Looting Social Security

Looting Social Security

The Washington Post has run a “news” article about deficit reduction produced by The Fiscal Times, an outfit backed by Social Security demonizer Pete Peterson.


He’s baaack–the Wall Street billionaire who wants to loot Social Security. This time, Pete Peterson has invented a “news service” to promote his right-wing rants about shrinking the only retirement system available to millions of working people. He styles himself as a patriot saving the nation from fiscal insolvency and has committed $1 billion to the cause (a chunk of the wealth he accumulated at Blackstone Group, the notorious corporate-takeover firm). His efforts might be dismissed as ludicrous–except money talks in Washington, and Peterson is buying DC reporters to spread his dire warnings.

The retired mogul has created a digital news agency he dubs The Fiscal Times and has hired eight seasoned reporters to do the work there. “An impressive group of veteran journalists,” Peterson calls them. I hope they’ve shaken a lot of money out of this rich geezer, because I predict doing hack work for him will seriously soil their reputations for objectivity and independence.

With his great wealth, Peterson could have also bought a newspaper to publish his dispatches, but he did better than that. He hooked up with the Washington Post, which has agreed to “jointly produce content focusing on budget and fiscal issues.” (This media scandal was uncovered by economist Dean Baker, as reported on his American Prospect blog.) The newspaper is thus compromising its own integrity. It’s like buying propaganda from a DC lobbyist, then printing it as if it were just another news story. Shame on the Post, my old newspaper.

The first TFT “dispatch” to appear in the Post–“Support grows for tackling nation’s debt”–made no mention of Peterson’s crusade. But it featured the same devious gimmick the financier has been peddling: Congress should create a commission of eighteen empowered to make the “tough” decisions politicians are loath to face–slashing benefits, raising payroll taxes or both. Other members of Congress would cast only an up-or-down vote on the entire package, no amendments allowed. Supposedly this would give them cover. Look, no hands! We just cut Social Security, but it wasn’t our fault.

This “reform” is profoundly antidemocratic, because it would strip ordinary citizens of their ability to lean on their elected representatives and exact retribution if they get sold out. Peterson has two Senate advocates, Kent Conrad and Judd Gregg, who are self-righteous fiscal hawks. The TFT story describes the federal deficits as a threat to the Republic yet fails to explain why they are rising: the billions have been devoted to bailing out major banks and Peterson’s old chums on Wall Street or to turning around the failed economy or fighting two wars at once.

So why do the TFT reporters (Elaine Povich and Eric Pianin) zero in on old folks and Social Security or entitlements like Medicare and Medicaid? Because those are Peterson’s favorite targets. For at least twenty years, he has flogged Social Security as a blight on our future. He’s a nut on the subject. His “facts” are wildly distorted or simply not true. Never mind; the establishment press portrays him as a disinterested statesman.

This crusade is dangerous because the “respectables” in governing circles and both parties embrace the same reactionary logic. Does government have money problems? Don’t restore the progressive income tax on the wealthy or capital; don’t cut away corporate boodle in the budget–too difficult politically. Instead, let’s whack Social Security while folks aren’t watching.

The biggest lie in Peterson’s storytelling is his refusal to acknowledge the looting aspect of what he proposes. Despite his inflamed rhetoric, Social Security is not broke–it has a huge surplus of around $3 trillion (trillion, not billion). With no changes at all, the trust fund will be solvent for at least another thirty years. In fact, workers retiring now have already paid for their benefits because they paid higher payroll taxes for the past twenty-five years. I might have a little respect for fiscal crazies like Peterson, Conrad and Gregg if I once heard them state these facts honestly instead of demonizing Social Security recipients.

Here is what really worries the fiscal hawks: as the Social Security trust fund built up huge surpluses, the government borrowed the money and spent it. In maybe ten or twelve years, the Treasury will have to start paying back its debts to Social Security. The accumulated wealth does not belong to the government, any more than does the money it has borrowed from China. The beneficial owners are all those working people who faithfully paid their FICA taxes for all those years. If Washington stiffs them now, it will be a bait-and-switch swindle larger than Wall Street’s.

A year ago the Obama White House was planning to give Peterson a starring role in its “fiscal responsibility summit.” The Nation disrupted those plans. I wrote a fierce attack on the billionaire’s looting scheme (“The Man Who Wants to Loot Social Security,” March 2, 2009). The White House abruptly downplayed its summit and dropped Peterson as keynote speaker. But we knew the assault would come back sooner or later, because many of Obama’s lieutenants are devoted to Peterson’s fiscal logic. Budget director Peter Orszag once co-wrote a “reform” plan that would raise the payroll tax on young workers and cut benefits for older ones near retirement. Isn’t that clever? Pinhead economists evidently think workers won’t notice. Candidate Obama said all the right things about Social Security, describing the modest adjustments that would solve any long-term problems. But we learned over the past year not to trust fuzzy expressions of good intentions. We need an explicit commitment from Obama to oppose the sleight of hand of Peterson, Conrad, Gregg and others.

Likewise, people need to confront Democratic Congressional leaders immediately. It has been reported that they might be prepared to go along with this ugly ploy. I find that hard to believe, but we need to find out now, because Conrad and Gregg and their rich friend intend to demand that “commission” legislation be included later this month when Congress votes to raise the federal debt ceiling. That’s clever timing designed to stampede members of Congress, since if the debt-ceiling measure is not enacted, government theoretically might be shut down.

Maybe progressives should recruit some Democratic senators to stage a filibuster. Let’s see how Harry Reid deals with that. Or maybe they can recruit some bipartisan support in House GOP ranks. Above all, people need to make a lot of noise, because this scheme would constitute one more fleecing of people already struggling. If the Democratic Party and the president decide to go down this road, arm in arm with the billionaire and the Washington Post, they may find themselves in a civil war much like the one tearing up the Republicans.

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