Crusaders know they’re nothing without something to crusade against. That’s undoubtedly why hedge fund billionaire Peter G. Peterson keeps harping on the federal debt.
It’s the same reason that army generals talk up the capabilities of national enemies, and World Series teams express the deepest respect for their opponents. It’s why Robert DeNiro’s White House operative Conrad Brean in “Wag the Dog” told William H. Macy’s CIA man: “If there’s no threat, what good are you?”
Peterson has made a name for himself as a deficit hawk, and even though the federal deficit as a share of the economy has come down sharply over the last six or seven years, he’s damned if he’s going to give up a good issue, even if he has to fake things a teensy bit.
Hence, the Peter G. Peterson Foundation’s “fiscal confidence index,” which purports to “gauge public opinion on the national debt, and provide the public with an instrument to communicate their concerns or optimism to elected officials.” The foundation released the latest monthly index reading Tuesday. You may be surprised to learn that it says you’re terrified.
The latest index comes in at a dismal 41, with 100 designated as “neutral.” Here’s how the foundation outlined the poll results that it compiled to reach that figure:
“More than two-thirds of voters (68%) say that the country is on the wrong track when it comes to addressing the national debt, including a majority (53%) who feel strongly the country is off course.... More than eight in ten Americans (83%) are calling for the President and Congress to spend more time on the national debt, with almost eight in ten (79%) agreeing that the national debt should be among the President and Congress’ top three priorities.”
If this were true, the national debt would be part of Americans’ daily discourse over their back fences and around the water cooler. Here’s my bet: You haven’t thought much about national debt for a year or two. Unless you got a call from a Peterson pollster, maybe. As it happens, Americans’ supposed level of concern over the national debt has scarcely budged over the 20 months that Peterson’s been measuring it. So if there’s “concern,” it appears to be a steady-state background hum.
To put all this in perspective, let’s start with Peterson. I described him in 2012 as “the most influential billionaire in U.S. politics,” referring to how thoroughly he had infiltrated the councils of Democratic and Republican policymakers alike. The son of Greek immigrants, Peterson, 88, served as commerce secretary under President Nixon, then became chairman and chief executive of Lehman Bros. He then made big money as co-founder of the Wall Street private equity firm Blackstone Group.
Peterson’s policy hobbyhorse is federal spending. His proposals for reining it in were aimed almost exclusively at cutting Social Security and Medicare, which he claimed to be bankrupting the nation (never mind tax cuts for the wealthy or out-of-control military spending).
The Peterson folks, who will never have to worry about how they’ll make ends meet in retirement, are still pitching this class warfare. After the release of the 2014 Social Security and Medicare trustees reports Monday -- they stated that Social Security is stable and the cost profile of Medicare is improving -- the foundation’s Michael Peterson called for a “fiscal plan that secures the future of Social Security and Medicare and stabilizes the long-term debt."
Here’s a suggestion: Eliminate the cap on Social Security payroll taxes, which is set this year at $117,000 in earned income. Making billionaires like Peterson pay more of their fair share for the program would, according to the Congressional Budget Office, “more than eliminate” any actuarial imbalance in Social Security over the next 75 years.
But what about the national debt? Is it a top-three crisis, as Peterso’s polls seem to say? The problem with these polls is that they’re done in a vacuum. According to the list of questions Peterson publishes, the pollsters don’t define the national debt for respondents. They don’t talk at all about what’s been happening to it or its fiscal driver, the deficit, or place it in historical context.
So here are some figures. Debt held by the public is today about 75% of gross domestic product. It’s projected to fall modestly over the next few years. It’s nowhere near a record -- that was just after World War II, when it reached 106%.
After that the ratio came down smartly, largely because of strong economic growth. That should give you a clue to what the first, second and third priorities of elected officials should be -- job growth. But job growth has been largely off the agenda in Washington, in part because lawmakers are fixated on, yes, trying to limit the national debt.
As for the federal deficit, that’s been falling even faster -- falling from 9.8% of GDP in 2009 to 3.7% this year, or by almost two-thirds. It’s projected to keep falling almost through the end of the decade.
Would the poll-takers respond any differently if they were asked, “Are you pleased that the national debt and federal deficit are falling?” instead of, “Thinking about our national debt over the last few years, would you say your level of concern has increased or decreased?”
Polling experts know that people asked about the future will almost always describe it as just like the present, except more so. Given the steady drumbeat of dire economic news we’ve had since 2008, it’s hardly surprising that people would assume that things will continue to be bad.
The people who profit from deficit panic are people like Peterson, whose investments retain their value in low-growth scenarios. They’ve already got theirs.
The squeeze on federal fiscal policy resulting from deficit hawkishness like his has only hurt the ordinary American who’s still waiting for job growth to pick up while Congress dithers, and who will be relying in retirement on Social Security and Medicare, which Peterson wants to cut because they’re ostensibly bad for the debt and deficit. He doesn’t talk about that in his monthly press releases about the “fiscal confidence index,” but why would he?
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