{"id":408,"date":"2010-08-17T00:27:31","date_gmt":"2010-08-17T04:27:31","guid":{"rendered":"http:\/\/kmci.org\/alllifeisproblemsolving\/archives\/which-party-poses-the-real-risk-to-social-security%e2%80%99s-future\/"},"modified":"2010-08-17T00:27:31","modified_gmt":"2010-08-17T04:27:31","slug":"which-party-poses-the-real-risk-to-social-security%e2%80%99s-future","status":"publish","type":"post","link":"https:\/\/kmci.org\/alllifeisproblemsolving\/archives\/which-party-poses-the-real-risk-to-social-security%e2%80%99s-future\/","title":{"rendered":"Which Party Poses the Real Risk to Social Security\u2019s Future?"},"content":{"rendered":"

By<\/strong><\/p>\n

Marshall Auerback<\/strong><\/p>\n

Hint: it\u2019s not Republicans.<\/em><\/p>\n

Social Security remains one of the greatest achievements of the Democratic Party since its creation 75 years ago. Although Republicans have historically fulminated against the program (Ronald Reagan once likened<\/a> it as something akin to \u201csocialism\u201d), they have actually made little headway in touching this sacred \u201cthird rail\u201d in American politics. President Bush pushed<\/a> for partial privatization of the program in 2005, but the proposal gained no policy traction (even within his own party) because Social Security continues to be hugely popular with American voters. It\u2019s a universal program that benefits all Americans, not a government handout to a few privileged corporations.<\/p>\n

Which is why it\u2019s odd that Democrats seem almost embarrassed to continue to champion the legacy of FDR. The party frets about long-term deficits and the corresponding need to \u201csave\u201d Social Security from imminent bankruptcy and, in doing so, opens the gate to radical cuts in entitlements that will do nothing but further destroy incomes and perpetuate our current economic malaise. It is true that some Republicans have signed on to the idea of privatization, notably a proposal<\/a> championed by Rep. Paul D. Ryan (Wis.), the senior Republican on the House Budget Committee. But only a handful of GOP lawmakers have actively embraced the measure and, in the aftermath of the worst shock to the financial system since the Great Depression, many Republican lawmakers would just as soon see the idea forgotten.<\/p>\n

So why don\u2019t the Democrats leave well enough alone? Why bother even setting up \u201cbipartisan commissions\u201d to discuss the issue of Social Security? At the risk of sounding like one of those ungrateful members of the \u201cProfessional Left\u201d, whom Robert Gibbs recently decried<\/a>, I note that it was President Obama who most recently re-opened this issue by setting up a commission on reducing long term budget deficits and dealing with the long term issue of entitlements, including Social Security. In the Commission\u2019s remit, nothing is off the table, including Social Security and Medicare. (Of course, given that one of the members is a director of Honeywell, it\u2019s hard to envisage any suggestions of defense cuts). I also note that according to the Washington Post<\/a>, \u201cDemocrats said Simpson and Bowles are uniquely equipped to blaze a path out of the fiscal wilderness \u2014 and to forge bipartisan consensus on a plan likely to require painful tax increases as well as program cuts.\u201d No mention of Republicans getting on board. This is self-immolation, plain and simple. And Obama wonders why voters remain unhappy?<\/p>\n

Now that the President has opened this Pandora\u2019s Box, it is hard for him credibly to make the case, as he attempted to do<\/a> in last Saturday\u2019s weekly radio address, that \u201csome Republican leaders in Congress want to privatize Social Security.\u201d In fact, it is an idea enthusiastically embraced by a number of Wall Street Democrats who are funded with huge campaign contributions from Wall Street itself. (Candidate Obama received more money from Wall Street in 2008 than Hillary Clinton.) These contributors would be the Rubinites who for decades have played a huge role in allowing for greater financial leverage ratios, riskier banking practices, greater opacity, less oversight and regulation, consolidation of power in \u2018too big to fail\u2019 financial institutions that operated across the financial services spectrum (combining commercial banking, investment banking and insurance) and greater risk. Privatization of Social Security represents the last of the low hanging fruits for Wall Street. Who better to provide this to our captains of the financial services industry than their major political benefactors in the Democratic Party?<\/p>\n

The issue of privatization is germane when one considers the members of the Commission approved by the President. There are questions of possible conflicts of interest. As James Galbraith has noted<\/a>, the Commission has accepted support from Peter G. Peterson, a man who has been one of the leading campaigners to cut Social Security and Medicare. It is co-chaired by Erskine Bowles, a current Director at North Carolina Life Insurance Co (annuity products are a competitor to Social Security and would almost certainly be beneficiaries of the partial privatization). Mr. Bowles\u2019 wife, Crandall Close Bowles, is on the Board of JP Morgan, and she is also on the \u201cBusiness Council<\/a>,\u201d a 27 member group whose members include Dick Fuld<\/a>, Jeff Immelt<\/a>, Jamie Dimon<\/a> and a plethora of other Wall Streeters.<\/p>\n

