis is, but suffice to say that liberals are very aware of what Peterson’s MO is and there’s a lot of handwringing that goes in to this kind of funding. The next thing that I think is by far the most pernicious is the think tank Committee for a Responsible Federal Budget. Now, the influence of the Committee for a Responsible Federal Budget on the media, I think cannot really be overstated. They are the single biggest source on any story involving deficit or debt for anyone. So we looked at fact-checking stories at PolitiFact and did a search for how many times the Committee for a Responsible Federal Budget was used as the main source for articles about deficit, debt spending and the cost of things like social security and Sanders’ Medicare for All plan and other people’s Medicare for All plans. We found over 200 separate articles were relied in part or primarily on the Committee for a Responsible Federal Budget, which as we noted, is entirely funded by the Peter G. Peterson Foundation.
Nima: It’s literally set up to talk about the national debt and deficits. That is why it exists.
Adam: Right. In a way that fearmongers, right?
Nima: Right.
Adam: Factcheck.org had over 70 references to the Committee for a Responsible Federal Budget — henceforth we will now call the CRFB. The Washington Post fact-check vertical had several dozen mentions of CRFB and there’s a few examples we wanted to sort of point out to show how pernicious their influence can be, how they, as we talked about in our episode on fact-checking, how they nickel dime and everything to give the most right-wing answer you can possibly get.
Nima: So for instance, in August 2010, Glenn Beck stated that the federal government was “on track for second-biggest deficit in 65 years.” PolitiFact decided to fact-check that claim. Who did they cite? CRFB effectively to prove Glenn Beck, right? Here’s the quote that PolitiFact uses in its fact-check, quote, “Going forward, the structural problems that were there before the recession will combine with the growth in spending from an aging population and health care costs, to cause large and ongoing deficits even once the economy recovers.” End quote. Another article, this is much more recent from December 2018, in factcheck.org talks about, quote, “Ocasio-Cortez’s Misguided Tweet,” and in it it talks about AOC tweeting out in December 2018 that the Pentagon’s accounting errors alone could finance two thirds of Medicare for All. This followed from a Nation article that stated that the Pentagon wasted $21 trillion in just accounting errors between 1998 and 2015. Ocasio Cortez stated that Medicare for All would cost $32 trillion, which is a number that comes even itself from the pro-free market Mercatus Center. So factcheck when it got its talons in this quote cited — who else? — Senior VP of CRFB Marc Goldwein to quote-unquote “prove” that defense spending cuts would come nowhere near covering the cost of Medicare for All. And they had Goldwein saying this, quote, “Actually, over the next decade, defense discretionary spending is projected to total $7 trillion. So even ELIMINATING defense spending — obviously a ridiculous notion even for the most anti-military politician — would only pay for about one fifth to one quarter of Medicare for all.” While there’s no source provided for this $7 trillion figure, The Nation article referenced earlier actually does provide plenty of evidence for the DoD spending far more than Congress appropriates for it.
Adam: There was a PolitiFact check from December 2019, it said, quote, “Rep. Ilhan Omar’s claim that the US spends 57% of the federal budget on defense is wrong. It’s 15%” This is from December of 2019. The Minnesota Congress woman was quoted as saying, quote, we have to not have over 800 military bases around the world. “We have to not have over 800 military bases around the world. We have to not spend 57 cents on the dollar on defense.” She was speaking about discretionary funds, not total funds. So they did what they always do, which is sort of wax pedantic and of course they quoted Marc Goldwein of the Committee for a Responsible Federal Budget, who said it was 17 percent, the only other number they cited was — you guessed it — the Pete G. Peterson Foundation, which said that the military budget was 15 percent. The article would go on to undermine its own argument by saying, quote, “As for the dollars, the 2018 federal budget contained, according to a June 2019 report by the Congressional Budget Office: $1.3 trillion went to discretionary spending, including $600 billion for defense. That would be about 46%.” So, she was obviously referencing discretionary funding. Now non-discretionary funding is what entitlements are. What does Pete G. Peterson want to cut? — entitlements — so they always have to make sure that everyone knows that if you’re serious about cutting money, the Defense Department’s not really going to cut it, you got to cut social security and Medicare, which is why they redirect every question away from military spending to Medicare and social security.
Nima: Because they don’t actually give a shit.
Adam: Yes, they don’t actually care about the deficit.
Nima: They want the good programs to go away and taxes not to go up.
