Democrats Rubin, Schwartz Clash on Spending Versus Deficit Cuts
By Rich Miller
June 11 (Bloomberg) -- Business executive and Democratic donor Bernard Schwartz is taking on former Clinton administration Treasury Secretary Robert Rubin in a battle over whether the party's top budget priority should be to cut the deficit or spend more.
In public forums and private meetings with top Democrats, Schwartz, a former chief executive officer of Loral Space & Communications Inc., is challenging a central tenet of Rubinomics: that eliminating the deficit should be the No. 1 goal of budget policy. Instead, he argues that growth will come by tackling the ``deficit in public investment'' through stepped-up government spending on everything from roads to broadband.
``Our infrastructure is beginning to show wear and tear,'' said Schwartz, 81, who has contributed $4.7 million to Democratic campaigns and causes since 1993, according to the Center for Responsive Politics, a Washington-based research group. ``We can afford to fix some of our problems without being burdened by having to balance the budget first.''
The debate may determine the Democrats' future fiscal strategy at a time when they are favored to win the presidency in 2008, according to contracts traded on Intrade, an online electronic exchange based in Dublin.
Schwartz is beginning to have an impact. New York Senator Hillary Clinton, 59, who is leading in most opinion polls to be the party's nominee for president and is a longtime friend of Schwartz's, rolled out a nine-point ``innovation agenda'' on May 31 that included increased support for broadband. Advisers to the campaign said Schwartz, who is backing Clinton, has influenced her thinking on the importance of infrastructure investment, though she still also supports balancing the budget.
Dodd's Support
Another Democratic presidential candidate, Senate Banking Committee Chairman Christopher Dodd, 63, also backs more investment and is considering introducing a bill that would establish a government fund to finance such spending.
His counterpart in the House, Representative Barney Frank of Massachusetts, 67, held a hearing on public investment at the House Financial Services Committee on March 23, where he spoke of its importance.
``The debate over the deficit is just now being reopened,'' said Robert Reich, 60, who served as labor secretary under President Bill Clinton and is now a professor of public policy at the University of California at Berkeley. ``When the economy slows, as I expect it will over the next year, the Democrats will begin thinking even more about this.'' ...
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