David Walker is a big-gun CPA – he was Comptroller General of the United States from 1998 through 2008 when he resigned to take over Wall Street billionaire Peter G. Peterson’s foundation, which has played a key role in spreading the now prevalent belief that the two great government insurance programs, Social Security and Medicare, are not only bankrupt, but will bankrupt our nation. Walker rode into town Tuesday on a bus in which he has been touring college and university campuses where he hopes to find a receptive audience among students for a corollary narrative, that of the generational inequality created by financing these programs for today’s elderly.
Consequently, it’s not surprising that the Gray Panthers of Kansas City & Western Missouri decided to accompany the Walker Bus Tour on his stops across Missouri on their own bus, and attempt to point out some of the problems with his fearmongering. At yesterday’s Washington University stop, The Gray Panthers were jointed by members of organizations such as Grass Roots Organizing, Missouri Alliance of Retired Americans, Veterans for Peace, Social Security Works, the National Committee to Preserve Social Security & Medicare, and the Missouri Progressive Action Group.
About 40 people from these groups gathered by the Walker tour bus on Forsythe Boulevard carrying signs with messages like “Hands off our Social Security.” To his credit, Walker joined the group and spent a few minutes talking with the mostly elderly and handicapped people gathered there. Walker was polite, calm and very careful to keep on message. His listeners were skeptical and several insisted that he listen to their particular stories of hardships, benefits denied, or fear of a future where the social safety net might disappear. In other words, there was a complete intellectual disjunct.
Walker’s actual program, though, delivered before an audience of about a hundred listeners on the Washington University Campus, was framed in viscerally emotional terms. The “burden barometer,” a huge electric sign depicting the rate of growth of the deficit per minute in flashing red lights, was set up beside the podium. It set the mood, suggesting that the deficit monster was lurking just off-stage; this was enhanced by appeals to save our grandchildren, replete with slide-show pictures of a tour member’s lovely grandchild peering out innocently, unaware of the massive debt that, as the speaker and the ever-flashing burden barometer insisted, will eventually crush her if we “do nothing.” The point that Walker hammers quite explicitly is that if folks like the Gray Panthers are frightened by cuts in the social safety net, they ought to be more frightened by what the cost of that safety net will mean to their grandchildren.
If the burden barometer was meant to suggest the urgency of the situation, Walker, on the other hand, worked hard to persuade us that he knew how to defuse that urgency. It was a stylistically effective presentation, and Walker made some good points which, however, failed to compensate for much that was misleading in his message.
PROS: So what are those good points? Many of them involve questions of procedure for dealing with fiscal issues:
* We need our leaders to be straight with us and stop feeding us, if you’ll forgive my paraphrase, political baloney.
* We need specifics about what our leaders propose to do about our fiscal situation and we need to understand the reason why they propose what they do.
* There should be specific criteria with which to evaluate solutions – and those proposed by Walker, with one practical exception, the insistence on bipartisanship which is almost surely impossible with today’s GOP, looked pretty good as long as they were to be applied in a flexible fashion. He suggested that the criteria should be:
2. socially equitable;
3. culturally acceptable;
4. Mathematically accurate
5. Political feasible
* He noted that our fiscal situation is at least partially a revenue problem – which is an important admission; we do need to reform our tax code.
* He made some important observations about the broken budgeting process on Capitol Hill.
* We need a systematic procedure for presenting, evaluating and implementing solutions to fiscal problems.
CONS: The deficit is a problem, but not as unsurmountable or immediate a problem as Walker wants us to believe; there are serious difficulties with the hardline story he’s trying to sell:
1. CPAs are not candidates for beatification. Walker claims special insights because he’s an accountant. He asserts that the deficit is actually much larger than the official numbers would have us believe. However, the invaluable Dean Baker pointed out in a paper titled “Pension liabilities: Fear Tactics and Serious Policy,” that there are numerous ways accountants can run the numbers and make them seem much worse than they are. Further he points out that this has been a favorite tactic of those who want to change Social Security and Medicare.
If Walker wants to be credible, he needs to be transparent about the controversies surrounding different accounting procedures, and present some compelling arguments for why we should believe him and not the folks who come up with the official numbers. Contrary to his willingness to let us think that the government is just sloppy and willing to overlook what he presents as inexplicable oversights, there are real, mathematical reasons for doing things the official way.