Adam: These are just three recent examples. There are literally scores, if not hundreds of examples of fact-checking organizations citing the CRFB as a neutral expert. They are not. They are a think tank for Peter G. Peterson, whose goal is to privatize and gut social security and Medicare. Now, what’s really shocking is how often the CRFB makes appearances in presidential and vice presidential and primary debates. This is just some examples. October of 2008, John McCain and then Senator Obama, Bob Scheiffer says, quote, “Both of you have said you want to reduce the deficit, but the nonpartisan Committee for a Responsible Federal Budget ran the numbers on both of your proposals and they say the cost of your proposals, even with the savings you claim can be made, each will add more than $200 billion to the deficit.”
Nima: Republican primary debate in February 2016 had Kimberly Strassel from the Wall Street Journal attacking Trump, but from the right, on entitlements, she said this, quote, “You have made a lot of promises and you have also — you’re the only candidate who has said he would not touch entitlements. The Committee for a Responsible Federal Budget has estimated that your ideas would cost an additional $12 trillion to $15 trillion over the next 10 years and that we would have to have annual economic growth of anywhere from 7.7 percent to 9 percent annually to pay for them. Are you proposing more than you can actually deliver, at least not without big deficits?”
Adam: Republican primary debate, March 2016, CNN’s Donna Bash also attacked Trump from the right on entitlements saying, quote, “You’re talking about waste, fraud and abuse, but an independent bipartisan organization, the Committee For a Responsible Federal Budget, says improper payments like you’re talking about, that would only save about $3 billion, but it would take $150 billion to make Social Security solvent. So how would you find that other $147 million?”
Nima: From a Democratic primary debate in April 2016, there was this: “Senator Sanders, you’re promising health care and free college for all, and those plans would be met with both political and practical challenges. The nonpartisan Committee for a Responsible Federal Budget says your initiatives would cost up to $28 trillion and, even after massive tax increases, that would add as much as $15 trillion to the national debt. How is this fiscally responsible?”
Adam: Vice Presidential debate October 2016, two separate questions by Elaine Quijano of CBS citing Committee for a Responsible Federal Budget. One fear mongering over the deficit and one spreading outright lies about social security, quote, “In 18 years, when the Social Security Trust Funds run out of money, you’ll be 76. The Committee for a Responsible Federal Budget estimates your benefits could be cut by as much as $7,500 per year.”
Nima: A Presidential debate from the same month, October 2016, Chris Wallace said this, quote, “Our national debt, as a share of the economy, our GDP, is now 77 percent. That’s the highest since just after World War II. But the nonpartisan Committee for a Responsible Federal Budget says, Secretary Clinton, under your plan, debt would rise to 86 percent of GDP over the next 10 years. Mr. Trump, under your plan, they say it would rise to 105 percent of GDP over the next 10 years. The question is, why are both of you ignoring this problem?”
Adam: So all this shit is not true. These are assertions made by the Committee for a Responsible Federal Budget. They’re entirely contestable. Not everyone agrees with these numbers. The idea that social security is going to run out of money is something that Peter Peterson has been screaming about since the seventies and it is always 20 or 30 years away, right? These are very ideological, extremely right-wing premises that are smuggled through this benign sounding, nonpartisan, bipartisan Committee for a Responsible Federal Budget. The whole reason that the Committee for a Responsible Federal Budget is created is because it sounds like a — potentially, I think if we polled a hundred people, you know, 80 of them would say, ‘Oh, isn’t that a, is that a government thing? That sounds like a government thing.’ Right? Committee for a Responsible Federal Budget. It sounds benign. It’s bipartisan, nonpartisan, nonpartisan, right? But again, just because something’s bipartisan doesn’t make it not right-wing. That’s the problem. It’s extremely right-wing. That’s why it exists and why it has to frame itself not as a foaming Tea Party outfit, but as a reasonable bespectacled, neutral, academic, just calling balls and strikes. ‘Sorry guys, social security’s going to blow up and there’s nothing we can do about it.’
Nima: One last thing to note is that Pete Peterson made his billions off of tax cuts and lobbied aggressively against raising taxes on hedge funds. The New York Times in 2008 reported that Peterson took in a one point $1.8 billion profit when the group that he founded, Blackstone Group, went public and that that pay out, nearly $2 billion, was a direct result of very friendly tax breaks on hedge funds and private equity.
Adam: So private equity and hedge funds get carryover tax after the 1990s reforms, they are taxed at a very low rate. Capital gains are taxed at a very low rate. And so The New York Times proposed this irony to him, they said, quote:
It is a quandary that has plagued Mr. Peterson for years. And while he supports increased taxes on the wealthy (along with broad-based benefit reductions), he remains firm in his defense of the special provision for private equity partnerships despite the view of many on Wall Street, including the billionaire investor Warren E. Buffett, that the rate is too low.
