It’s not a pretty spectacle when a very rich man tells little people they ought to get by with less, particularly when his firm benefitted handsomely from the pump and dump operation that led to the financial crisis.
Pete Peterson, one of the two founders of the Blackstone Group, has had a longstanding campaign against Social Security and Medicare. He’s sufficiently aggressive that to combat consistent poll ratings that show that both programs enjoy substantial support, his foundation set out to generate different survey results by stacking the deck heavily in its favor. As we recounted last July:
For those who did not catch wind of it, the Peterson Foundation, which has long had Social Security and Medicare in its crosshairs, held a bizarre set of 19 faux town hall meetings over the previous weekend to scare participants into compliance and then collect the resulting distorted survey data, presumably to use in a wider PR campaign. It’s important to keep tabs on this propaganda effort, since its big budget (the Foundation has a billion dollars to its name), means it will keep hammering away on this topic. But it appears that they overestimated how much public opinion expensively produced and stage-managed presentations can buy.
The brazenness and ham handedness of these so-called “America Speaks” sessions, which have garnered well deserved criticism on the Internet, is probably due to at least two factors: deluded confidence that the average person will fall into line when a confident and well-credentialed presenter makes a pitch and a stunningly naive belief that aggressive efforts to manipulate opinion and mislabel it as polling would not be called out.
And we also noted:
It is refreshing that this effort failed, but it is a given that the Peterson crowd will go back to the drawing board and figure out a way to credibly produce the answer it wants.
The Peterson Institue’s new ruse is to avoid grownups with fully formed opinions, since they are not amenable to short-form reprogramming. Instead, they are targeting high school students with an anti-deficit “education” program, on the assumption if they can inculcate a belief system, the desired policy choices will follow.
From Remapping Debate (hat tip Dean Baker):
No one has done more than the billionaire private-equity investor Peter G. Peterson to stir America’s anxiety over deficits, debt, and what Peterson (among others) considers out-of-control entitlement-program spending. Those same concerns now lie at the heart of a “fiscal responsibility” curriculum being developed for America’s high schools. The curriculum bears the stamp of Columbia University’s prestigious Teachers College, but reflects the focus suggested by the Peter G. Peterson Foundation, which provided $2.4 million in funding for the project.
Teachers College gave Remapping Debate access to a set of 24 lessons set to be test-taught in four states this spring prior to a wider roll-out in 2011-12. Heavily weighted toward the themes and arguments of Peterson and other deficit hawks, the trial lessons could be seen as part of an effort by one of the country’s wealthiest men, now 82, to spread his gospel to coming generations…
Yves here. Tactically, this is very clever. Education schools are academic backwaters, which means they have no brand to tarnish by association with a venture like this And it’s patently clear what is at work here. Teachers College initially approached the Peterson Foundation to get some modest funding to develop a program about personal finance. The Foundation came back to pitch a completely different concept with ultimately 48 time as much money to the college involved. Guess whose idea prevailed? Back to the article:
[T]he trial lessons repeatedly point toward two core ideas of Peterson’s long crusade: first, that America’s future is threatened by deficit spending, and, second, that Social Security and Medicare have helped put our economy on an “unsustainable course.”
Andrew Fieldhouse, one of several economists asked by Remapping Debate to review parts of the 409-page curriculum, objected strenuously to what he said was a loaded discussion of the debt and deficit, one designed both to fuel alarm and to put undue focus on the spending rather than the revenue side of things.
Fieldhouse, a federal budget analyst at the left-of-center Economic Policy Institute, questioned the practice of treating taxes, spending and fiscal balance as issues unto themselves. “Budgeting is the numeric embodiment of all your national values and priorities,” he said. “It’s about the public goods you want to provide for the nation, and how you pay for them.”
Robert Prasch, an economics professor at Middlebury College, voiced similar complaints about the way the curriculum deals with Social Security. “No effort is made to explore whether, and to what extent, there may or may not be a fiscal crisis facing Social Security,” Prasch said. “It is presumed or taken as an unimpeachable fact.”
In its discussion of Social Security and other issues, the curriculum does sometimes cite materials from liberal as well as conservative sources, but the effort to provide balance is often brief or oblique….
The article is very much worth reading in full, since it discusses the biases and scare messages woven into the
indoctrination course in some detail.
Parents may want to make inquiries to see if their children will be among the guinea pigs. If you don’t like the answers, consider writing letters to school administrators, the local media, and the Dean of Columbia University about the propriety of letting a billionaire use high schools as a marketing channel for his long-standing political agenda. At a minimum, Soros should demand equal time.
This is beyond sad. It’s downright pathetic. Pete Peterson has to be one of the biggest losers around. Someone needs to catch him with his proverbial pants down to out him for good. I know this can happen because someone did an interview with him(who I cannot remember now) and basically had Peterson admit to him in person that he was probably misleading on a few things, but when it came to the interview he went straight back to the script.
So, someone at Columbia bent over for $2.4 million, or $100 thousand per lesson.
Now, if you’d said $24 million, or $1 million per lesson, I’d show some respect.
Sadly, Columbia is working 42d Street, not 5th Avenue.
Instead of spending $50,000 to teach basic personal finance, he spends $2.4 million to teach that the government spends too much.
Listen to the man, he sounds like he knows what he is talking about.
I think you hit the nail on the head. When do I get to throw around ridiculous sums of money for my own personal gain without a clear sense of rationale?
Granted Education (my field) is an academic backwater in which lurk some of the foulest eggheads imaginable. But if there’s one education program with Foreign Legion elan then its Columbia Teachers College. As commentator McMike wrote yesterday, this is full-on, up-is-down land.
Didn’t mean to offend and didn’t realize Columbia was a standout. This makes Peterson getting his hands on their brand a more nefarious affair.
So you’re saying all these reports are false, and that:
1. Columbia Teachers never approached the known criminal Peterson;
2. Rejected him when he pushed this, and are not in bed with him in any way.
Agreed. I’m currently a graduate student at the “academic backwater” of Teachers College. It is the first place where I heard (for example) a critique of neoliberalism. This is an article that is currently on Columbia’s home page: http://www.tc.columbia.edu/news/article.htm?id=7842 (an excerpt: “The gap between the rich and the poor that continues to grow in our market-driven society is profoundly affecting all public institutions, especially our schools. The need for public policies that compensate for growing inequality has never been greater or further from the radar screen). I know that the faculty and student body would be repulsed by this. As with most universities (which are being run more like corporations than like a democracy, obviously) in the US, it is clearly a matter of the powerful people within the organization dominating the conversation. I am doing what I can to bring this the attention of my colleagues. If anyone has any other ideas, feel free to contact me. firstname.lastname@example.org
(Meant to agree w/ bmeisen)
I wonder how Peterson feels about the government backed counterfeiting cartel, the banking system?
