Nation Topics - Economics | The Nation

At a time when the economy needs vast and purposeful help from the federal government, America faces a peculiar handicap: Neither political party really believes in liberal economic intervention or knows how to do it. Democrats are still not over their infatuation with Hooverite fiscal austerity--embracing budget surpluses, bemoaning deficit spending. Other than serving their wealthy friends, Republicans work at dismantling government's ability to steer and stimulate the private economy. Both parties are enthralled by the most conservative advisers, Federal Reserve Chairman Alan Greenspan and former Treasury Secretary Robert Rubin (now at Citigroup), who counsel caution. Democratic Senate majority leader Tom Daschle expressed doubts about any stimulus program, fearful that next year's budget might go into deficit.

This reluctance to act boldly will have to change very quickly. The economy was already in contraction before September 11. It needs hundreds of billions in new federal spending--yes, deficit spending--to counteract the great shrinkage under way in consumption and business investment. No one knows the severity of what's unfolding, but false optimism will make things much worse. Acting too fast and spending too much have economic risks, but none compare to what can unfold if Washington is too timid.

Back to basics. As John Maynard Keynes and American originals like Marriner Eccles, FDR's Fed chairman, taught, when the economic engine starts to seize up, government is the only force capable of jump-starting it--pulling idle capital into real investment while bolstering the incomes and confidence households need to buy things. It does this by borrowing the money from private sources--running large federal deficits financed by Treasury bonds--and spending the money in ways that generate waves of collateral economic activity. Deficit spending is not an unfortunate side effect. It is the necessary cure. America is especially vulnerable now to a deepening contraction because Washington is flush while companies as well as households, particularly those in the bottom half, are mired in debt. An aggressive government stimulus program is essential to regenerate the wherewithal--and the motivation--for business and families to renew their spending. If we are truly at war, the government must also do this in ways that renew social trust and a sense of equity. Patriotism cannot endure if the reigning ethos continues to be "winner takes all."

The $15 billion bailout for the airlines is a disgraceful start. Washington couldn't avoid aiding these terribly mismanaged companies, but it demanded nothing in return for the taxpayers or the workers being laid off by the tens of thousands. When Congress bailed out Chrysler twenty years ago, Lee Iacocca volunteered to work for $1 a year, labor got a seat on the board and the government took warrants in exchange for its cash infusion, later redeemed in full. This time hapless Democratic Party leaders refuse even to demand that the CEOs stop ripping up union contracts. The insurance industry is next in line for a handout, and there will be others. If more bailouts follow the same pattern, America's newfound unity will swiftly curdle into bitter resentments.

The agenda must be of sufficient scale to make a difference--and pump out money quickly. Top-end tax cuts, the Republican answer to all questions, are particularly inappropriate; companies and capitalists aren't likely to invest when consumers are cutting back. Particularly laughable is the reflexive Republican call for a capital gains tax cut, as if investors need an incentive to sell stocks.

The government's $40 billion emergency appropriation for reconstruction and the military is only a hesitant start. Washington should immediately ship $40 billion or $60 billion (or more) in revenue sharing to state governments that are being forced by balanced budget requirements to cut spending or raise taxes. And rather than cut domestic spending to pay for the huge bundle just approved for the Pentagon, Congress should fully fund domestic programs--particularly those in education, nutrition, housing and health. Congress should also act immediately to aid those workers being laid off through no fault of their own. A sensible program would extend unemployment insurance to thirty-six weeks and raise the average benefit to $300 a week. Special provisions are needed for short-term, contract and part-time workers, who would otherwise not be eligible for assistance. The Economic Policy Institute estimates that a decent unemployment insurance program might cost $30 billion a year.

On a grander scale, America has huge unfilled public investment needs that can easily cost more than $1 trillion over the next five years. The money can buy things people and society want and need:

§ Education. School boards have a backlog of thousands of desperately needed school construction and repair proposals. A $40 billion school fund could generate construction jobs and contracts across the country in a matter of weeks.

