Last March, House Speaker Nancy Pelosi appointed Rep. Jan Schakowsky, a progressive Democrat from Chicago’s north lakefront and near north suburbs, to President Barack Obama’s 18-member National Commission on Fiscal Responsibility and Reform. Co-chaired by Erskine Bowles, former chief of staff for President Clinton and a millionaire investment banker, and former Wyoming Republican Senator Alan Simpson, the bipartisan but distinctly conservative commission is supposed to come up with a plan to reduce long-term growth of federal budget deficits – deficits fueled by Bush’s tax cuts, two wars, the Great Recession, programs to fight the recession, and rapidly rising health costs.
In early November the two co-chairs floated their proposal, much to the surprise of commission members like Schakowsky, a former community organizer (of senior citizens, among others) and part of the House Democratic leadership team. Shortly afterward, amid a flurry of other proposals, Schakowsky presented her own, much different plan.
It would not go into effect until 2015 or after unemployment subsides, and it provides for $200 billion of job-creating investments during the next two years, in addition to reducing the deficit by $441 billion in 2015, nearly double Obama’s target. Slightly more than a third of Schakowsky’s proposed deficit reduction would come from new revenue (mostly tax changes hitting the wealthy and corporations but also from cap-and-trade carbon emission controls), 30 percent from ending or reforming tax expenditures (again, mainly benefiting rich taxpayers), a quarter from defense cuts, and 9 percent from mandatory programs (like offering a public option for health insurance and requiring Medicare to bargain over drug prices). Though Social Security does not contribute to the deficit, Schakowsky plans to secure future payouts without benefit cuts by increasing how much the wealthy pay into the retirement program.
Schakowsky worries that if Democrats go along with ideas such as those in the Bowles-Simpson plan, they will deeply hurt seniors and working- or middle-class constituents and pay a heavy political price. In 2010, she notes, Democrats lost seniors by 20 points. Among those voters who said they were economically worse off than four years earlier, Democrats won by 40 percent in 2008. But in 2010 they lost voters worse off than two years earlier by 29 percent.
The Commission needs 14 out of 18 votes to approve a plan by its December 1 deadline. A few days before Thanksgiving, Schakowsky discussed the commission’s work with In These Times.
JS: Next week is the big week. Either we’re going to have a proposal or not.
I do not have any clarity on process, believe it or not. It’s never been made clear at the commission meetings. Are they based on all of the conversations and reactions to their proposals and other proposals that are on the table? Are the chairmen going to come out with a final recommendation that will be voted up or down? I have no idea how the whole thing gels.
Erskine Bowles moderates the discussion. That’s how it’s been. So far it’s not just progressives who are unhappy. The Republicans don’t like any revenue increases.
Do you see a final decision, a consensus coming out of this commission?
It depends on how we define it at the end. Theirs is very sweeping – this complete overhaul of the tax code, eliminating all tax expenditures, lowering the rates for everybody. So I think the chance of that kind of recommendation is very low and probably impossible to achieve. On the other hand, I think there are a number of things it’s possible to agree on, on defense spending. We’ll see in the end if they actually do it, but at least the conversations in the commission seemed to indicate that Sen. Tom Coburn (R-Okla.) is very amenable to that. Or there could be even a laundry list that points us in the way of deficit reduction. But I think something as comprehensive as the Bowles proposal is not going to happen.
What was the message you were trying to convey with your proposal, both politically and economically?
The politics and economics are combined. I wanted to make it very clear that we could do some important things on reducing long-term debt and achieve primary budget balance without harming the middle class. I felt it was important to have a progressive point of view. …
I also wanted to make the point – which has gotten very much lost in the shuffle – that investment in the economy is very important, important for deficit reduction. If we make the needed investments, then more people will be working, the economic situation will be improved, and the deficit will actually be reduced. There’s very little discussion of that and nothing in the Simpson-Bowles proposal to invest in the economy.
The other point I wanted to make is that it’s disingenuous to talk about shared sacrifice. Low-income people and middle-class people have done their share of sacrificing over the last number of decades. We now have the largest disparity in income since 1928. To exacerbate that by cutting Social Security – again, Social Security has nothing to do with the deficit. While lip service is paid in the Simpson-Bowles plan, I think it’s quite conflated, seriously. Simpson-Bowles somehow implies Social Security. I have my own examples of how we could create solvency for Social Security for the next 75 years as well.
Fixing the economy is not a green eyeshade, bean counter kind of plan. It’s figuring out first what are our values, who pays, who doesn’t. So I’ve consistently asked for distributional analyses for any proposal we’ve made. To the extent that we’ve got them, they pretty clearly show that the burden will fall on the very people who have not shared the prosperity over the years. So I think having a plan out there has helped the conversation considerably. I’ve been getting – I don’t know how serious – but fairly respectful coverage.
It seems to me that your plan consistently gets left out. I wondered why your plan is not taken seriously.
I’m definitely not being taken as seriously, partly because I wasn’t attempting to do a long-term, 20-year plan. We didn’t have the capacity to do that. I thought my plan was more illustrative than anything. …
It also hasn’t been dismissed as just silly. It’s useful for the progressive audience to provide some talking points and examples of why we don’t need to do this.
Do you see some common ground between your plan and Bowles-Simpson?
I think we may be able to agree on some of the defense cuts, some of the discretionary spending like ag[riculture] subsidies. I think there may be some revenues that we can agree on. My categories are defense, revenues, tax expenditures, and non-defense. And on mandatory spending, I’m mainly doing things like negotiations on Medicare prescription drug prices. …
The goal is that we need to get five people who will ultimately say no if [other commission members] make the kind of proposals or the assumptions that underlie Simpson-Bowles.
