It is difficult to believe that this genuinely happened, but it seems that a bunch of CEOs actually gathered today at the New York Stock Exchange to simultaneously ring the opening bell and demand that America’s elected officials embrace the Simpson-Bowles “Fix The Debt” campaign as an alternative to going over the fiscal cliff.
Adam Smith once wrote that “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
The only trade these CEOs have in common is being really rich, so you can guess that this is a generalized conspiracy against the public rather than a narrow contrivance to raise prices. Specifically, what they’re after is lower tax rates on themselves. But instead of saying so, they’re pushing two different notions. One is that the “fiscal cliff” by making the 2013 deficit too low is harming the economy. The other is that we need to “fix the debt” through a mix of spending cuts and a revenue-raising measure that, strangely, ends up cutting high-end tax rates through a tax reform process.
Note that if you’re genuinely concerned about these twin issues of fiscal cliff and long-term deficit, there’s absolutely no need to implement the Simpson-Bowles plan. All we need to do is go over the fiscal cliff. Then with taxes reset to a new higher level, Obama and Congressional Republicans can agree on a middle class tax cut with no spending cuts and even agree to wholly or partially roll back the “sequester” cuts if they like. That will minimize the fiscal drag in 2013 and also keep the medium-term deficit at an acceptable level. The difference, relative to Simpson-Bowles, is that my way Jamie Dimon will pay a higher tax rate than he would if we “fix the debt.” But that’s the real issue here—taxes on the rich—not the debt or the fiscal cliff.