§ Health. One essential defense against terrorist attack with biological or chemical weapons is to rebuild our decayed public health infrastructure--laboratories, public hospitals and clinics, and properly staffed public health departments with modern computer and communications systems.

§ Transportation. To counter highway congestion and the nightmare of air travel, the country needs to develop alternatives like high-speed trains. This takes planning and time, but many projects are ready to go. For example, MAGLEV Inc., a Pittsburgh consortium, has been seeking federal funds to demonstrate a high-speed train that could get to Philadelphia in ninety minutes.

In addition, Congress can swiftly get money into the hands of those most likely to spend it. The next tax rebate can be targeted to low-wage workers who got nothing from the Bush tax cut; it would pump about $10 billion into the economy. The government could require all contractors to boost pay to a living-wage level. Aggressive new wage standards should be part of the government's quid pro quo for corporate bailouts. Indebted families need "stretched out" payment terms so they can keep spending.

After decades of conservative government, the list of needs and possibilities is long. Alert citizens must understand that it's time for Washington to act boldly, on a scale commensurate with the challenge. They must awaken Washington politicians from the stupor that suffocates imagination.

Bush lied. About
the cost of his tax cut. About who benefits. About his budget. He
lied when he claimed he could throw money at the military, fund a
prescription drug benefit, pass his tax cut and still not touch the
Social Security surplus. And he's lying now as his budget office
cooks the books to mask the fact that he's already dipping
into the Social Security surplus--without counting the full cost of
his military fantasies, or a decent drug benefit, or the inevitable
tax and spending adjustments yet to come.

Democrats have
every reason to rail about Bush's lies and to condemn his
irresponsible tax cut--about a third of which will go to the
wealthiest 1 percent (and for which, it should be noted, twelve
Democratic senators voted). But Democrats are about to lock
themselves in their own box with their posturing about the "raid on
the Social Security trust fund."

There is no lockbox and no
raid. The Social Security and Medicare trust funds are credited with
bonds for every dollar of surplus whether the money is spent, given
away in tax cuts or used to pay down the debt. Those bonds--the most
secure investment in the world--can be redeemed when Social Security
payments start to exceed payroll taxes. When the surpluses first
showed up, Clinton invented the notion that paying down the debt
would "save Social Security first" as a clever tactical ploy to fend
off Republican tax cuts. With the economy growing and unemployment
low, debt reduction had a threadbare rationale. But even then,
Clinton was forfeiting a historic opportunity to argue for meeting
vital needs: healthcare, housing, more classrooms and teachers,
preschool for all. Now Democrats have turned Clinton's tactics into
perverse principle. The trust fund surplus is "raided" if it doesn't
go toward debt reduction. House minority leader Dick Gephardt argues
that Bush should present a new budget--one with either less spending
or more taxes.

But the world economy is teetering on the
verge of a global recession. Japan is sinking. Europe is slowing.
Latin America is a basket case. The US stock market has tanked.
Corporations are slashing investment and laying off workers.
Consumers are starting to tighten their belts. State and local
governments are cutting programs. This is hardly the moment for the
federal government to run the second-largest surplus in history. And
Bush already has his tax cut for the wealthy. So all the Democratic
posturing about the lockbox puts pressure on spending. Already White
House flack Ari Fleischer says the squeeze "will prevent the
politicians from busting the budget and spending more pork." Worse,
Democratic talk about "raiding the trust fund" adds to the myth that
Social Security is at risk--a big lie that Bush is pushing to sell
private accounts and cuts in guaranteed benefits.

Democrats
should be indicting Bush for turning his back on working families by
enforcing austerity in a time of need. They should be making the case
for extending unemployment insurance, aiding poor mothers (the first
to be laid off), making investments in housing, schools and mass
transit that can help jump-start the economy. And they should be
taking credit for the tax rebate that people are getting--that was a
Democratic idea that wasn't even in the Bush plan. Instead, Democrats
are whistling Calvin Coolidge and ceding the growth argument to Bush.
Bush says his tax cuts are needed to help the economy revive; that's
right--only he's lying about his tax cut. Most of it doesn't kick in
for years and goes to the already rich. Those cuts should be
reversed, particularly the ones in the estate tax, which is paid only
by the wealthiest families. Democrats should reclaim the money for
investment in making America better.

