Many American liberals and economic populists are on guard in the wake of the fiscal cliff deal between Congress and the President on taxes and revenue, because what Washington expects to negotiate in the next two months is cuts. With the "sequester" automatic Pentagon cuts postponed rather than canceled, we're still operating in the framework of the Budget Control Act, which mandated $1.2 trillion in reduced projected government debt over ten years. The deal on revenue took care of half of that. The Washington understanding is that the other half will come from cuts.
The two most dangerous proposed cuts from the point of view of the long-term interests of the majority of Americans are the proposal to cut Social Security benefits forever by reducing the annual cost-of-living increase ("chained CPI") and the proposal to cut Medicare benefits forever by raising the Medicare retirement age to 67, forcing more seniors onto the private insurance market. Many establishment Republicans want these cuts; many Wall Street Democrats want these cuts; the President has signaled his potential willingness to agree to these cuts as part of a "big deal." Most liberal groups vehemently oppose these cuts, and the majority of Americans would never go along with these cuts - cutting benefits for working families for which they have already paid through their payroll taxes - if they have effective say.
But two months from now, automatic cuts to Pentagon discretionary spending will again loom, tax increases will likely not be on the menu of negotiations, and Republicans may again try to wield the purported threat of default by saying that they won't raise the debt ceiling without big cuts, including cutting Social Security and raising the Medicare retirement age.
Two months from now, who do you want leading the President's negotiating team? Someone who will fight tooth and nail to protect Social Security and Medicare benefits, or someone who will trade those paid-for benefits away in order to protect bloated Pentagon spending and endless war?
Treasury Secretary Tim Geithner, who has led the President's negotiating team, is stepping down. President Obama has not yet named his replacement.
Beltway conventional wisdom is that the Treasury Secretary has to be vetted by Wall Street. In the wake of the financial and economic crisis brought on by Wall Street gambling, that's a bad idea to start with. We need a Treasury Secretary who can stand up to Wall Street, not a Treasury Secretary chosen by Wall Street.
But the fact that negotiations over ten years of cutting debt are hanging fire makes the idea of a Wall Street-chosen Treasury Secretary especially dangerous, because Social Security and Medicare benefits are in peril, and bigfoot military contractor lobbyists will be pushing Congress to cut domestic spending instead of Pentagon spending. Now, more than ever, we need a Treasury Secretary for the 99%. We need a Treasury Secretary who will see job creation, not austerity, as job one.
Why not Paul Krugman?
He has a Nobel prize in Economics. He's proven his ability to communicate economic knowledge to the multitude. And he's a fierce opponent of cuts to Social Security and Medicare benefits, and the austerity dogma more generally, which as economic policy has a track record of spectacular failure around the world. As Treasury Secretary, Krugman would make job creation his top priority.
The Treasury Secretary doesn't just oversee domestic U.S. economic policy. The Treasury Secretary also oversees international U.S. economic policy. The United States Executive Directors at the International Monetary Fund and the World Bank report to the Secretary of the Treasury. As Treasury Secretary, if Paul Krugman decides that the U.S. isn't going to tolerate IMF support for cruel and destructive economic austerity policies in Europe and elsewhere, he'll have the power to bring that about. Since the U.S. is far and away the most powerful country in the IMF and the World Bank, that would be a world-historical change.
Many will say: a Treasury Secretary not vetted by Wall Street? That's impossible! It's certainly not likely. But how about for a week we try to behave otherwise. How about for the next week we tell our fellow citizens what the world could be like if Paul Krugman were Treasury Secretary instead of someone vetted by Wall Street: unemployment would fall, retirement benefits America's working families have already paid for would be protected, debt cutters would have to go after Pentagon bloat and endless wars instead of the things Americans need. The war in Afghanistan would have to end, because people would realize that ending the war would save the government more money than cutting Social Security or Medicare benefits. And unlike war spending in Afghanistan, Social Security and Medicare spend money in the United States, creating jobs here at home.
Danny Glover has started a petition at MoveOn urging President Obama to nominate Paul Krugman for Secretary of the Treasury. Why not help Danny change our national conversation about economic policy?
Robert Naiman is Policy Director at Just Foreign Policy.