The plot to steal our future

September 13, 2010

Alan Maass reports on the drive by America's ruling elite to slash Social Security.

CLOSED-DOOR meetings in Washington, attended by a carefully chosen collection of America's corporate and political elite. The crusade of a megalomaniac billionaire, and the un-scrutinized activities of his supposedly philanthropic foundation. Political agendas and records obscured by a manipulated media. The fates and futures of hundreds of millions of people on the line.

Sounds like the ingredients of a cheesy thriller, right?

Think again. This is exactly what's happening in Washington today with the campaign to wreck the Social Security system for current and future retirees.

The long-held obsession of some U.S. political and corporate leaders to make deep cuts in Social Security and impose other measures aimed at cutting working-class living standards is closer to reality than it's ever been, thanks to a Democratic president and a Congress controlled by the so-called "party of working people."

The vehicle for this conspiracy to carry out measures that would cause an uproar if they were exposed to the light of day is the National Commission on Fiscal Responsibility and Reform, established by President Barack Obama by executive order after an attempt by two senators to create a congressional commission failed.

Deficit commission discussions on how to slash Social Security are taking place behind closed doors

Obama promised as a candidate that he would back such a body--to make the "hard decisions" about government spending and taxes that politicians avoid. Supposedly, every proposal is "on the table" in the commission's deliberations about how to tackle the federal budget deficit and the financial future of government programs like Social Security.

But no one expects the commission to recommend, for example, significant reductions in Pentagon spending as a way to balance the budget. To make sure it didn't, Obama appointed David Cote as the one commission member who's closely associated with the issue of defense spending--that is, with increasing defense spending, especially to the company he runs, Honeywell, one of the Pentagon's biggest contractors.

On the other hand, the commission is stacked with advocates of cutting Social Security benefits--the kind of proposal that's very popular among the leaders of both the Republican and Democratic Parties, but that gets derailed when legislation comes before Congress and lawmakers start feeling popular pressure.

So the work of slashing a program that tens of millions of Americans depend on when they become too old to keep working has been delegated to the unelected commission.

THE COMMISSION has been meeting all year, with a carefully timed deadline for issuing its recommendations after congressional elections in November. The commission's report will then be taken up by a lame duck Congress. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid have promised a vote on the recommendations before the end of year--under special rules that bar amendments.

Rumor has it that the commission will take up other austerity measures--a new squeeze on the Medicare and Medicaid government health programs, and perhaps a regressive value-added tax that would increase the price of consumer goods. But Social Security has taken center stage in what limited discussion there has been about the panel.

The commission's final report has to have the support of 14 of its 18 members--a super-majority that might seem like it would rule out recommendations that aren't broadly popular.

But the eventual margin in favor of unpopular measures like cutting Social Security has already been rigged--because of who got appointed.

The Democratic co-chairman is Erskine Bowles, who served as Bill Clinton's chief of staff in the mid-1990s. Bowles was in charge of budget negotiations with the Republican Congress, led by House Speaker Newt Gingrich.

According to numerous accounts, Bowles struck a deal--with Clinton's approval--with Republicans on a proposal for raising the Social Security retirement age, for recalculating the cost-of-living adjustment for benefits, and for taking the first steps toward privatizing the system by allowing money from the Social Security trust fund to be invested in the stock market. The Clinton-Gingrich agreement only fell apart because of the impeachment circus that dominated Clinton's second term.

Now Bowles is chairing a commission considering the same measures--along with Republican Alan Simpson, the former Wyoming senator and all-around nut job.

Simpson has had Social Security in his sights for years. In 1985, he declared, according to the Congressional Record: "I just happen to believe that Social Security and Medicare are so out of whack they ought to be constantly subject to budgetary review."

Earlier this year, Simpson said in a Fox News interview that opposition to Social Security cuts was coming from "these old cats, 70 and 80 years old, who are not affected in one whiff. People who live in gated communities and drive their Lexus to the Perkins restaurant to get the AARP discount."

Simpson's big mouth has gotten him in trouble--for example, when he replied to Ashley Carson of the Older Women's League with the comment that Social Security is "like a milk cow with 310 million tits!" Simpson concluded his diatribe by telling Carson to "[c]all when you get honest work!"