At the very least, these kinds of ties raise questions in regard to proposals for dealing with Social Security. Many members of the Commission stand to become clear direct and indirect beneficiaries of the privatization that the President is now warning against. It\u2019s disappointing that these ties have not been fully explored by the press, and it is extraordinary that the President would exhibit such political tone deafness in making these kinds of appointments. It tends to undercut the message of his last radio address.<\/p>\n

I\u2019ll leave aside the nonsensical arguments in regard to Social Security\u2019s \u201csolvency,\u201d because Professor Stephanie Kelton has dealt with them conclusively here<\/a>. The only point I would add is in regard to the alleged issue of deficit spending today burdening our grandchildren. In reality, we will be leaving our grandchildren with government bonds that are net financial assets and wealth for them. As Randy Wray and Yeva Nersisyan have recently argued<\/a>, even if government decides to raise taxes in, say, 2050 to retire the bonds (for whatever reason), the extra taxes are matched by payments made directly to bondholders in 2050. We can question the wisdom of whether it is right to make this political<\/strong> argument in favor of bond holders over tax payers. But it is a decision to be made at that time (not before) by future generations as to whether they should raise taxes by an amount equal to those interest payments, or by a greater amount to equal retirement of debt.<\/p>\n

In the meantime, President Obama\u2019s approval ratings<\/a> continue to plummet. His scaremongering has little credibility, given the disparity between his rhetoric and his actual policies. At the risk of further upsetting Robert Gibbs, we\u2019ll try to explain why Obama isn\u2019t finding stronger support from his base despite having passed, for instance, a health care bill, a fiscal stimulus bill and a financial regulation bill. For a start, follow the money: with the President and leading Democrats having taken the most campaign dollars from corporate interests those bills purport to challenge, and having gutted the most progressive elements in the bills themselves (see Matt Taibbi\u2019s latest<\/a> as a perfect illustration of the phenomenon), it is clear that those signature pieces of legislation do not fundamentally challenge the structure of power at a time when that\u2019s what Americans most want. The only \u201cchange\u201d most Americans might experience is a reduction in their Social Security benefits from a President currently presiding over one of the most regressive wealth transfers in history. They\u2019ll be receiving nothing but pocket change if a serious attack on entitlements is legitimized by this commission. A scaremongering radio address doesn\u2019t do a whole lot to change that or to alter the country\u2019s current economic trajectory. To paraphrase one of his leading political opponents<\/a>, Mr. Obama would do well stop practicing the cynical \u201cpolitics as usual\u201d that his Presidency was supposed to \u201crefudiate\u201d.<\/p>\n

Marshall Auerback<\/a> is a Senior Fellow at the Roosevelt Institute, and a market analyst and commentator<\/em>.<\/p>\n

(Cross-posted from New Deal 2.0<\/a>).<\/p>\n","protected":false},"excerpt":{"rendered":"

By Marshall Auerback Hint: it\u2019s not Republicans. Social Security remains one of the greatest achievements of the Democratic Party since its creation 75 years ago. Although Republicans have historically fulminated against the program (Ronald Reagan once likened it as something akin to \u201csocialism\u201d), they have actually made little headway in touching this sacred \u201cthird rail\u201d […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[693],"tags":[3092,1774,3096,3243,3291,1944,1193,3292,3293,2996,2842,3294,3099,1186,3029,3295,3296,3297,2004,2578,3045,3298,1122,2961],"class_list":["post-408","post","type-post","status-publish","format-standard","hentry","category-politics","tag-alan-simpson","tag-democratic-party","tag-erskine-bowles","tag-fiscal-commission","tag-george-w-bush","tag-hillary-clinton","tag-james-galbraith","tag-jamie-dimon","tag-long-term-deficits","tag-marshall-auerback","tag-new-deal-20","tag-paul-ryan","tag-peter-g-peterson","tag-president-obama","tag-randy-wray","tag-republican-party","tag-robert-gibbs","tag-ronald-regan","tag-social-security","tag-solvency","tag-stephanie-kelton","tag-the-roosevelt-institute","tag-wall-street","tag-yeva-nersisyan"],"_links":{"self":[{"href":"https:\/\/kmci.org\/alllifeisproblemsolving\/wp-json\/wp\/v2\/posts\/408","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/kmci.org\/alllifeisproblemsolving\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/kmci.org\/alllifeisproblemsolving\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/kmci.org\/alllifeisproblemsolving\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/kmci.org\/alllifeisproblemsolving\/wp-json\/wp\/v2\/comments?post=408"}],"version-history":[{"count":0,"href":"https:\/\/kmci.org\/alllifeisproblemsolving\/wp-json\/wp\/v2\/posts\/408\/revisions"}],"wp:attachment":[{"href":"https:\/\/kmci.org\/alllifeisproblemsolving\/wp-json\/wp\/v2\/media?parent=408"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/kmci.org\/alllifeisproblemsolving\/wp-json\/wp\/v2\/categories?post=408"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/kmci.org\/alllifeisproblemsolving\/wp-json\/wp\/v2\/tags?post=408"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}