2. You can’t compare apples and oranges. Right away, Walker attempted to scare us by implying that as Greece goes, so goes the United States. Many economists have pointed out that there are a number of reasons why a comparison between the two countries is not valid. An excellent resume of those reasons is provided by the economist, Dean Baker, who notes that, “the analogy to Greece is a farce from the word go.”
Nor is government debt similar to household debt. Although in his presentation – at least so far as I remember – Walker didn’t resort to the standard canard that compares household debt to government debt, the printed explanatory handouts did. This overused analogy, as many have observed ad infinitum, ignores the fact that households do not control their own currency, nor do they have the network of international trade and other relationships that characterize nations like the US, and which would force other nations to shore us up if the dollar were threatened.
3. You can’t compare half an apple to a complete apple. While we’re on the topic of comparing household and national debt, we shouldn’t overlook the fact that much of American prosperity depends on borrowing. How many people do you know who don’t have a mortgage? A car-loan? College loans for themselves or their children? Remember all those folks who attribute the delayed economic recovery to tight credit? So that businesses can’t borrow … get it?
4. We may have met the enemy but it is not the Federal Reserve Bank. I have noted in several places that Walker’s account of the dangers of debt overlooks the role of currency control and market manipulation that is open to sovereign countries with their own currency. Actually, however, based on his response to the most recent exercise in quantitative easing (QE3) on the part of the Federal Reserve Bank, he is more hostile than indifferent.
Walker seems – and I am inferring here – to belongs to the contingent that believes as an article of faith that actions by the Fed to create economic outcomes are almost certain to result in inflation and a larger deficit. These beliefs are far from universal, and if Walker is going to put them forward as a given to people who are not as informed as he, then he should defend them explicitly, answering the arguments of most modern economists who see monetary control measures as entirely appropriate, and, when used judiciously, beneficial.
5. Medicare costs are not exploding; healthcare costs are. Walker’s proposals to cut Medicare costs are bound to be ineffective as long as they focus on Medicare in isolation as the source of the problem. To give him credit, he does attempt to address some market cost drivers such as payment methodologies and he proposes a type of “someday” single-payer system that would deliver “basic” benefits to everyone. I missed the full discussion of his proposed health care solutions, and I wonder what those basic benefits would be.
6. Social Security is not a Ponzi scheme. Walker said it publicly last Tuesday. Texas Neanderthal Rick Perry also said it. Hilarity ensued. It’s that dumb. Why aren’t we laughing at Walker? He thinks the system went broke a few years ago when it started paying out more than it takes in. Enough said.
Walker has several ideas to “save” Social Security. Many involve cutting benefits by raising eligibility ages, means-testing and changing the way cost of living increases are calculated. Many reputable economic thinkers point out, however, that simply raising or removing the cap on Social Security taxable income, which would also make the tax more progressive, might do the job all by itself. Ezra Klein observes that removing the cap could actually create a surplus. So why is David Walker pretending that the program is in such perilous shape and no matter what, we need to cut benefits?
7. The buck could stop with the President but it would have to get to his desk first. Walker concedes that the GOP has built a brick wall, fortified with concrete, around their ideological no-new taxes stance, and that this position will result in growing financial instability. But then he pivots and declares that President Obama is obligated to breach that wall. Michael Tomasky, writing about GOP obstructionism, made the following observation which is equally apropos to Walker’s assertion: “Really-this is like blaming Sharon Tate for failing to make peace with Charles Manson.” There’s only one solution for partisan gridlock. Get rid of the folks in congress who are manning the barricades on Gridlock Ave. You know who I mean. Otherwise, nothing any executive branch member does will amount to a hill of beans.
8. Who is Peter G. Peter G. Peterson and why is he haranguing us. Walker explicitly denied that his work is funded by his former boss, billionaire Peter G. Peterson. I do not doubt that Walker honestly considers himself an independent agent. Yet, the tour is sponsored by Walker’s Comeback America Initiative, which the Washington Post described as a “Peterson-supported organization” in a fluff-piece on Walker published in March 2011. So did Walker lose the Peterson funding in the interim? Or is the Post mistaken?
In 1983, in a letter to the New York Review of Books, Rosemary Rinder characterized the Social Security fearmongering of David Walker’s former employer in this way:
Peter Peterson’s obvious good intentions and apparent lack of a “vociferous constituency”1 have lent his two-part article on Social Security an aura of accuracy and intelligence that it does not deserve.
The same could be said of David Walker; the acolyte may or may not be supported by the master, but he hasn’t strayed too far from his message or his methodology.