Bill Black: Wall Street Uses the Third Way to Lead its Assault on Social Security

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By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Cross posted with New Economic Perspectives

Third Way, lobbyists for and from Wall Street who are leading the effort to enrich Wall Street by privatizing Social Security, was created by Wall Street to fool some of the people all of the time. I have written previously here and here to expose their fictional claims to be a moderate or liberal Democratic group.

Eric Lautner documented Wall Street’s effort to become even wealthier by privatizing Social Security in articles and his recent book (“The People’s Pension: The Struggle to Defend Social Security Since Reagan (AK Press)).

I showed that Third Way makes itself useful by providing a faux “liberal” or “moderate” “Democratic” quote machine that can be used to discredit Democrats and Democratic policies such as the safety net. I gave examples of how Third Way gave aid and comfort to the effort to defeat Elizabeth Warren and the effort to unravel the safety net. Third Way continues to prove that you can fool some of the people all of the time.

The National Journal ran an article on November 8, 2012 entitled “Left Divided over ‘Grand Bargain.’

Groups concerned with protecting entitlements such as Social Security and Medicare are finding themselves at odds over whether an overarching fiscal deal during Congress’s end-of-year session would help or hurt their cause.

The AFL-CIO organized a day of action on Thursday–part of a broader post-election campaign to protect entitlements–with dozens of events scheduled nationwide to urge lawmakers to avoid such a deal.

A “grand bargain” to prevent the year-end onset of tax hikes and spending cuts “could cut Social Security, Medicare and Medicaid benefits, all to give tax cuts to the wealthiest Americans,” the labor group argued on its organizing site. But the union campaign is being met with resistance from others on the left.

“We, like you, are ecstatic about the reelection of President Barack Obama and what it means or American growth and prosperity,” wrote Jim Kessler, senior vice president for policy for Third Way, a liberal think tank with a centrist approach, in an open letter to the groups involved with the day of action. “However, as fellow progressives, we were disappointed to learn that you will be leading an effort against the President to impede a balanced grand bargain.”

In order to protect safety-net programs, such as Social Security and Medicare, the left must embrace reform, Kessler writes.

Let me attempt again to make the basic facts clear. Third Way is not a “liberal think tank.” It does not take “a centrist approach.” It is not run by “fellow progressives.” It is not concerned with “protecting entitlements.” It is not even a “think tank.” Third Way is a creature of Wall Street. It’s version of “protecting” the safety net was made infamous during the Tet offensive in Viet Nam when the American officer explained that “it became necessary to destroy the village in order to save it.” Third Way is the Wall Street wing of the Democratic Party, which seeks to defeat Democratic candidates like Elizabeth Warren running against Wall Street sycophants like Senator Scott Brown and seeks to unravel the safety net programs that are the crown jewels of the Democratic Party. Wall Street’s “natural” party is certainly the Republican Party, but Wall Street has no permanent party or ideology, only permanent interests. Third Way serves its financial interests and the personal interests of its senior executives. Wall Street has always been the enemy of Social Security and its greatest dream is to privatize Social Security. Wall Street’s senior executives live in terror of being held accountable under the criminal laws for their crimes. They became wealthy by leading the “control frauds” that drove the financial crisis and the Great Recession. This is why Wall Street made defeating Warren a top priority.

Third Way is run by a man who Lautner terms an “acolyte” of Pete Peterson. Peterson is a Republican, Wall Street billionaire who has two priorities – imposing austerity on America and privatizing Social Security. Privatizing Social Security is Wall Street’s unholy grail. They would receive hundreds of billions of dollars in fees and ensure that their firms were not only “too big to fail,” but “too big to criticize” if they could profit from a privatized retirement system. (We do not know who funds Third Way because it refuses to make its donors public. Given who dominates its Board of Trustees, however, the donors must be overwhelmingly from Wall Street.)

Third Way’s self-description has some elements of honesty, admitting that it is “led by a prominent private sector Board of Trustees, drawn from finance, industry, academia, the non-profit sector and government.” The order is revealing – the board is dominated by finance, with a thin veneer provided by industry, and with the barest patina of “academics” and “government.”

Here are key excerpts from their web site identifying their board.
• John L. Vogelstein

Mr. Vogelstein is the Chairman of New Providence Asset Management, LLC and Senior Advisor to Warburg Pincus, LLC. [He co-managed that huge private equity firm.]

• Bernard L. Schwartz

Mr. Schwartz is Chairman and CEO of BLS Investments, LLC.

• David Heller

Mr. Heller … was … the Global Head of Equity Trading for Goldman Sachs.

• Georgette Bennett

Dr. Bennett—an award-winning sociologist, criminologist, and journalist…. [Yeah criminologists!]

• William D. Budinger

William D. “Bill” Budinger is the founder of Rodel, Inc., where he served for 33 years as its chairman and CEO. [Rodel manufactured semi-conductors.]

• David A. Coulter

Mr. Coulter serves as Managing Director and Senior Advisor at Warburg Pincus, focusing on the firm’s financial services practice.