Now we have a
dishonest debate: Bush lies, and Democrats defend austerity in a time
of need. It's time for progressives inside and outside Congress to
find their voice and break with austerity politics.

Finally, President Bush is "deeply worried" about the economy. Yep, in remarks last week, he even went so far as to observe that "the recovery is very slow in coming."

Nothing in modern times has symbolized the scourge of racism--and the potential for overcoming it--more than South Africa's recent history.

It should surprise no one that the European revolutionaries are not inspired by the American dream. Nobody, after all, expected the fighters for national liberation in the post-Napoleonic era to cherish the memory of Metternich, and the United States is now a much mightier pillar of the new Holy Alliance for the preservation of the status quo. It intervenes, directly or by proxy, wherever the social order is threatened, from Taiwan to Greece to Guatemala. Whenever they are under attack, profit and privilege can rely on the forces of "freedom." In Vietnam the American bombers spell out for the local population the bloody message "Better dead than red." The Green Berets are ready to jump in order to rescue the ruling oligarchies of the banana and other republics of Latin America (though the profits of US companies are now better insured by training local troops for the struggle against "subversion"). Like a black knight in nuclear armor the United States Navy patrols the seas, proclaiming that no more social revolutions will be allowed, that China's in 1949 was the last to be tolerated, while the Cuban affair was simply a misunderstanding. The Vietnamese resistance aroused enthusiasm far from Hanoi and Saigon because it challenged American presumption and proved that human courage still counted even in the world of nuclear balance. The Tet offensive in 1968 drove Western students to action because it revealed that the enemy was not invincible. Che Guevara, alive or dead, was hailed as a symbol of solidarity, of the international nature of the anti-imperialist struggle.

The salesmen of the American dream, and they are legion in Europe, prefer to bypass this role of international gendarme, or to justify it in terms of domestic achievement. They point to the democratic niceties, to the civil liberties the United States can still afford. They stress even more the economic achievement, the technological lead, the intellectual investment that vast accumulation has rendered possible, the level of research and management, the high productivity--in short, the superior wealth of the nation; and they turn to the young revolutionaries with the rhetorical question: Can you dismiss the American model in spite of all this? The answer is not in spite of it but because of it. The most frightening prospect, the American nightmare, is that with so much wealth man should not be able to build a different kind of society. In fact, the Europeans are merely echoing the indictment of America's New Left which, instead of being dazzled by the moon, points to the dark side of American society; its inequality and racism, its collective poverty and private plenty, its derelict health services, its belated discovery of pollution and urban chaos--and to the system responsible for it all.

To its admirers, the United States has discovered the secret of perpetual motion for capitalism. Advertising, as a new dynamic method of sales promotion, is a way of getting rid of industrial surpluses superior to that of coffee burning in agriculture. Above all, with military expenditures absorbing, even in official figures, about one-tenth of the national product, the state has a powerful lever to direct the rhythm of output. Advanced capitalism differs from its predecessor. The vagaries of the cycle are less pronounced, unemployment is relatively smaller, growth comparatively more regular. This is not the place to discuss whether this post-Keynesian equilibrium, resting on a militarization of the economy unprecedented in peacetime, is stable and lasting. The painful discovery of America's rulers is that even while the going is good, the system runs into new contradictions. American expansion meets resistance at home, as well as abroad. The outsiders rebel. The hitherto passive blacks refuse to continue being pariahs in the alleged land of plenty. The growing movement of protest among students and the radical part of the intelligentsia is a symptom of something deeper--the clash between the direction to which the expansion of productive forces is geared and the social needs of our age.