‘This is a fairness argument,’ said Mr. Peterson, who says that increasing the 15 percent rate for so-called carried interest, compared with ordinary tax rates of roughly double that, would force private equity companies overseas. ‘There are so many other partnerships, why pick on this high-growth sector?’
So the one way he made all his money, ‘cause again this is the difference between $2 billion and $1.3 or $1.4, right? This is a lot of money we’re talking about, hundreds of millions of dollars, the one thing he made his money on happens to be the one that he doesn’t think we should increase taxes on. This captain deficit right here, so we wanted to end on that note of irony, you know, obviously this isn’t the world’s biggest gotcha, like a phony billionaire deficit monger is not the biggest surprise to the listeners, but it’s worth noting that his entire, his ability to grow such an obscene amount of wealth is absolutely based on the fact that he barely paid any taxes.
Nima: To discuss this and more, we’re going to be joined by David Dayen, executive editor of The American Prospect. His work has appeared in The Intercept, New Republic, Washington Post, Los Angeles Times and elsewhere. His first book, Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud, won the Studs and Ida Terkel prize. His latest book is Monopolized: Life in the Age of Corporate Power, which will be published in June of this year. David will join us in just a moment. Stay with us.
[Music]
Nima: We are joined now by David Dayen, executive editor of The American Prospect. David is great to talk to you today on Citations Needed. Thanks for joining us.
David Dayen: Yeah, thanks for having me on.
Adam: So we’re excited to have you on. In our research, we were discovering all these old articles and new articles you have written and you’ve been following Pete Peterson’s astroturf campaign for longer than I’ve been in the game and back in the early 2010s you attended an America Speaks rally. In your time covering Peterson’s deficit PR machine, I want to sort of start broadly here — to do, as we always say, which is set the table — what are some of the themes that you’ve noticed that makes his messaging empire effective? Specifically how, unlike the Tea Party, he spends so much money and makes such an effort and bends over backwards to make his right-wing gutting of social security and Medicare and social programs, to make it seem both sort of sterile and bipartisan, the coveted bipartisan label?
David Dayen: Right. I mean, first is its ubiquity and I have to plead guilty here for a few years I was a paid a columnist for the Fiscal Times, which is part of the Peterson empire and I wrote plenty of articles about how terrible austerity was, how social security needs to be expanded, you know, all these things sort of antithetical Peterson’s worldview. I think I was sort of a ghost in the machine, but it just goes to show you how there was a moment there in the 2010s where there was just a lot of money being thrown around and, you know, they were kind of veering from project to project and yes, looking for that golden bipartisan brass ring. I mean, I’m assuming that’s why they brought me on. They’re like, ‘Here, we have liberals too,’ even though, you know, I was kind of against the message, but they had this America Speaks thing, which was trying to engage the public. They had this thing called The Can Kicks Back, which was an attempt, a really ham-handed attempt to engage millennials. Fiscal Times was like this journalism outlet. They had very high level think tank type places in Washington, like the Committee for a Responsible Federal Budget and others and then donated to other people’s groups as well so that it was really full spectrum warfare here. The Peterson empire really tried to get involved in so many little pieces and there was a ubiquity to it and also a continuity of message, I guess except for me, there was this continuity of message throughout that really pushed this line that Washington has pretty much swallowed whole and has founded even in this new era where progressives are pushing back against it. It’s still been a tough thing to get, you know, members of even the Democratic Party and also the establishment to play off.
Nima: You bring up the Committee for a Responsible Federal Budget. I would love to kind of dig into this a little bit more. This is a group that is constantly cited in the press and has been repeatedly referred to during election cycles, notably by debate moderators in electoral debates. The name Committee for a Responsible Federal Budget sounds very neutral and bipartisan and, you know, trustworthy-
Adam: Well, it sounds like it’s a part of the federal government.
David Dayen: Could certainly be.
Nima: Yeah, it sounds really official but to what extent do you think just by citing this group, how has this pushed election discourse to the right consistently and also is there a way we can almost quantify or really demonstrate quite how influential this one institution has been in its bludgeoning of the left?