Mr. Coulter retired in September 2005 as vice chairman of J.P. Morgan & Chase Co. He previously served as Executive Chairman of its investment bank, asset and wealth management, and private equity business.

• Jonathan Cowan

Prior to co-founding Third Way, Mr. Cowan founded and ran Americans for Gun Safety…. In 1992, he co-founded Lead…or Leave, which became the nation’s leading Generation X advocacy group. [He lobbied to protect “second amendment rights” to bear arms and led a Pete Peterson inspired group urging “Gen X” members to unravel the safety net.]

• Lewis Cullman

Mr. Cullman was the Founder and President of Cullman Ventures, Inc., a diversified corporation that included the At-A-Glance group, which manufactures and markets diaries….

• William M. Daley

William Daley served as President Obama’s Chief of Staff from January 2011 until January 2012.
Prior to his Chief of Staff role, he was Vice Chairman … of … JPMorgan Chase, from 2004 until 2011.
As Special Counsel to President Clinton in 1993, Daley coordinated the successful campaign to pass the North American Free Trade Agreement (NAFTA).

He was co-chair of the US Chamber of Commerce Center for Capital Markets Competitiveness. [This is code for deregulation of finance.]

• John Dyson

Mr. Dyson is Chairman of Millbrook Capital Management, Inc. (MCM), a private investment firm.

• Robert Dyson

Mr. Dyson … is Chairman and CEO of the Dyson-Kissner-Moran Corp., a privately owned, diversified investment holding company….

• Andrew Feldstein

Andrew Feldstein is the CEO and Chief Investment Officer of BlueMountain Capital Management….
Prior to co-founding BlueMountain in 2003, Mr. Feldstein spent over a decade at JPMorgan where he was a Managing Director and served as Head of Structured Credit; Head of High Yield Sales, Trading and Research; and Head of Global Credit Portfolio. [“High yield” is a euphemism for junk bonds.]

• Brian Frank

Mr. Frank is a Director and Portfolio Manager at MSD Capital, L.P., the private investment firm founded by Michael Dell.

• Michael B. Goldberg

Mr. Goldberg joined Kelso & Company in 1991 as a Partner and Managing Director. [Private equity.]

• Peter A. Joseph

Mr. Joseph has been in the private equity investment business for over twenty years….

• Derek Kaufman

Derek Kaufman is Head of Global Fixed Income at Citadel LLC. He is a member of Citadel’s Portfolio Committee.
Prior to joining Citadel in 2008, Mr. Kaufman was a Managing Director at JPMorgan Chase….

• Derek Kirkland

Mr. Kirkland is a Managing Director and Co-Head of the Global Financial Institutions Group at Morgan Stanley’s Financial Institutions Group in Investment Banking.

• Ronald A. Klain

Ronald A. “Ron” Klain is President of Case Holdings, and General Counsel of Revolution LLC. [Case is an investment fund for the holdings of AOL’s founder.]

• Thurgood Marshall, Jr.

Mr. Marshall is a partner at Bingham McCutchen LLP, and a Principal of Bingham Consulting Group. Mr. Marshall counsels and devises strategies for advancing clients’ interests before Congress, the executive branch and independent regulatory agencies. [He is a lobbyist for a firm best known for representing financial firms.]

• Susan McCue

Ms. McCue is President of Message-Global, LLC, a strategic communications and public affairs firm she founded in January 2008 to advance progressive campaigns, activism and issue advocacy in the U.S. and globally.

• Herbert Miller

Mr. Miller, former CEO and Chairman of The Mills Corporation, one of America’s most innovative and successful mall developers and managers, founded Western Development Corporation (WDC) in 1967 and serves as its Chairman, Chief Executive Officer and Principal Stockholder.

• Michael Novogratz

Mr. Novogratz has been President and Director of Fortress Investment Group LLC….. Prior to joining Fortress, Mr. Novogratz spent 11 years at Goldman Sachs….

• Andrew Parmentier

Mr. Parmentier is a Founding and Managing Partner of Height Analytics. He and fellow Managing Partner John Akridge formed the company in January 2009. He has worked in the financial services industry since 1997….

• Kirk Radke

Recognized internationally as one of the top private equity attorneys during his 28 year career at Kirkland & Ellis….
Among professional activities, Mr. Radke is Co-Chair & Organizer of the International Bar Association Private Equity Symposium, Founder of the Private Equity General Counsel Network, Founder of Legal Series and Co-Founder of the Private Equity Law Firm Roundtable.

• Howard Rossman

Dr. Rossman is a President and Founder of Mesirow Advanced Strategies, Inc. and a Vice Chairman of its parent, Mesirow Financial Holdings Inc. He is responsible for all aspects of fund management, including manager due diligence, strategy analysis and asset allocation.

• Tim Sweeney

Mr. Sweeney has been President and CEO of the Denver-based Gill Foundation since October 2007. For more than 30 years, he has worked to advance equality for all people regardless of sexual orientation or gender expression.

• Ted Trimpa

Mr. Trimpa is a partner with the international law firm, Hogan Lovells LLP.

