Blue Mass Group

Reality-based commentary on politics.

Social Security: The War Begins Tuesday, And You Better Say…Oh, No!

By

BIG MISTAKE

MANY MAKE

RELY ON HORN

INSTEAD OF

BRAKE

BURMA SHAVE

–Actual “Burma Shave” Message, 1945, from “Verse By The Side of the Road“, Frank Rowsome, Jr.

So here’s the dish: a limited partnership corporation called The Blackstone Group, through years of trading in real estate, operating hedge funds, giving financial advice to other companies and governments, and buying and selling companies (Hilton Hotels is one of theirs, the company that makes Corexit, the oil dispersant, is another), made its boss Peter G. Peterson a more-than-billionaire; a billion of that went to endow a Foundation that bears his name.

The Foundation has a particular interest in things budgetary and governmental, and they are seen as one of the groups most looking to change the way Social Security works today.

(Change, you say? Indeed, and if you’ve been following this series of stories, you already have an idea of what that might entail.)

The next thing you need to know is that there is a Great Big Deal Presidential Commission currently at work who is charged with identifying…

“…policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run. Specifically, the Commission shall propose recommendations designed to balance the budget, excluding interest payments on the debt, by 2015. This result is projected to stabilize the debt-to-GDP ratio at an acceptable level once the economy recovers. The magnitude and timing of the policy measures necessary to achieve this goal are subject to considerable uncertainty and will depend on the evolution of the economy. In addition, the Commission shall propose recommendations that meaningfully improve the long-run fiscal outlook, including changes to address the growth of entitlement spending and the gap between the projected revenues and expenditures of the Federal Government.”

…and that the Commission is going to deliver a report with its suggestions December 1st.

It would be fair to say that there are those who are concerned that “the fix is in”, so to speak, and that the report will be the beginning of an effort to privatize Social Security…and guess what?

Managing the Federal Government’s Social Security money, for a handsome fee, would be a spectacular business opportunity for Pete Peterson and The Blackstone Group, and to help create the environment where that can happen, the Peterson Foundation is dropping $20 million on a TV ad campaign to try to convince you to get interested in privatizing Social Security, too.

This Tuesday morning, November 9th, Peterson will appear at Washington, DC’s Newseum to unveil the advertising campaign, presumably to the delight of the assembled throng and the sipping of the coffee of the assembled media; this according to a Peterson Foundation press release that came across my desk yesterday.

There’s even a catchy name for the reform program: “OweNo”…and if you’ve already written your own “Oh, No!” Social Security joke, you’re apparently a bit faster on your feet than the guy who tried to sell Chevy Novas in Spanish-speaking countries…or the folks who came up with this catch phrase.

So that’s the story: come Tuesday, Pete Peterson, who runs a Big Fat Wall Street Firm That Would Love To Manage Your Money For Big Fat Fees, is dropping $20 million to tell you that it’s time to “get a Chilean“…and I’m here to tell you that such a procedure is going to hurt your wallet, a lot-and when it’s all over, you’re the one who’s going to be saying “Oh, No!”

FULL DISCLOSURE: This post was written with the support of the CAF State Blogger’s Network Project.

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Comments

  2. Have a look at who’s on that Presidential commission:

    Alan Simpson … will forevermore be known for comparing Social Security to a mutant bovine. Awkward as that was, though, it was just another piece of his decades-long career of calling for partial privatization of and benefit cuts to Social Security.
    Alice Rivlin … has publicly argued that Social Security benefits should be cut and means tested.
    David Cote … is a Republican and the CEO of defense contractor Honeywell. ..  he has, according to commission sources, advocated cutting service member benefits to avoid other defense budget cuts that would harm contractors…like Honeywell.
    Paul Ryan almost needs no introduction. The House Republicans’ top budget guy is one of its most outspoken advocates of fiscal austerity. He’s the author of legislation that would dramatically overhaul and shrink the country’s budget, largely by privatizing Social Security and turning Medicare into a voucher program.
    Jeb Hensarling As recently as February, Hensarling was publicly advocating partial privatization of and cuts to Social Security and Medicare.
    Dave Camp … In the past, Camp advocated for President Bush’s Social Security privatization scheme…
    Judd Gregg In 1998, he teamed up with conservative Democrat John Breaux to co-chair the National Commission on Retirement Policy. According to USA Today, their plan would have raised the retirement age to 70 by 2029, and included a Bush-like privatization component.
    Tom Coburn On Social Security, he says all options should be on the table… except the ones that preserve benefits and the current structure of the system.
    Mike Crapo In 2006, he teamed up with Sen. Jim DeMint (R-SC) — one of the most conservative members of the Senate — on legislation that would have “[p]rovided a voluntary option for younger Americans to obtain legally binding ownership of a portion of their benefits,” (also known as privatization)…
    Max Baucus Now he’s chairman of the Finance Committee, but before the Democrats recaptured the Senate, he entertained the idea of negotiating with the Bush White House on Social Security cuts.