David Dayen: Right. I mean what’s interesting about the Committee for a Responsible Federal Budget is that it’s really a kind of a vaporware of a committee. I mean it puts out a few press releases. It does random papers and things like that, but it’s not an extensive, deep analysis kind of situation, at least not to me. There are plenty of think tanks in Washington that do very thorough work and the Committee for a Responsible Federal Budget just sort of picks up a handful of things here and there and every time there’s a budget they don’t like, they send out a press release, not in anger, but in sorrow, you know, saying, ‘Well this is this deeply distressing that we’re passing on this debt to our children and grandchildren,’ however you pinpoint it, they are a go to source for the media. They punch well above their weight. I mean if you asked the average person on the street what is the Committee for a Responsible Federal Budget, they would have no idea. It is something that exists wholly inside Washington and yet they have this reach in some ways because there are a lot of people associated with it who were former congressional budget office staffers who were just connected in some way or another. And in part because the media is completely lazy and they have been demurred to think that if ‘I want to sound good and talk about policy, I can talk about the deficit because at least I kind of understand that, I how to add and subtract, I can’t do anything too much more extensive than that.’ And so you see this over and over again, like in the 2016, I don’t remember if it was the presidential or vice presidential debate, it was Elaine Quijano of CBS News who cited the CFRB three or four times. It was practically that Maya McGinnis was the questioner. Maya McGinnis is the head of this organization. It was appalling. I mean the ratio questions that they were able to give relative to the actual influence of this organization nationally, I’m not just talking Washington and I’m talking like within the nation, like four people outside of Washington probably know who they are, is appalling. I mean it’s unbelievable how they are able to be so successful in getting their message to a very tiny but influential group of people in Washington, this sort of gang of 500 that’s their entire constituency. But that’s very powerful because that’s who gets listened to by policymakers, by people in power. So it’s a narrow but influential constituency.
Adam: Yeah, and it’s a, as a point of comparison, earlier in the show we note that in 2016, set aside the primaries where the Committee for a Responsible Federal Budget was mentioned several times, but just in the debates, the vice presidential and the regular presidential debates, one on Fox News, the one on CBS you mentioned, the Committee for a Responsible Federal Budget was mentioned in four different questions, whereas global warming hasn’t been mentioned really since the 2000 debate between Gore and Bush. There was a pseudo global warming question in 2008 but it was really about domestic energy.
David Dayen: In fairness, the survival of the planet is not nearly as important as how many percentage points will be different in the long run budget window in 2035 so, you know, I mean put yourself in perspective.
Nima: And that’s what really people talk about at their kitchen tables. That’s the real bread-and-butter issue.
David Dayen: (Laughs.)
Adam: This is true. Simpson-Bowles is the center of every kitchen table.
Nima: (Laughs.) Just a bust of his head. You mentioned addition and subtraction, and I want to actually talk about this rhetorical tick of, ‘Hey, we’re just doing the math here,’ which is something that Peterson and his acolytes have relied on for years. Can you tell us about how this deficit hawk appeal of ‘just doing the math’ may be more about just simple arithmetic then what the idea of actually doing the math about people’s lives? What is going on here?
David Dayen: Yeah, I mean deficit politics rely and capitalizes on the simplicity of the very narrow media elite that it seeks to associate itself with and get its message out through. The truth is that this idea that the government is like a household budget is ridiculous on two levels. First of all, tens of millions of them in this country run deficits all the time. It’s called a mortgage or it’s called your credit card or it’s called your student loan debt and the mortgage, for all intents and purposes, is an investment, it’s something that is preferred as a means of building wealth. And so the idea that you have to only spend that which you have in your bank account right that second, it doesn’t even work on the household analogy level. So that’s number one. And number two, no household that I know legally has a money printing machine in its basement.
Adam: Well. You don’t know any sovereign citizens, buddy.
David Dayen: (Laughs.) Well, this is true. This is a good point.
Adam: Have you ever been to West Texas?