The "consumer society" is a misnomer suggesting that at least, as regards consumption, the average citizen is the uncrowned King. Though his material conditions have in many ways improved beyond recognition, modern man is still an alienated producer and a highly conditioned buyer of goods, a dissatisfied purchaser of leisure and pleasure with very little control over his environment. A producer society, guided by industrial and commercial profit, would be a much more accurate description. That problems such as pollution and urban decay are tackled only when they become unbearable is in the logic of things. Modern capitalism has changed enough in method and manner to face up to the unprofitable when it is under pressure. But it has preserved its essence. Profit remains its ultimate driving force, and it is intrinsically unable to confront the collective or individual problems of our society from any other angle. Consciously or unconsciously, this is what the protest is really about.

The similarity of some of its manifestations on both sides of the Atlantic is quite natural. The Englishman, the Frenchman or the German traveling in the United States is less struck by contrasts than by resemblances. He has the strange impression of making a journey through his own country's more or less distant future. For the most political among them, however impressed they may be by the technological progress, it is a journey to night's end. They know that this is their inevitable prospect unless Europe can forge a different kind of society. The bitter controversies between "Europeans" and "anti-Europeans" are really irrelevant in this context. The conflict that has begun cuts across continental as well as national frontiers. The European protesters who look ahead are joining hands with America's New Left. In Western Europe the real division is between those who seek socialism and those who opt for the American model. "Et tout le reste est littérature." It was no accident if during the French May crisis the United States authorities trembled for the fate of Gaullism. They sensed, quite rightly, that the forces then launching the assault against Gaullism are the same that are waging the struggle against Europe's American future.

The conflict is now intercontinental, and so is the solidarity. Revolutionary "grouplets" across Western Europe used to look exclusively to the Third World, to the Vietnamese or the Latin American guerrillas fighting against imperialism from without. They are now also looking to America's young radicals, who are beginning to carry on the same struggle from within. By the same token, they have discovered their own independent and intermediate role.

In mood at least, there are some parallels between the present period and the middle of the 19th century in Europe. Then, too, solidarity was the order of the day, and during the so-called "Spring of the People," fighters for national liberation journeyed from country to country battling "for your freedom and ours." Now, whatever policemen may think, direct intervention is still rare. The community of purpose and struggle is nevertheless growing. Europe's young students and workers salute their fellows across the Atlantic with the new message: "Against your present and our future."

West wind, east wind.... There is nothing new in the violent reaction of Europe's radicals against American interventionism nor in their hostile rejection of the American model. The real novelty is that the Soviet Union has practically vanished as a counter-attraction. During the French crisis there were many references to the Bolshevik October, but none, apart from contemptuous dissociation, to the bureaucratic rule of Stalin's heirs. This antagonism or indifference to the Soviet model--revisionist for some, Stalinist for others, irrelevant for most--characteristic of the May movement, was one of the reasons why orthodox Communists viewed it from the start with deep mistrust. Yet even the orthodox in the West are by now highly discreet about citing the Soviet Union as an example. They are particularly reticent about dwelling on the prospects of the Soviet bloc since the invasion of Czechoslovakia.

Spring in 1968 flourished in unison in Paris and Prague, but hopes faded separately. The French crisis was over, at least temporarily, by the time the Russian tanks rolled into Prague on August 21, and their invasion marked the beginning of the end of the unique experiment of Czech students and workers. The epilogue in Prague came after the French act, and thus could not affect it. But it has affected the European horizon. The Czech tragedy throws a new light on the problem of the dismantlement of Stalinism in Eastern Europe. It makes it necessary to reassess the hope of a Socialist revival within the Soviet bloc and, by the same token, the chances that inspiration in Europe may once again come from the East.

Daniel Patrick Moynihan, the former senator, has a careerlong history of promoting bold new ideas for government, helping turn them into public policy and then explaining a few years later, with urbane detachment, why the scheme was wrongheaded folly. If the White House should succeed in dismantling Social Security as we know it, expect Moynihan to hold forth a few years from now on how stupid that was. The ex-liberal neocon intellectual is nimble if not reliable. In retirement he sounds like a born-again libertarian serving as high-minded front man for George W. Bush's privatization campaign, with textual conceits supplied by the Cato Institute.

