For weeks on end the dominant financial story has been: (A) the consequences of falling off the fiscal cliff; (B) the need to cut entitlements, aka Social Security and Medicare; and, (C) whether the president or John Boehner has the upper hand. So when a story comes along like this November 29th piece from New York magazine introducing us to the Campaign to Fix the Debt, it’s refreshing. The piece, by Kevin Roose, is also revealing. Roose deserves a CJR laurel for showing us how the movers and shakers on Wall Street and corporate bigwigs do business to push their ideas into the media.
The idea behind the Campaign to Fix the Debt—created in mid-July by former Wyoming Sen. Alan Simpson and former Clinton chief of staff Erskine Bowles—was, according to the group’s inaugural press release, to bring about an “unprecedented coalition” that “will mobilize members of the business, government and policy communities and people all across America in support of a comprehensive debt deal.” Roose got behind this “unprecedented” mobilization to show how it all came together, and how media appearances by Goldman Sachs CEO Lloyd Blankfein, Aetna CEO Mark Bertolini, and others were part of a carefully designed strategy to prod the pols to fix the debt. This effort has been financed with what Roose calls a “reported” $43 million war chest and the support of Peter G. Peterson, the billionaire investment banker who has invested his own sums into a variety of enterprises over the years to build support for his debt-fixing crusade.
Piecing together the inner workings of the coalition wasn’t easy, Roose reported. “Most on-the-record comments are a mishmash of platitudes about shared sacrifice and working together for the good of the country,” he wrote. But apparently he got enough insiders to chat off-the-record, and their discussions with him “point to a massive networking effort among one-percenters—one that relies on strategically exploiting existing business relationships and appealing to patriotic and economic instincts.”
This far-reaching networking operation among the corporate heavy hitters began in early fall, Roose reported, shortly after a series of private dinner parties held at the home of Virginia Democratic Sen. Mark Warner and hosted by Maya MacGuineas, president of the Committee for a Responsible Federal Budget. MacGuineas is widely quoted in the press and has connections to Peterson. (David Sirota, writing for Salon, describes MacGuineas “as the lead coordinator of the so-called ‘Fix the Debt’ coalition.”)
From those Virginia dinner parties, the coalition sprang forth nurtured with more food—small lunches and dinner meetings—prompting Roose to call the Campaign “a massive business kaffeeklatsch.” The group’s “CEO Council” now counts some 150 executives from the upper echelons of Wall Street (JPMorgan Chase, Morgan Stanley, Citigroup—you get the picture). The process worked like this, Roose reported: “Executives recruited their friends, board members, and clients, who then dug into their own networks on the group’s behalf.” JPMorgan Chase vice chairman “Jimmy” Lee mined what Roose called his “golden” Rolodex and out came more recruits. “These phone calls take about a minute when you explain what you’re doing,” Lee told Roose. “It doesn’t matter if you’re talking to a Democrat or a Republican—they say ‘where do I sign?’”
The goal clearly is to spread the message of the urgent need for debt reduction. “We have these great dinners,” a relatively new member of the group raved to Roose. “Everyone has been throwing out ideas about how to get the message to a broader audience.” The Campaign helps them out with something called “CEO Tools,” which include sample letters to employees and PowerPoint decks to “communicate the debt story in a visual way.”
What’s the takeaway from this very interesting read and a rare glimpse of social networking in high places? Dean Baker, an economist for the liberal Center for Economic and Policy Research, offered a clue in a recent blog post. Baker pointed to a December 14th Washington Post story—Baker has been something of a thorn in the side of the Post—quoting David M. Cote, the CEO of Honeywell and an early member of the Campaign to Fix the Debt. “As head of Honeywell,” reported the Post, Cote “has frozen most hiring and capital investment because of uncertainty about the fiscal cliff—a strategy other corporate heads have followed as well to hedge against a new downturn.” Baker took a look at Honeywell’s website, and reported that the company was not putting its expansion plans on hold. In the last two weeks, it announced $20 million in new contracts to produce simulations for industrial companies, a new contract with Boeing, plus the purchase of another company for $600 million.
Is the line about businesses curtailing investments in the Campaign’s “tool kit?” Aetna CEO Mark Bertolini, one of the early members of the Campaign, also made a similar point on the NewsHour a few weeks ago, telling Judy Woodruff Aetna was “gating” its investments and “pulling back on employment” because of the uncertainty surrounding the fiscal cliff. Apparently this uncertainty has not stopped Aetna from making an acquisition of its own. In a press release announcing its third quarter earnings in late October, the company said: “We committed to deploy more than $7 billion of capital for our proposed acquisition of Coventry Health Care.” Perhaps this is another place for dot connection.