David Dayen: The Oath Keepers. But my point is that thinking of a government budget as akin to the household when the government has a sort of infinite time horizon to pay back debts has, I mean especially now when we’re seeing interest rates that are at historic lows, that the debt service relative to GDP is very, very low, but much lower than it has been in some time and that’s ultimately the only important number that you need to know. Can we make the debt service right now? And the answer is yes. And it has been yes for many, many years. That just shows the complete fallacy of this but it sounds good, right? It sounds good on paper. ‘We should cover our debts.’ ‘We should not spend more than we take in.’ That’s not how the government works. We are supposed to make investments. I mean if you look at sort of the main things that we’re told that we cannot afford, so you have the climate policy and if we don’t have a planet to live upon, I think the idea that we’ll get a debt to GDP ratio over 90 percent becomes somewhat irrelevant. The second part of that is that the cost of inaction is probably greater than the cost of action in terms of the emergency funding for environmental disasters, for extreme weather events, things like that. You look at something like education, like free college, that policy, that is an investment in human potential and if you educate your citizens, you create more talent in your country and get more entrepreneurship, innovation, workforce potential. It has proven true anytime that we’ve done it throughout US history, including in California where we had a master plan for education in the 1950s and 1960s, and it created one of the richest areas anywhere in the world within California. So that, I mean it’s sort of a proven strategy of investment that works. You could say the same thing for infrastructure. You spend the money now, lay down the infrastructure and it pays itself back in spades because you can attract, if you have world-class infrastructure, you’re going to attract a world-class business climate. The third thing would be healthcare and as we know using government run single-payer healthcare is actually cheaper in terms of national health expenditures then it would be just to continue on our broken status quo. So the situation with these deficit hawks doesn’t make sense even on the individual policies, let alone it not making sense in the aggregate to be worrying about the deficit in a time of incredibly low interest rates when inflation and interest rate rises, which is the thing that they worry about in every missive, hasn’t happened for 12 years and even though they’ve been screaming about it that entire time, so it doesn’t make sense in the specific, it doesn’t make sense in the general, it doesn’t make sense at all, but it makes a lot of sense to stupid people who happen to also be in charge of our media.
Adam: Yeah. I want to talk about the ways in which I think they do this bipartisan kind of cup and ball game where what they’re good at doing is unlike the Tea Party, that was sort of one major difference to be fair to the CRFB, is they extensively oppose tax cuts and support some kind of tax increases. We discussed earlier in the show how Pete Peterson theoretically supported tax increases, but then would lobby against tax increases on hedge funds and other ways he made his money. So when the Trump tax cuts came along, they did some mild hand wringing. But the thing is if you’re running a deficit schooled propaganda outfit, you know that the odds of meaningful tax increases is infinitesimally small compared to the odds that we’re going to privatize and gut social programs and cut social programs, right? Like that’s sort of the racket they play. For example, if I say ‘Nima, you know, I would never leave Citations Needed, but only in the instance in which I get a better paying podcast job or I’m drafted by the LA Lakers.’ I know that the ladder is never going to happen. Right?
Nima: (Laughing)
David Dayen: (Laughs.)
Adam: So it’s like-
Nima: Are you trying to tell me something, Adam?
Adam: Well, no, I love you. But like there’s this thing they throw out where they’re like, ‘Oh, well we’re for taxes but like you and I both know that meaningful tax increase in this country is not at all plausible,’ right? So that I’ve noticed that’s kind of how they get away with it ‘cause when you criticize them for saying, you know, they want to put grandma on a can of tuna, they go, ‘Oh no, no we support tax increases,’ but then 90 percent of their literature they produce is not about tax increases it’s about cutting entitlement programs. And they do the same thing for defense too. They sort of have every now and then they’ll do like a token ‘Maybe we need to cut some costs in the DoD by 1 percent.’
David Dayen: Yeah, I mean I think they nod at it and it gives them plausible deniability. I think you’re correct about that. I think the other part of it, the participation of the parties involved. Now with Democrats, every so often they will get on their high horse and, you know, we saw this during the George W. Bush years, Democrats would talk about putting two wars on a credit card and things like that but it’s somewhat half-hearted and it’s not sort of a massive attack. When a Democrat gets into office, Republicans completely turn on their policy of running up deficits for things they like and they weaponize the kind of Peterson rhetoric incessantly and they’re very on message about it and to a much greater degree than Democrats ever are. And that amplifies the message. So what is being foregrounded here? It means effectively that Peterson style deficit hawkery, it aligns with Republican policy preferences and those are, you know, cutting social programs and the like. So I think that’s also a part of it.
Adam: Yeah. ‘Cause I want to talk for a second about the ideological capture of the Obama administration in the early years of his administration. Now it’s obviously difficult to tell to what extent that was just donor service because Obama raised more money on Wall Street than McCain did or if that was ideological — of course it’s probably some combination of both — but they really bought into the deficit logic on a fundamental basis. You had people like Ezra Klein who were constantly hammering about the deficit, doing profiles of Paul Ryan and of course that, you know, Jake Tapper doing the whole household income thing, he literally had like a CGI table with a budget and I guess what I’m asking is like, to what extent do you look back on that era of being like, what the fuck was going on?