• Barbara Manfrey Vogelstein

She has over 24 years of experience in venture capital and specialized equity investing. [S]he was a Partner of Warburg Pincus, one of the world’s largest private equity firms.

• Joseph Zimlich

Mr. Zimlich is the Chief Executive Officer of Bohemian Companies, a group of family-owned real estate and private equity holdings.

Twenty of the twenty-nine trustees come from finance (counting the lawyer whose specialty is representing private equity firms). Their most common background is Mitt Romney’s – private equity – and hedge funds. The nine non-finance members include:

• A Pete Peterson acolyte who previously created supposedly centrist front groups for gun rights and an effort to enlist “Gen X” in Wall Street’s assault on the safety net
• A developer of giant malls
• A semi-conductor manufacturer
• A manufacturer of diaries
• A criminologist/journalist
• A PR specialist
• A gay rights activist
• A lobbyist at a firm best known for representing finance
• A lawyer

The board includes three representatives of “main street” (malls, semi-conductors, and diaries). They are not heavy hitters compared to the finance representatives. On finance issues, Third Way is Wall Street. It is run by Wall Street for Wall Street. It is liberal only on social issues such as gay rights – and Wall Street created Third Way to focus on finance.

I have explained in other articles the incoherence and ineptitude of the financial policies that Third Way (including Casey, who temporarily left Third Way’s board to serve as President Obama’s chief of staff, where he urged Obama to adopt austerity and the Great Betrayal. I have explained how those policies would have thrown the nation back into recession and doomed Obama’s chance for re-election. Third Way has learned nothing from their errors – they continue to push the Great Betrayal and austerity. Their overriding goal is to begin the process of privatizing Social Security. The fact that their policies would cause a gratuitous recession, immense misery, and terrible electoral losses to Democrats does not represent a policy failure to Wall Street. Wall Street would be the grand winner if we began to privatize Social Security as Third Way proposes.

The “left” is not divided on the need to oppose austerity and the Great Betrayal. Third Way is not left or center or even right. It is Wall Street on the Potomac. Opposition to austerity and the Great Betrayal is not a left v. center issue. Wall Street’s proposed financial policies are terrible for virtually all Americans.

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  1. Malmo

    Social Security will not be privatized, even partially, at least as far as the eye can see. If this was 2007 I’d say there might be a chance, but subsequent to the econmic meltdown there isn’t a snowball’s chance in Hell that this would go any further than water cooler chatter at some obscure think tank.

    1. Kokuanani

      You can wish, Malmo, but Obama wants it, and he’ll pressure the Dems to go along with whatever he wants.

      Dems ought to be mindful of the fact that THEY’RE up for re-election in 2014; Obama is not.

      Also, every “liberal” and “progressive” reader of this blog ought to be writing his/her members of Congress denouncing the Grand Betrayal and those who propose it. Don’t waste your time on “petitions” to Obama. You’ve got no leverage with him.

    2. Brooklin Bridge

      That’s what you think. Obama almost got away with the first part of this heist less than a year ago when he only failed to reach a toxic agreement with Bohener due to Bohener’s incredibly ironic, self defeating – monkey can’t get the banana through the bars- intransigence (no increase in taxes on rich; deep cuts for everyone else). As Mr. Black has explained elsewhere, privatization is not a one step process; it is an unraveling of the safety net programs over time by fakery, ruse, and rigid Orwellian complicity by the media. Obama’s taking the first steps and the Democratic party is so utterly corrupt there will be literally no resistance.

    3. Valissa

      I agree with you… they will simply modify the existing system to screw people. That’s much less work than remodeling/privatizing the existing SS bureaucracy. Plus I think the citizenry really would go apeshit if they tried privatization… can’t have the little people from both parties upset at the elite for the same reason and uniting against them.

  2. TK21

    It’s my understanding that Obama wants to cut Social Security to offset tax breaks for the wealthy. Would he be willing to privatize it instead?

    1. rotter theres some washington-versaille “centrism” distilled…obama wants to cut social security (and medicare) to pay for more tax cuts for the overcass…right down the a Jim Palmer fastball. yessir.

    2. lambert strether

      There is no “offset” for two reasons:

      1. While the checks to the poor, elderly, and working class will definitely shrink, the taxes of the rich will only increase to the extent they cannot hire accountants to avoid and evade them (and not write off the accountants). So, in practical terms, there is no “offset.”

      2. Taxes do not fund spending. So, in analuytical terms, there is no offset either.

  3. Gerard Pierce

    In my response to a previous article regarding Bill Black (and the Third Way), I asked how Wall Street could make any money out of social security when all FICA revenue is already being used to write current social security checks. There is no surplus for Wall Street to play with steal. The draw on the trust fund is minimal so far, but it will be increasing over the next 30 or so years. And the trust fund has no actual money, just intergovernmental loans.

    Most of the responses were inappropriate except for a few that confirmed that there is no there there.

    I concluded that the Grand Bargain was a shuck. Wall Street and the Third Way know that they can’t make a profit by taking over social security until there is a surplus (which isn’t going to happen any time soon).

