The federal deficit and Saxby Chambliss’ new best friends

A quartet of Saxby Chambliss’ new best friends toured metro Atlanta this week.

Their task was to scare the bejeezus out of every human being they came in contact with. And they did a stellar job.

In front of Atlanta Kiwanians, on a public television program, in discussions at Kennesaw State University and before the Atlanta Press Club, these four experts on the blooming federal deficit warned that we stand on the edge of catastrophe.

U.S. Sen. Saxby Chambliss. Associated Press

U.S. Sen. Saxby Chambliss. Associated Press

However harmless she may look, diminutive Alice Rivlin, an economist and member of the National Commission on Fiscal Responsibility and Reform, was an absolute terror.

“We could tank the economy, go into a recession much worse than the one we’re coming out of now, and we’d be a much less prosperous or influential nation for a long time,” she said for the cameras in Georgia Public Broadcasting’s basement studios.

“We’ve made all these promises to older people, under Social Security and Medicare and Medicaid, and we don’t have the revenues to pay for it. That’s the big structural problem going forward, and it gets worse,” she said.

Rivlin and her three friends — former U.S. comptroller David Walker; Robert Bixby, executive director of the Concord Coalition; and Joseph Antos, a health care expert with the American Enterprise Institute — are essential to Georgia’s senior senator.

On Tuesday and Wednesday, they were his alibi. Their reams of dark statistics explain why Chambliss has embarked on what could be the riskiest venture of his political career.

For the last few months, Chambliss and chamber colleague Mark Warner, a Democrat from Virginia, have formed the core of a bipartisan Senate venture to implement as many recommendations of the deficit commission — issued last December — as possible.

Forbes magazine is paying attention. The Economist is impressed. An editorial in the Washington Post this week heaped praise on the pair: “With the president having failed to offer leadership and House Republicans frittering away their energies on a tiny slice of the budget, the Warner-Chambliss effort is looking like the only game in town.”

Fame comes with a price. For Democrats, a deficit deal could mean severe and uncomfortable cuts to Social Security, Medicare, and the rest of the social safety net. For Chambliss and other Republicans, the political risk is the fact — not theory, but hard fact — that Americans will have to begin paying for the real cost of their government.

No one has gotten down to specifics, so — for the moment — the stark solutions remain theoretical.

In a telephone interview, Chambliss said he and his colleagues hope to lure President Barack Obama and House Republicans into negotiations by late spring, during the debate in Congress over raising the debt ceiling.

If that’s the case, the bargaining will make the current budget tussle in Washington look like the pie fight that it is — involving only 12.5 percent of the federal budget.

Not even repairs to Social Security, Medicaid and Medicare will suffice. “You still can’t get to the point where you get that deficit to level off,” Chambliss said. “That’s complicated, and it’s hard to understand.”

In a tea party climate, “complicated” and “hard to understand” are words that set off all sorts of alarms. Grover Norquist, the anti-tax guru in Washington, fired a warning salvo earlier this month.

How do you argue in favor of raising more tax revenue?

First, you point to national security. In their rebuttal to Norquist, Chambliss and his crew — core membership has grown to six — said their work “affirms the oath we have taken to support and defend the Constitution of the United States against all enemies, foreign and domestic, of which our national debt may now be the greatest.”

Chambliss’ friends down in Atlanta agreed. “It’s not just about national security. It’s about national sovereignty, too,” Walker, the former U.S. comptroller, said.

Rivlin had another conversation starter for conservatives.

“You do it in terms of tax reform. We are going to need more revenue. But we have a terrible tax system,” she said. “It’s much too complicated, and has so many loopholes in it, that it has quite high rates. If you get rid of the loopholes, you can lower the rates and still raise more money. Many Republicans, I think, find that attractive.”

Bixby is head of the Concord Coalition, the nonpartisan budget watchdog group underwriting the presentations in Atlanta.

Americans, Bixby said, will have to think differently about the underground spending contained in the federal budget — much of it directed at the middle-class. Take the home mortgage interest deduction — a decades-old tax break favorite meant to encourage home-buyers.