David Dayen: I mean, I don’t think it was just Obama. I mean what we know is that Nancy Pelosi gave a eulogy for Pete Peterson on the house floor. She didn’t need to do that. Peterson had, when he was alive, an annual event that called the Fiscal Summits that people would, you know, in both parties, all the leaders would go to and kiss the ring. And Pelosi was there, like, every year. She is deeply tied into this idea, as is her lead staffer on health policy, but really on everything, this guy, Wendell Primus, who is someone who went to, just in the past couple of years, went to healthcare meetings, like health industry meetings and said, ‘We’re not really going to do single-payer don’t worry about that.’ There’s a certain kind of Democrat, a kind of Brookings Institution, Center on Budget and Policy Priorities Democrat that has lived their life through the Reagan era in a total defensive crouch. Like, ‘We have to protect what we have because we’re never going to get anything better than that and we have to make sure we’re not spending too much on these other programs or they’re going to take Medicaid away from us or food stamps away from us’ or things like that. I mean, that’s a real mentality in Washington and it manifests itself with that. And there’s this weird need for approval around the deficit that Democrats have that Republicans don’t give a fuck about. Democrats really want to be loved by this cohort and this has been true since Clinton. I mean, this has been true for a long time. It’s actually been true since Mondale. I mean, Mondale ran this, he really ran on deficit hawkery. As did Dukakis. There was the famous thing where Mondale during the Democratic National Convention in 1984 said, uh, ‘My opponent will raise your taxes and so will I. He won’t tell you, but I will.’ And that was such a winning strategy that he got 10 electoral votes or maybe 13, so this has been true for a long, long time among Democrats. They crave the label of being responsible. They shrink from this tax and spend caricature that was built, you know, 50 years ago. They still run away from it. And there’s a continuum there. So Obama represented continuity I think rather than change in this department. And he picked up the old Clinton era economic team and they were very concerned about crowding out private investment and all these other nonsense ideas. And in 2010, just a year after he gets into office and has to put out this $700 billion stimulus package during the greatest economic collapse of 80 years, he pivots. He pivots away from spending and towards deficit politics. He gives a State of the Union address where he talks about tightening our belts, eat your peas, I think was one of the phrases he used, that we all have to be more responsible and you can actually see it. There’s a great Goldman Sachs chart. Now Goldman Sachs, if they know anything, they know money. So I mean, I know that when I said Goldman Sachs chart, like, why are you citing Goldman Sachs? Well, they’re good at fiscal analysis. They know cash and there’s a great Goldman Sachs chart that shows that in the middle of 2010, fiscal policy starts going negative. In other words, they were stimulating the economy with federal spending and then it stopped around 2010 just a year into Obama’s presidency and it continues to be low thereafter. Obama would start bragging near the end of his presidency that public investment is at its lowest level since Eisenhower. There are charts, he said that out loud, ‘Look how great we are, we kept our fiscal house in order.’ Meanwhile, this demonstrably stunted the recovery, I mean, it wasn’t necessarily to the degree of Europe and their austerity programs, but it was in line and there’s no question that millions of people needlessly suffered because Obama wanted to be liked by the Committee for a Responsible Federal Budget. That’s the sad fact and the real problem of, you know, the last couple of decades of the Democratic Party. Now I think we’re starting to get away from that, but it’s certainly not happening in a rapid way. I mean, we’ll see what happens after the primaries and who is actually leading the Democratic Party and maybe we’ll see a change here, but it’s a pervasive kind of link going all the way back to the 1980s and it’s continuity with today.
Adam: I mean, to some extent it is — call me a crazy conspiracy theorist — but it is who sort of butters your bread, right? I mean it’s like with Pete Buttigieg, it’s a watchword, there’s a correlation between the fact that he’s raised more money from billionaires than anyone, he may be tied with Biden, big bundlers, big wealthy donors, this is like when Sanders gets up on stage and talks about the coup in Guatemala in like 1950, it’s left-wing catnip, right? We all go crazy for it.
David Dayen: Right.
Adam: I mean it’s catnip for the super wealthy.
