Looting Social Security, Part 2

Looting Social Security, Part 2

The Washington Post has run a "news" article about deficit reduction penned by The Fiscal Times, an outlet backed by Pete Peterson, the Wall Street millionaire who wants to loot Social Security.


He’s baaack–the Wall Street billionaire who wants to loot Social Security. This time, Pete Peterson has invented his own "news network" to promote his right-wing rants about shrinking the only retirement security system available to millions of working people. Peterson styles himself as a patriot saving the nation from fiscal insolvency and has committed $1 billion to that 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 does talk in Washington, and Peterson is now buying Washington reporters to spread his dire warnings.

The retired mogul has created a digital news agency he dubs "The Fiscal Times" and hired eight seasoned reporters to do the work there. "An impressive group of veteran journalists," Peterson calls them. I hope they have 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 the budget and fiscal issues." (This media scandal was first uncovered by economist Dean Baker.) The newspaper is thus compromising its own integrity. It’s like buying political propaganda from a Washington lobbyist, then printing it in the news columns as if it was just another news story. Shame on the Post, my old newspaper. I predict a big stink like the one that greeted the Post when its publisher decided to hold pay-for-access "salons" for corporate biggies.

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 around Washington. Congress should create a special commission of eighteen senators and representatives empowered to to make the "tough" budget decisions politicians are loathe to face–slashing benefits, raising payroll taxes or both. Other members of Congress would be prohibited from changing any of the particular measures, and would cast only an up-or-down vote on the entire package, no amendments allowed. Supposedly, this would give them political 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 the only leverage they have in Washington–the ability to lean on their elected representatives and exact retribution if they get sold out. Peterson has two advocates in the Senate–Kent Conrad of North Dakota and Judd Gregg of New Hampshire–who are self-righteous fiscal hawks. The TFT story describes the rising federal deficits as a threat to the republic, yet fails to explain why deficits on rising. The billions have been devoted to bailing out major banks and Peterson’s old chums in 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 Pete Peterson’s favorite targets. He has flogged Social Security as a blight on our future for at least twenty years. He is 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 for the people 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 some of the corporate boodle in the federal budget–that politics is too difficult. Instead, let’s whack Social Security while folks aren’t watching.

The biggest lie in Peterson’s story-telling 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 Social Security 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 the huge surpluses, the federal government borrowed the money and spent it. The time is approaching–maybe ten or twelve years from now–when the federal treasury will have to start paying back its debts to Social Security. The accumulated wealth does not belong to the US government, any more than the money it 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 playing footsie with Peterson and intended to give him a starring role in its "fiscal responsibility summit." The Nation disrupted those plans. I wrote a fierce attack on the billionaire’s looting scheme and the true fiscal history of Social Security. The sting that really hurt was The Nation‘s cover–an unfortunate photograph of Mr. Peterson in which he resembled a Mafia don. The White House abruptly downplayed its summit and dropped Peterson as keynote speaker.

But the assault on Society Security, we knew, 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-authored a "reform" plan that would raise the payroll tax on young workers and cut benefits for older people near retirement. Isn’t that clever? Pinhead economists evidently think that workers won’t notice. Now the billionaire is cranking up another fight. We should finger him again, big-time, and all those who willingly collaborate in his plot.

As a candidate, Barack Obama said all the right things about Social Security and described the modest adjustments that would solve any long-term problems. But we learned during the last year not to trust fuzzy expressions of good intentions. We need to bang on the president right now and demand explicit commitment to oppose the sleight-of-hand proferred by Peterson, Conrad, Gregg and others.

Likewise, people need to confront Harry Reid and Nancy Pelosi immediately. It has been reported the two Congressional leaders are 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 the "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 in theory might be shut down.

Maybe progressives should recruit some Democratic senators who will stage a progressive filibuster. Let’s see how Harry Reid deals with that. Or maybe progressives in the House can recruit some bipartisan support in Republican ranks. Above all, people need to make a lot of noise, because this issue represents one more fleecing for people already struggling. If the Democratic party and the Democratic 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.

Ad Policy