That deduction is one of many likely to be slated for reduction or elimination.

“They are, in effect, entitlement programs run through the tax code. If you begin thinking of them that way, they’re not really tax increases. They’re spending reductions,” Bixby said. “That’s the way you can talk about it.”

Strap yourself in, people. This is what an adult conversation sounds like.

- By Jim Galloway, Political Insider

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49 comments Add your comment

hsgrad

March 2nd, 2011
6:50 pm

Jim, you’ve been a busy bee today. Six posts in one day!

HL

March 2nd, 2011
7:14 pm

Agree except for the mention of Social Security. Social Security will not add to the deficit for twenty years. Yes, it needs to be fixed but it’s not urgent. Medicare has not paid for itself and the prescription drug plan that was not funded only adds to the deficit. The biggest part of the deficit is the Bush tax cuts though. I wish that every paper would agree to show a chart showing the effect of the tax cuts to the deficit.
Fox News screamed that you can’t raise taxes during a recession but said nothing about spending cuts that will put several hundred thousand on the street and cause the GNP to drop by either .5 or possibly 2.5 percent.
On this and other sites, the current President is blamed for all the deficits but he inherited a good part of those deficits.
I’m nearing Medicare age and I certainly wouldn’t mind paying a higher co-pay and most seniors should.

M(oney's) Worth

March 2nd, 2011
7:24 pm

Let’s hear it for Saxby! There’s a guy with real guts. He’s walking the walk, unlike the rest of them in Congress and certainly the 94 house members who have nothing important to take care of other than birth certificates. And hats off too to Mark Warner. Let’s hear what the Dem and Repub party hacks have to say now. Finally, someone who gets it and is willing to do something about it.

Dave

March 2nd, 2011
7:37 pm

Adult conversation? Buzz words, as your lead indicated, intended to scare. No one in Washington engages in adult conversation. Chambliss and the people you, with some sarcasm call his “friends” are throwing pies, just flavors they like.

William R.

March 2nd, 2011
7:49 pm

I was very glad the Concord Coalition brought this group to Atlanta. They are just about the only group out there that makes sense on these budget issues. Most groups involved in this are either far left or far right. Concord is fact based and no-nonsense. I’ve been following them for years… I only wish more people would listen to them.

Northeast Georgia Voter

March 2nd, 2011
7:56 pm

As an independent minded voter, I’ve always been sort of underwhelmed with Saxby, but Concord is a terrific organization. We’ve had them speak at my Rotary Club and it was literally the best program we ever had. They do a chart presentation like Ross Perot used to have.

I’m glad to hear that Saxby might finally be stepping off the back bench and doing something. Maybe he has some grandchildren he’s thinking about instead of just the next election.

rufus

March 2nd, 2011
7:59 pm

I’m glad Sen. Chambliss has been located and is ok. His picture has been on milk cartons for about 7 years.

Mr. Financial Planner

March 2nd, 2011
8:06 pm

kudos to the commenter who said the Concord Coalition is terrific. I completely agree and have witnessed the same thing you mentioned. They have a local guy here in Georgia who speaks to groups all the time. By the way, Concord isn’t just Sam Nunn… it’s bipartisan. Warren Rudman is also one of their leaders.

cs

March 2nd, 2011
8:09 pm

What a bad joke. TARP supporter and farmer welfare supporter and corporate welfare supporter Saxby Shameless is leading some pack of birdbrains on a deficit reduction crusade.

Leigh

March 2nd, 2011
8:10 pm

The wars started during the Bush Administration is what is killing this country. Bring our men and women home and slash military spending.

Let members of Congress and the Senate pay 100% of their own healthcare and take way their pensions too! NO ONE SHOULD BE EXEMPT

Matthew

March 2nd, 2011
8:23 pm

Most of those Senators really are a pack of birdbrains so we have to hold their feet to the fire.