    My conclusion is that the Grand Bargain is an attempt to scare the crap out of everyone and then cut a phony deal to leave social security alone if the Democrats agree to dismantle the rest of the safety net.

    This theory is either substantially correct, or it is wrong. Does anyone out there know which?

    1. TK21

      It was my understanding that Wall Street wants to “manage” the money going into Social Security. They’ll invest it or some such, taking a cut of the total for their hard, hard work. And since they’re such savvy businessmen, the fortunes of S.S. can only improve!

      A rational person might say “but there’s no reason to let Wall Street fool around with this money before paying it to beneficiaries. They’d just be useless middlemen we’d have to pay for contributing nothing.” Well, that describes like a third of our modern economy already.

      1. rotter

        well right, but if one accepts your statement then wal street are only ever “useless middle men” anyway, who the world would be much bettter rid of. they and thier deluded hero-worshippers arent going to swallow that fur ball of truth.

        1. TK421

          No disagreement here. Most stock brokers don’t pick winners any more frequently than 50% of the time, so one would be better off flipping a coin.

    2. sd

      I must be missing something because I thought it was obvious that Wall Street intends to make its money off of management fees.

      1. Gerard Pierce

        Maybe I’m the one missing the obvious – that’s why I asked the question in the first place.

        If the FICA money comes in and immediately goes right back out to write a social security check, what is there to manage?

        You could play some weird games with the $2.7 trillion in the trust fund, but Wall Street already has more money than it has places to invest.

        I still believe that the whole thing is an attempt to use FUD to provide an excuse for dismantling the safety net.

        1. rotter

          If the FICA money comes in and immediately goes right back out to write a social security check, what is there to manage?

          what makes you think it would work that way?

          1. Gerard Pierce

            Because that’s the way it works now, and if it doesn’t work that way there is no money to write the checks. Obviously there are other sources for the money – all of which would make Republican heads explode.

        2. EconCCX

          >>If the FICA money comes in and immediately goes right back out to write a social security check, what is there to manage? @Gerard Pierce

          As I recall, GWB’s plan for privatizing SS anticipated younger workers diverting some of their FICA payments into privately managed individual accounts. For Wall St’s plunder.

          1. Gerard Pierce

            That was the plan until someone explained to Bush that the money he wanted to divert to Wall Street was currently being diverted from the social security trust fund to the general fund – where it was being spent on the defense department and on corporate welfare.

      2. TK421

        Well it’s like health insurance: what do those companies add to the process? Yet Obama has already enshrined them at the center of America’s health care system.

        Wall Street would take the incoming money and invest it for us, then pay it out. Unless they lost it, of course.

        1. Gerard Pierce

          The could, lose, and the social security checks might not get written -leading to a congress-critter hanging from every light pole in DC.

        2. Gerard Pierce

          The point I didn’t emphasize was that there is no time period for the money to be “invested”. The social security checks are due every month. The money to write the checks has to either come from FICA receipts or from the trust fund/general fund. As soon as a buck is collected through FICA it needs to be paid out. There is no lag time for Wall Street to play with their pud while they try to figure some way to earn a return on the money.

          1. Procopius

            You seem to be dismissing the Trust Fund. It exists. There’s something like $2 Trillion in computer entries or actual bond certificates somewhere. That can be used as a time delay buffer. They used to demand that the Trust Fund be invested in equities because the returns would be so much better and the historical record proved they were just as safe (hello, 1829 & 2008). I don’t get why people keep saying the money isn’t there. Of course it’s there. Do these people really believe the U.S. Government is going to default on one class of its bonds? I know that’s what the Republicans want, but I really don’t expect it to happen.

    3. Brooklin Bridge

      It does look as though the primary interest right now is on attacking Medicare and Medicaide by cuts, but not for the reason(s) you mention, or at least irrespective of them. A lot of what’s happening right now are simply “trial ballons” to see just how much they can get away with. If they can sneak raising the age of SS into the mix amongst all the hullabaloo, they will not hesitate to do so.

      Managing the funds, or the IOU’s if you prefer, by private enterprise, as the two comments above mine suggest, are all that would be necessary for “privatization” to work against the public’s interest and for that of Wall St. regardless of whether or not there is any “there there”. The cost of such management and the payout would be respectively more than seniors pay now and less than they get in return and that would only worsen over time.

      Explain why management of government iou’s are not just as easily privatized as a positive balance sheet or accept that you are simply covering your eyes and ears to any explanation you don’t like.

      1. Brooklin Bridge

        If the FICA money comes in and immediately goes right back out to write a social security check, what is there to manage?

        Maybe I’m missing something.

        1. Brooklin Bridge

          I think you got it exactly right above. Wall Street would take the money and invest it. There might not be any need for such investment, that is, @Gerald Pierce might be right that the debt should or could be converted to notes and sent right back out, but that obvious solution could easily be obscured by enough hand waving, smoke and mirrors, to give Wall Street more than enough justification for literally appropriating the IOU converted cash, investing it, and then book-keeping any proceeds paid out to appear as money managed via finance over a period of time. The investment firms would then skim ever more off the top for their “services” and when the whole system finally went belly up, or whenever Wall St. had a crash, they would yell and holler frantically for a tax payer supplied bail out.