Also, socialism did not really take off in the US till the government backed banking system ruined the economy in the 1920s and 1930s.
If we fundamentally fix the money system then the need for socialism should wither away. Why wouldn’t it?
At 82, one would think Pete Peterson would have some fear of the Lord since he will soon be Judged by Him. Oppression of the poor is a serious sin.
F. Beard said: “Also, socialism did not really take off in the US till the government backed banking system ruined the economy in the 1920s and 1930s.”
Nah. Read Kevin Phillips’ Wealth and Democracy.
Government welfare for the rich and powerful is what America has always been about, ever since its inception.
Government welfare for the rich and powerful is what America has always been about, ever since its inception. DownSouth
I won’t disagree with that but I usually label socialism for the rich as fascism. The biggest offenders are the bankers so I label that as banker-fascism.
“I usually label socialism for the rich as fascism”
Your choice obviously, but I prefer the former term as it highlights the hypocrisy.
No, it just slanders socialism and whitewashes fascism.
“I wonder how Peterson feels about the government backed counterfeiting cartel, the banking system?”
He loves it, as that is one of the principal sources of his wealth: private equity leveraged buyouts to destroy wealth-producing companies which employ people, then he destroys that company and their jobs, while enriching himself and his cronies — gotta love those leveraged buyouts.
And of course, when Peterson took the Blackstone Group public, he continued to keep his PE tax rate of 15% instead of the legal 35% because he bought and paid for several congressional critters who passed crooked, predatory legislation on his behalf, SOP.
Peterson, Davy Rockefeller’s demonic familiar, who was practically handed all his jobs and fortune by Rockefeller: handpicked to follow Rockefeller as chair of the Council on Foreign Relations, handpicked to chair that phony commission on foundations (to be sure said foundations continued on as “tax-free holding companies”), later handpicked to chair Clinton’s commission “to end welfare as we know it” — or to destroy any remaining social safety net for those Peterson helped to impoverish.
And all those structured finance loans Peterson, and the other PE scum have received from JPMorgan Chase, Citigroup, BankofAmerica, Goldman and Morgan Stanley (via credit derivatives, ‘natch).
And that vile Peterson Institute, one of the five most influential econ pirate groups in America and all boasting international membership (can you spell “no longer a sovereign nation — assuming America ever really was?”):
Bretton Woods Committee
Council on Foreign Relations
Group of Thirty
Did anyone in all of this take note of the fact that Peterson also funded “Waiting For Superman”, a movie that sets teachers’ unions as the ultimate educational evil? These teachers are now supposed to teach the propaganda of the very man who’s trying to crush their pay and ruin their job security?
Yup. That’s what every group of corrupted wretches does under this kleptocracy. No matter how many others they come for, each group sells out the rest and is then dumbfounded when its turn comes.
That’s part of why we have to reject all existing “leadership” and structures.
Thanks for mentioning that, and of course, it is because they all support “the privatization of everything” — which is the diabolical yet logical extension of the privatization of land, the beginning of the monopolization of everything, and fundamentally continuing the lord/serfs ruling model.
Forgot to add that their outfit, TFA, or Teaching For America, is simply a more subtle extension of that privatization of education model, heavily funded by Wall Street investment banksters, who have almost exhausted their “securitization of student loans” scams.
As a high-school teacher of honors students in central WI, who teaches into 10 schools daily via the internet, I can tell you the students are already getting massive exposure to right-wing curricula, but at home, from Fox-News parents, the teachers of most impact. These lessons of course are pure misinformation, that also includes racism, jingoism, violence as a first choice, etc., as part of the lesson. I imagine in some classrooms Fox is actually used by teachers as a “news source,” because there are many right-wing teachers, another aspect of the problem, so to call it, the article above discusses, the online propaganda course content. Also, Peterson’s and other “anti-entitlement” think tanks for years have been writing and feeding biased “news” articles to the Associated Press, which I call the Appropriated Press, that mislead the masses against their own self interests, another kind of “teaching,” via the adult print media.
Yves says that SS has “Wide spread support”. Of course it does Yves! 55 million Americans get a check once a month. In February of 2011 the checks totaled 59.7 Billion. And you wonder why some people like it?
Yves/Baker take issue with the Peterson on this issue:
America’s future is threatened by deficit spending, and, second, that Social Security and Medicare have helped put our economy on an “unsustainable course.”
I study SS. It was in deficit by $40b in 2010. It will be in deficit every year for the next 75. The CBO said a week ago that the deficits at SS could reach $1 Trillion over the next decade. I think they will be much higher.
Let me assure you that SS has put the country on an “unsustainable course.”
Think what you will of Peterson and his tactics. He happens to be be right. We won’t make another ten years unless the problems at SS are addressed.
BK I’ve always respected your research but, I don’t think SS is the “unsustainable course.” There are far bigger issues nationally, if not globally. The root causes must be addressed…um wars[?], crazy military spending cough complex, silly Ag subsidy’s you know bio stuff, etc, etc.
Yeah its messy although think of all those people, there are no jobs, nada, never going to be either, so you better give them sum chump change or you know what or do you have enough for a private army…eh…landed gentry will be the first to go.
Skippy…what do you fear more…the big D or the big I…I fear neither…I’ve got my towel!
PS. people that hang on to tight, well you know what I mean.
The deficity is on an unsustainable course so we have to cut the taxes for Peter Petersen and his class?
As Cobberly of Angry Bear states:
“And we have the really bad people (Pete Petersen, et. al) who want to fix Social Security by raising the retirement age. “It’s the obvious solution,” they say. ” After all, we are going to be living longer.” It never troubles them that if people can pay for their own retirement (with an extra forty cents per week per year) they may not want to work longer, or they may have other age related conditions that will not reduce their life expectancy but may make working painful. But people with jobs they like can’t imagine why working people might want to stop working for the boss and have a few years of freedom before they die.” …
…I have done the math. So has CBO. The cost of keeping your Social Security insurance, just in case you do get old without getting rich, looks like about a forty cents per week increase in the payroll tax each year, while incomes are expected to go up about ten dollars per week each year.