I am a member of the Concord Coalition and have been for years. There really is no other group like them when it comes to federal budget issues. The local Concord person (Mr. Smith) spoke to my college class a few years back and blew my mind… the most memorable guest speaker we ever had. These are huge challenges that will require tough choices.

khc

March 2nd, 2011
8:34 pm

where is the shared sacrifice? cuts proposed hit the poor and middle class the most….and granted many don’t pay federal income taxes, but they do pay quite a bit percentage wise in state income and sales tax. unless they make significant cuts to entitlements more revenues needed and more upper income brackets with mildly progressive increases would seem logical. or means testing for medicare and social security may be in order. wish there was a better way…our military should be subsidized by the rest of the world for all the work we do. the longer we put this task off the worse it gets….

Lee H.

March 2nd, 2011
8:37 pm

I adore Alice Rivlin! I wish I could have seen her in person! I wish SHE wouldnrun for President!

Lee H.

March 2nd, 2011
8:39 pm

That should read “she should run for President!”. Go Alice go!

Northeast Georgia Voter

March 2nd, 2011
8:42 pm

I saw David Walker (the Comptroller General of the United States) in the movie IOUSA. I think HE should run for president of the United States!

Nick

March 2nd, 2011
8:50 pm

Kudos for Mr. Chambliss this shows guts and I am glad that we may be starting having an adult conversation about one of the most pressing issues of our time.

the Duke

March 2nd, 2011
9:35 pm

Please, until the government takes all waste out of spending, I don’t want to hear the words “tax increase” uttered . . . especially by a Republican.

John

March 2nd, 2011
10:19 pm

Cue the lemmings on the left and right. Go Saxby!!!

Linda

March 2nd, 2011
10:40 pm

How ironic that you all seem to applaud efforts to cut spending attacking programs that help the hardworking people who have generally don’t have lots of extra money. The work hard their whole life paying into SS, Medicare and now those are the programs you want to cut. One of the only tax breaks they get is on their home mortgages. What about the HUGE tax breaks that the rich have had since the Bush administration and the Republicans insist are made permanent? What about the tax breaks for big oil companies who have made record profits for years and years at our expense? Are you all Nuts????? Don’t you get it?? Have you all lost your mind? I have lost faith in the intelligence and caring of people who feel that this kind of action is OK. And it seems to be oh, so prevalent here in Dixie where the Republicans rule!!!!

Jerry

March 2nd, 2011
11:03 pm

Linda, I agree that we need to be careful and not just cut like a crazy man with an ax. I also agree that the Bush years were horrible… huge spending and lots of tax cuts before the recession ever hit. We borrowed a lot a money to spend big on the war, prescription drugs and never paid for it. While I’m uncomfortable with the Obama spending too, he at least had the excuse of the worst recession in decades to deal with.

I would encourage you to take a close look at the long term projections though. Those programs like SS and Medicare and Medicaid, combined with interest on the debt will absolutely kill our country if we don’t reform them. It is a myth to say we paid for our benefits when in reality we are getting back tons more than we ever paid in. Our children and grandchildren will pick up this tab, not us. That is very unfair.

Children are the most likely group to live in poverty and yet we are pushing our bills onto them all b/c we are unwilling to pay our own way. That is just not right.

Sexy Chablis

March 2nd, 2011
11:31 pm

Oh, the way y’all do go on! Miss Chablis is blushing! Sugar loves you too, Babies…

FranA

March 2nd, 2011
11:48 pm

I suspect that taxes will need to be raised. But I think we should go back to the Clinton rates for everyone – not just the “rich.” If everyone that isn’t “rich” feels no pain, they wil vote themselves more and more goodies.

The Centrist

March 3rd, 2011
2:13 am

Saxby reminds me of an arsonist standing at the scene of the fire he started, complaining that the fire department is not working fast enough, even though he also cut a hole in the water line..

Yankee in Gooberville

March 3rd, 2011
4:40 am

Until they want to talk about cutting billions of dollars given straight to oil companies, or big farm subsidies, or take back the insane extension of the 9/11 tax breaks on the highest income levels (costing us $800 billion) or military waste then they are just partisan parrots squaking whatever lines they get rented to say over and over until people believe them.

