The problem is that, however understandable Bernanke’s circumspection might be, both he and all of those who take up the stop-the-fiscal-cliff-now cause are not also being forced to say that budget deficits are not always bad, don’t always have to be lowered and that federal debt is not the tool of the devil it often is said to be.
The CEOs’ letter took advantage of this Bernanke-provided get-out-of-jail-free card. The letter specifically said, “We urge you to negotiate a bipartisan agreement as quickly as possible to prevent us from going over the fiscal cliff so we can avoid the damage to the economy and the markets that inaction will cause.”
For the record, “fiscal cliff” is mentioned six times in the letter’s seven paragraphs, but the word “deficit” never appears at all. There’s also no mention that cutting spending and increasing taxes would be the wrong thing to do at the start of 2013. And even though the mathematics is incontrovertible, CEO support for the resulting increase in the federal debt is nowhere to be found.
There’s absolutely no doubt that the CEOs who signed the letter — some of the biggest names in the financial world — were indicating that higher budget deficits and federal debt would be acceptable to them. But they artfully avoided saying it directly. Like Bernanke, that will give them the ability to deny their support for a higher deficit and preserve their ability to deal with Congress on other issues. After all, they’ll be able to say that they were for preventing the fiscal cliff from doing economic damage rather than insisting that higher deficits were appropriate.
This is the kind of obfuscation and spin that will make matters worse for the federal budget debate.
It means that no matter what happens near Jan. 1, the fiscal cliff will have a longer-term negative effect on the budget debate that wouldn’t have happened if Bernanke and the financial services CEOs had been willing to talk openly about what was needed.
Frankly, that’s no joke.
Stan Collender is a partner at Qorvis Communications and founder of the blog Capital Gains and Games. He is also the author of “The Guide to the Federal Budget.”