David Dayen: I mean we’ve certainly seen Democrats get a little bit more comfortable rhetorically about taxing the rich. I mean even Bloomberg is talking about ‘Rich people like me should pay more.’ However, you mentioned the sort of the hedge funds loophole, which is known as carried interest. It’s the way that hedge funders who make tens of millions, sometimes in some cases hundreds of millions of dollars a year, get it taxed as a capital gain rather than earning income even though it’s their income. So this particular policy could actually be changed by IRS regulation. You actually don’t need a new law to fix this thing. And Obama was in there for eight years, he professed that we have to close the hedge fund loophole, but that was something he just never got around to. And right now, Democrats in the House of Representatives, they control it, if they wanted they could pass a bill, wouldn’t go through the Senate, but it would certainly put pressure and show the position of the party. They have not gotten around to that either. And this hedge fund loophole is obviously very important to a certain class of hedge funders and private equity firms who are as much as, you know, there’s a split in the community, but they give a lot of money to Democrats and so yes, is there a tension there? Yeah, absolutely. And this dates back to the 1980s and Tony Coelho, who was the head of the DCCC in the early 1980s and he said, ‘We’re finally going to go after those corporate dollars’ and this is his top fundraiser at that point was a guy named Terry McAuliffe. This has been pervasive for 40 years. This is how Democrats sort of lost their way. They chased big money and when you chase big money, you end up constraining yourself on those kinds of policies and it’s very convenient to talk about the deficits then, right? Because you can say, ‘Oh, well, we’re not doing this because the deficit.’
Nima: No, exactly. Exactly. They perhaps didn’t lose their way, but they found a third way. I think that, yeah, this idea that what we’re seeing, you’ve said some of these rhetorical devices have decreased in their frequency of late, but still there’s the constant ‘Yeah, but how are you going to pay for it’ and that is being, you know, trained on numerous candidates by other candidates, by the media, by opponents. It’s always the, ‘Yeah, yeah, yeah, this all sounds great, everyone wants that but like really how are you going to pay for it?’ Which is just a different way to talk about the same thing.
David Dayen: Yeah. I mean some of that is about how Congress set itself up to put the shackles upon itself and this is very much led by Pelosi. So we have this thing called the Congressional Budget Office, right? I did a very long feature for our January/February issue about the Congressional Budget Office, which comes into play in 1975. So we didn’t have it when we passed Medicare. We didn’t have it when we passed social security. There was nobody looking at the 10 year budget window of any of those policies, food stamps, what have you. We just passed them and we figured it out later. In 1975, the Congressional Budget Office comes in and what it does is it scores legislation. So it says how much something’s going to cost and how much an offset, like a tax increase or spending cut will actually offset that fiscal cost. And then what happened is, I mean it’s Pelosi and other Democrats passed this policy called PAYGO, which is the pay as you go policy, which says that no new spending can be put in without these offsets. And the thing you have to know about the Congressional Budget Office is they’re always wrong. So they update their policies, they look back at their forecasting all the time and they are almost always off by hundreds of millions of dollars, if not hundreds of billions of dollars and yet we take them as gospel. I mean someone said to me, it’s like asking, and by the way, it’s not their fault that they’re wrong, it’s just they have a very hard job. It’s like asking the Congressional Budget Office to figure out the 10 year cost of a certain policy is like driving on a road on a foggy night and knowing what’s two miles down the road — you just can’t do it. And yet Congress has said, ‘Well we have to accept whatever it is the Congressional Budget Office says, and this is why we can’t have nice things.’ And that is very powerful. They’ve literally outsourced these ideas for what is worthwhile to a group of unelected economists operating under impossible conditions, trying to figure out the cost ratio of a certain policy that is based on millions of factors within the world that they can’t really control. And they do that on purpose because they have taken the democratically sort of response, legislative response of the people and they’ve handed it over to economists and that gets them off the hook for the policies that they don’t really want to do because it would offend people they might get money from to get reelected in the future. So there’s a whole sort of hierarchy here. And by the way, Alice Rivlin, who was the very first head of the Congressional Budget Office, ends up being on the Peterson payroll much later in her career and I believe she worked at the Committee for a Responsible Federal Budget ad you know there is a hierarchy there.
Nima: What!?
Adam: Lies. Before we let you go, do you want to tell us what you’re working on, what we should look out for, where we can find you? Let’s uh, let’s do some self promotion here.
David Dayen: So our next issue, which comes out at the end of March, we’ve got a lot of interesting stuff in it. We’ve got a piece on gig workers who have been organizing against the gig economy sector. We have a long feature on Trump corruption that you don’t hear about a lot, which is not the corruption of Trump himself, but the corruption of the executive agencies, all the cabinet positions. And we’re actually going to have an interactive map of Washington where you can click on each federal building and you can find out what’s going on inside of it. So we’re doing, uh, those couple of things.
Nima: That sounds horrifying.
