The Campaign to Fix the
Debt was founded by former White House official Erskine Bowles (R) and
former senator Al Simpson, pictured here in 2011, whose deficit plan
issued two years ago was not adopted by Congress and the White House.
April 21, 2013
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On April 19, just after I had written about how the key academic research used to bolster austerity policies was
exposed by a 28-year-old grad student at U Mass, Amherst, I got a surprise in my email box.
In
the email, Erskine Bowles and Alan Simpson giddily announced their new
deficit-reduction plan, which includes, among other things, a
recommendation to increase the eligibility age for Medicare. Their plan
would reduce debt as a share of GDP below 70 percent by 2023 and, as the
Washington Postreports,
“seeks far less in new taxes than the original, and it seeks far more
in savings from federal health programs for the elderly.”
What’s
incredible is that over the last week, the study by Harvard economists
Carmen Reinhart and Ken Rogoff that famously warned of the dangers of
government debt has been proven to be riddled with errors and
questionable methodology. To recap: R&R’s paper purported to show
that countries with public debt in excess of 90 percent of gross
domestic product suffered negative economic growth. Austerity hawks
everywhere used it to justify cuts that have cost people jobs and vital
services. The original spreadsheet used by R&R was obtained by a U
Mass grad student, who found that in addition to the mistakes already
noted by several economists, there was a coding error in their Excel
spreadsheet that significantly changed the results of their study.
As
New York Magazine’s
Jon Chait has pointed out, that same discredited research has been used
by Bowles and Simpson to formulate their deficit-reducing austerity
plans.
Let’s take a look at some ugly chronology.
January, 2010:
Reinhart and Rogoff release their famous paper, “Growth in the Time of
Debt” (early versions of the paper had been circulating since 2009) to
widespread acclaim.
February, 2010: President Obama
announces
the “Bipartisan National Committee on Fiscal Responsibility” otherwise
known as the “Simpson-Bowles Commission” (also the Catfood Commission),
chaired by Erskine Bowles and Alan Simpson.
June, 2010: The notorious
2010 Toronto Summit
takes place, in which G-20 leaders agree to pursue austerity policies
instead of addressing the jobs crisis in the wake of the 2007-2008
financial meltdown.
December, 2010: Bowles and
Simpson release “The Moment of Truth: Report of the National Commission
on Fiscal Responsibility and Reform” which warned of increased
government spending and called for cuts in benefits for the elderly,
veterans, and many government employees.
There is no question that
Bowles and Simpson were doing their dirty work as the influence of
Rogoff and Reinhart’s paper had given rise to a misguided Washington
consensus on deficit reduction.
There is also no question that
Bowles and Simpson, two wealthy white men equipped with an outsized
sense of their own entitlement, have always appeared shockingly out of
touch as they have tried to foist “shared sacrifice” on the public
(Simpson famously sneered that
Social Security was a "milk cow with 310 million teats").
But do they not even turn on the news? Do they not employ some staff
person who could warn them of beclowning themselves by sending out their
package the same week as the austerity revelations?
Literally
days after the news was full of reports of the faulty austerity
research, Bowles and Simpson have launched a campaign to reignite
congressional interest in a $2.5 trillion package of spending cuts and
tax increases. Their plan represents the height of fiscal
irresponsibility and moral insensibility given the current and growing
retirement crisis Americans are facing, and it is particularly egregious
given the new revelations about the academic underpinnings of their
economic theory. There has never been any economic justification for
their cynical attempts to rob ordinary people of more of their
hard-earned money, but now, as the intellectual dishonesty of cutting
government spending in the name of deficit hysteria is on full display,
Bowles and Simpson should be booed off the national stage once and for
all.
How many people have suffered, indeed, how many people have
died, as a result of deficit hysteria promoted by the likes of Bowles
and Simpson?
Lynn Parramore is an
AlterNet senior editor. She is cofounder of Recessionwire, founding
editor of New Deal 2.0, and author of 'Reading the Sphinx: Ancient Egypt
in Nineteenth-Century Literary Culture.' She received her Ph.d in
English and Cultural Theory from NYU, where she has taught essay writing
and semiotics. She is the Director of AlterNet's New Economic Dialogue
Project. Follow her on Twitter @LynnParramore.
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