The Peterson Foundation Responds

The Peterson Foundation Responds

David M. Walker, president and CEO of the Peter G. Peterson Foundation, responds to William Greider’s essay, Looting Wall Street, published in the March 2 edition of The Nation.


To the Editor:

William Greider’s essay, “Looting Social Security” (March 2 issue), grossly misrepresents Pete Peterson and the Peter G. Peterson Foundation’s views on Social Security reform and overlooks some large and inescapable truths.

Both Republicans and Democrats in Washington have charged everything to the nation’s credit card, including tax cuts and spending increases, without paying for them. Washington’s imprudent, unethical and even immoral behavior is facilitated by a lack of transparency and accountability. As of September 30, 2008, the federal government was in a $56 trillion-plus fiscal hole based on the official financial consolidated statements of the US government. This amount is equal to $483,000 per household and $184,000 per American. Left unchecked, this burden rises every year by $6,600 to $9,900 per person, even with a balanced federal budget.

The nation’s bedrock social safety programs, Medicare and Social Security, are not in danger of being looted–they already have been looted. The federal government already has spent any related surplus and replaced it with non-marketable IOUs that aren’t even considered liabilities by the federal government. In addition, Medicare is already drawing down on these IOUs and Social Security will start doing so within ten years.

Mr. Greider is correct in saying that the government will have to repay what it borrows from Social Security–but how will it do so, and what level of tax burdens will be required to meet our growing Social Security, Medicare and Medicaid obligations without fundamental reforms?

As a former Comptroller General of the United States from 1998 to 2008 and a former public trustee of Social Security and Medicare, I share Pete Peterson’s deep commitment to preserving a strong, sustainable safety net for all Americans, including seniors. And contrary to the impression that one could draw from Mr. Greider’s essay, Pete and I both support the concept of a sound, defined-benefit program for Social Security supplemented by additional automatic savings accounts for individuals.

At the same time, Pete and I also believe that the process one employs is critically important when transformational changes are needed. We have sadly concluded that the “regular order” in Congress is broken and that achieving progress on multiple fronts within a short timeframe is not possible on a piecemeal basis.

What does this mean? The president and the Congress need to work together to establish a “Fiscal Future Commission” (or task force) which, unlike most Washington commissions, would be designed to accelerate action and get the ball across the goal line rather than punt it down the field. Ideally, this bipartisan commission would be created by statute to ensure buy-in from both the Congress and the president. It should include selected and diverse members of Congress and of the administration as well as non-governmental officials. It should engage the public outside Washington’s Beltway, including by leveraging digital technology and the web. Everything, including budget controls, entitlement reforms, spending constraints and tax increases, would be on the table. After engaging the public and key stakeholders, it would make a range of recommendations that would be subject to an up-or-down vote in Congress.

Mr. Greider is incorrect in claiming that such a commission would be a back-door attempt to cut benefits or “dismantle the Social Security entitlement.” A commission, and ultimately the Congress and the president, would be required to look at many alternative solutions to these structural fiscal challenges and make recommendations designed to put us on a more prudent and sustainable path.

It is disappointing that Mr. Greider and The Nation in its misleading cover pictorial seem to have used hyperbole to falsely impress upon readers that Pete Peterson is trying to “loot Social Security,” or that he is alone in trying to address Social Security’s financial challenges. Indeed, a growing number of prominent individuals spanning the ideological spectrum support the need for dramatic and fundamental reforms of several of our nation’s current programs and policies.

Why is a diverse coalition supporting this growing movement? Because there is a increasing consensus that our policy of ignoring our fiscal realities, by spending the Social Security surplus, ignoring out-of-control healthcare costs, running operating deficits and relying increasingly on foreign lenders, serve to threaten our collective future.

In my view, our country is deeply fortunate that Pete Peterson is willing to dedicate a significant portion of his net worth to help keep America strong and the American dream alive for future generations.


David M. Walker

President and CEO

Peter G. Peterson


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