          1. Gerard Pierce

            That’s not even close to how it works. As long as the trust fund has a positive balance, Social Security moves money from the general fund to the account that backs the checks that are written. Then after a while they reconcile the bookkeeping -> general fund vs trust fund. Subject to these constraints, they create the money to write the checks out of thin air, like everything else in our economy.

      2. Gerard Pierce

        “Explain why management of government iou’s are not just as easily privatized as a positive balance sheet or accept that you are simply covering your eyes and ears to any explanation you don’t like.

        The reason the iou’s are not as easily privatized is that there is no there there.

        The iou’s that back the trust fund are special interest bearing) T-Bills that are not counted as part of the national debt and can’t be owned by any one other than the federal government. There is no market for them, because (by law). they can’t be marketed.

        If you convert them to regular T-Bills – so you can privatize and market them – you’ve just added $2.7 trillion to the national debt.

        If you were to redeem them in the form of dollar bills, you have to get the money from the general fund – again increasing the deficit.

        Bottom line: government iou’s are not easily privatized because Republican heads would explode.

    4. MRW


      I asked how Wall Street could make any money out of social security when all FICA revenue is already being used to write current social security checks.

      First of all, FICA is NOT being used to write current social security checks. All social security checks come out of the general treasury. Ask anyone who receives one. Signed by Timmy Geithner. It doesn’t say Social Security Trust Fund. That’s a convenient fiction for a bundle of insurance programs created in the year they passed Social Security so people would feel they were contributing, and to get it past the screeching Republicans at the time because they called it a ‘tax’. (Check the history of how the SS came to be. They used the same trick with Obamacare, page 151 of the final Act.)

      Medicare B and D were guaranteed by an act of Congress to be paid in perpetuity, no matter what. Medicare A and C takes money from people, but Congress could do the same thing. Stroke of a pen by Congress. That’s all it takes to put A & C under the same umbrella. The Federal Government ISSUES the currency. There is no threat to Social Security, and there is no threat to Medicare. The government just marks up the balance in our bank accounts through the US banks’ accounts at the Fed.

      The issue is that Wall Street knows how this works–really works–and Main Street doesn’t. So it (Wall Street) is salivating over 308 million people handing over hard-earned cash to them, an untold bonanza they can flip into derivatives, knowing full well that the Federal Government is going to cover it anyway. Social Security: the new “Too Big To Fail.”

      You got a couple of hours? Watch this:

      At the very least watch the first few minutes of Warren Mosler, the first speaker.

      1. MRW

        Should be: “screeching Republicans by calling it a ‘tax’, which protected the program when it reached the Supreme Court…the Chief Justice came up with that hint to help FDR out.”

      2. EconCCX

        The Federal Government ISSUES the currency. There is no threat to Social Security, and there is no threat to Medicare. The government just marks up the balance in our bank accounts through the US banks’ accounts at the Fed.@MRW

        MRW, I’m sure you’re not simply making this up. Have you documentary evidence that money issuance works as you claim, or merely the assertions and surmises of fellow MMTers? Any links to indicate how many dollars USG created last year by marking up accounts at the Fed? Bank ledgers? Budget lines?

        To issue proof platinum coins is well within USG’s sovereign power. But Federal Reserve Banks are private banks. To mark up balances therein without recompense would be an act of fraud and of theft.

        USG funds itself through taxes, through bond sales, and by issuing coins worth mere hundreds of millions. I’d love to see some documentary support that it also funds itself through unreciprocated account entries at the Fed. From you or any MMTer.

        Why would any self-respecting NC reader be persuaded by anything less?

  4. Paul Tioxon

    Sam Stein of the Huff Post buries a fair and balanced end of the story snippet from the discredited “3rd Way”. They should be called what they are, the 3rd rail of politics. This Wed, Nov14, The Left meets with the prez in the WH. The usual suspects are there with a message about social security: HANDS OFF SOCIAL SECURITY!! Labor know that by stopping the abusive tax avoidance privileges of the 1%, including the massive loophole of capping the FICA tax payment at $113,700/yr, hundreds of billions go untaxed. By removing this give away to the highest income earners, there will be no need for discussion about social security as a problem for anyone, for a long time to come.

    Obama knows this:

    Many in Congress know this:

    So today, as Washington girds for a debate on the size and scope of government and how to pay for it, Philly U.S. Rep. Bob Brady, the city’s Democratic chairman, planted his flag on the left, declaring that he would not accept any cuts to Medicare, Medicaid or Social Security. Tuesday’s election results, he said, show that the public is with him.

    “I don’t know what other message we could send them other than what we sent them on Tuesday … do not mess with our Social Security, do not mess with Medicare, do not mess with Medicaid,” Brady said, standing with about 50 union members outside Social Security Administration offices on Spring Garden Street.


    But the “3rd Way” wants to mess what it should just leave alone if it knows what is good for it.

    From the above link, this is what the “3rd Way stands for when it comes to SS, Medicare/Aid.

