Rallying the troops: the Wall Street charm offensive

Rallying the troops

by digby

The president is going to need the help of supporters to push through his budget proposals so he's started a charm offensive:

President Obama met at the White House Thursday morning with a group of top Wall Street chief executives as part of the administration’s efforts to forge better relations with the industry and enlist them in efforts to sell his fiscal proposals.

The CEO group included Lloyd Blankfein of Goldman Sachs, Jamie Dimon of JPMorgan, Brian Moynihan of Bank of America, Michael Corbat of Citigroup, James Gorman of Morgan Stanley, John Stumpf of Wells Fargo, Bob Benmosche of AIG and several others.
But the Thursday meeting was expected by participants to focus more on the president’s efforts, most recently through his budget proposal, to reach a “grand bargain” on deficit reduction to take the threat of fiscal crisis off the back of the economy. Also expected to be on the agenda: the president’s support for sweeping immigration reform.
I'm going to guess this is one group that will be extremely happy to sign on to the Chained-CPI. After all, the wealthy corporate and banking class are the one's behind this deficit obsession in the first place. And they are seizing their moment:
In a candid moment, otherwise known as a “gaffe,” former Tennessee Gov. Phil Bredesen said the efforts of corporate-backed Fix the Debt and other debt scolds is to create an “artificial crisis” that would extract federal spending reductions to reduce long-term debt.

Speaking at a gathering of students and business leaders at Lipscomb University in Nashville, Bredesen was joined by financier Tom Pagliara and Robert Bixby of the the debt-scolding Concord Coalition, a billionaire-financed mouthpiece similar to Fix the Debt. From the Tennessean:
The Tennessee Democrat said he and other members of the national Fix the Debt effort are trying to create an “artificial crisis” that would force Congress to bring the $16 trillion federal debt under control.
Yes, he said it out loud.

I don't know the answer to why the wealthy are so obsessed with the deficit instead of actually boosting the economy or why they are specifically so hostile to "entitlements" --- after all, they cost them very little money personally. The old idea that they were worried about interest rates doesn't seem to be relevant anymore. The stock market's doing great, their own fortunes are growing at a faster clip than they were before the financial crisis. Yet all over the world wealthy elites are insisting on using this "artificial crisis" to end government programs that benefit average citizens --- and they can't seem to communicate a cogent rationale beyond "debt is bad."

Krugman speculates that they see this as a morality play wherein the rich are obviously the virtuous heroes (being rich and all) and the plebes are a bunch of lazy, immoral parasites who refuse to carry their weight. I think he's probably right, but I'm going to speculate further that for many of them this is a result of guilt at their own gargantuan selfishness and greed. I can only imagine that it's hard to live with yourself when you're taking more and more of the wealth that humans create while everyone else is falling behind. It must require some psychological jiu-jitsu to look yourself in the mirror and believe that you deserve it.

That's just my personal theory, and the truth is that it's completely uninformed about the psychological make-up of the super-rich. I've met a few and they are the oddest people I've come across in life --- it may be that their psychology is so unique that average people like me simply cannot understand it. (It's also possible that they're just as stupid as everyone else and believe what talking heads on TV tell them about the deficit. Since they aren't affected by the horrors of the larger economy like everyone else is, they just consider them irrelevant.)

Anyway, the key question of why they believe that old people should starve while they hoard every last penny they get their hands on remains obscure. But the fact that they do believe it is indisputable. And as this report from DEMOS proves, the fact that the political elite of America is in their thrall  (as it is in nearly every Western democracy)  is also indisputable.

A notable area where the affluent have different priorities is deficit reduction, which wealthier Americans tend to see as more important than other economic priorities, such as job creation. Polls over the past two years have repeatedly found that while many Americans are worried about deficits and the national debt, addressing unemployment and improving the economy has consistently been a bigger priority for the public. For example, a June 2010 NBC News/Wall Street Journal Poll found that 33 percent of Americans named job creation and economic growth as their top priority; 15 percent named “deficit and government spending.” Most polls throughout 2011 and 2012 found that the public remained focused on jobs and the economy over the deficit by two-to-one margins or more.Exit polling on Election Day found that 59 percent of voters rated the economy as the most important issue facing the country, compared to 15 percent who named the deficit.

This is why both parties are obsessed with deficit reduction. They are responding to their patrons and wealthy constituents.

President Obama famously presented himself as a transformational president in 2008. From his earliest days in office he has proclaimed that he wanted to do fundamental "reform" of our government's structures and its relationship to its people. This is currently being defined as a battle between his priorities and the Republican vision of Paul Ryan. But the truth is that we are in a battle between the people's priorities and the elite vision of those people the President is allegedly "enlisting" in his cause today (and who Paul Ryan blatantly calls the "makers.")

Just yesterday the president was said to be anxious because "entitlements" were crowding out all the things he wanted to do.

Anxiety, not ideology prodded Obama to push for entitlement savings, people close to the president say. Obama has told people in his orbit that he feels “squeezed” by the rise of entitlement spending and sees it as a threat to getting anything else done, especially his plans for increased education and infrastructure spending.

Well guess what?

As you can see, the top priorities of the wealthy are the same as those priorities President Obama is afraid "entitlement" spending is threatening.

Now it's true that the general public is also in favor of infrastructure and education. But they don't prioritize it above everything else. Indeed, only education comes above Social Security in their list of priorities. Health care ties for number three.

Keep in mind that infrastructure, research and education, while they benefit everyone, are of particular benefit to private industry which profits handsomely from the taxpayers' paying for these investments. Considering their misanthropic attitude to the general welfare of the nation in any other category, one can fairly assume that's the only reason they support it.

This is what our political leaders are responding to. If the people benefit, that's nice.  But clearly, the number one priority is fulfilling the needs and desires of the wealthy.

Think about this:
It shocks people when I tell them the deficit as a percent of GDP is already close to being cut in half (this doesn't seem to ever make headlines). As Hatzius notes, the deficit is currently running under half the peak of the fiscal 2009 budget and will probably decline further over the next few years with no additional policy changes.
This report from Goldman Sachs says;
We expect the deficit to continue to decline and are forecasting a deficit of 3% of GDP or less in fiscal 2015. Some of this is policy-related. ... But the more important reason, in our view, is that there is still a great deal of room for the economic recovery to reduce the deficit for cyclical reasons. ...
So, if the deficit has been cut in half, why are we still pursuing a Grand Bargain? Because it's not really about the budget deficit at all. Once more, here's the president in January of 2009:
"What we have to do is to take a look at our structural deficit, how are we paying for government? What are we getting for it? And how do we make the system more efficient?"
This is the real "transformation" he was seeking. And it looked like this:
President-elect Barack Obama will convene a "fiscal responsibility summit" in February designed to bring together a variety of voices on solving the long term problems with the economy and with a special focus on entitlements, he said during an interview with Washington Post reporters and editors this afternoon.

"We need to send a signal that we are serious," said Obama of the summit.
Who does that really serve? You be the judge.