This book is Volume II of a two volume series critiquing austerity politics at the Federal level in the United States. It completes the analysis, begun in Volume I, of its fallacies, its closed-mindedness and futility, and especially its reliance on wrong-headed conceptions of fiscal sustainability and fiscal responsibility. Volume I, focused on the role of progressives in “the village” defined by the Washington/New York political, economic, and communications elites, in supporting macroeconomic austerity and the ideological framings governing fiscal debates and negotiations carried out within those frames.
In Volume II, the focus is on the primary network at the center of faux fiscal responsibility activity in that same “village.” In turn, the center of that network is the Peter G. Peterson Foundation (PGPF), incorporated in 2007. Vol II continues the analysis by focusing on PGPF activities, especially on its six annual “Fiscal Summits.” It details and provides commentary and analysis of the views of the highly placed people who participated in them (including former President Clinton, Democratic and Republican Congressional leaders, highly visible media news personalities, and financial leaders in government and business), and on how the orientation of the summits has evolved to adjust to changes in the political climate, since the first summit in 2010. The pattern and remarkable bipartisan unity of these views is shown, as is the way they provide a faux fiscal sustainability/fiscal responsibility ideological frame for debates and action in the realm of fiscal policy. Then based on the summits and other important activities of the Foundation, the outlines of the PGPF network are drawn, showing its remarkably broad scope, both in and out of government, and its likely influence in fiscal policy making. After the network is identified and its scope and likely influence indicated, the record of the austerity policies it has advocated for and implemented is reviewed. Its primary claims of effectiveness are shown to be at variance with the facts, and to have no basis other than the intuitions and faith of their partisans. In addition, the austerity policies rationalized in terms of fiscal sustainability/ responsibility are seen to have not only failed to perform as advertised, but to have also produced the opposite of their promised outcomes, including economic stagnation which has exacerbated economic inequality. Vol. II then offers an alternative narrative about real fiscal responsibility based on Modern Money Theory (MMT). The counter-narrative is stated from both critical and positive perspectives, and ends with an analysis of real fiscal responsibility and its relation to public purpose. That analysis is then used in a succeeding chapter to address the problem of inequality and to relate it to the extremely important work of Thomas Piketty. Finally, the new counter-narrative is used again to show that a commitment to real fiscal responsibility also entails one to a comprehensive agenda of fiscal policy, making full use of the expanded policy space provided by that commitment. That agenda is one that reclaims the future of American Democracy and the heritage of the New Deal, the Fair Deal, and the Great Society. It is one that combines them all in a Green New Deal that will secure and extend US democracy in all its dimensions, and also FDR’s unfinished business; his Economic Bill of Rights.