    “I think the idea of thanking the base in some sort of unified, symbolic way is either fantastical or a mistake. I think that is what George W. Bush did in the beginning of ’05, when he tried to privatize Social Security, which was the ultimate gift to his base and turned out to be a disaster for him and derailed the rest of his agenda,” said Matt Bennett, senior vice president for public affairs and a co-founder of the centrist-Democratic think tank, Third Way. “Obama will have learned that lesson and won’t try to hit a grand slam that will solidify his base.”‘

    Sam Stein should understand that he is not balancing the article by showing a moderate or intellectually valid point of view by a “think tank”. Any Democratic think tank would not denounce Labor and Social Security defenders as some how, strident lone voices of abusive sloganeering out of touch with mainstream Americans, such as George W was with his crazy privitization plan, which was attempted again by Paul Ryan, and again, defeated. The 3rd way is homegrown astro turf, ala Clinton era attempts to appear conciliatory during the reactionary aftermath of the Reagan Revolution. That was a long, long time ago.

    With Gays in the military, legalization of pot at the state level, and a Black president in his 2nd term, we are so far beyond the Reagan era that we might as well be talking about Reconstruction for all of the familiarity it has today for young voters, women and immigrants. The 3rd way is as out of touch with the American electorate, as the just sorely beaten republicans. The terrible situation of the financial depression we live under has changed the circumstances of politics so radically, it will be a while for all of us to catch up and gain perspective.

    The 3rd way is another dead end lobbying technique that supplies nothing of value to a policy mix other than more of the same phoney Wall St innovations that created the disaster to begin with.

    1. SayWhat?

      Obama has a “base?” [Other than Wall St of course, but they’re every pol’s base.] News to me, and apparently to him as well.

    2. TK421

      What a stupid quote, where to even begin? Republican voters don’t want Social Security messed with any more than others, first of all. And Bush made a blunder by playing to his base, so no one else should give their voters what they want? How ridiculous.

      Good point about Obama’s base–he sure doesn’t care a whit about his voters.

  5. jal

    The rich have better ways of making money than privatizing Social Security.

    Using “the “Fiscal Cliff” as an exaple.
    Right now, the best available course of action for the majority of the USA people would be for the gov. to do nothing.

    That’s not going to happen.

    The super committees, (rich people), spent Billions of dollars on the election so that they would be sitting at the table to make sure that any future legislation would not be harmful to their interest.

    If the gov. lowers spending and gives less to the spenders, ( Social Security for the poor), then there will be less profits from that source of income.

    Therefore, The rich will have to raise prices to maintain profit margin for their “New yatch fund”.

    If the gov. tries to reduce loopholes in the tax code then there will be less profits from that source of income.

    Therefore, The rich will have to raise prices to maintain their “New yatch fund”.

    If the gov. increases taxes on the rich then they will raise prices to maintain their “New yatch fund”.

    See… its nice to be rich … you get to write the new legislation and can keep your “New yatch fund” growing.

    1. rotter

      raise prices on what? they really dont make or sell “things” anymore do they? all they make is debt and all they sell are fees(and propaganda)..i hope they DO raise prices on those ectoplasmic commoditites, because when prices go up, sales go down.

  6. docg

    All the Democrats need do is let the Bush tax cuts expire as scheduled, at the end of the year. Once they’ve expired, the Senate Democrats can pass a new tax bill, retaining the same cuts for all income below $200,000 (or some comparable amount), with no cuts for income at or above that amount.

    The House Republicans would then be faced with the decision to either pass that legislation or vote against lowering taxes for the great majority of Americans. That’s what I would call sticking it to them. If they vote down such a bill, then, hey, that’s their right. But I really doubt they’d be so foolish, as their action would be tantamount to a tax hike. It would also violate their sacred pledge, no?

    Obama need not play any role in this at all, unless he prefers to veto the bill, which would be foolish indeed. So, sorry, I fail to see any need for a Grand Bargain as far as taxes are concerned.

    As for Social Security, the only sensible thing is to raise the income cutoff. Raise it as much as needed to cover anticipated costs. Actually if you raise it a bit above that amount, you would then be lowering the payroll tax for the great majority of workers, so again the House Republicans would be faced with yet another unpalatable choice. That too is what I would call sticking it to them.

    So please someone explain to me the need for this Grand Bargain, because I don’t get it.

    1. Wat Tyler

      What Obama needs to declare (and stick to it) is that the starting point of negotiations will be the Clinton 2000 tax levels – pre-Bush cuts. The Bush temporary rates are totally irrelevant going forward. Past history.


      1. different clue

        But since Obama is committed to making the Bush tax cuts permanent, why would he want to see them expire?

  7. SayWhat?

    What do you call it when an American pol represents him/herself as one thing during a campaign, and then without so much as batting an eye, morphs into the exact opposite the day after the campaign is concluded?

    Well, in the past we’ve merely called it “business as usual,” but seeing as Obama has raised it to a new art and giving credit where it’s no doubt due, maybe it’s only fitting that we call it “doing an Obama” from here on out. Not to pass on any economic opportunity great or small, I’m sure has already filed Trademark paperwork. You know, just in case the first daughters ever become destitute, and heaven forbid, have to do something REALLY desperate like join the military or something.