Try to keep that in mind when the man in the suit is selling you snake oil.”http://www.angrybearblog.com/2011/02/eyes-on-prize-social-security-summary.html
I find this argument so incredibly weird. Is it not a fact that the United States is incredibly richer than it was in 1950? Will it not be true, absent some terrible catastrophe (Nuclear War, catastrophic climate change) we will be at least as twice as rich as a society in 15 years or less if we return to trend growth? http://www.web-books.com/eLibrary/Books/B0/B62/IMG/fwk-rittenmacro-fig08_001.jpg
I cannot read Pete Petersens’s mind. It appears that he disagrees with Social Security on deep principle as departure from the winner take all society and he sees this as opportunity to destroy the program. He certainly has little regard for individuals who have not become rich and probably has internalize the Randian view that all who are not are just parasites.
Yes, please do go to this article and read it. Then look down to the comment section on the bottom of the first page you will see an exchange between Coberly and I. You might find it amusing.
Coberly’s plan raises $55 in additional revenue for SS over ten years. That is a drop in that hat. Benefit payments in February 2011 were 59.7 B We will top 60b next months and rise every month thereafter for the next 20 years.
There is no Coberly plan. The numbers are much bigger than he lets on.
SS will take in 650b in payroll taxes this year. Nearly a third of all taxes.
SS will pay out 730b this year. That is 5% of our entire economy.
This is the elephant. You can dabble around all you want with other areas as ways to cut the deficit and size of government. But if you mean business and actually want to get total deficits under control you can’t avoid looking at SS.
“SS will take in 650b in payroll taxes this year … SS will pay out 730b this year … This is the elephant.”
That projected $80B SS deficit (which SS will take out of its $2.5T trust fund) is a whopping 5.3% of the projected $1.5T federal deficit.
They must have mighty small elephants where you come from.
Bruce Krasting said: “SS will take in 650b in payroll taxes this year. Nearly a third of all taxes. SS will pay out 730b this year. That is 5% of our entire economy.
This is the elephant. You can dabble around all you want with other areas as ways to cut the deficit and size of government. But if you mean business and actually want to get total deficits under control you can’t avoid looking at SS.”
So now you have inflated this year’s deficit up to $80Billion. Now the Social Security Trust fund will run out in 31 years!
Let’s see, $730Billion is 5% of our economy, so our economy must be $14,600Billiion.
So $80Billion is .54% of our economy. Is that your best argument? Wow, I am shaking in my boots.
The war in Afghanistan is running $40 to $55Billion a year according to the New York Times. Maybe you should spend your efforts saving that money?
Perhaps class warfare is more important to you.
Since 1935 the Social Security system has been promising benefits and collecting contributions. Now you believe that those promises were worthless. Where would that attitude end? Would you favor defaulting on Treasury bonds?
You point to Afghanistan and a NY times report that it costs us 40 billion a year!!!!
I say again to you folks. SS spent $60b in February alone. Get some perspective, please.
Hum. Let’ see. Here are the budget figures.
Defense spending, including Veterans benefits and services, in 2000 was $341,352 billion, or 19.1% of total Federal outlays. By 2009 that figure had increased to $661,049 billion, or 21.5% of total Federal outlays.
In 2000 Social Security spending was $409,423 billion, or 22% of total Federal outlays. By 2009 that figure had increased to $682,963 billion, or 19.4% of total Federal outlays.
So as a percentage of total Federal outlays, by 2009 Defense spending (21.5%) was greater than Social Security spending (19.4%).
So by all means, Bruce: Get some perspective, please.
And Jim the Skeptic is right.
If you look at Table 2.4 of the 2011 budget, the draw on the draw on the trust fund is $60.15 billion.
So Bruce, you may “study SS.” All I can say is that your definition of “study” must be very different from mine.
i hope anyone who reads Angry Bear does so more carefully than Krasting.
In the first place what he calls Coberly’s plan is the CBO option number three. You don’t have to trust Coberly, you don’t even have to trust the Congressional Budget Office, you can read the Trustees Report and do the arithmetic yourself, or write Angry Bear and I’ll send you my pdf that points the way.
Meanwhile Krasting appears to believe he beat me up on AB, or perhaps he just thinks you will find some amusement in watching him try to make the case that my “fix” does not pay the entire cost of Social Security. Of course it doesn’t, my fix…. and the CBO’s…. pays the EXTRA cost that Social Security expects due mostly to longer life expectancies over the next seventy five years.
It’s as if Krasting goes into the grocery store with a twenty dollar bill and the tab comes out to $20.05, so he runs out into the parking lot and screams to his wife “we’re all going to die!” She gives him a nickle to pay the extra, and he rolls on the ground screaming… “that’s not enough, that’s not a drop in the hat!” So she patiently explains to him that with the twenty dollar bill he already has, the extra nickle covers the full tab.
But Krasting takes the twenty and goes into a bar and knocks back a couple and tells everyone who will listen about his silly wife claiming to pay a twenty dollar tab with a nickle.
dale coberly says: “Moreover, the “deficit” projected in Social Security’s own accounts… after the Trust Fund is repaid (what Bush used to call “goes broke.”) amounts to a need for a tax increase of forty cents per week per year so the workers can pay for their own longer life expectancy.”
Sir you seem to advocate small changes which would only serve to make the Social Security system better.
That is something that we all should want.
Unfortunately we can not have a reasonable conversation because Peterson, Krasting, and others want to balance the budget on the backs of the Social Security recipients. The Social Security payroll tax were collected for one purpose and they want to spend it on something else. That is fraud.
Also unfortunately the politicians of today routinely carry on the public’s business behind closed doors and in close consultation with lobbyists. That process has regularly abused the average citizen.
In 1983 the politicians sold us on the idea that by paying higher payroll taxes the baby boomers would be pre funding their own benefits. It made sense. What we did not realize was that the federal government would treat those excess contributions as a large slush fund. The Federal government has borrowed over $2.5Trillion from the Social Security system and that is motivating Peterson, Krasting, and others to fight over whether the that money should be returned to Social Security as envisioned.
So I favor no change whatsoever until the politicians are brought under some control.