Shame on Moynihan, but don't leave out his co-chairman on Bush's Commission to Gut Social Security, Richard Parsons, co-chief operating officer of AOL-Time Warner. Both are media darlings, well spoken and knowledgeable, but both are too smart not to know the deceitful word games their commission is playing on Americans. Big media, with a few honorable exceptions, are respectfully swallowing the big lies. In its news columns, the Washington Post described defenders of Social Security as "know-nothings" and "Luddites." On the editorial page, the Post called House Democratic leader Richard Gephardt "demagogic" for his reasonable assertion that Social Security's problems can be fixed without cutting benefits. The Moynihan-Parsons lies are more artfully crafted than the broadsides from ham-handed right-wingers, but they encourage the same fallacious inferences, designed to mislead and frighten: Social Security is on the brink; it hits the wall in fifteen years; the Social Security trust fund is a mere accounting device--the trust fund, the pair wrote in the Wall Street Journal, "holds no accumulated reserves of wealth but only promises that future taxpayers will be asked to redeem.... Where will the Treasury get the money?"

These scaremongering phrases are verbal tricks on innocent citizens unfamiliar with the accounting realities. Moynihan knows better because he co-engineered the bait and switch the last time a bipartisan commission "reformed" Social Security, back in 1983, when Congress raised the payroll tax rate dramatically to build up huge Social Security surpluses--$1 trillion now, more than $3 trillion by the end of the decade--the very surpluses Moynihan now suggests are meaningless. Social Security no longer operates on a pay-as-you-go basis; it's now pay-in-advance. Roughly three-quarters of the country pay more in regressive payroll taxes than in income tax. They rightly resent it, and Bush wants to whip that resentment into support for privatization.

If the money isn't there, as Moynihan-Parsons insinuate, what happened to it? The federal government spent it. What did it buy? Mainly, Reagan's huge tax cuts for corporations and the wealthy, also his military buildup. That money was borrowed, and when more workers retire, the government has to pay it back.

Practical solutions to this noncrisis are simple and modest in scale. The government can reborrow funds in the bond market to pay back Social Security when that becomes necessary. Or Congress could eliminate the earnings cap on payroll taxes that now exempts income above $80,000 (even Moynihan would raise the cap to $100,000). Or, for equity's sake, it could restore the estate tax on the wealthy that Bush just repealed and dedicate the revenue exclusively to Social Security.

Bush's privatization scheme is another grand attempt at bait and switch, only this time the money will be turned over to Wall Street, which just lost $3.5 trillion in net worth for American households. Yes, some people do win big in the stock market, but many others lose. The real trade-off citizens are being asked to accept is giving up the rock-solid security of social insurance for the open-ended risks of private investment. The ex-senator would not experience this, since he has a Congressional pension--a promise Congress is unlikely to rescind.

The affluent welcome the choice since they are already well fixed for retirement, but the majority will, I expect, wisely reject it. Social insurance does not make anyone rich, but it delivers what it promises: a modest but secure nest egg for retirees (also widows, orphans and the disabled). Moynihan's malicious insinuations to the contrary, Social Security can default only if the nation has collapsed in utter ruin or if right-wing politics cancels everyone's insurance policy.

This past March, the Zapatista National Liberation Army (EZLN) made history with a march on Mexico City from its jungle stronghold in the poor southern state of Chiapas, demanding acceptance of its peace plan, the San Andrés Accords [see Al Giordano, "Zapatistas on the March," April 9]. But within six weeks, the accords--constitutional amendments recognizing the autonomy of Mexico's indigenous peoples--were gutted by federal legislators, causing the rebels once again to break off dialogue. At the heart of the debate over the plan is the question of who will control the fate of the Chiapas rainforest, the Selva Lacandona--where real indigenous autonomy has been in place ever since the 1994 Zapatista uprising.