    As to “the Third Way.” I thought we retired that old turkey when Tony Blair and BillyBob NumbNuts retired to the $50K a plate rubber chicken circuit. Evidently, just like “Trickle Down Economics/Prosperity” before it, it just won’t die. Reminds me of the movie industry’s fascination with all things zombie these days, not to mention their tried and true recipe of recycling the old shitty movies and/or TV shows of the boomers’ youth, in hopes of squeezing just a little bit more blood from the proverbial turnip. Ahh capitalism and it’s attendant politics! Ain’t it wonderful? SO f***ing innovative in its eternal quest to shit out another gold nugget for it’s already hyper-wealthy masters. And the shit stew will only get thicker and more aromatic from here on out…

  8. run75441


    Tet started January 30th and into February. My Lai to which this quote was attributed was mid March and well after Tet. I would not associate My Lai with Tet as terrible as it was and well covered up by Collin Powell (read Kovac) and others.

    This does not take away from the usage of the infamous phrase in association with current political activities.

  9. Michael Fiorillo

    Cutting, and opening the door to long-term privatization, of Social Security: the job Obama was politically engineered to do.

  10. Punkyclown

    Your missing the point about privatizing SS, if that happened the whole law would be changed. Senior who are 55 or older would get their SS kind of like it is today, something like 3% less and no cost of living raise, retirement at 67 going up to 70 after 10 ten year and that money would be garanteed by the Gov. There would be no more trust fund, or a completely revamped one. And those younger than 55 would be allowed to stipulate what percentage of their SS payment would go to the SS 401 fund or some such. And the rest would then be recalculated and paid out at whatever dividend is left. End of SS as we know it.

  11. kst

    Mr. Black writes:

    “Peterson is a Republican, Wall Street billionaire who has two priorities – imposing austerity on America and privatizing Social Security.”

    He goes on to explain why Wall Street wants to privatize Social Security, and the reason is as clear as day (they stand to profit immensely from “managing” your Social Security taxes).

    But what’s the impetus for the austerity push? I mean, in what way do they benefit from this like they so clearly do with Social Security above?

    I’m not being snide, I’m honestly asking. From what I gather, the argument is that they plan to take over previously government run enterprises that get cut back, then milk them for profit.

    The issue I have with this argument is that we all know government largesse doesn’t just benefit the poor — defense spending, welfare (think JP Morgan’s management of food stamps), Medicare/Medicaid (provides customers to insurance/pharma who otherwise could not afford it), etc. etc. greatly benefit large corporations and Wall Street by extension.

    How is the government money lost through austerity reclaimed?

    1. Gerard Pierce

      “He goes on to explain why Wall Street wants to privatize Social Security, and the reason is as clear as day (they stand to profit immensely from “managing” your Social Security taxes).”

      And that is complete nonsense – which is why I wound up hijacking most of the comments section of this article.

      There isn’t any money to be made in managing social security. If you did get into a “management” position, your costs would be easily comparable to the historically low costs of the social security administration. Even the thieves of Wall Street don’t like deals like this unless they have a good cover story.

      There’s no limit to the stupidity of the American public, but the old geezers currently receiving checks are very good with a pocket calculator. They have to be to avoid living on cat food.

      And after all this time, I still haven’t been able to get a straignt answer about why Wall Street would want social security. If they do, it’s not for the “profits”.

      1. kst

        I saw your comments earlier in the discussion and my simple answer is that your premise is flawed. You say:

        “FICA revenue is already being used to write current social security checks. There is no surplus for Wall Street to steal”

        I counter that:

        1) Clearly the payment system isn’t simply tax money comes in, payment immediately goes out. The tax is collected and held for some period of time before it goes out. Banks routinely sweep money into overnight accounts to earn interest and the same thing could happen here. With a large amount of money, this is clearly not a trivial amount at stake. Rough swag at a calculation: social security taxes amounted to something like $600 billion last year, so let’s say they get 1/365th of this a day, park it in an overnight account currently earning .16% interest (per NY Fed) and voila, free money. I don’t even have an MBA and I came up with that. Imagine the schemes they have in mind…

        2) In the privatization scenario, banks have a claim on the labor output of this country. Let that sink in. Given their track record over the last 5 years, do you not expect them to use this to their advantage to make money? If I could go out and say I was managing the nation’s tax dollars, do you not see how that could be used as leverage (pun intended…) to make some obnoxious deal??

        1. Gerard Pierce

          That’s at least a plausible reason why Wall Street would like to get their hands on even transient FICA receipts. It’s not up to their usual standards of rape ad pillage, but you’ve got to start somewhere.

          Later on this page, I posted a reason why Wall Street might like to be able to invest the social security trust fund in the stock market.

          Now at least we have some theories as to why Wall Street would want to get their hands on a fund where there is mostly nothing there.