DavidEm

March 3rd, 2011
5:46 am

The most obvious place to cut is in our bloated military spending (approximately $1 million spent PER SOLDIER deployed to Afghanistan), but anyone bringing that up will be loudly denounced as a TRAITOR, since we have officially become worshippers of the military.
Secondly, I know it sounds counter-intuitive, but we desperately need public funding for elections. This is the ONLY way we can eliminate the fatal influence of lobbyists on our public spending, and the need for our representatives to spend the majority of their time searching for political funding from special-interest sources.

Ga Values

March 3rd, 2011
6:21 am

When Saxby starts talking about ending FARM SUBSIDIES we’ll know he is serious and his son Bo has given up his job lobbying for the ETHANOL industry.

Olderandwiser49

March 3rd, 2011
7:00 am

I have no problem with paying my fair share of reasonable taxes to help support the country. My problem comes from the government waste of, and sometimes illegal use of, this money, giving it to support illegal aliens, unions, and to too many other special interest groups to mention. Couple that with the huge number of redundant government offices and officers, along with the sheer stupidity of our Congress and Administration for things like bailouts, cash-for-clunkers, failed public education programs, TARP, and Obamacare, I take great exception to being asked (told) to pay more taxes. Though, I must admit that my taxes are allowing the Obamas to take some pretty nice vacations and have more parties than a frat house. Increasing our taxes may allow them to go to Fiji this summer. If they promised to stay there and not come back, I’d pay for the entire trip myself!

The General

March 3rd, 2011
7:16 am

My previously low level of admiration for Chambliss has just gone up exponentially.

Corey

March 3rd, 2011
8:08 am

Start two wars and lower taxes and elect a new president who lowers taxes for everyone making less than 250k/yr and also lowers the payroll tax by 2% and dare him to raise taxes on the wealthiest when those tax cuts were set to expire. Elect a group of purist who scream go after the low hanging fruit(EPA, labor, education, aid to the poor, PBC, Endowment for the Arts, FDA, Energy, health care housing and transportation), now scream deficits! Deficits! Deficits! We are our own worst enemy.

Prisca

March 3rd, 2011
8:32 am

Important as their contribution is to this debate, I bet they stayed in the best hotels in Atlanta at a rate of $200/night.

td

March 3rd, 2011
8:47 am

Let us see if you libs can really rap your minds around a FACT this morning. CORPERATIONS DO NOT PAY TAXES NOW, HAVE NEVER PAID TAXES IN THE PAST AND WILL NOT IN THE FUTURE. When you pay for the goods and services a corporation produces you are also paying for the taxes they are charged by the government. This cost is embedded in the price the same as the cost of buildings, lighting and all other expenses the corporation has. When you libs scream about raising taxes on corporations all you are really saying is raise the prices we pay for goods and services.

double

March 3rd, 2011
8:55 am

Raise taxes, so they can use more of your money, to fund,bribe,kickback in the secret hidden deals that the ones furnishing the money knows nothing about until too late.

Dr. Craig Spinks/ Augusta

March 3rd, 2011
8:59 am

America needs more citizens who are willing to put our long-term national interests before our short-term personal ones. Let’s applaud Dr. Rivlin, Mr. Bixby as well as Sens. Chambliss and Warner for working to implement fiscal reforms proposed by the recent national commission. Let’s also follow their lead. I’m willing to accept cuts in my Social Security and in Medicare benefits. I’ll also pay more taxes. Let’s deal with our fiscal problems before the international financial markets do it for us.

Douglas

March 3rd, 2011
9:00 am

td, and when will you cons wrap (not rap, I don’t do rap, sorry) your heads around the FACT that Social Security and Medicare and other “entitlements” are there to keep the people from destitution, which can lead to revolution, and has for some led to communism. That was the real reason behind the establishment of SS in the 30’s. Up to that point the commies had been licking their chops. You may think that because we are Americans we are immune, but desperation can create a lot of craziness. So please just keep that in mind too.

BTW, I am neither a lib or a con. I fancy myself as a dead-center indy, but others don’t always see me as I see myself, the poor, deluded dears.