Bruce Krasting said “Yves/Baker take issue with the Peterson on this issue:
America’s future is threatened by deficit spending, and, second, that Social Security and Medicare have helped put our economy on an “unsustainable course.””
“I study SS. It was in deficit by $40b in 2010. It will be in deficit every year for the next 75. The CBO said a week ago that the deficits at SS could reach $1 Trillion over the next decade. I think they will be much higher.”
Sir, your biases are showing.
All the statistics show that Social Security can continue as it is until 2037 without any changes. The Social Security Trust Fund balance is about $2,500Billion. At $40Billion at year it will take 62 years to deplete that fund!
And please spare me the 10 year projections, they are meaningless and you know that! You guys can’t predict what this economy will be doing 2 years from now, let along 10 years.
What you and your ilk fear is that your taxes will go up when the federal government doesn’t have excess Social Security contributions to borrow.
And the even larger fear that your taxes will go up when the federal government has to start repaying Social Security all the funds it has borrowed.
In your minds, Social Security payroll taxes represent a slush fund. You favor stealing from the poor!
You have aligned yourself with slugs. Have you paid your taxes?
Bruce is on his own information stream. Unless there is complete capitulation, both he and Andrew Biggs could care less than the low, intermediate, and high cost projections by SS (relatively conservation). Nor is he interested in the growth of the Civilian Labor Force and its impact on Withholding Tax Revenues.
Yeah that civilian labor force growth thing is the ticket. That should save us, right?
Read the papers. We created a lousy 37k jobs last month. We lost 8.5mm jobs in two years. We are not getting them back with the “new normal”. If you accept that reality you will also accept that significant changes need to be made at SS.
If you think that we are (any day now) going back to 2006 you’re dreaming. That is the least likely outcome.
And the ticket to creating jobs and economic growth is austerity?
Got any more aces up your sleeve, Bruce? That ace of spades you’re trying to play looks entirely too much like the two of clubs to me.
Instead of attacking the Coporate Lords should rule and continue to peddle securitized debt at everyone else’s expense (that’s why they are called debt-financed billionaires), and suggest the stopping of FDI-created jobs offshore, and continued jobs offshoring of the few remaining ones, Krasting wants to continue the dismantling of the American economy (which truly doesn’t actually exist anymore) and keep shoveling monies to Wall Street.
Screw off, Krasting.
So you wish to admit job creation will never grow beyond 37,000? The failure to grow job creation beyond 37,000 or population growth is the result of the policy you support as a shill for Wall Street. There is no money to be made in job creation and more to be made in Wall Street gambling. Change the paradigm.
If job creation does not increase fool, you as a Wall Street Bond Trader are going to be in more trouble than you can imagine. When 20+ percent of the population is jobless silly, do you believe your job is secure?
I don’t favor stealing from the poor. Where did you get that? Reading Angry Bear posts? They make stuff up.
I have supported a means tax on SS benefits. The Warren Buffett tax if you will. If you are 65 and collecting SS benefits and have taxable income (outside of SS) of $250,000 you don’t get a check that year. Simple.
I am one would lose benefits if this were done. Don’t tell me I’m robbing poor people. I’m willing to take money out my pocket to see to it that those poor people do not suffer.
You can’t argue with me on this. I’m sitting on the high ground.
Bruce Krasting said: “I am one would lose benefits if this were done. Don’t tell me I’m robbing poor people. I’m willing to take money out my pocket to see to it that those poor people do not suffer. ”
“You can’t argue with me on this. I’m sitting on the high ground.”
You and Peterson don’t have to wait for a change in the law, you can give your Social Security benefit back to the government anyway.
Your suggestion is never one of the recommended solutions to the “problem” in 2037.
What you fear is higher federal income taxes when the government has to start repaying the Social Security Trust fund all the money it has borrowed. You insist on conflating the Social Security taxes with all other taxes.
Your biases are showing. And that is not “high ground” that you are sitting on! IT IS CALLED PROPAGANDA.
You have no clue what I fear. But I assure you higher federal taxes is not one of them. Keep in mind that if one says they are retired, it means they have no earned income. They are taxed in much different way than you. Changes in the marginal rate would have very little impact to the likes of me. Again, you are going in the wrong direction.
I do have two children. I do fear for them. The bill for the baby boomers in America will be put squarely on them. That is something I have a problem with. Not you?
Bruce — I mean, really, this is an allocation issue, as you surely must understand at some level. It is not “unsustainable” any more than anything else in the world is unsustainable, like you, me, your blood line, this country, etc. It will all end someday. Of all the things to fear, allocating who gets what share of our national income (especially when it’s relatively small amounts per capita over a very large group) just doesn’t strike me as being at the top of the list.
As for SS and Medicare, there will be some winners and some losers, as with every policy. Get a grip and some perspective. This is a democracy. It only makes sense for the majority (those who get SS benefits) to vote for policies that make them wealthier, not poorer. This will not change. Your breathless hyperbole and impotent words will not change this. You might want to consider doing something actually productive with your life, but it is your life, so live it as you see fit.
Social Security already has means testing. Unfortunately it only applies to the working stiff recieving wages and income. Those individuals with investment and interest income are not means tested
Individuals who recieve SS before full retirement age are taxed at a rate of 50% on SS benifits of any income over $14,160
Individuals who recieve SS at full retirement age are taxed at rate of 33% on SS benifits on any income over $37,260
Individuals on SS can recieve an unlimited amount interest or investment income without any decrease in SS benefits
“America’s future is threatened by deficit spending”
True that, so we better avoid the major sources of the government’s deficit: irresponsible tax cuts and predictable financial crises caused by a grossly irresponsible and sometimes outright fraudulent FIRE sector. Bonus points if you don’t bail out the bad actors and perhaps even (gasp) prosecute them.
Oh, that’s so silly of me! Of course the real answer is to make sure that granny doesn’t splurge and eat two bowls of cold oatmeal per day – one is sufficient for people as inactive as the elderly.
“The CBO said a week ago that the deficits at SS could reach $1 Trillion over the next decade.”
Wow, so they’ll only be in the black by $1.5T? I wish the general fund was in such good shape.
BTW, if your house was burning down, would you worry about the living room’s decor? It would show the same sense of priorities as you have about financial problems.