The UN-recognized Montes Azules Biosphere Reserve holds the Selva's last, threatened heart of virgin forest. Despite President Vicente Fox's pledges to withdraw troops from Zapatista territory, many military positions remain in the Selva. Barred by the cease-fire from attacking the Zapatistas, the troops are ostensibly policing Montes Azules against drug traffickers and protecting it from deforestation. But the Selva's Maya inhabitants, the Zapatista base communities, say that--in defiance of both UN guidelines and the San Andrés principles--Montes Azules is not being protected for the resident indigenous peoples but for transnational biotech corporations that hope to profit from the region's genetic wealth.

In 1998 the California firm Diversa signed a three-year "bio-prospecting" deal with the Mexican government. Diversa, which has a similar deal with the US government for Yellowstone National Park, is granted access to Mexico's biodiversity in exchange for $5,000 to train and equip personnel from the National Autonomous University of Mexico, who are to collect the samples; $50 per sample; and royalties of between 0.3 and 0.5 percent of net sales on products derived from them. In contrast, Yellowstone National Park got $15,000 of equipment, royalties of from 0.5 to 10 percent--and $100,000.

The terms of both deals had been secret. Environmental groups went to US federal court to try to get the Yellowstone terms released--but they were eventually reported in the Salt Lake Tribune. The terms of the Mexican deal were leaked to the daily La Jornada, which lambasted them as "bio-genetic plunder."

The University of Georgia, the Britain-based company Molecular Nature Ltd. and El Colegio de la Frontera Sur have launched a similar five-year project. This one, titled Drug Discovery and Biodiversity Among the Maya of Mexico, specifically targets Chiapas. Tapping the vast reservoir of Maya herblore, the program will receive $2.5 million from the International Cooperative Biodiversity Groups (ICBG), a consortium of US government agencies, including the National Science Foundation and the Department of Agriculture. The Chiapas Council of Traditional Indigenous Midwives and Healers (COMPITCH) is urging Indians not to cooperate with the researchers, charging that "the pact was developed without notifying or informing indigenous communities and organizations." The US program has developed its own partnership with local Indian communities, called ICBG-Maya. Director Brent Berlin of the University of Georgia told the Associated Press that the project has received the consent of nearly fifty communities and forged profit-sharing deals with them. But Berlin said he warned them that financial windfalls were a long shot.

Since 1993 the ICBG has awarded eleven bio-prospecting grants totaling $18.5 million worldwide. Commercial partners include GlaxoSmithKline, Dow Agroscience, American Cyanamid (recently acquired by BASF) and, until recently, Monsanto Searle. The revenues at stake contrast sharply with the agonizing poverty of Chiapas villages. A unique geyser-dwelling microbe collected from Yellowstone in 1966 was the source for enzymes widely used in DNA research and sold to Hoffman-LaRoche for $300 million. Rather than bring wealth to impoverished villages, new patents may impose economic burdens by requiring farmers to pay royalties to foreign corporations to grow their own indigenous maize. The Mexican government has expressed concern over DuPont's recent patenting of all corn varieties with certain oleic acid levels, including many originating in Mexico.

Beth Burrows of the Seattle-area-based Edmonds Institute, one of the litigants in the Yellowstone case, is still waiting for a court-ordered impact study on the bio-prospecting program there. Says Burrows: "To privatize living organisms, whether it is Mexican maize or Yellowstone microbes, may serve corporate interests, but it does not serve our social contract or our duties to steward the land and support farmers. Farmers all over the world save seeds and trade them with neighbors. But Monsanto has taken farmers to court for violating their property rights. Farmers have to go to the corporations like to masters on the manor."

This system is now supported by the "trade-related intellectual property rights" provisions--or TRIPs--of NAFTA and the WTO, instating international recognition of patents on life. In contrast, the United States still resists ratifying the Biodiversity Treaty, unveiled at the 1992 Rio de Janeiro Earth Summit, which would recognize indigenous peoples' intellectual property rights. Adds Burrows: "We're creating a social disruption which I'm not sure people are seeing."