Rob

March 3rd, 2011
9:02 am

This is the most impressive thing Chambliss has done in office. As far as I can tell, this is actually based in real principle and the common good of the country. I am genuinely surprised.

td

March 3rd, 2011
9:12 am

Douglas

March 3rd, 2011
9:00 am

Well my friend then what is the answer? You do know that when FDR set up SS that the most people were dead before they could collect and now most people collect for many years before they die. Why do people not save money and prepare on their own for retirement? Why do we as a society have to subsidise the income or benefits now of more than 25% of the our entire population?

the mehlman rings twice

March 3rd, 2011
9:54 am

td@9:12am
I have disagreed with you on my fronts but you are right on this. SS is the biggest income redistribution scheme ever and the people who have benefited the most have been women whose husbands earned enough income over the years to save for retirement.

Dirty Dawg

March 3rd, 2011
10:39 am

Why do I think that the reason Saxby is doing this is that, in the end, this bunch propose that Chambliss’ pet project, the, so-called, Fair Tax, i.e., a 30+% sales tax, is the only way to save us from destruction?

Montego

March 3rd, 2011
11:19 am

“We’ve made all these promises to older people, under Social Security and Medicare and Medicaid, and we don’t have the revenues to pay for it.”

Yes, we do. It’s called: print more money. Cynical I know, but I’m convinced that is how the government will deal with the problem until we’ve literally gone over the edge of the cliff.

Gregory Mann

March 3rd, 2011
1:53 pm

Sorry but I have to disagree. One simple fix for Social Security and it is solvent for the next hundred years. That fix is to remove the income cap, currently if you earn over $106,000 a year, you pay no FICA or Medicare tax on that income above $106,000. The Greenspan Commission that Reagan appointed said that the cap should be at 90% and adjusted annually. It has not been adjusted in over 25 years, and that adjustment alone would fix many of the problems. But I think that the cap should be removed entirely. And it should apply to earned as well as unearned income. Apply that simple fix, and the system is solvent for as far as one can reasonable project. And after the baby boom bubble is through the system, in 2055 and after, you could even look at lowering the over FICA and Medicare tax rate. One proposal would be to exempt the first $25,000 income, thus making the current regressive tax a much more progressive tax.

If you want a really open discussion, bring in former Social Security trustee, and Clinton cabinet member, and Ford and Carter appointee, Robert Reich, currently a professor of public policy at the University of California.

Professor Reich argues – “The Republican strategy is to split the vast middle and working class — pitting unionized workers against non-unionized, public-sector workers against non-public, older workers within sight of Medicare and Social Security against younger workers who don’t believe these programs will be there for them, and the poor against the working middle class.

“By splitting working America along these lines, Republicans want Americans to believe that we can no longer afford to do what we need to do as a nation. They hope to deflect attention from the increasing share of total income and wealth going to the richest 1 percent while the jobs and wages of everyone else languish.

“Republicans would rather no one notice their campaign to shrink the pie even further with additional tax cuts for the rich — making the Bush tax cuts permanent, further reducing the estate tax, and allowing the wealthy to shift ever more of their income into capital gains taxed at 15 percent.”

Jaypat

March 3rd, 2011
5:24 pm

The totality of the argument presented by this group is based on notion that the US Dollar (USD) is backed by gold. Walk their arguments backward and you will get to a point–before 1971, when gold “convertability” ended–when the the value of the currency (USD) really was backed by gold. Nixon took us off the gold standard and the US (and EVERY OTHER COUNTRY IN THE WORLD) is now on a fiat currency. The dollar “floats” against most of them.

As an illustration of the fallacious nature of their argument one simply need look at the value of the dollar, inflation rates and the rate of interest. The deficit has mushroomed since the Bush years, but astoundingly the rate of inflation is at record low rates, interest rates are at decades-long lows, and the USD is still highly sought after. If what they claim were true, inflation would be sky-high, interest rates would be in the double-digit range, and the dollar would be losing its value.