The same as you conflated the 40 cent average increase per week (1 tenth of 1% on withholding) per worker as a huge tax increase rather than closing the ~1.9% gap between daily revenues and payouts by producing an ~$1.4 trillion revenue pool over the years (as Coberly suggested at Angry Bear), you are again gaming the information here at Naked Capitalism. This revenue increase in itself would cure your issues with paying back the TF.
Our future is threatened by deficits, deficits from two off budget wars not having a revenue stream the type which both SS and Medicare have and the same as wars in previous wars. Our future is threatened by the the 2001/2003 unfunded tax breaks which went unfunded for over a decade and should have been funded then by Bush and the Kove. The future is still threatened by the gambling being done on Wall Street in derivatives and securitization. A far greater threat in the future is from the healthcare industry which “sells” procedures, pharma, and services having a lesser benefit then the growing costs. The selling of a product having a lesser return than proven methods and products is the cause of today’s rising healthcare costs and when compared to the cost of aging, it has a 20 to 1 ratio. No Bruce, Wall Street and previous administrations put us in this situation and on an unsustainable course.
SS does have wide support and well beyond those who get a check monthly.
America’s future is threatened by deficit spending
That’s false, of course. America’s future is threatened by kleptocracy and corporatism.
But for the sake of argument let’s pretend anyone actually believes it’s true.
Anyone who actually believes that has to be on the warpath demanding an end to the Bailout, the wars, the vast majority of Pentagon spending, Big Ag subsidies, the drug war, the prison/police complex, and all other corporate welfare.
And only once all that’s been done away with could we then explore whether or not the government should default on its debts and declare itself guilty of stealing our pension and health care money.
The answer, very clearly, is that no such default would be necessary. The government sovereign in its own currency can pay all its debts at will.
Especially once it purged all the welfare parasites listed above.
The fact that no one is on this warpath proves that literally no one is really worried about the deficit or the debt. Deficit terrorism is nothing but a lie meant to justify Nuremburg-level robbery.
‘Anyone who actually believes that has to be on the warpath demanding an end to the Bailout, the wars, the vast majority of Pentagon spending, Big Ag subsidies, the drug war, the prison/police complex, and all other corporate welfare.’
I’m with you on every single one of these objectives … PLUS abolishing the ‘sovereign in its own currency’ Federal Reserve, which is basically a system of war finance.
Income tax and the Federal Reserve were introduced in 1913; World War I started in 1914. Coincidence? No. Both are mechanisms of war finance and the corporatism which we both deplore.
I’m with you on those.
I think you’ve been reading too much Hayek, statements such as this one from his essay “The ‘Austrian’ Theory of the Trade Cycle”:
The material means of production and the labor available have not increased; all that has increased is the quantity of the fiduciary media which can play the same role as money in the circulation of goods. The means of production and labor which have been diverted to the new enterprises have had to be taken away from other enterprises. Society is not sufficiently rich to permit the creation of new enterprises without taking anything away from other enterprises.
If one embraces such a faulty zero-sums notion of what constitutes wealth—-the inevitable conclusion being that no new wealth is ever created and the only way to enhance one’s own wealth is to take it away from someone else—-then how is it possible to have an intelligent, much less moral, conversation about economics?
As Will and Ariel Durant put it in The Lessons of History: “Wealth is an order and procedure of production and exchange rather than an accumulation of (mostly perishable) goods, and is a trust…in men and institutions rather than in the intrinsic value of paper money or checks.”
Don’t be so harsh on them about the zero sum assumption – they may have written that before the latest data on productivity improvements from the introduction of the steam engine.
It’s not only the coming deficits of Social Security, but its negative net worth when those projected deficits are discounted back to present value.
Last time I checked (in the Financial Report of the United States), Social Security’s negative net worth was over $7 trillion. Medicare’s negative net worth was in the tens of trillions.
Neither Social Security nor Medicare are subject to the Erisa law which keeps private pension plans honest (e.g. fiduciary responsibility to beneficiaries) and fully funded (using accrual accounting). Why not? Because they have been LOOTED (as their negative net worth indicates). And because they are politically-managed frauds, which have exempted themselves from legal liability to their beneficiaries (consult the notorious Nestor v. Fleming case). These are prima facie indications of bad faith.
The message that ‘Social Security and Medicare have helped put our economy on an unsustainable course’ is not ideological. It’s simply an accounting analysis; an auditor’s opinion. Those who disagree should submit their own accounting opinion. A serious one, not the loony-tunes MMT cargo-cult babble that we can print our way to prosperity with unlimited fiat currency credit.
Oh hell, let’s warp back to Betelguese, Bruce! There’s no intelligent life on this planet.
how would you recognize intelligent life if you saw it?
If you take a projected expense and ignore the obvious way to pay for it, you can indeed come up with “a looming deficit”, and if you have had a little, but not much, education you can express that deficit as a negative present value, and if you project that deficit out to the infinite horizon you can come up with some outer space size numbers.
But the fact is, and CBO agrees with me, and you could calculate it yourself from the TRustees Report, the fact is that the projected deficit can be paid for with an increase in the payroll tax of one half of one tenth of one percent per year, while incomes are expected to rise more than one full percent per year.
one half of one tenth of one percent of an average workers wage today is forty cents per week.
in other comments you show that your knowledge of accounting is primitive. but like all ignorant people you cannot imagine anything you don’t know, so you think you know everything.
that “fraud” you are talking about has been paying retired workers benefits for seventy years. and can continue to do so forever…. or at least out to that infinite horizon.
Krasting “studies” Social Security and manages to know nothing about it.
Social Security “is in deficit” only if you don’t count the income from it’s savings account, also known as the Trust Fund. Of course people like Krasting don’t think that Social Security should be paid back the money the government borrowed from it. Because to pay back the money it borrowed, the government will have to either borrow money from someone else, or, gasp, raise taxes, or cut other spending.
Moreover, the “deficit” projected in Social Security’s own accounts… after the Trust Fund is repaid (what Bush used to call “goes broke.”) amounts to a need for a tax increase of forty cents per week per year so the workers can pay for their own longer life expectancy.
This is a case of the Petersons and their little helpers like Krasting turning good news into bad news: The good news is we are going to be living longer and will have plenty of money to pay for a longer retirement. But Peterson and company just look at the extra money it will cost to live longer and pretend it’s a huge deficit.
SS isn’t in deficit any more than any other part of government spending.
