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Posts Tagged 'privatization'

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The Wolves of Wall Street, Hillary Clinton and Social Security

The Democratic primary campaign is not over and already there are media rumblings about who is working the inside track to become Hillary Clinton’s Treasury Secretary, if she’s elected President.  Normally, this is the kind of story we read and then move on to the next one (it is only March, after all).  However, David Dayen’s story in The Intercept suggesting that Wall Streeter, privatization supporter and Pete Peterson-connected, Larry Fink, is positioning himself for the Treasury job stopped us dead in our tracks.  Dayen reports:

“Larry Fink, BlackRock’s CEO, has assembled a veritable shadow government full of former Treasury Department officials at his company. Fink has made clear his desire to become Treasury Secretary someday. The Obama administration had him on the short list to replace Timothy Geithner. When that didn’t materialize, he pulled several members of prior Treasury Departments into high-level positions at the firm, which may improve the prospects of realizing his dream in a future Clinton administration.”

Now, considering someone from Wall Street to serve as Treasury Secretary is hardly shocking.  However, what is alarming is Fink’s views on Social Security including raising the retirement age and shifting Social Security funding to private accounts:

“Fink has also promoted the privatization of Social Security, while mocking the idea of retiring at 65, which is easy for a business executive who sits at a desk all day to say, rather than working on an assembly line or as a waiter. Fink owes his initial backing at BlackRock to Pete Peterson, the former commerce secretary who has been at the forefront of the campaign to cut or privatize Social Security. He sat on the steering committee of the Campaign to Fix the Debt, a stalking horse for Peterson’s ideas.

Fink’s claims that all Americans are living longer and thus should work longer is classic boilerplate language offered by the GOP and the billion dollar anti-Social Security lobby (funded by Pete Peterson) to justify cutting benefits for average Americans by raising the retirement age.  It ignores that fact that it’s wealthy white men who’ve benefited most from any longevity increases, while communities of color, women and low income workers do not see the same benefits.

“Men at the top of the economic ladder saw an eight-year increase in life expectancy, while men at the bottom saw virtually no change.” National Academy of Science 

For perspective, let’s remember that there will be a lot of political tea leaves to read between now and November. It has been welcome news to the National Committee to Preserve Social Security and Medicare that Hillary Clinton’s positions on Social Security have already seen some shifting during this the correct direction.  She has restated her long-held opposition to privatization.  Raising the retirement age, cutting the COLA and benefit cuts are non-starters for her.  She recently gave her support for boosting benefits in a more limited way than Senator Bernie Sanders, with her focus on elderly women and caregivers.  Clinton also has softened her position on lifting the payroll tax cap while proposing raising revenue by taxing unearned income for Social Security. 

There’s a lot for retirees, people with disabilities, survivors and their families to like in both Democrats’ campaign approach to Social Security.  However, seniors expect more than just campaign promises.  Appointing a Treasury Secretary who believes Americans must work longer with some of their payroll taxes diverted into private accounts would deliver a very different message about what a Clinton administration could mean for Social Security. 

“While Clinton has adamantly pledged not to cut or privatize Social Security benefits, Fink’s track record would cause concern among advocates, were he to obtain a cabinet post. And having a ready-made team of trusted advisers who know their way around the Treasury building and the players in a potential Clinton West Wing can only help Fink in that campaign.”...David Dayen, The Intercept

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What If Your Social Security Was Riding the Wall Street Roller Coaster too?

Today might be a good day for a financial exercise...

Chances are if your retirement savings are in a 401K or countless other market-based products, you may have seen what the latest Wall Street downturn has done to your balance. If not, go ahead and bite the bullet and check it.  After you get over the shock, check your Social Securitystatement.  Take some solace in knowing that while your market savings have taken a hit, the good news is your estimated Social Security benefit today is the same it was on Wednesday. 

That’s why Social Security exists.  That’s why it works.  That’s why it’s beyond reason that so many in the GOP still support sending your Social Security to Wall Street and destroying the stable income protection (it’s not an investment) Social Security provides. 

