Businesspeople are fond of saying politicians don’t know anything about business. While in the main that is true, the opposite is also true: business geniuses are often political numskulls.
Case in point: the Campaign to Fix the Debt—a dream team of CEOs, including registered Democrats like Goldman Sachs’s Lloyd Blankfein and Honeywell CEO (and Obama supporter) David Cote. These are smart people. Smart enough that they can grasp the fiscally obvious: America must pay down its debt. And it can only do so through a combination of increased revenue and restrained spending.
So far so good. Fix the Debt should follow the lead of billionaire investor Warren Buffett, who campaigns for higher taxes for upper-income Americans. Buffett’s courage, clarity, and common sense make it easier for Republicans to do the responsible thing. After all, Buffett is hardly a Marxist. Drawing on decades of experience during which he made billions, Buffett notes that when both capital-gains and income-tax rates were much higher than today, the economy boomed.
This is elementary. And yet some of the platinum-plated CEOs currently sounding off about the politics of debt reduction don’t seem to understand their role. Instead of patriotically calling on their fellow millionaires to pay a little more, they are lecturing the poor and the middle class on the need to cut entitlements, and even advocating—get this—zero taxes on corporations. That’s right, zero. Honeywell’s Cote has actually called for a corporate tax rate of zilch-point-nada. As the great political mind Homer Simpson might say, “D’oh!”
Millionaire CEOs calling for higher taxes on the rich is Nixon to China. Millionaire CEOs calling for cutting health care for the elderly while eliminating taxes on corporate profits is more like Mao to China. They no doubt have their hearts in the right place. Debt is a major long-term challenge, and the cost of Medicare and Medicaid has exploded, as has private-sector health care.
But what Blankfein, Cote, and other business titans don’t seem to grasp is that struggling seniors or families with a special-needs child are not eager to hear CEOs tell them, as Blankfein recently did, “You’re going to have to undoubtedly do something to lower people’s expectations—the entitlements and what people think that they’re going to get, because ... they’re not going to get it.” It’s Blankfein who doesn’t get it. I’m sure he’s a wiz at whatever it is Goldman Sachs does, but he stinks at what political leaders do: build support for tough choices.
An agenda of reducing Medicare for your grandma while simultaneously eliminating taxes on big corporations is political suicide. I asked one of the toughest, smartest professionals on Capitol Hill—someone deeply committed to finding a deal to pay down the debt—whether the CEOs were helping. His response nearly burned a hole in my computer screen:
“These fools are under the belief that ideas like limiting deductions on individuals is a good plan to help raise revenue for the deficit, yet at the same time they think we are going to lower the corporate tax rate, which we know will increase the deficit! They turn around and say things like they will be open to closing loopholes, but we both know they will fight like lions to protect their favorite tax breaks. And then, can you imagine a member of Congress choosing to lower corporate taxes while telling Granny she has to wait another two years before getting Medicare!!!!!!”
Umm, no, I can’t. If we are going to pay down the deficit (which, by the way, was caused by Republican economic policies of tax cuts, two wars, and a recession), everyone has to do their part. Responsible businesspeople need to call for a return to the Clinton tax rates on the rich and leave the advocacy of entitlement cuts to those who have credibility on that front.
Dick Durbin gets it. The progressive Democratic senator from Illinois has the guts and the brains to provide his party cover, as he did when he recently said, “Progressives should be willing to talk about ways to ensure the long-term viability of Medicare and Medicaid.” Durbin went on to state this obvious—but coming from a Democrat, startling—fact: “We can’t be so naive to believe that just taxing the rich will solve our (fiscal) problems.”
That’s the way to do it. You make an admission against your partisan interest; you say something counterintuitive. Comments like Durbin’s create a powerful pull of reciprocity, encouraging Republicans to give a little in return. It’s politics played wisely. Remarks like Blankfein’s and Cote’s, on the other hand, push partisans even deeper into their entrenched positions. It’s politics for amateurs.