The revenue taken in by the SS tax doesn’t go to pay SS benefits. It goes into general spending, and benefits are paid out of general revenues. (Using “general” as a word in English, not as accounting fraud jargon.)
The notion that SS “pays for itself”, and then it “starts dipping into the trust fund”, and eventually “the trust fund is exhausted”, is just book keeping tricks for the sake of political lies. None of that has a shred of reality.
If government chooses to make good on its SS commitments, then it can and will do so. If it chooses to default ojn its debt, that’s what it will do.
But anyone in government who says a word about an SS “crisis” is simply threatening a voluntary partial default on the government debt. Anyone outside government who mentions it is commenting on such a voluntary default.
“I study SS. It was in deficit by $40b in 2010.”
Doubly wrong. By the metric Krasting likes to use that is $45 billion in deficit. By the metric honest people use it is $72 billion in surplus. BK just likes to bury his premises and identify glibness with studiousness.
Teacher’s College and Pete Peterson appear to be maintaining a curriculum website:
This is the link to Peterson’s page on SS. If you actually read it, does it sound that bad? I am not defending the guy, I know nothing about him. I looked for myself at one issue on the website. This page. About SS. It doesn’t sound unreasonable to me. Incremental fixes via multiple options. BTW it doesn’t paint as bad a picture as BK does above…
dodahman says: “This is the link to Peterson’s page on SS. If you actually read it, does it sound that bad? ”
Sir, I will give you the benefit of the doubt. You must not have been around in the early 1970’s when the news media was widely reporting on Social Security recipients were buying pet food because they couldn’t afford meat.
As a result Social Security taxes were raised, benefits were increased, and a cost of living raise was instituted.
That is the cost of living raise that the slugs want to lower. As though the elderly don’t eat or heat their homes. The CPI understates inflation as it is experienced by HUMAN BEINGS as opposed to corporations and Wall Street.
I do not favor a return to Social Security recipients consuming cat food. DO YOU? Should they have to choose between starving or freezing to death?
This is such a political hot potato that now they propose to adjust Social Security only for those not currently living in poverty. Apparently so that others can experience the same poverty. BETTER TO STEAL FROM THE MIDDLE CLASS, BUT IT IS STILL STEALING A PROMISED BENEFIT BASED ON CONTRIBUTIONS!
The Social Security Trust fund balance is a little over $2,500Billion. There will not be a problem for DECADES.
These slugs can’t predict what the economy will do 2 years from now, why should we believe projections for 10 years?
The federal government has been borrowing Social Security contributions to fund the deficit spending, that day is over. Now it will have to start to repay. The federal government will repay these obligations just as they will pay Treasury bondholders. They will repay both debts by reducing spending or raising taxes.
It is the possibility of those increased taxes that the slugs fear.
OK,I appreciate the benefit of doubt. Thanks.
I first paid into SS in 1964. And I still pay.
Jim, I understand that the elites want to stay that way by standing on my back. And that this Peterson guy is an elite. Got it.
I stick by what I said, relative to the information given on the peterson website about how to fix SS so that in 2037 it doesn’t goof up. I read nothing there about removing cost of living increases. He may be proposing that, but it is not on that page where ‘solutions’ are offered.
I also understand that the CPI is full of shit and doens’t reflect what non elites see in the marketplace. I am probably as big a skeptic as you. That is why I went and read a bit at the website.
I also understand that we can rail here all we want. Nothing will be changed.
dodahman said: “I read nothing there about removing cost of living increases.”
From that Website: “or changing the cost of living adjustment (COLA) to more accurately reflect consumer behavior.”
You have to read the fine print! :^) Those are code words for “when steak gets too expensive, consumers will shift to hamburgers.” Or I suppose cat food?
I first started to pay Social Security in 1963. Haven’t draw a dime yet, but I will.
Once upon a time I would have interpreted that website the same way you do now. Not anymore.
They put their most conservative arguments in writing. Catch them on the Television or Radio news and it is gloom and doom, nothing but the reducing benefits can saavvvveeeeee the system. A system which is financially sound until 2037, as of today. Outrageous!
Their motives are clear. The Federal government has been borrowing the Social Security Trust fund and now the day has come when it will have to repay.
They fear higher taxes. And unless the economy improves the burden will have to fall on them.
There is something we can do. We can point out the flaws in their arguments every time they bring this subject up.
We can ensure that their propaganda does not get accepted as anything other than self serving drivel.
‘The Social Security Trust fund balance is a little over $2,500Billion. There will not be a problem for DECADES.’
These are NON-MARKETABLE bonds — basically memos in a filing cabinet. They don’t have CUSIP numbers. They can’t be sold for cash on the NYSE.
When these Trust Fund IOUs are ‘redeemed,’ the Treasury will have to go out and borrow by selling regular, marketable Treasury bonds to the public in the same amount.
Since the Trust Fund cannot be redeemed without recourse to fresh borrowing, it should be obvious that it is NOT an asset. You and I don’t have to borrow in order to cash out our bank and brokerage accounts. The Trust Fund is a rank accounting fraud, of a most simplistic and patronizing type.
If Americans can’t understand that they’re being duped, even when the modus operandi of the fraud has been published in painstaking detail, then there is little hope of correcting it.
The fraudulent Social Security Trust Fund is like honoring Charles Ponzi’s pyramid scheme built on international postal reply coupons by naming him Postmaster General.
Indeed, if elected, I will introduce a bill to rename it “The Charles Ponzi Social Security Trust Fund.” As Chas himself said,
Jim Haygood said: “These are NON-MARKETABLE bonds — ”
Ah, you are one of those people who believe that when a borrower makes a promise to pay, it is conditional. Some bonds are better than other bonds!
I have never understood that attitude. When I borrowed money I paid it back as agreed. You might say that my word was my bond.
Have slimey financial transactions become so common that they are considered the norm?
Why would anyone buy Treasury bonds if your attitude prevails?
Why would anyone buy Treasury bonds if your attitude prevails? Jim the Skeptic
Why should any sovereign governemnt give anyone the privilege of loaning it money?
Government, as the legal monopoly on force, has the perfect right to issue debt and interest free money backed by that force. Of course that money should only be legal tender for debts to government, not private ones.
Government bond buyers have it backwards; they are not doing the government any favours, the government is doing them favours. Those favours should cease immediately and forever.