“In June, presidential candidate Jeb Bush said that he thinks the next president will have to try to privatize Social Security. Others have gotten behind the idea as well: Sen. Rand Paul (R-KY) drafted a plan in 2013 that included partial privatization, and Sen. Ted Cruz (R-TX) is in favor of using private accounts. Rep. Paul Ryan (R-WI) has included privatization in his budget blueprints.

The market drop, and ones before, expose the dangers of such a plan, which usually entails diverting some or all of the money workers contribute to Social Security through their paychecks into private investment accounts.” Think Progress

Governor Mike Huckabee also prefers a privatized Social Security system but says he opposes benefit cuts.  The problem is benefits would have to be cut to create private accountsJohn Kasich has also supported privatizing Social Security.

No doubt, conservatives will remind us that over the long-term the market has been good to us.  Maybe so, but as previous market collapses have shown, retirees don’t have the benefit of the long-term to rebuild savings now lost.  

“Look at successive 45-year periods, as I did for my 2005 book, "The Plot Against Social Security," and you find huge variability. The average worker who invested $1,000 every year in the stock market starting at age 20 in 1954 would have $470,000 when he or she was ready to retire in 1998. But the worker who started just five years later, in 1959, would end up with only $234,000 at age 65--half as much--despite investing exactly the same sum over the same time span. 

Market crashes could destroy a nest egg that took a lifetime to nurture. A near-retiree with, say, a half-million in stock in 2007 had just over $300,000 a year later, following a 37.22% plunge in 2008. Those who held fast managed to recover their losses, but that took five and a half years--and what about those who didn't have the luxury of time?”...Michael Hiltzik, Los Angeles Times

Trading Social Security’s guaranteed benefit for a ride on Wall Street makes no sense for Americans who need to be secure in their retirement.  That’s true whether the market is up or down.  

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What Do Swatting Mosquitos and Cutting Social Security Have in Common?

John Nichols at The Nation has this week’s must-read story on Rep. Paul Ryan’s never-ending quest to cut Social Security benefits.  Nichols has read Ryan’s new book (so we don’t have to) and provides this analysis:

The well-regarded second-term congressman met with Vice President Dick Cheney, who was at the peak of his co-presidency powers. Like Cheney in his younger years, Ryan was a former congressional aide who had worked the conservative think-tank circuit before getting himself elected to the House. The Washington insiders should have gotten on famously.

But the vice president was not buying what the man, who is now described as “the intellectual leader of the Republican Party,” was selling.

Ryan recalls the meeting this way:

“The surplus has given us a huge opportunity,” I explained. “If we dedicate the Social Security surplus to reform, we can shore up the program and end the raid on the trust fund.” I talked about the opportunity to create a real ownership society, how workers could actually own a piece of the free enterprise system through these reforms. As soon as I finished my pitch, Vice President Cheney said, “Yeah, we’re not going to do that.” Then he looked at the person sitting next to me, signaling that he was ready to hear the next idea. His terse reply was the verbal equivalent of someone swatting an annoying mosquito from his face.

Of course later the Bush administration did in fact try to privatize Social Security with a famously failed national town-hall blitz in which the more they talked, the more the American people rebelled against Bush’s plans to send workers' Social Security to Wall Street. Cheney also supported the privatization of the Pentagon; however, Nichols points out that the politically astute Vice President at least understood one truism that Paul Ryan still seems oblivious to:

Cheney recognized then, as he appeared to again in his 2001 “annoying mosquito” conversation with Ryan, that domestic political calculations require at least some deference to the wisdom of the American people.

Today that wisdom says that the United States need not, and must not, slash the social safety net in order to advance reforms that will be very good for Wall Street but very bad for Main Street. Until Paul Ryan accepts this reality, he will remain stuck on the same questions. Indeed, if the Republicans nominate the ambitious young congressman for president in 2016, and if he runs on the agenda Dick Cheney swatted away fifteen years earlier, Ryan will again find himself asking, “Why did we lose? How did it happen? Why does the Republican Party seem to keep losing ground.”