Furthermore, David Walker is an employee of the Pete Peterson group, who has as one of his goals the elimination of Social Security; The Concord Coalation wants to”eliminate deficits” (every time in US history when the deficit has been sharply reduced a severe economic contraction has followed); and the American Enterprise Institute is a right-wing Republican think tank. It is interesting to also note that the “National Commission on Fiscal Responsibility and Reform” couldnt even muster a majority vote among themselves on a recommendation to make.

About the only positive thing that may come out of this hornswoggle is that the American public may _finally_ begin to understand how their monetary system works at the national level.

I’d like to suggest that these same institutions who hosted this quartet also invite Prof. L. Randall Wray, Prof. James K. Galbraith, or Warren Mosler to speak so that they may undo some on the unnecesary fear that these four are spreading.

the mehlman rings twice

March 3rd, 2011
7:58 pm

Notice how few people post to this topic?

Bobbie

March 4th, 2011
12:19 am

I have to say that I’ve never been a fan of Senator Chambliss and have written him on several occasions to tell him so. When I heard the news that he was putting on the Daddy pants, I was frankly stunned. That is not an overstatement. I don’t know what kind of “come to Jesus” moment he’s had but that doesn’t matter. What does matter is that he could very well be instrumental in turning this boat around. I will write him yet again but this time, with words of encouragement and support.

I had the priviledge of being at two events with this gang of four. Scray? You bet. Honest? Completey. Bi-partisan? Thank god. Bottom line, it is going to take painful cuts in things that are important to all of us and tax increases to raise revenue. There are opportunities here for structural change if we all remain open minded and realize that no one is going to leave the room with everything they want.

Bama Bill

March 4th, 2011
9:16 am

I attended the “gathering” at KSU and it was truly a dynamite “sermon” by insiders who fully understand due to years of being insiders of great power – The question is: Will our Congress step up and force some serious action in addressing the ecnomic future of the USA – before it’s too late ?
Glad to see Saxby on the “action” team, but where is Isakson and the rest of the Georgia delegation ?

beths

March 4th, 2011
2:08 pm

TD, lets do the math. I calculate that in the 35 years that I worked, $428,000 was taken for SS and medicare. I paid taxes on $214,000 of that at the time.

I worked until I was 72. SS pays me $25,000 annually which I must pay taxes on again (double taxation)+ $2400 for medicare part B. It would take 17 years to be paid back – what are the odds I will live until I am 89? What if I could have kept the money originally and invested it?

[...] haven’t progressed as far in Washington, where Georgia’s Saxby Chambliss is among a bipartisan handful of senators pushing [...]

beowulf

March 5th, 2011
6:20 pm

Jaypat is absolutely right. See Jamie Galbraith’s report of crashing their deficit revival meeting in Austin.
The Fiscal Solutions Tour is the latest Peter G. Peterson Foundation effort to rouse the public against deficits and the national debt — and in particular (though they manage to avoid saying so) to win support for measures that would impose drastic cuts on Social Security and Medicare… They came to Austin on February 9 and (partly because Rivlin is an old friend) I went.
http://www.huffingtonpost.com/james-k-galbraith/deficit-hawks-down-the-mi_b_822811.html

If Galloway or any reader (I fear Saxby is beyond redemption) is interested in how Tsy and the Fed operate, go read Warren Mosler’s book, Seven Deadly Innocent Frauds. You can download it for free here–
http://moslereconomics.com/2009/12/10/7-deadly-innocent-frauds/

beowulf

March 5th, 2011
8:11 pm

Before I go out, I wanted to quote something from Warren Mosler’s book that is fairly awesome and belies the notion that it is only liberal that realize that “Reagan taught us deficits don’t matter”…
…He suggested I talk to Donald Rumsfeld… who personally knew many of the country’s leading economists, about getting it published. Shortly after, I got together with “Rummy” for an hour during his only opening that week. We met in the steam room of the Chicago Racquet Club and discussed fiscal and monetary policy. He sent me to Art Laffer who took on the project… which was completed in 1993.
http://webcache.googleusercontent.com/search?q=cache:fNDHl58zRbIJ:moslereconomics.com/wp-content/powerpoints/7DIF.pdf