So it is OK for William Ayers to promote his Anti-American views to every public school teacher/student in America, but very bad for someone to promote the truth that Social Security as it exists today,is a complete Ponzi scheme.
Madoff is sent to prison for fraud while Social Security is promoted as a sound program. Amazing!
Ah, Pagar, I will skip the ad hominem with you (apparently your favorite form of argument) and just point out how unbecoming this “we are victims, Billionaire Pete Petersen is a victim, stop picking on him” response is when Mr. Petersen’s dissembling and really what can only be considered lies are pointed out. Yes, Mr. Petersen has his right to free speech. And from what I can see when I read the Washington Post and NY Times parroting his talking points every day he is getting plenty of exercise of it. But apparently we who disagree with him don’t have free speech. We don’t have the right to critize and point out the lies and the terrible consequences his policies will have with real human beings. A vew again, with the exception of Paul Krugman’s columan, missing from the mainstream media since those who defend Social Security are banished to the Net Roots and small circulation liberal magazines.
You don’t like social security and medicare, fine. If you have a world view that if you don’t get rich you need to work until you die, fine. If you believe that if one gets sick before they get rich, than they should die, fine. Just admit to it. Don’t justify it for unnamed posterity, 95% of whom you will just have contempt for because they are not rich.
As final note, I observe that you Movement Conservatives claim to love humanity and care only about posterity in the abstract (the more non-existent the human, the better), but real life, concrete human beings, with all their weaknesses, mistakes, and foibles, not so much.
Pager, you do have a point about William Ayers and his ilk. I hope everyone in America is familiar with type: “social justice” robots who regard inculcation as more important than teaching people to think for themselves. The only truth to retain from them is regarding themselves as products of the system they push. To my mind, such people share a great part of the blame for this steady move to a plutocracy.
That said, two wrongs don’t make a right. As a libertarian I am not wild about SS; however, there are far bigger drains on this country than it. The average Joe in this country has been and is still being shafted by our corporate masters to the tune of trillions via the Wall St bailouts, etc., the MIC and the self-perpetuating wars. SS, especially as it is spread out over so many people, is so small in comparison.
When this country recoups all the money given to the banks, shrinks the military budget by 90%, withdraws from the middle east, gets out of NATO, etc., then we can worry about SS.
This points out a huge problem with our federal tax code.
The oligarchy avoids taxes by setting up non profit foundations. Then they use the foundations to fund their own political views. They should have to use taxed dollars for this propaganda.
It is time to get rid of the tax deductions for contributions to non profit organizations.
This will help with the deficit that Peterson and Krasting claim to fear.
At a minimum, Soros should demand equal time.
Yes, because Soros is “one of us”! He’s one of the good guys!
Because when Soros speaks in the schools, he’s speaking “truth to power”!
Since “WE” agree with him, it’s not considered “propaganda”, like that baddie Peterson!
No because Soros is another billionaire with an agenda, which ironically for the most part is more favorable to the average US citizen than Peterson’s is. Soros gets far more flack from the media than Peterson does.
Funny how you throw mud and fail to offer a substantive critique.
Great catch Yves. I had discussed the issue with several econ bloggers for high school curriculums and found a variety of reactions.
I have an appt. in Cambridge in a few minutes, but I and others will be along today…unfortunately Peterson’s material overall is highly selective and actually inaccurate. But I have to run….links to come.
This is why I love this blog. The B & F is educational to this old 72 year young man. I for one, live on my S.S. check, support my daughter who’s retraining and her son too. We live on the edge, so when I read these, I do wonder just how many have or are living on the edge? This is not to say I’m sniveling & whining, because, we as humans came into this world with nothing, will leave with nothing, but living on the edge gives one the insight to what really is important. As for Mr Petersen’s endeavor, well, I think I won’t go there due to the fact that it sounds too much like what has/is taking place at one of the great Religious congregations concerning youth.
I worked for blackstone back in the early 00’s. Actually, they had bought out the factory I worked for (TRW automotive) and did their fancy spinoff game with it. They really didn’t affect us (no loss of benefits, etc.). The factory was known as the only productive one in the company and many people came from across the world to see it for it’s cleanliness and efficiencies.
For some backstory, TRW is an aerospace company. They took over/bought Lucas Varity (where I worked). L/V was all auto parts. They didn’t want any of that, they just wanted certain motor component parts. So they dumped everything else onto blackstone. Then blackstone took TRW automotive public. We called them “blackbone” because we were always waiting to get shafted.
In my hi skool they made us read George Orwell and Ray Bradbury.
Lets see…deficits? SS has a trillion dollar deficit over the next ten years? Paying back on the $2.5T SSTF is deficit spending? And offshoreing jobs is not part of the problem?
Translate back to Old Speak:
We will fix the “deficit” by making a multi decade, retroactive, regressive income tax increase (re-allocating payroll tax to income tax, retroactively). We would use the term “clawback”, but that has scary connotations to us.
High Medicare cost creates the deficit?
Translate back to Old Speak:
High Healthcare cost creates the deficit and also high medical insurance cost to employers and/or whomever has to pay them. (including Medicare recipients whom buy supplemental private insurance to cover the medicare co-pay, caps and deductibles)
Defense spending is mostly off bounds for cuts?
Translate back to Old Speak:
$700B a year isn’t much for all the security and good feeling we receive from this investment in Our Nation.
Cedric Regula said: “We will fix the “deficit” by making a multi decade, retroactive, regressive income tax increase (re-allocating payroll tax to income tax, retroactively).
I happen to work for one of Blackstone’s “assets”.
How any of their employees (outside of top management) could fund a retirement without social security by working for them is beyond me. Perhaps I should enroll in one of these classes so Peterson can explain it to me.
Working for this particular Blackstone “asset” means full time is 32 hours at a sweet $10.50 an hour. This year I found out they don’t pay a Christmas bonus, not even a card. They throw in a bonus program that could make you all of another $500 for the year, max.
Right before Christmas they notified me, almost as if it was a perk, that I may qualify for the earned income tax credit, and that this won’t interfere with my ability to collect food stamps, or qualify for government assisted housing. I’m happy that at least my government can offer me that small Christmas tidbit, and thank you, dear employer, for bringing my attention this windfall funded by the taxpayer.
At the first of the year they presented me an affidavit to fill out, about my employment status PRIOR to their hiring me. I can only assume it is to be used so they can collect government incentives for hiring the unemployed, again funded by the taxpayer.