Some people are seeing it. In April representatives from more than 100 Chiapas Indian communities held a Maize Meeting in the highlands city of San Cristóbal de Las Casas, vowing not to plant bio-tweaked corn. In mid-June COMPITCH held an international anti-bio-piracy Forum for Biological and Cultural Diversity, in San Cristóbal. And on June 24, when the Biotechnology Industry Organization met in San Diego, Diversa's hometown, activists held their own "BioJustice" counterconvention.

The San Andrés Accords would create a formidable obstacle to corporate designs on Mexico's Indian lands: uncooperative Indian communities with greater control over their turf. Which is why peace is likely to remain illusory in southern Mexico as long as the government remains beholden to corporate globalization. But the issues raised by the Zapatista autonomy demands have implications for indigenous peoples, farmers and environmentalists worldwide.

Treasury Secretary Paul O'Neill is turning out to be a dangerous crank.

With the Bush Administration, the corruption isn't hidden in the Lincoln Bedroom. It's paraded in your face. On June 18 Treasury Secretary Paul O'Neill lunched with executives of leading financial houses at Windows on the World high atop New York's World Trade Center. His unstated purpose was to help raise $20 million from the companies he regulates, as an initial ante for a private advertising campaign to promote Social Security privatization. When George W. Bush joked during the campaign that the rich were "my base," he wasn't kidding.

The Administration has lurched straight from its tax cut to privatizing Social Security. On June 11 the sixteen members of Bush's Commission to Strengthen Social Security, all handpicked by the White House for their prior support of private accounts, announced that they are unanimously in favor of using part of Social Security taxes to create "individually controlled personal retirement accounts" to be invested in the stock market. Commission co-chairman Richard Parsons, co-chief operating officer of AOL-Time Warner, made the costs clear, saying the panel would consider raising the retirement age and cutting benefits. "For future retirees, you can consider everything on the table," he said.

A coalition of citizen organizations led by the Institute for America's Future and including labor, women's groups, the National Urban League, senior and youth groups, and disability activists immediately denounced the commission members as "astonishingly unrepresentative of the views held by most Americans concerning Social Security's future." A week later two members of the House Ways and Means Committee ran into a Midwestern version of the same citizens' coalition in Missouri when they conducted a "field hearing" to promote privatization. According to the St. Petersburg Times, committee chairman Bill Thomas had envisioned the hearing as an opportunity to foment an "intergenerational clash" between retirees and Generation Xers on Social Security reform. Instead, seniors and young people demonstrated for "intergenerational solidarity" against privatization.

Similarly, O'Neill's airy power lunch was punctuated by a protest rally organized by the AFL-CIO, the Institute for America's Future, the New York Statewide Senior Action Council, the 2030 Center (for young people) and other groups. Joined by Representatives Jerrold Nadler and Jan Schakowsky, the protesters denounced the blatant impropriety of O'Neill's helping solicit private funds to lobby for a plan that will generate billions for financial barons like Morgan Stanley, American International Group, Citigroup and Deutsche Bank, all of whom were expected to be at the lunch.

To repeat what we've said before: Social Security is not in financial trouble now and may never be; just tweak the actuarial assumptions used by the privatizers and any shortfall disappears. But even if more money is needed at some point to pay benefits, sensible solutions are at hand--the simplest being to raise or remove the cap on the amount of earnings on which Social Security taxes are levied. That idea, of course, does not go down well with the high-income crowd that supports Bush.

By the fall, the Bush Administration will hang around the neck of every Republican running for Congress a detailed plan for privatization, and Bush and O'Neill will be publicly identified with the campaign designed to sell this lemon to the American people. In 2002, Americans will have a clear choice to make.

A Nation analysis finds that benefits to Bush, Cheney and the Cabinet could top million.