No doubt Simpson's loose-cannon outbursts are frustrating to fellow commission members--but not because the vast majority are any less committed to slashing Social Security. For example, the commission's executive director is Bruce Reed, head of the conservative Democratic Leadership Council within the party that served up the ideological justifications for Clinton's and Bowles' policies in the 1990s. Another of Obama's appointees is Alice Rivlin, a Clinton administration veteran with a reputation as a "deficit hawk."

For these supporters of cutting Social Security, the real problem with Simpson's comments is, as's Glenn Greenwald wrote, that they "prematurely dragged out into the open what has been an open secret in Washington, but was supposed to be a secret plot for everyone else until the election was over."

There are six members of Congress from each party on the commission, appointed by congressional leaders.

Predictably, the Republican lawmakers are, to a man, budget-ax-wielding maniacs--like Rep. Paul Ryan of Wisconsin, who has introduced legislation he calls the "Roadmap for America's Future" that would abolish income taxes on capital gains, dividends and interest, the corporate income tax and the estate tax; privatize part of the Social Security system; and abolish Medicare and most of Medicaid, replacing them with a voucher system.

Among the Democratic legislators are some well-known liberal voices of the party, but they are far from reliable defenders of Social Security. For example, last spring, Illinois Sen. Dick Durbin lectured what he called "bleeding heart liberals" that they should be open to cuts in benefits to ensure the financial future of Social Security.

Durbin was reflecting the conventional wisdom in the Washington political and media establishment--that lawmakers might not have the courage to do what's needed, but something has to be done to impose fiscal restraint, or the Social Security system will go bankrupt and the federal deficit will spiral further out of control.

Thus, Washington Post commentator Dana Milbank, the snidest-working man in mainstream journalism, wrote a column defending Simpson's ranting--on the grounds that nothing should be "sancrosanct" in dealing with the federal government's most pressing problem: the deficit. "Special-interest groups on the left and right, the real sucklings at the public teat, don't want this to happen," Milbank wrote, "so they derailed the effort in Congress to name a commission and now want to discredit Obama's version."

Greenwald's furious response got it exactly right:

Leaving aside the fact that Social Security is not really a deficit issue, the true causes of America's debt and deficits are absolutely sacrosanct and will never be attacked by this commission. Does anyone believe it's even remotely possible that meaningful cuts in America's war and military spending, surveillance and intelligence networks, or even the corporate plundering of America's health care system, will be enacted as a result of this Commission process?...

It's the people who don't control Washington--ordinary Americans who need Social Security--who are being targeted in order to feed even further the fattest, most piggish factions actually in control. That's what makes this process so ugly and odious.

SPEAKING OF the piggish faction, there's another man lurking behind the not-so-public face of the commission whose name won't even appear on its report--but who nevertheless wields an enormous amount of influence.

Peter Peterson is cofounder of the Blackstone Group, a Wall Street investment firm that specializes in leveraged buyouts--in other words, swooping in to buy up companies, loading up on debt to finance the purchase, closing factories, slashing costs, and then selling it off in pieces or a whole at a tidy profit. The leveraged-buyout racket made Peterson a billionaire--he's number 149 on the Forbes 400 list of the richest Americans.

Peterson recently signed up for Bill Gates and Warren Buffett's Giving Pledge--an initiative for the super-rich to hand over at least half of their fortune to philanthropic causes.

Only Peterson's idea of charity isn't stopping AIDS in Africa or curing cancer. He's devoting his fortune to the modestly named Peter G. Peterson Foundation, whose sole project is...promoting government fiscal austerity.

Peterson--who benefited like the rest of the rich from the $1.3 trillion tax cut law enacted under George W. Bush that contributed most of all to the federal deficit--claims that "unfunded entitlement promises" and "ballooning debts" are "not only an economic issue, but a national security issue and, above all, a moral issue."

Peterson has been involved in the Obama administration's attack on Social Security since the first days after Obama took office. In February 2009, the White House planned for the first "fiscal responsibility" summit meeting to set the stage for forming the deficit commission.

The planned keynote speaker for the summit? Peter Peterson.

As a result of the uproar after the liberal Web site FireDogLake revealed his planned speech, Peterson was disinvited. But he's continued to shape the drive to cut Social Security benefits and slash government spending.