So I guess government programs like medicare and social security for me are bad, but government hiring incentive tax credits and government housing subsidies for your employees are just good business?
Here’s a timely post. The old lying fossil says he’s worried for you. And “us”.
I really hope you were employed so he doesn’t get the tax credit.
2.5 Trillion in “assets”, the only way to redeem those “assets” is for Treasury to issue more debt. Of course, the Federal Reserve can then magically create the money by buying the debt at a premium from the Primary Dealers.
Basic accounting if you have to into debt to spend an asset it’s not an asset.
Check your accounting again.
The $2.5 Trillion is most certainly an asset to the millions of American taxpayers to whom it is owed. It’s all money that will get put back into the economy, to be spent buying goods and services. The horror!
For bonus points, count how many of the RW talking heads that got bent out of shape about Obama’s address to schoolchildren back in 2009 (for instance, Glenn Beck asserted it was “the Hitler Youth”) somehow fail to notice this…
The problem is not Peterson. The problem is the mainstream economists. See: J’accuse mainstream economists
Rodger Malcolm Mitchell
What’s with all the Pete Peterson shills?
Stop the wars, stop the bank bailouts first, then get back to us, and maybe we can discuss cutting Social Security.
For crimes against humanity, Pete Peterson should be tried by a People’s Court, found guilty, then hanged from the nearest lamp post.
I suspect some people who have too much time on their hands have either “Social Security” or “Peterson Foundation” as Google Alerts.
What could be this man’s motive? A billionaire trying to destroy Social Security.
Is his heart really so black he wants old people to live (die) in poverty?
He must be a really sick, sick person. Nazi sick.
John said: “What could be this man’s motive?”
He must be doing God’s work, the same as Lloyd Blankfein.
A brief skim of the website reveals no surprises except that Columbia Teachers College seems to believe that it can call this non-partisan. It continues the GOP redefinition of deficits as spending, as though revenue does not change or influence the realized deficit. Perhaps not surprisingly, it is overly reliant on Fox News and tends to pick pieces that are particularly prone to slant and editorializing without disclaimer or acknowledgement. It lacks balance, but that is pretty hard to find these days.
The part that I do not really understand is this. It takes significant background knowledge to process these issues and to adopt the curriculum without recognizing the essentials it builds upon seems pretty irresponsible. Indeed, it seems to license forming opinions about things without really understanding them; I am not sure this virtue is under-supplied in modern America as it, in part, helps to explain how we got to where we are.
This is not new. “Washington Week in Review” has been offering high schools a curriculum on the “debt” which is essentially Peterson’s agenda.
I guess lying to school kids is okay if you call it a charitable education program.
Back aways Krasting was all worked up because SS “is 5% of our economy.”
Amazing how much it costs to feed and house 50 million people. But the fact is these people paid for that SS. The rough equation for retirement… whether it’s Social Security or Bonds… is that if you work for forty years and save 12% of your income, you can pay yourself 40% of your income for 12 years in retirement. There are fine points that change the equation somewhat.
But that 5% of the economy is just people paying in advance for their own groceries when they get old, and it would cost them the same even if there was no Social Security. The difference is that it is very hard for working people to save money and not lose it to inflation or bad days on the stockmarket.
“Amazing how much it costs to feed and house 50 million people. But the fact is these people paid for that SS.”
Indeed. The shell game Petersen and his ilk are playing runs like this: 1) point out that the Trust Fund has been spent on other government activities, 2) label this a “ponzi” fraud, then (and this is the beauty part), 3) propose punishing the *victims* of this fraud rather than the perpetrators.
It’s the same con game they run on bank regulation. In that variation, the steps are: 1) shout about the terrible fraud going on, 2) point out that regulatory lapses facilitated the fraud in various ways (because they were bought or intimidated into inaction), then 3) propose eliminating the regulatory agencies.
Your average crook has no idea how to shift blame. A smart crook tries to make the cops into accomplices with bribery. And the very smartest crook spends on PR to establish that the victims were actually the guilty parties.
Private Equity operators, needless to say, are among the most gifted grifters on God’s green Earth.
In case anyone wants to point out that my formula above for retirement leaves out the interest you can earn… or profits from stocks… actually it doesn’t.
I leave it out of the equation just to keep things simple enough to understand. But SS, even, pays interest in the form of “wage indexed” calculations for the initial retirement benefit, and of course the inflation adjustment after that.
it can do this for the same reason a corporation or bank can afford to pay interest: the wealth of the “company” is growing. in the case of SS the “company” is The United States of America, or more correctly, the pool of workers paying into the system… and unlike a Ponzi scheme, there is no reason for this pool to dry up. As long as each new generation has a need to save for retirement, the Social Security system provides the best way, the only way, to insure a part of that savings against all the bad things that can happen to savings.
Studying SS as demonstrated by the people Mr. Krasting criticizes, knowing the National Academy of Social Insurance is invitation only. Check solution 7c for a claim to authority…
Also using the trustees report and CBO numbers and a set of scenarios is much more useful for adults who plan…
Since high school was not really addressed, in comments, I saw no math being used except in one lesson plan. http://understandingfiscalresponsibility.org/
The questions are framed mostly with three things in mind: The federal budget in relation to the fiscal deficit and national debt, but nothing I found on reasons to tax, services, and context.
There was one on what the public thinks of as what the budget is spent on. I would use this one: http://www.thefiscaltimes.com/Columns/2011/02/04/Voter-Ignorance-Threatens-Deficit-Reduction.aspx
Kids do not understand basic vocabulary of economics such as supply and demand and pricing, much less SS and funding.
The graphs and cartoons used offered little context, and by definition of the objectives of the curriculum considered the politics of the federal budget in relation to deficit and debt but I saw no mention of the purpose of a budget, taxes and spending, why there may or may not be a crisis currently.
High school kids have no idea about retirement and social security unless you guide them as to the purpose of such. And that begins with making one’s own budget… living on one’s own, income and spending, who pays for school etc.,
I think Peterson know whats he is talking about…
One thing too often forgotten about Peterson is that as Nixon’s Secretary of Commerce, he was one of a very select few who advised Nixon to completely take the USA, and hence the world, off the last remnants of the gold standard, and make the dollar a pure fiat currency in 1971. So every word he says about the national debt being hard to pay off is a complete, bald-faced, knowing lie.