We recommend you read the whole story here.




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Wall Street vs. Main Street – They don’t need their Social Security so why should you?

The Business Roundtable has presented the latest CEO/Wall Street attempt to convince Washington that slashing Social Security and Medicare benefits for the average American is the brave thing to do to cut our deficits. Their proposal is nothing more than a knock-off of the Bowles Simpson and the Ryan plan – two plans that have been soundly rejected by a majority of Americans in poll after poll and at the ballot box in November. Incredibly, this plan doubles-down and includes virtually every bad idea Washington has considered over the past decade all rolled into one proposal.  In short, America’s CEO’s say raising the retirement age to 70, cutting benefits immediately for seniors, the disabled and veterans, turning Medicare into CouponCare while also raising the Medicare eligibility age, really isn’t too much to ask from millions of middle-class American families still reeling in this economy.

Now maybe if you were a millionaire or billionaire, you might think these were good ideas too. But most Americans are living well below what these CEOs earn, explaining why preserving and strengthening Social Security and Medicare benefits is so vitally important for the middle class. It’s clearly not a priority for America’s corporate class. But there’s also another explanation for this disconnect between Wall Street and Main Street. The dirty little secret the Business Roundtable doesn’t want to talk about is the vested interest that corporate and Wall Street CEO’s have in convincing Congress we can’t afford Social Security and Medicare. 

The Business Roundtable is fighting to protect more than $1 trillion dollars in tax giveaways—paid for with working American’s tax dollars. Roundtable leaders portray their plan cutting benefits to millions of American families as “practical.”  What’s “practical” about spending a trillion dollars in tax expenditures to pad corporate bottom lines and executive bonus checks while telling an average senior receiving only $14,000 a year in Social Security income to live on less?  While they decry the high cost of providing healthcare to seniors and veterans they conveniently ignore the fact that tax code spending is up 60% since 1986 and is a bigger part of the budget than SS, Medicare, Medicaid or national defense. 

The Business Roundtable’s so-called  “practical” approach also shows that “shared sacrifice” really just means middle-class families should sacrifice so corporations and wealthy CEO’s can share the gains of a trillion dollar tax giveaway. If these captains of industry are truly concerned about the future of Social Security then why not why not lift the payroll cap and subject all income such as deferred compensation to FICA? Or how about limiting just two of those massive tax breaks for the wealthy & corporations, which saves much more than raising the retirement age?

·         Limit some  itemized deductions for high earners  ($114 billion)

·         Eliminate Corporate meals and entertainment write offs ($84 billion)

These two common sense changes save $198 billion over just 5 years while raising the retirement age to 70 saves $120 billion over the next decade.

Surely, writing off expensive business dinners for multimillionaires isn’t a higher priority for our nation than providing enough income so the average senior can afford to buy groceries.

This debate really is about America's priorities for generations of middle-class families.  Unfortunately, America’s CEO’s have made their priorities perfectly clear.





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Social Security & Medicare as Bargaining Chips?

Only time will tell whether the "reforms" President Obama offered up again in last night's State of the Union are the standard Washington formulation of reforms = benefit cuts for seniors or something more meaningful.   And on the payroll tax, we've repeatedly said the White House stimulus strategy is just plain wrong.  Here's what he said about Social Security, Medicare & Medicaid in last night's speech followed by our reaction:

Right now, our most immediate priority is stopping a tax hike on 160 million working Americans while the recovery is still fragile. People cannot afford losing $40 out of each paycheck this year. There are plenty of ways to get this done. So let’s agree right here, right now: No side issues. No drama. Pass the payroll tax cut without delay. When it comes to the deficit, we’ve already agreed to more than $2 trillion in cuts and savings. But we need to do more, and that means making choices. Right now, we’re poised to spend nearly $1 trillion more on what was supposed to be a temporary tax break for the wealthiest 2 percent of Americans. Right now, because of loopholes and shelters in the tax code, a quarter of all millionaires pay lower tax rates than millions of middle-class households. Right now, Warren Buffett pays a lower tax rate than his secretary. Do we want to keep these tax cuts for the wealthiest Americans? Or do we want to keep our investments in everything else – like education and medical research; a strong military and care for our veterans? Because if we’re serious about paying down our debt, we can’t do both. The American people know what the right choice is. So do I. As I told the Speaker this summer, I’m prepared to make more reforms that rein in the long term costs of Medicare and Medicaid, and strengthen Social Security, so long as those programs remain a guarantee of security for seniors. But in return, we need to change our tax code so that people like me, and an awful lot of Members of Congress, pay our fair share of taxes. Tax reform should follow the Buffett rule: If you make more than $1 million a year, you should not pay less than 30 percent in taxes. And my Republican friend Tom Coburn is right: Washington should stop subsidizing millionaires. In fact, if you’re earning a million dollars a year, you shouldn’t get special tax subsidies or deductions. On the other hand, if you make under $250,000 a year, like 98 percent of American families, your taxes shouldn’t go up. You’re the ones struggling with rising costs and stagnant wages. You’re the ones who need relief.
Our President/CEO, Max Richtman responded:
“We share President Obama’s belief that we must rebuild our economy in a way that rewards Americans’ hard work and re-instills fairness into an economic system that too often rewards the rich and punishes everyone else. Ironically, these core American values of hard work, fairness and compassion are also the tenets of the programs most often targeted by Washington for cuts—Medicare, Medicaid and Social Security. If offering more reforms leads to benefit cuts for seniors in these vital programs then seniors program will once again become a bargaining chip traded in exchange for tax breaks millionaires don’t need in the first place. The President’s support for providing a middle class tax cut to help spur the economy is the right policy, but reducing Social Security payroll taxes is the wrong way to do it.  Extending the payroll tax cut further endangers Social Security's financial integrity and could undermine our efforts to defend the program from benefit cuts or privatization.  If seniors are required to pay for the payroll tax holiday -- which most would not benefit from – through Medicare cuts as some lawmakers have suggested, that would also be contrary to the President’s stated goals of fairness. We urge President Obama to safeguard the middle-class by drawing a clear line in the sand, promising the American people that this so-called ‘holiday’ will end this year. Restoring Social Security’s successful self-funding model is the only way to preserve its independence for future generations.” Max Richtman, NCPSSM President/CEO
Meanwhile Republicans are poised and ready to make a "deal" that demands benefit cuts and privatization, coupon care and work til you die.  Here's the GOP response to the President's State of the Union, replete with dire warnings and fear-mongering the facts, claiming there are only two options for Social Security and Medicare--do nothing (which NO ONE supports) or radical reforms that destroy the programs in their current forms.  False options and the same song---102nd verse, taken from the Cato playbook written more than 25 years ago:
"We can preserve them unchanged and untouched for those now in or near retirement, but we must fashion a new, affordable safety net so future Americans are protected, too. [...]
“The mortal enemies of Social Security and Medicare are those who, in contempt of the plain arithmetic, continue to mislead Americans that we should change nothing Listening to them much longer will mean that these proud programs implode, and take the American economy with them. It will mean that coming generations are denied the jobs they need in their youth and the protection they deserve in their later years."
Just a reminder:  according to the Social Security Trustees the  Social Security Trust fund currently has a surplus of $2.6 trillion. This surplus is projected to grow until 2022. At that time the balance in the trust funds are projected to be $3.7 trillion.  The skyrocketing costs of healthcare system wide have posed a greater threat to Medicare; however, healthcare reform added  years of solvency to the program.  While there's more work to be done conservatives are now working to undo the progress already made by repealing the Affordable Care Act and reversing the savings already seen in Medicare.

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