Peterson's foundation helped bankroll Alice Rivlin's post-Clinton era career as one of the Democrats' toughest "deficit hawks"--Rivlin appeared prominently in the deficit-cutting propaganda film I.O.U.S.A. funded by Peterson's foundation. The day after the commission first met last April, Erskine Bowles, Alan Simpson and several other commission members appeared at a daylong symposium on "fiscal responsibility" put on by--you guessed it--the Peter G. Peterson Foundation.

And to top it off, the Peterson-backed Committee for a Responsible Federal Budget is supplying staff members to Obama's deficit commission.

THE PETERSON-inspired sales job to justify cuts in Social Security benefits depends on several myths--that the Social Security system is on the brink of running out of money, and that its "generous" benefits are contributing to the rapidly increasing federal deficit.

Neither is true. The money for Social Security comes from a separate financing system of payroll deductions, which are held in a trust fund run by the government. The current surplus in the Social Security trust fund is $2.5 trillion, and that is expected to grow to $4.3 trillion by 2023, enough to cover all claims without cuts for at least three decades.

According to left-wing journalist Carl Bloice, writing in the National Nurses United magazine, even the possibility of a shortfall in the distant future could be easily avoided--for example, by lifting the cap on payroll deductions. Currently, the rich stop paying the payroll deduction for Social Security after their income reaches the cap--set currently at $106,800.

So the case for cuts is based on a hoax. In fact, Social Security benefits really need to be increased, not decreased, says Steven Hill of the New America Foundation.

In theory, says Hill, Social Security was supposed to supplement other sources of income for retirees--chiefly, pensions and personal savings, largely coming from home ownership. But pension plans at private-sector employers have been disappearing at a rapid pace, and the 2000s economic crisis hammered home values, leaving most people with little or no savings for their retirement years.

According to Hill's research, people in the bottom half of the U.S. population by income depend on Social Security for 84 percent of their retirement income. Even those between halfway and three-quarters on the income ladder still rely on Social Security for more than half of their income during retirement.

Social Security checks amount to between 33 and 40 percent of a worker's average wage in the year before retirement, Hill says. "That is simply not enough money to live on when it is your primary--perhaps your only--source of retirement income," he wrote on the Common Dreams Web site.

But you won't hear about the need to increase Social Security benefits from Obama's deficit commission--nor any voice in the Washington establishment.

The Republicans, of course, are on the warpath about federal spending. House Minority Leader John Boehner is vowing that a Republican majority in Congress after November would repeal any money left unspent from the $787 billion stimulus bill passed early last year.

Contrary to what you might expect, Boehner does want to increase tax revenues to the federal government--as long as the money doesn't come from corporations or the rich. Among the proposals Republicans plan to raise is elimination of the mortgage-interest deduction that benefits working-class homeowners.

But instead of exposing the hypocrisy of the Republicans--and demanding to know what kind of "sacrifice" they would share on the runaway defense spending and massive tax cuts of the Bush years, which turned a federal budget surplus into a record deficit--the Democrats have adopted the same language.

When Obama was asked by NBC News' Brian Williams about his thoughts on the economy following his Martha's Vineyard vacation last month, his first words weren't about jobs. Instead, he said: "I think the next couple of years, we've got to focus on debt and deficits."

Obama and the Democrats won overwhelming support in the 2008 elections by talking about how they would help working people, but in their two years in power in Washington, they've done the exact opposite. They bailed out the bankers, they protected the profits of Corporate America, and they continued the one-sided class war that has continuously squeezed working-class living standards while the tiny few at the top, like Peter Peterson, grow more obscenely rich.

Slashing Social Security is the next battle in that class war. "It's terrible what's happening," Kay McVay, past president of the California Nurses Association, told Carl Bloice. "It's the top 1 percent of people in this country, who control over a third of all privately held wealth, that are agitating the hardest to cut the lifeline that makes it possible for older working people to live with some measure of security and comfort."

Social Security is probably the most popular program of the federal government. As the Nation's William Greider wrote, "The people from left to right overwhelmingly support the program (88 percent), and a majority (66 percent) believe benefits should be increased now to cope with the loss of jobs and savings in the Great Recession."

But we can't trust any politician in Washington to acknowledge this vast public support and defend our futures. The fight to save Social Security is bound up with a wider struggle--to build an active political alternative to the Washington status quo and the one-sided class war.

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