          But neither of these theories explain why the public would want these clowns to manage their money. None of these theories give a reason why the public should not run screaming away from the very thought of putting Wall Street in charge.

          Even staunch Republicans should run screaming at the thought – unless they have figured out a way to get a piece of the action.

  12. Conscience of a Conservative

    Bill Black is at his best when he discusses financial fraud. The more he strays fom his core compentancy the less he resonates.

    1. scraping_by

      Handing over social security into private hands is the greatest opportunity for fraud the financial industry’s ever seen.

      Look up what happened when they tried in the UK under Thatcher. 8B in two months?

      Just because a suit calls it a fee doesn’t mean it isn’t theft.

  13. lambert strether

    What we ought to be talking about is:

    1. Decreasing the eligibility for Social Security to 60. Maybe that way more young people could get jobs.

    2. Making benefits age-neutral. It’s shameful and dishonorable that we in my generation allowed a tiered benefit structure to be introduced; I can only plead ignorance in the face of propaganda.

    1. different clue

      What was your generation supposed to do about it anyway?
      Maybe you should plead weakness in the face of superior force.

      Maybe the majority of individually near-powerless mere-citizens should think about the collective power of attrition and erosion they could wield against selected bussiness targets if they thought about how to function as moles or army ants or such. If the Class Enemy Occupation government passes the catfood plan, is there a way for all the targets who underSTAND that they are targets . . . to target selected bussinesses and revenue streamers in return?
      Target them for slow and eventual extermination through attrition of revenue streams?

      You can bring a ten ton elephant to the Washington Monument and have it push against the Washington Monument from now till forever and it won’t fall over. Or you can bring ten tons of moles and gophers to the Washington Monument and have them dig all the soil out from under one side of it. Give them enough time to dig out enough soil, and it WILL fall over. ( Or you can bring ten thousand demonstrators to the Washington Monument and have them march around it waving their little signs and chanting their little slogans. It will never respond to them. It can’t hear them. It don’t gots no ears, you dig?)

  14. Susan the other

    If Wall Street has proliferated so many financiers and money managers that it must now have a guaranteed source of money to play with it is time, clearly, to downsize Wall Street. There is a Fourth Way. Shrink Wall Street.

    1. different clue

      Here is an inspiring article I read years ago by Martin Hutchinson in his Bear’s Lair website, called Financial Services Rust Belts. Hutchinson is some kind of conservative and I don’t understand some of what he wrote and don’t agree with other parts of it. But I found his vision of deep shrinkage of Wall Street and the City of London to the status of un-needed reverse-developed Rust Belts to be a deeply inspiring vision. What can we do to realize the vision of shrinking the Financialist Sector so severely that tens of thousands of its employees lose their jobs and run out of money, run out of food, starve to death, and die? How do we make the dream real?

  15. Gerard Pierce

    Plan B-

    I’m still convinced there is no profit in “managing” social security money, so I concluded that the current Third Way efforts were a form of financial terrorism.

    Someone at Smirking Chimp suggested that Wall Street always has one place to invest money – the stock market. It makes a kind of perverse sense.

    They’ve already pumped the stock market up from abysmal to mediocre largely using money borrowed from the fed.

    The problem is that they can’t cash in until they locate the “greater fool”. They need someone to buy those stocks they have been pumping up.

    Not only could they get paid for “managing” social security money, but they could offload the stock market onto the social security administration, take the money and run.

    1. run75441


      It made sense when there was a surplus that WS wanted to get their hands on the surplus and invest. Now that there is no surplus, I think they are more afraid of the impact of the draw down of funds from the GF and resulting tax increase on the Bond Market (Bruce Keating). PS . . . I am not pro WS and very much support SS. Have you put your question to Bruce Webb?

  16. scraping_by

    “Third Way, a liberal think tank with a centrist approach…”

    I find it bizarre that anyone educated in language, such as our media workers, couldn’t jump on someone speaking out of both sides of the mouth. But, I suppose that’s the price of paying your mortgage.

  17. nah

    invest your money with social security, wall street hasnt made me or anyone i know real money…
    risk vs reward i guess

  18. rotter

    “I watched the first debate between Obama and Romney, and somebody said, you know, “Who do you think won?” And I said, “Pete Peterson.”

    -Stephanie Kelton-

  19. Punkyclown

    I just have one last thing to say since some of you can’t listen to reason. If there is no money in privatizing Wall Street then why did GW make it the main moving point of his second administration. Why has every right wing think tank made it a central point on there attack of deficit reduction. Becuase there all faking a hand off and throwing a pass. No, it’s becuase they know it’s a constant flow of money locked in for the long term. Professor Black is not someone who just fell off the truck. He’s been at this a long time. And for anyone on this blog to denigrate what he’s saying without stepping out of the shadows and listing their credentials so we can see why we should take them seriously is completely insulting.

    1. jrs

      Meh. Some good points but argument from authority really isn’t very persuasive. I take seriously whatever makes sense to me, and the critiques here have been reasonable and sensible. I realize everyone sees The Enemy everywhere in these paranoid political times, but some people are just asking questions. Your real enemies are in D.C. throwing away your future.

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