David Dayen: (Laughs.) Yeah, it’s an architecture of corruptions, I call it. And, uh, yeah, those are the major features that we have in the next issue. And then of course, online every day we tell the story of ideas, politics and power. We do a lot of corporate power obviously with this coronavirus nightmare, we’ve been doing a lot of coverage on that. I think we’re pretty early on that and we’re going to continue to look at the economic, social and public health impact.
Nima: And tell us a little bit about your new book.
David Dayen: Sure. So in June, my book Monopolized: Life in the Age of Corporate Power comes out. There’ve been a lot of books about economic concentration and monopoly, Matt Stoller’s book Goliath for example, Tim Wu did a book, Zephyr Teachout has a book coming out. What I did that I think is a little different is I tried to do some reporting about how people are affected by monopoly in their daily life. So I went to Iowa and talked to farmers who are getting ruined by Big Ag. I went to Tennessee and talked to people in the rural areas who can’t get broadband because of a Tennessee policy that the telecoms wrote that says no high speed internet that is done through public wifi, community wifi, that can’t reach past the service area of the electric company. So three minutes away from the fastest broadband in the world, which is in Chattanooga, Tennessee, people are using dial up and they’re going to Starbucks parking lots to have their kids do their homework by catching the wifi out of Starbucks. I went to places like Ohio, talked to someone whose kid died of an opioid overdose and looked at the whole supply chain in pharmaceuticals and that concentration and how that was instrumental in that tragedy. So the idea is that this isn’t just sort of some artificial thing that is a statistical reality with charts and you have to know about some index of how concentrated a market is, this is about what happens to real people when they’re living through a society that has sort of run a muck with these monopolies and a government that refuses to do anything about it.
Nima: Well that sounds exactly as bleakly on brand as the show that we tend to put together each week. (Laughs.) It sounds absolutely amazing and I urge everyone to go out and check it out. David Dayen, executive editor of The American Prospect. His work has appeared in The Intercept, New Republic, Washington Post, Los Angeles Times, many other places. His first book, Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud, won the Studs and Ida Terkel prize. His latest book, as you just heard, is Monopolized: Life in the Age of Corporate Power, which will be published in June of 2020. David, thank you so much for joining us today on Citations Needed.
David Dayen: Absolutely. Thank you.
[inaudible]
Adam: Yeah, it’s good to talk to someone who was actually at one of those weirdo astroturf deficit town halls ‘cause that was just an urgent thing people really wanted.
Nima: America Speaks!
Adam: What’s so great about the Tea Party and America Speaks and all this stuff about the deficit is it was the height of the recession because they knew a big stimulus package was coming and they didn’t like that. So all this weird astroturfing took place like right when people needed the government the most and so again, without tethering it to vitriol and racism, you just aren’t going to get people to show up. That’s what Pete Peterson’s big mistake was.
Nima: He was just relying on the math instead of the meanness.
Adam: Well yeah he didn’t, he didn’t realize that the most effective, if not, I mean obviously you want to call up liberalism, that’s important, but like in terms of getting bodies in the streets, the only effective way of doing that really is to say there’s that black guy over there buying steaks and riding in limos on your dime, right? Once you eliminate that element, it’s like who really cares? Like the average person is not going to care. DC will care, but outside, outside of DC, nobody gives a shit.
Nima: Well, sure, because showing like a ledger doesn’t have that visceral-
Adam: Nah, nobody cares. Alan Simpson doing Gangnam Style is not gonna get asses in the seats. It’s just not.
Nima: (Laughing.) Yeah, flash mobs kicking cans are not really going to do it. Means testing somehow doesn’t always work unless you tether it to just like being mean.
Adam: Right.
Nima: So anyway, that will do it for this episode of Citations Needed. Thank you everyone for listening this week. Of course, you can follow the show on Twitter @CitationsPod, Facebook Citations Needed and become a supporter of the show through Patreon.com/CitationsNeededPodcast with Nima Shirazi and Adam Johnson. As always, a very special shout out goes to our critic level supporters through Patreon. I am Nima Shirazi.
Adam: I’m Adam Johnson.
Nima: Citations Needed is produced by Florence Barrau-Adams. Associate producer is Julianne Tveten. Production assistant is Trendel Lightburn. Newsletter by Marco Cartolano. Transcriptions are by Morgan McAslan. The music is by Grandaddy. Thanks again for listening everyone. We’ll catch you next time.
[Music]
This episode of Citations Needed was released on Wednesday, March 11, 2020.
Transcription by Morgan McAslan.