    <

    p>I have said it before, and I will keep saying it – eliminate the income cap on the SS tax, and the “problem” will disappear.

    • Commiserate increase in benefits for those who are paying in additional amounts as benefits are based, in part, on amounts paid into the system.

      <

      p>Doing this will indeed solve a large part and potentially all of the social security projected shortfalls.  However, it will also mean President Obama goes back on his no increased income taxes on people earning less than $250,000 per year.  This would be a big increase for those working for an employer and a HUGE increase for those working for themselves and paying both sides of the Social Security tax.

      <

      p>I am looking forward to what the Commission has to say after their months of work.  These are the types of discussions that need to be held if we are to solve our budget deficit and debt issues in our lifetimes.

      • … a mistake because it concedes that the real problem is the deficit.  The real problem is the lack of growth because growth is the single best way to attack a deficit.  Nothing this deficit commission will come up with will address that.

        • …that will never come out of that commission…single payer being just one example…and to the extent that this sort of thinking was not brought into this process, this process will obviously be a flawed one.

      • …raising the tax rate by 2% isn’t as bad as it sounds.

        <

        p>for example, on %50,000 you’re looking at $500, which is $40 a month…which ain’t exactly free, but it’s also not as horrible as many might think.

  3. I am amongst millions of Americans who assume I will never see a penny coming from SS to my bank account when I retire. I also believe it is on the path to destruction without serious reform. Now, my comments have been challenged here on BMG that this is all a product of the Republican boogie-man machine.

    <

    p>So what’s the real story. Please don’t reply with a link since there are links galore showing credible people explaining why SS “is and isn’t” on the way to hell. WTF??? Can’t some unbiased (politically and ideologically) group put out a report on SS? The CBO is a possibility but they are wrong so many times that their unbiased qualification gets trumped by their disastrously incorrect assumptions.

    <

    p>I might add that similar projections have been made for decades about state pension systems and we are now finding out that these projections are spot on with some states having ten and hundreds of billions of dollars in unfunded pension liabilities. And those projections were dismissed as well much like concerns about Fannie and Freddie, much like concerns about banking deregulations were dismissed, sub-prime mortgages…

    <

    p>We have to stop kicking this can down the road.

    • …in a nutshell:

      <

      p>–the way it looks today social security will be able to pay 100% of anticipated benefits out through about 2037.

      <

      p>at that time, it looks like they could continue to pay about 75% of anticipated benefits from then on, indefinitely, even if no changes are made to the current way we fund things.

      <

      p>–we are putting money aside today to help cover some of this 25% gap (last year, social security took in about $134 billion more than they paid out), but this is highly controversial, as it appears to many observers that the money is used to fund the current operation of government (the “borrowing” you hear about), meaning, if they’re right, that we’re collecting money today that we won’t have tomorrow.

      <

      p>–from there out is where the fighting starts.

      <

      p>some people feel that letting individuals invest the money in various ways is the way to go, and this is something that was tried in several latin and south american countries; i wrote a story on how this went in chile the other day, and we’ll be looking at more examples as we go along.

      <

      p>some people suggest that you can make changes to the age in which you could retire, that you can put an upper income limit qualification on collecting social security, and that the income “cap” on social security and medicare tax payments could be removed to solve the social security funding problem (any income above about $110,000 is exempt from taxation); various combinations of this approach put more or less emphasis on one or more of these three variables.

      <

      p>there is also a proposal to simply raise the social security payroll tax to fund a solution; it’s suggested that raising the rate from 12.6% to about 14.5% would get you to a stable funding situation after 2037.

      <

      p>so that’s the “quick and dirty” version of where we are, except to add, as you seem to have noticed yourself, that a variety of interest groups are working to advance their various interests with a variety of misleading information, and that you should be aware that among those who propose privatizing social security there are a number of financial interests who would like to have access to the ongoing income stream that fees for administering that money would represent.  

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