In a blog post today, Yves Smith stated that the Economic Policy Institute “supported the extension of the Bush tax cuts back in December,” and went on to criticize EPI and other progressive organizations for submitting a budget plan (and receiving funding for doing the work) at the 2011 Peterson Fiscal Summit. For the record, I also was on a panel at their first summit last year.
Smith sees these activities as part of a larger trend of converting “what were once left-leaning organizations and think tanks into message-carriers for the right.” In this instance “the arch-enemy of Social Security, Pete Peterson, rented out the good name of Franklin Delano Roosevelt, the reputation of the Center for American Progress, and EPI.”
This is a wrong-headed and factually-challenged argument. Let’s start with the tax cut deal last December. Judge for yourself whether my statement was an endorsement of the tax deal or in any way ‘supported the extension of the Bush tax cuts’:
Who got what out of (Monday’s deal between President Obama and Republican leaders) is clear. The Republicans got tax cuts for the best-off two percent and lower estate taxes for the very wealthiest families, neither of which will do much if anything to create jobs. President Obama won policies that will put or keep money in the pockets of the unemployed and middle and low-income families, which will increase spending and create jobs.
That’s what a payroll tax holiday for workers, unemployment benefits and the various tax credits will do: create customers for business and create jobs, which is our biggest need right now.
In two years, the American people will have a clear choice about who the tax code will favor. That debate will, I hope, highlight the hypocrisy of those wanting to deepen the deficit by extending tax cuts for the rich while simultaneously cutting health care, Social Security and domestic public investments in the name of deficit reduction.
It’s also hard to see the logical connection between Peterson Foundation funding that originated in 2011 with the position I took on legislation last December. Usually EPI’s funding comes under attack because we receive about a fourth of our funding from trade unions. Smith’s attack is perhaps a welcome change of pace.
Moreover, EPI’s track record on the Bush tax cuts is clear and consistent. EPI experts have consistently attacked the Bush tax cuts in reports and public appearances. Most recently, a policy memo EPI published June 1st assailed the Bush tax cuts for being poorly designed, disproportionately benefiting the wealthy, adding significantly to our debt and deficits, and failing to create long-run growth. An EPI snapshot on June 2nd highlighted a distributional analysis of the tax cuts, showing that the top fifth of income earners received 65% of the Bush tax cuts, while the bottom 20% only received 1% of the tax cuts.
Last November EPI, along with Demos and The Century Foundation, released “Investing in America’s Economy: A Budget Blueprint for Economic Recovery and Fiscal Responsibility.” In this long-term budget blueprint, EPI repeals the Bush tax cut for top earners, and enacts a progressive estate tax. Additionally, EPI had a major hand in putting together the Congressional Progressive Caucus’ FY2012 budget – the “People’s Budget” – providing advice, analysis, and scoring of the policy proposals within the budget, and modeling out the impact of those policies over the next decade. The People’s Budget not only does not budget for the extension of the Bush tax cuts, it also rescinds the tax cuts passed in the December tax deal for upper income earners. EPI would not have been associated with this project had the People’s Budget chosen to extend the Bush tax cuts. The People’s Budget, in fact, raised so much revenue that some, including Ezra Klein, criticized it for relying “a bit too heavily on taxes.”
EPI developed a budget as a part of the Peterson Initiative that was based solely off of our “Investing in America’s Economy” report. The budget EPI submitted, like the budget we put together in November, prioritized the recovery and job creation over deficit reduction, particularly in the near-term. The plan provides a substantial and sustained increase in funding for job creation and investments, modernizes the tax code, and provides a solid footing for Medicare, Medicaid, and Social Security in the long-term (no benefit cuts). The plan not only rescinds the upper income Bush tax cuts extended in the December tax deal, but includes a number of other progressive tax increases, including a millionaire surcharge, an increase in rates on capital gains and dividends, and a progressive estate tax. Furthermore, the plan includes a financial transactions tax as well as a tax on financial leverage. Dean Baker, often a critic of the Peterson Foundation (and a former EPI economist we’re very proud to say), wrote a recent piece in which he extolled the plan EPI presented at the fiscal summit as being focused on jobs and growth and getting most of its revenue from increasing taxes on the wealthy.
How EPI’s participation in the Peterson Foundation summit (and the funding we received) can be said to have influenced our policy position remains a mystery to me and Smith definitely does not demonstrate one. The other claim is that our participation provides legitimacy to Pete Peterson. It seems to me that Mr. Peterson readily gets media attention and has lots of means to communicate his policy views and that EPI’s participation in his foundation’s summit did not amplify his voice. In my view, EPI’s participation helped establish a properly-framed debate, one that is not a debate between the centrists like Alice Rivlin and the Heritage Foundation. Evidence of this is in the actual media coverage of the budget plans presented at the summit. Reasonable people can disagree on whether our participation is an appropriate tactic or not.
What is not up for debate is EPI’s credibility as a progressive organization. We were the organization that incubated the ‘public option’, working with Jacob Hacker and Campaign for America’s Future. EPI is the organization that’s documented the economic problems of the working class for 25 years, challenged free trade agreements, and championed the rights of workers to join unions and use collective bargaining to better themselves and their community. We’ve criticized the policies of presidents whether they were Democrats or Republicans. EPI is proud of its work and stands behind it.