It seems to me that the committee was skewed to right of center with very few progressives. Do you have five votes that could block it?
You mentioned public investment for growth and the public option for healthcare cost control, but many progressives see the deficit as a result of the recession and, longer term, rising healthcare costs. They are skeptical about whether some massive budget-balancing plan is needed. Are you convinced a plan as ambitious as even yours is needed?
It is very much a losing strategy for us to say we don’t need to do anything. Among those anythings are major investments. For example, we have to be absolutely unwavering when it comes to unemployment insurance. The very notion that we have to pay for it [through spending cuts] destroys all the stimulus capacity. That’s why some Democrats, incredibly, voted against extending unemployment insurance.
So we’re going to need to talk about healthcare costs. We did for 18 months on the healthcare bill, which made some progress, but I think there are some other ways that we can do it. But the notion of taxing dividends and capital gains as ordinary income is something we should do anyway. The idea of eliminating some tax expenditures that are never scrutinized and so skewed to the wealthy is an important thing to do. We need more money. I feel very comfortable in any case about all the recommendations I make for cuts
The defense contractors have been very clever and put jobs in every state, so there actually may be arguments about displacement that are real… Remember, that’s all public dollars that we’re spending on these outdated weapons systems. So we could spend them in other ways and put people to work in a more productive way. Having that kind of conversation about how we allocate resources in our society is very much worth doing.
How do you anticipate that Republicans will try to play the deficit issue in the next Congress? Are there particular targets you expect? Do they really want to accomplish something?
Their answer to every question is more tax cuts for the rich. Whatever the problem, that is the answer. I think we’re going to see them continue along those lines.
The question is whether we can show the Tea Partiers – who in many ways are anti-corporate, too – that they bought snake oil. If they’re looking for help for the middle class, they bought the wrong thing. …
The Republicans are in disarray themselves. It will be very interesting to see how they deal with these Tea Partiers. There’s distrust of Wall Street among everyone, including the Tea Partiers, and a sense of how unfair the bailouts have been. Yet the Republicans have talked about repealing the Wall Street reforms.
We have to pick the right fights, and we have to be willing to fight. That has to be a White House and congressional strategy we can all agree on, because this is now about the presidential election.
So far we’ve been sorely outspent, and this Citizens United decision – God only knows what that means in 2012. It doesn’t look like we’re going to do anything about that, which is pathetic. Are Senators going to have the courage to end the filibuster as we know it – or as the Republicans know it – or at least put some constraints on it? I think we have a number of tools. It’s a question of whether we’ll be willing to use them.
What strategic targets do you think Democrats should pursue? And what, if anything, are you fearful your colleagues or President Obama might do? There’s certainly a lot of pressure to compromise, and that opens several cans of worms.
I think we need to be better poker players. The president said he used to play poker when he was in Springfield as an Illinois state senator.
For small stakes though.
We’ve got big stakes now. And we haven’t been the best poker players. We’ve been ready to fold when we shouldn’t be. We should be taking principled positions that are very clear and not just given away. I just feel so strongly about unemployment right now, especially if you juxtapose it with the tax cuts for the wealthy that we’re being held hostage over. Or, forget the people – just look at the stimulative effect on the economy. There’s no comparison. That’s a worthy fight to have. A lot of us in the Democratic caucus don’t want to give up on that.
As far as the points in Bowles-Simpson and your plan, where do you draw the principled lines of opposition with it?
I can’t vote for the Bowles and Simpson plan. I don’t really see how it could be made into a proper plan. … This is supposed to be a deficit-reduction plan, and they start with how much they won’t raise taxes.
They begin their cuts in 2012. I think that’s bad for the economy. Mine starts in 2015, and I’d be open to arguments that it’s too soon, depending on where we are in unemployment.
I just don’t see how the underlying assumptions could be changed enough for me to support that plan. They act as if the wolf is at the door, and if we don’t act immediately, the economy will sink. I don’t agree with that. …
When you look at what the Republicans are doing on this, do you see them as having an agenda beyond deficits? Obviously they weren’t that concerned about deficits under George W. Bush.
Absolutely. This idea that they love – starve the beast – is one they embrace. Where were they during the Bush years?
Obama decided not to look back, but we Democrats did a crummy job of explaining how we got here, including deregulation – which Republicans [now] want to go back to for Wall Street. This is same old Republican [way] of cutting spending and revenue and giving tax breaks to rich people. It would further exacerbate the disparity in income we now have.
Do you think that’s an issue Democrats can successfully make more of a political issue?
I decided to just do that myself: I’ll put something out there.
Did you try to get anyone else to sign on?
No, I didn’t because I didn’t want to spend weeks fiddling with it. It’s mainly illustrative of what we can do. I’m not sure I would have been successful, though I know other members are happy I did. But everyone is being very polite. So I didn’t even go for it.
Do you worry that your colleagues will feel too much pressure to compromise?
I do. I worry that the Democrats might think the public will believe that we’re not sufficiently serious about this problem, and so we’ve got to go along. I do worry about it. We’ve somehow lost the brand on a number of key issues. In many cases, Democrats are associated with Wall Street, not working families.
A shorter version of this interview appeared in In These Times January 2011 issue.
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David Moberg, a former senior editor of In These Times, was on staff with the magazine from when it began publishing in 1976 until his passing in July 2022. Before joining In These Times, he completed his work for a Ph.D. in anthropology at the University of Chicago and worked for Newsweek. He received fellowships from the John D. and Catherine T. MacArthur Foundation and the Nation Institute for research on the new global economy.