A closed-door speech to Morgan Stanley in 2013, revealed in hacked emails posted by WikiLeaks, could stoke new questions for Hillary Clinton Wednesday night about whether she truly believes in the fiscal sustainability of the promises she is making on the campaign trail.
In the speech, Clinton referred to the 2010 Simpson-Bowles deficit reduction plan as “the right framework,” a stance that is seemingly at odds with her 2016 platform. Throughout the year, Clinton has been decidedly to the left of Simpson-Bowles, which called for a series of changes, including raising the Social Security retirement age from 67 to 69, cutting the growth of future benefits and considering a change in the Medicare eligibility age from 65 to 67 if health care costs grow faster than expected.
While the general election has been seemingly void of policy issues, the future of Social Security and Medicare may come up at Wednesday’s final presidential debate, where “debt and entitlements” are one of six pre-selected topics.
WikiLeaks has posted roughly 15,000 emails hacked from campaign chairman John Podesta’s account this month, with more to come. The Clinton campaign is not confirming the authenticity of any of the individual emails and sharply criticized Trump for not condemning what they view to be a hack directed by Russian President Vladimir Putin for the purpose of influencing the US election.
But the Clinton campaign is simultaneously distancing itself from the Simpson-Bowles framework and is suggesting that the Democratic nominee is now firmly in the liberal camp wanting to expand benefits.
“Since the beginning of the campaign, Secretary Clinton has committed to expanding Social Security and she’s made clear that she would not raise the retirement age or reduce cost of living adjustments,” Clinton spokesperson Julie Wood told CNN
In her 2016 campaign, Clinton has promised to look at raising Social Security taxes on wealthier Americans without specifying exactly how she would do it. Currently, the Social Security tax only applies to the first $118,500 of income. At the same time, Clinton has shied away from the kinds of restraints on spending advocated in the Simpson-Bowles deficit reduction plan.
But in the April 2013 Morgan Stanley speech, Clinton suggested that Democrats who call for higher taxes while rejecting restraints on spending contribute to Washington’s “gridlocked dysfunction” because they leave no room for compromise with Republicans.
“[T]he Simpson-Bowles framework and the big elements of it were right. The specifics can be negotiated and argued over. But you got to do all three. You have to restrain spending, you have to have adequate revenues, and you have to have growth. And I think we are smart enough to figure out how to do that,” said Clinton, according to the speech excerpt contained in the stolen email.
“[Y]ou’ve got Democrats saying that, you know, you have to have more revenues; that’s the sine qua non of any kind of agreement. You have Republicans saying no, no, no on revenues; you have to cut much more deeply into spending,” she said according to the excerpts. “Well, look what’s happened.”
Trump tried to seize on the Simpson-Bowles hacked email while campaigning last week in Pennsylvania.
“The speeches also show that Crooked Hillary supports cutting Medicare and Social Security benefits, one more example of how Hillary Clinton’s public position is a lie,” Trump said. “She wants to knock the hell out of your Social Security. She wants to knock the hell out of your Medicare and Medicaid. And I am going to save them.”
Trump’s suggestion that Clinton would “knock the hell” out of Social Security and Medicare has been called “false” by CNN’s Reality Check team — the Simpson-Bowles blueprint would not have amounted to drastic cuts as suggested by Trump’s language.
Trump has endorsed sweeping tax cuts and a “hands off” approach to entitlements that could explode the nation’s debt somewhere between $5.3 trillion and $7 trillion, according to studies conducted by the Committee for a Responsible Federal Budget and the Tax Policy Center, leading to the obvious question of how that can be paid for and maintained.
Clinton’s 2016 plan
On her website, Clinton promises to “oppose reducing annual cost-of-living adjustments” and to “oppose Republican efforts to raise the retirement age” — stances that her staff reaffirmed this week to CNN.
The Simpson-Bowles blueprint, by contrast, called for both of those moves: it would have raised the retirement age and it would have changed how annual cost-of-living adjustments are calculated, a controversial move that would have meant lower benefits for some Social Security recipients.
Changing how benefits are calculated would have reduced deficits by an estimated $280 billion over a decade.
Maya MacGuineas, the president of the centrist Committee for a Responsible Federal Budget, maintains that the Simpson-Bowles debt plan was an “opportunity missed” for a country that is currently on track to add $9 trillion to the nation’s debt over the next 10 years.
“Under Simpson-Bowles, debt was projected to peak around 70% of gross domestic product and come back down to less than 55% of GDP by 2026,” MacGuineas wrote in The Wall Street Journal. “Instead, under Mrs. Clinton’s proposals, the country is on track for debt to be 86% of GDP in 2026 or 105% of GDP under Donald Trump’s.” MacGuineas says that a debt burden of this magnitude would slow future growth, starve public investment, and eventually lead to even larger across-the-board cuts.
Adam Green, the co-founder of the Progressive Change Campaign Committee, a group leading the charge for expanding Social Security benefits, told CNN that he is not surprised that Clinton appears to have been supportive of Simpson-Bowles back in 2013. Green said the “center of gravity” has shifted since then due to organizing efforts of liberal activists and the support of leaders on Capitol Hill like Sen. Elizabeth Warren.
Clinton’s praise of the Simpson-Bowles framework “would be concerning if it were a private comment last week,” said Green. “But it is not a surprise that she held the view of many other Democrats — including President Obama — in 2013.”
Green says that Trump has been voicing a “faux populism”: he talks about protecting Social Security and Medicare while advocating deep tax cuts for the rich. According to a recent study by the Tax Policy Center, Trump’s tax plan would cut taxes for the top 1% of earners by $317,000 per year despite saying back in April on NBC’s “Today” show that he believes in raising taxes on the wealthy including himself.
Clinton, by contrast, has proposed a series of measures to raise taxes on Americans who make more than $250,000 per year with the heaviest burden falling on multi-millionaires.
‘Free lunch economics’
Deficit hawks are looking forward to Wednesday’s debate, believing that the nation’s fiscal challenges have been virtually ignored during the 2016 campaign.
“They are both embracing free lunch economics,” MacGuineas said of Trump and Clinton “in that they are not holding themselves responsible for dealing with … the $9 trillion that we are on track to borrow.”
“I would challenge anyone to point to any hard choice that either candidate has proposed during this campaign,” she added.
While criticizing both candidates for not doing enough on the debt, MacGuineas was quick to point out that there is an important difference between the proposals that Trump and Clinton have put forward thus far.
“She would grow the debt by [an additional] $200 billion over 10 years,” said MacGuineas. “Trump would grow the debt by [an additional] $5.3 trillion.”
“Clinton has taken the critically important step of saying that these fiscal issues matter while Trump is absolutely burying his head in the sand,” said MacGuineas. “They are not equivalent but neither is sufficiently fiscally responsible.”